Shamloo v. Ladd

2003 WL 68054

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Nature of the Case

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Facts

P and D formed Ginnytex, which was to be incorporated in California but was not active. The parties did not complete all required formalities to conduct business under Ginnytex as a corporation. The corporation operated under an oral partnership agreement. Ginnytex was to manufacture yarn into fabric for resale; the conversion or manufacturing of the yarn was to be performed by third parties for which Ginnytex would pay the market rate for their services; P's own facilities could also be used for the processing of the yarn; and P would be paid for the use of such facilities according to the market rate. D contributed $75,000 as a capital investment to the partnership and another $75,000 in the form of an interest-free loan. P contributed “sweat equity,” which was in the form of labor, knowledge, and expertise in the industry. P devoted approximately 50 percent of his time and energy to running the enterprise. The agreement was revised in October 1995 after P expressed his desire to end the partnership and distribute the proceeds. D's company, Inner Circle Graphics, was to order fabric from Ginnytex who would then add an additional 10 percent to the invoice cost to be split as a “50/50” profit between P and D. This lasted from October 1995 until February 1999, when the parties mutually agreed to end the partnership and wind up its affairs. D unilaterally withdrew $61,000 from the corporate bank account as repayment of the $75,000 loan from Ginnytex. P alleged a breach by D for failing to pay him his share of partnership assets. The court concluded that the parties had not proved the other causes of action alleged in the complaint and cross-complaint. The court dissolved the partnership. D disputes an award of $41,700 to P which was reduced to $27,344.96 in the amended judgment due to lack of partnership assets among other issues.