Starr v. Fordham

648 N.E.2d 1261 (1995)

Facts

P was a partner in the Boston law firm Foley, Hoag & Eliot. Fordham invited P to join the new law firm Kilburn, Fordham & Starrett in January 1985. P was not a rainmaker, and Fordham assured P that business origination would not be a significant factor for allocating the profits among the partners. Relying on this representation, P withdrew from Foley Hoag on March 1, 1985. Prior to executing the partnership agreement, P informed Fordham that certain provisions in the agreement disturbed him. The founding partners had the authority to determine, both prospectively and retrospectively, each partner's share of the firm's profits. P was told to take it “take it or leave it.” On March 5, 1985, the founding partners executed the partnership agreement for D. P also signed the agreement without objection and without making any revisions. In August of 1985, Kilburn withdrew from the firm. Subsequently, the firm assumed the name, Fordham & Starrett. In September 1985, the partners met to consider entering into a ten-year lease for office space. The partners were anxious about both the length of the lease and the additional cost; the new lease rate was double the rate that they had been paying. After individually confirming their commitment to shoulder the additional burden, the partners agreed to enter into the lease. Profits were divided equally among the partners in 1985. Each of the five partners received $11,602. On December 31, 1986, the firm's profits were $1,605,128. In addition, the firm had $1,844,366.59 in accounts receivable and work in progress. P withdrew from the firm on December 31, 1986. P's accounts receivable and work in process was $204,623. P's share of the firm's profits for 1986 was to be 6.3% of the total profits. P sued recover amounts to which he claimed that he was entitled under the partnership agreement. P also sought damages for breach of fiduciary duty and fraudulent misrepresentation. Ds counterclaimed that P had violated his fiduciary duties to his partners and breached the terms of the partnership agreement. The judge concluded that Fordham, P.C., and Starrett, P.C. (founding partners), had violated their fiduciary duties to the P as well as the implied covenant of good faith and fair dealing in the partnership agreement when they determined the plaintiff's share of the firm's profits for 1986. The judge awarded the plaintiff damages of $75,538.48, plus interest. The judge rejected P's claim that he was entitled to a “fair share” of the firm's accounts receivable and work in process for 1986. Judgment was entered for P on the Ds' counterclaims. P and D appealed.