California Partnership Dispute Demand Letter

I am writing in my capacity as a partner in [PARTNERSHIP NAME] (the "Partnership"), a California general partnership formed on or about [FORMATION DATE]. I made an initial capital contribution of $[CAPITAL CONTRIBUTION] and hold a [PERCENTAGE]% interest in the Partnership. This letter constitutes a formal demand for accounting, return of misappropriated funds, and notice of your material breach of fiduciary duties owed to me and to the Partnership.

FACTUAL BACKGROUND

The Partnership was formed to engage in [BUSINESS PURPOSE]. Under our partnership agreement [dated DATE / or, if oral, as mutually agreed], profits and losses were to be shared [equally / in proportion to capital contributions / per specific percentages], and major business decisions required [mutual consent / majority vote / unanimous agreement].

I have recently discovered that you have engaged in conduct that constitutes a serious breach of your fiduciary duties as a partner. Specifically, you have:

1. [DESCRIBE FIRST BREACH - e.g., "Taken unauthorized distributions totaling approximately $85,000 from the Partnership account between January 2024 and June 2024, without my knowledge or consent and in excess of your proportionate share."]

2. [DESCRIBE SECOND BREACH - e.g., "Diverted at least three business opportunities that rightfully belonged to the Partnership to your separately-owned company, [COMPANY NAME], resulting in lost profits to the Partnership of approximately $120,000."]

3. [DESCRIBE THIRD BREACH - e.g., "Failed to disclose and account for commissions and referral fees totaling approximately $35,000 that you received from Partnership vendors."]

4. [DESCRIBE ADDITIONAL BREACHES AS APPLICABLE]

LEGAL BASIS

Under California's Revised Uniform Partnership Act, Corporations Code Sections 16000-16962, you owe fiduciary duties to both the Partnership and to me as your co-partner. Specifically:

Corporations Code Section 16404(b) requires you to account to the Partnership for any profit derived from Partnership business or use of Partnership property, and to refrain from dealing with the Partnership on behalf of parties having an adverse interest.

Corporations Code Section 16404(d) requires you to discharge your duties in good faith and deal fairly with the Partnership and your co-partners.

Your conduct, as described above, constitutes a material breach of these statutory duties. Under California law, partners stand in a fiduciary relationship requiring the highest good faith, candor, and fair dealing. See Jones v. Wells Fargo Bank (2003) 112 Cal.App.4th 1527.

DEMAND FOR ACCOUNTING

Pursuant to Corporations Code Section 16403, I hereby demand a complete and formal accounting of all Partnership affairs from [START DATE] to present. Within fifteen (15) days of this letter, you must provide:

1. Complete bank statements for all Partnership accounts;
2. All Partnership financial records, including QuickBooks files or equivalent;
3. Documentation of all distributions made to either partner;
4. All contracts, invoices, and business records;
5. Partnership tax returns (Form 1065) and Schedules K-1;
6. A complete list of Partnership assets and liabilities.

DEMAND FOR PAYMENT

Based on the information currently available to me, I demand that you pay to the Partnership the sum of $[TOTAL AMOUNT], representing:

Unauthorized distributions: $[AMOUNT]
Diverted business profits (Partnership share): $[AMOUNT]
Undisclosed commissions/fees: $[AMOUNT]
[OTHER ITEMS AS APPLICABLE]: $[AMOUNT]
TOTAL: $[TOTAL]

This demand is based on limited information. Following a complete accounting, the amount owed may increase. I reserve all rights to seek additional damages.

DISSOLUTION / DISSOCIATION NOTICE

[INCLUDE IF SEEKING DISSOLUTION:] Given your material breach of fiduciary duties and the irreparable breakdown of our partnership relationship, I hereby provide notice of my intent to dissolve the Partnership pursuant to Corporations Code Section 16801. [For at-will partnerships: This notice is effective immediately.] [For term partnerships: I am dissociating from the Partnership pursuant to Section 16601 and demand a buyout of my partnership interest at fair value pursuant to Section 16701.]

DEADLINE AND CONSEQUENCES

You must respond to this demand in writing within thirty (30) days - by [DEADLINE DATE]. Your response must include the complete accounting demanded above and a proposal for returning the misappropriated funds.

If you fail to respond adequately by this deadline, I will have no choice but to pursue all available legal remedies, including but not limited to:

1. Filing a civil action for breach of fiduciary duty, fraud, and accounting;
2. Seeking preliminary injunctive relief to protect Partnership assets;
3. Petitioning for judicial dissolution under Corporations Code Section 16801(5);
4. Seeking compensatory damages, disgorgement of profits, and punitive damages;
5. Seeking an award of attorneys' fees and costs.

This letter is written to resolve this dispute without litigation. However, I am prepared to take all necessary legal action to protect my rights and the interests of the Partnership.

This letter is not intended to be, and shall not be construed as, a waiver of any rights or claims I may have. All rights are expressly reserved.