Bohatch v. Butler & Binion
Supreme Court of Texas
977 S.W.2d 543 (1998)
Partner Colette Bohatch (plaintiff) reported her suspicion that fellow partner McDonald was overbilling the firm's major client, Pennzoil, to the firm's management committee, which investigated, heard from Pennzoil's own in-house counsel that the bills seemed reasonable, and found no basis for the allegation. The firm, Butler & Binion (defendant), then zeroed out Bohatch's 1991 distribution without proper notice, cut off her monthly draw early, and ultimately expelled her from the partnership. Bohatch sued for breach of fiduciary duty and breach of the partnership agreement; the jury found for her on both, but the court of appeals limited fiduciary-duty liability to expulsions made in bad faith for the expelling partners' own self-gain, found none here, but upheld the contract claim based on the improper notice. Both sides sought further review in the Texas Supreme Court.
Whether a partnership owes a duty not to expel a partner for reporting a good-faith, but ultimately unsubstantiated, suspicion that another partner was overbilling a client.