Partnership Dispute Lawyer

Read the Agreement Before Anything Else

Every business divorce starts in the same place, and people skip it because they think they know what their agreement says. Usually they signed it years ago, often from a template, and have not read it since.

The operating agreement or partnership agreement governs first. It may set out how an owner exits, how an interest gets valued, whether there is a right of first refusal, what happens on death or disability, and how decisions get made when the owners disagree. Where it contains a deadlock-breaking mechanism, that provision can decide the outcome before a court is asked anything. Florida makes this concrete: where the members are deadlocked and the operating agreement contains a deadlock sale provision that was initiated before the court determines that grounds for dissolution exist, that provision applies instead of the court ordering dissolution or a buyout.

Read the clause that seemed unimportant at signing. A shotgun provision, where one owner names a price and the other chooses whether to buy or sell at it, is a completely different negotiation from a right of first refusal, and it rewards whoever moves first and has financing ready.

The other thing to establish early is what the agreement does not cover. Many closely held companies operate for years on a short document that says nothing about exit at all, and some operate on no document. That is not fatal. It means the statutory default rules govern, which is the rest of this page.

What Your Partner Owed You

Co-owners of a closely held business owe each other real duties, and this is where most claims live. The core set is a duty of loyalty, a duty of care, and an obligation of good faith and fair dealing.

Loyalty is the one that gets breached. In practice that means diverting a company opportunity into a side entity, competing with the business, self-dealing on transactions with the company, taking company assets or paying personal expenses out of company accounts, and putting family members on the payroll for work nobody can identify.

A point worth knowing before you conclude the paperwork defeats you. Florida limits how far an operating agreement can go in eliminating the duty of loyalty, the duty of care, or the obligation of good faith and fair dealing. What such an agreement can sometimes do is prescribe the standards by which performance of the obligation is measured, provided those standards are not manifestly unreasonable. So an agreement drafted to protect the managing owner frequently does not dispose of a loyalty claim, which surprises the side that drafted it.

Deadlock, and Why It Is Its Own Remedy

Two owners at fifty percent who cannot agree is the classic case, and people arrive believing they are simply stuck. They are not.

Florida lists deadlock as a ground for judicial dissolution in its own right. A circuit court may dissolve a limited liability company in a proceeding by a manager or member where the managers or members are deadlocked in the management of the company's activities and affairs, the members are unable to break the deadlock, and irreparable injury to the company is threatened or being suffered.

Deadlock is not the only ground, and the others matter in freeze-out cases where one side does have control. A court may also dissolve where the conduct of all or substantially all of the company's activities is unlawful, where it is not reasonably practicable to carry on the company's activities in conformity with the articles and the operating agreement, where those in control have acted or are reasonably expected to act in a manner that is illegal or fraudulent, or where the company's assets are being misappropriated or wasted so as to injure the company or, in a member's proceeding, one or more of its members.

Read that last ground again. Misappropriation causing injury to a member, not only to the company, is a dissolution ground. That is the provision that reaches the owner who has turned the business into a personal account.

The Threat That Produces a Buyout

Here is the part that decides most of these cases, and it is why a dissolution petition is usually a negotiating instrument rather than a genuine request to end the company.

When a member petitions for judicial dissolution in Florida, the company may elect to purchase the entire interest of the petitioner at the fair value of that interest. If the company does not elect, one or more of the other members may. Once made, the election is irrevocable unless the court determines that it is equitable to set it aside or modify it.

Follow the incentives. An owner who has been refusing to buy you out for two years, on the theory that you have nowhere to go, now faces a proceeding that could wind up the business he runs and lives on. Buying your interest at fair value is almost always the better outcome for him. So the filing frequently produces the transaction that the negotiation could not.

Which moves the fight to valuation, and that is a different kind of case. Fair value is not what a stranger would pay for a minority interest in a company with a live dispute, and the arguments run through method, comparables, normalized earnings and whether discounts for lack of control or marketability apply. This is the stage where the accounting records earn their keep.

What a Court Can Do While the Case Runs

People assume nothing happens until a final ruling, and in these cases that is usually wrong. Interim relief is where control changes.

In a Florida dissolution proceeding a court may issue injunctions, appoint a receiver or custodian pendente lite with the powers and duties the court directs, take other action required to preserve the company's assets wherever they are located, and carry on the business until a full hearing can be held. On a sufficient showing the court may appoint a receiver or custodian, order a purchase of the petitioning member's interest, or, for good cause, order another remedy it considers appropriate, including an equitable one.

That matters most where money is moving. An owner draining accounts, encumbering assets or moving customers to a new entity is doing damage that a judgment two years later may not undo. Cases where somebody neutral takes control of the bank accounts in the first months tend to settle much sooner and on better terms than cases where the same person keeps the checkbook throughout.

Getting the Books Open

The owner who controls the accounting controls the story, and nearly every claim worth bringing in a business divorce is proved out of the company's own records. Bank statements, the general ledger, payroll, credit card activity, related-party payments, and the tax returns against which all of it can be tested.

So the records demand is usually the first substantive move rather than a step along the way. It is generally enforceable, and refusal is itself informative. An owner who requires a court order to produce the company's own books has told the judge something about the rest of the case.

One warning, because the temptation is strong and the consequences are serious. Do not obtain records by self-help. Logging into accounts you are not authorized to access, or taking documents you no longer have a right to, can expose you to state and federal claims and turn you into a defendant in your own case. The lawful route reaches everything you need.

Suing for Yourself or for the Company

Two kinds of claim run through these disputes and confusing them is a procedural way to lose a case that had merit.

Where the wrong ran to the business, the claim generally belongs to the business and is brought derivatively, meaning you sue on the company's behalf and a recovery goes to the company. Diverted funds, usurped opportunities and waste usually sit here. Where the wrong ran to you as an owner, the claim is direct. Being denied distributions you were entitled to, or excluded from rights the agreement gave you, usually sits there. Florida provides separately for direct actions and derivative actions by members.

In a two-owner company the distinction can feel artificial, because a recovery to the company is half yours anyway. It is not artificial to a court, and pleading it wrong invites a dismissal that costs months.

This Is State Law, and What That Means for You

Everything above describes an architecture that most states share in outline. Owners owe fiduciary duties. The agreement governs first. Courts can dissolve a company on grounds that include deadlock and oppressive conduct. A buyout at fair value is available as an alternative to winding the business up. Records rights are enforceable.

The details are genuinely different from state to state, and the specific statutes cited on this page are Florida's. Some states are considerably more protective of minority owners than Florida, others less. Deadlock provisions, valuation standards and the availability of discounts vary. Anyone telling you the answer without knowing which state your company was formed in is guessing.

So here is how we work. If your company is a Florida entity or the dispute belongs in a Florida court, we handle it directly, including the litigation. Kevin litigates these cases here rather than referring them out, and began his career as a Miami-Dade prosecutor before he ever drafted a business document.

If the company is elsewhere, we work with local counsel in that state. The structural work travels, meaning reading the agreement, mapping which claims are real, sequencing the records demand, sizing the valuation fight and running the negotiation. The filings happen where they have to happen. And where a matter is plainly better served by a firm in that state handling it outright, we will tell you that at the consult rather than take it. That is not a small thing to say on a page like this, and it is the reason the consult is worth taking even if the answer is that we are not the right firm.

What a Business Divorce Costs

These are quoted after we see the agreement, the financial records and the size of what is in dispute, because a two-owner services company with clean books is a different matter from a multi-entity operation with related-party transactions to trace.

Two honest points about the economics. A significant share of these resolve at the demand and negotiation stage, before anything is filed, and that is a much smaller engagement than a dissolution case. The earlier a lawyer is involved, the more likely that outcome, because the leverage that produces a deal comes from the other side understanding what happens if there is no deal. And the largest single cost driver in a contested case is usually valuation rather than liability, which is an argument for getting the accounting in order early. The 30-minute consult is free.

Frequently Asked Questions

Common Situations

The fifty-fifty freeze. Two equal owners of a profitable services company stop agreeing on anything. One controls the bank accounts and stops distributions while continuing to pay himself a salary. There is an operating agreement and it says nothing useful about exit. A dissolution petition on the deadlock ground puts a buyout election in play, and the case resolves with one owner purchasing the other's interest at a negotiated fair value.

The opportunity that went sideways. A minority owner discovers the managing member has been routing the company's best customers to a second entity he owns alone. That harm ran to the company, so the claim is derivative, and it is proved out of the general ledger and the customer records rather than out of anyone's recollection. The records demand comes first and the pleading follows what the documents show.

Florida Guides

Where the company is a Florida entity, these go deeper on the specific mechanics.

• Florida business partner disputes, the Florida-specific overview.
• Business partner buyout in Florida, on pricing and structuring the exit.
• How to remove a business partner in Florida.
• The fifty-fifty deadlock, on the specific problem of equal ownership.
• Florida LLC derivative actions, on suing for the company rather than yourself.
• Suing a business partner in Florida.
• Florida buy-sell agreements, the document that prevents most of this.
• Florida operating agreements, including the provisions that decide a deadlock before it happens.

Sources of Law

The statutes below are Florida's, and they are cited because Florida is the worked example used throughout this page. Other states address the same questions under their own acts, and the wording and outcomes differ.

• Fla. Stat. §605.0702 (grounds for judicial dissolution in a proceeding by a manager or member: unlawful conduct of substantially all activities; not reasonably practicable to carry on in conformity with the articles and operating agreement; those in control acting illegally or fraudulently; assets being misappropriated or wasted causing injury to the company or, in a member's proceeding, to one or more members; and §605.0702(1)(b)5, deadlock in management which the members cannot break where irreparable injury is threatened or being suffered. §605.0702(2), a deadlock sale provision in the operating agreement initiated before the court determines grounds exist applies instead of dissolution or a §605.0706 buyout order). (verified 2026-08-21)
• Fla. Stat. §605.0703 (procedure and alternative remedies: the court may issue injunctions, appoint a receiver or custodian pendente lite with the powers and duties it directs, take other action required to preserve the company's assets wherever located, and carry on the business until a full hearing; on a showing of sufficient merit may appoint a receiver or custodian, order a purchase of the petitioning member's interest under §605.0706, or order another remedy in its discretion including an equitable one). (verified 2026-08-21)
• Fla. Stat. §605.0706(1) (election to purchase instead of dissolution: in a member's proceeding under §605.0702(1)(b) the company may elect, or failing that one or more other members may elect, to purchase the entire interest of the petitioner at the fair value of the interest; the election is irrevocable unless the court determines it is equitable to set it aside or modify it). (verified 2026-08-21)
• Fla. Stat. §605.04091 (standards of conduct for members and managers) and §605.0105(4) (an operating agreement may not eliminate the duty of loyalty or the duty of care under §605.04091, nor eliminate the obligation of good faith and fair dealing, although it may prescribe the standards by which performance of that obligation is measured if the standards are not manifestly unreasonable; nor vary the grounds for dissolution under §605.0702, though a deadlock resolution mechanism does not count as varying them). (verified 2026-08-21)
• Fla. Stat. §605.0801 (direct action by member) and §605.0802 (derivative action). (verified 2026-08-21)

What the First Call Usually Sounds Like

In 14 years of law practice, partnership disputes almost never start with the thing the client leads with. They lead with money and the deadlock is about control.

A common question I hear is, "Whose company is it if we each own half?" Fifty-fifty means neither of you can act without the other, which is a design that works until the day it does not, and then it stops the business rather than resolving anything.

What determines the outcome is the agreement signed when everybody liked each other. Where it names a way out, a valuation method, or a tie-breaker, the dispute has a shape. Where it is silent, the parties are negotiating in the dark and paying for the privilege.

Practice pointer. Gather the formation documents, the bank signature cards and the last three years of returns before the first meeting. Those three things tell me more about your position than an hour of description.

Avoid locking a partner out of the accounts or the premises. It feels decisive and it hands the other side the first real claim in the case.

Kevin D. Klagge, Esq., admitted in Florida since 2012. General information rather than advice on your situation.

Updated on September 1, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate and tax planning, business structuring, and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. General information, not legal advice, and no attorney-client relationship is created. Business divorce is governed by state law and the statutes cited here are Florida's; the law where your company was formed may differ materially. Outcomes depend on the specific facts and past results do not guarantee a similar outcome. Do not send confidential information until we have agreed to represent you.