Consumer Law, Warranties Conflict of Interest

[Bronxtale2]

My jurisdiction is: New York

- I am am the majority owner of an IT consulting business with one partner, in an S-Corp. (Corp A.)

-Our business is project based with some ongoing support. There is not a steady stream of cash. That is, our income from this business changes from month to month and year to year. This is only a supplement to our full time jobs.

- A year ago, my partner joins another IT consulting firm and swears that the lines of business are not related. (Corp B)
- Last month, my Partner decides to steal a client from Corp A and make it a client of Corp B.

What is my legal recourse? How can I place a value on that client?

 

[dee_dub]

Depending on how your business is structured, your co-owner may owe a fiduciary duty to act in the company's best interests. (He doesn't have that duty just because he's an owner, but he might if he's a director or if you have some other agreement of his duties.) Taking clients is probably a pretty clear breach of that duty. You can sue him for that.

Did he just "decide to take a client", or did he actually take a client? Place a value on it by calculating your income from that client in the past, and what it would be likely to have been in the future.

 

[Bronxtale2]

When speaking with the client under the capacity of Corp A., she presented some new opportunitites that would be of substantial value to Corp A., at that point he "made a decision to tell her about Corp B." and noted that "there is nothing to resolve with the client".

 

[Bronxtale2]

I needed to add this to my last post. The client, up to now has merely been a very small contributor to our bottom line, less than $500 USD a year. She has now decided to expand her business and the opportunites that she is now requesteng help with are worth between $200,00 - $500,000, over a four year period.

If I sue him, as i see it, I should be receving half of that income over the perioed of time that the project last. Is that correct?

 

[dee_dub]

at that point he "made a decision to tell her about Corp B." and noted that "there is nothing to resolve with the client".

It sounds like you are quoting him. I'm not sure what either of you means by this. It sounds like he took a legitimate business opportunity from your company, but its anybody's guess how it would play out when all the facts are in evidence.

The client, up to now has merely been a very small contributor to our bottom line, less than $500 USD a year. She has now decided to expand her business and the opportunites that she is now requesteng help with are worth between $200,00 - $500,000, over a four year period.

If I sue him, as i see it, I should be receving half of that income over the perioed of time that the project last. Is that correct?

I can see some problems the claim might face - who's to say your company would have got that business, if she's been a penny-ante client so far; who's to say you would have been in the running at all for it, being as you're a couple guys who do this in your spare time; who's to say she's going to spend that amount on her new project; etc. It might be a reasonable starting point, though. Consult a lawyer.