Reference no: EM132296713

Spector (“S”), Rosenberg (“R”), Patron (“P”), and Konover (“K”) agree to build a shopping plaza in Seymour, Connecticut. There is no written partnership agreement. The four orally form Tri Town Realty Co., a partnership in which each partner receives a 25 percent interest. S and R contribute a land lease, while P and K are responsible for building, operating, and managing the shopping plaza. Initially, K and P manage the shopping plaza themselves, charging the partnership for any out-of-pocket expenses they incur. Over time, K and P form K and P Management Company, which eventually is replaced by K Management Corporation, which manages Tri-Town. K’s duties in managing Tri-Town include preparation and distribution of monthly reports to each of the partners. S believes that that K’s reports are not adequately explaining the finances of the partnership. S asks for an explanation of various expenses that appear on the monthly report. When S does not receive a response from K, S again reaches out to K and demands that the partnership be terminated. K never responds and stops making profit distributions to S. S hires a CPA whose investigation reveals that K did not maintain any account dedicated solely to the Tri-Town partnership. It is discovered that the Tri-Town partnership funds were commingled with funds from several other K entities, and all the funds were commingled in one account called the K and R Associates Trust Fund (K and R). Not only were the funds commingled in one account, but the Tri-Town funds were used by other properties owned by K. Even though Tri-Town funds supposedly were kept in the K and R checking account, the balance of the entire K and R checking account was actually far less than the amount purported to be in the Tri-Town partnership account. Additionally, the interest earned on Tri-Town funds was not credited to Tri Town’s account. K admits to diverting funds between his various entities. K said that by sharing the funds in the K and R account, K could use one property’s funds to cover expenses incurred by another property. S sues K seeking damages stemming from K’s alleged breaches of his fiduciary duties in managing the Tri-Town partnership. Will the court find that K breached his fiduciaries?