Contract Suit Claims Joint Venture and Partnership
Related business entities must always be vigilant in maintaining legal separation between them, not only in documentation, but in the manner in which they conduct business. In Best Cartage, Inc. v. Stonewall Packaging, LLC and Jackson Paper Mfg. Co., a North Carolina Court of Appeals case decided March 20, 2012, a trucking company sued two related businesses on a contract with one of the businesses. The suit claimed that, although the defendants were two businesses, they should be treated as a partnership and/or joint venture. The Court of Appeals reversed dismissal by the trial court of the claims for partnership by estoppel, joint venture and de facto partnership and allowed the case to continue with these claims intact.
Among the factors relied upon by the Court of Appeals was the plaintiff’s claim that it thought it was dealing with a partnership, the execution of the contract on behalf of one defendant by an officer of the other defendant, a press release from the Governor referring to the two businesses as a joint venture, and the expenditure of funds by one defendant for the other defendant with no expectation of reimbursement