Frequently, two or more people will combine their financial resources, efforts, skill, and knowledge in furtherance of some business enterprise and in the hope of generating a profit. These co-venturers may choose not to form a corporation or limited-liability company, but instead operate along less formal lines. They may choose to bind themselves to some sort of formal written agreement, or they may instead proceed with little more than a handshake and a set of mutual assumptions and understandings. In these circumstances, such businesspeople—intentionally or not—may have established an arrangement that qualifies as a joint venture or a partnership under New York law. Fiduciary duty questions have arisen in joint ventures and partnerships perhaps since as long as those arrangements have been legally recognized, and a recent decision of the Appellate Division, First Department, offers an illuminating glimpse into how courts assess the nature and scope of the fiduciary duties owed by joint venturers or co-partners.
In Jeremias v. Toms Capital LLC, 204 A.D.3d 498 (1st Dep’t 2022), a case involving the development of a valuable parcel of real estate in Manhattan’s Meatpacking District (the “Property”), the court upheld a fiduciary-duty claim asserted by the plaintiff, a real-estate developer, against the defendants, with whom the plaintiff alleged he had reached an agreement to jointly develop the Property.
Before getting into the specifics of the case, a brief review of the legal definitions of “joint venture” and “partnership” will help set the stage.