Problem
Jack, Janet, and Chrissy are best friends who just graduated from CSUN. With respective degrees in software engineering, health, and marketing, they decide to develop and market telehealth software to physical and mental health providers. They call their partnership Calladoc. Because they have been friends for so long and trust each other, they do not enter into a partnership agreement. They do agree that once their product is on the market, they will wrap up the business and apply to graduate school.
Janet soon discovers that Jack and Chrissy are extremely capable and hard workers and begins cutting down the time that she devotes to the partnership. Soon, Janet is working on partnership business only one day a week. She spends the other days at the beach. Janet brags on the beach about how ingenious and successful the software product will be. Janet attracts the attention of two other individuals, Ralph and Stanley, who are intrigued by the product and believe that it could be highly successful. Ralph and Stanley hire Janet as a consultant to help them explore the viability of creating a similar product. Ralph and Stanley agree to pay Janet $1,000/week for her consulting services. During the course of her consulting, Janet provides Ralph and Stanley with information that Janet learned while working with Jack and Chrissy, including a list of healthcare institutions that had expressed interest in possibly purchasing telehealth software. Eventually, at the urging of Ralph and Stanley, Janet leaves Calladoc before the software design is complete and becomes partners with Ralph and Stanley in developing software that will directly compete with Calladoc. Immediately after leaving Calladoc, Janet files a Notice of Dissociation with the Secretary of State.
On the day that Janet dissociated from Calladoc, the balance in her capital account was $10,000, the value of Calladoc's assets was $90,000 and Calladoc's worth had it been sold as a going concern was $120,000. Janet's leaving Calladoc caused it to suffer damages of $20,000.
Calladoc released its software 45 days after Janet left to join Ralph and Stanley. Unfortunately, the software had a bug that exposed the users' computer networks to hackers. Several healthcare institutions were hacked, and incurred significant expenses in remedying the problems caused. Uheal, a hospital that purchased the software on the first day of release, and that was damaged by being hacked, sues Jack, Janet, and Chrissy for the damages caused to its network. Uheal's initial contact regarding the software had been with Janet, and it was unaware that she had left the partnership at the time that it made the software purchase.
1. Has Janet breached any fiduciary duties to Calladoc and Jack and Chrissy? Which ones? What specific facts support the breach of each duty that you identify?
2. Is Janet entitled to be paid for her partnership interest in Calladoc? If so, how much is she entitled to be paid? When is Janet entitled to receive payment?
3. Will Janet be liable to Uheal for the damages caused by the software? Why or why not?