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No Separate Action For Partners

A corporation and a partnership enter into a contract.  Alleging that the partnership is in breach, the corporation sues the partnership and its two general partners.  Neither of the partners is a party to the contract.  However, California's Uniform Partnership Act of 1994 provides that with certain exceptions "all partners are liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law." Cal. Corp. Code § 16306(a).  The partners move to dismiss, arguing that they may only be sued in a separate proceeding after the corporation has obtained judgment and the partnership's assets are insufficient to satisfy the judgment.  

Ruling on the partners' motion to dismiss, U.S. District Court Judge Edward M. Chen concluded that the partners could be sued in the same action.  In support of his decision, Judge Chen noted that Corporations Code Section 16307(b) provides that "an action may be brought against the partnership and any or all of the partners in the same action or in separate actions."  He also noted that California Code of Civil Procedure Section 369.5(b) provides "A member of the partnership or other unincorporated association may be joined as a party in an action against the unincorporated association".

Despite ruling for the plaintiff, Judge Chen dismissed the complaint and ordered the plaintiff to file an amended complaint to clarify that joint-and-several liability is the only basis for the two claims against the two partners.  

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