You can’t take it with you—or can you? That’s the primary question presented in a partnership-dispute lawsuit that Diamond McCarthy filed recently in a Harris County district court. The law firm seeks to prevent one of its departing nonequity partners, Sheila M. Gowan, from keeping a $1.4 bankruptcy trustee fee “for her sole personal benefit.”
According to the original petition in Diamond McCarthy v. Gowan, which was filed on July 2, Gowan was a nonequity partner at Diamond McCarthy from April 2008 until February 2013. In December 2008, she was appointed Chapter 11 trustee of the Dreier LLP estate, a law firm that filed for bankruptcy after “its principal was indicted for committing investment fraud using a Ponzi scheme,” according to the petition.
Under the contractual terms of her employment with the firm, all fees Gowan would earn from her engagement as the Dreier trustee would be the property of and owed to Diamond McCarthy, according to the petition.
Gowan worked almost exclusively on her engagement as Dreier trustee during her time with the firm. The firm provided substantial support for those efforts, paying Gowan’s biweekly “partner draws” as well as insurance and substantial outlay of resources in reliance on its contract with Gowan that it would be entitled to the Dreier trustee fee when it became payable, according to the petition.
“Gowan’s work as the Dreier trustee is now complete and the bankruptcy court has entered an order authorizing the Dreier estate to pay a Dreier trustee fee in the amount of $1,451,067.50. Gowan resigned from the firm and has taken the position that Diamond McCarthy is not entitled to any portion of the fee,” the petition alleges. “Diamond McCarthy files the instant petition against its former nonequity partner with considerable regret and only after potential avenues of compromise reached an impasse.”
The petition lists breach of partnership agreement, breach of fiduciary duty, quantum meruit and unjust enrichment in its causes of action.
Gowan, who is now of counsel in New York’s Sadowski Fischer, did not immediately return a call for comment.
Kathy Patrick, a partner in Houston’s Gibbs & Bruns who represents Diamond McCarthy, also did not immediately return a call for comment. Neither did Allan Diamond, Diamond McCarthy’s managing partner.