Friday, November 22, 2013

Bane v. Ferguson case brief

Bane v. Ferguson case brief summary
890 F.2d 11 (1989)

Plaintiff partner appealed the order of the United States District Court for the Northern District of Illinois, Eastern Division, which dismissed his negligent mismanagement claim against defendant firm managers based on their decision to merge with another law firm. The merger caused the dissolution of the firm managers' law firm and loss of the partners' pension.

The partner's law firm adopted a retirement pension plan that provided that plan payments would end if the firm dissolved. The partner retired and began drawing his pension. The firm merged with another law firm but dissolved with no successor, and the partner's pension terminated. He brought an action against the firm members, alleging that they had committed negligent mismanagement in merging. The district court dismissed the claim.


  • On appeal, the court held that Ill. Rev. Stat. ch. 106 1/2, para. 9(3)(c) prohibited less than all partners from doing an act that made it impossible for the partnership to carry out its business and that the statute was inapplicable because it only applied to protect partners, which the partner ceased to be when he left the firm. 
  • Moreover, the firm members had no fiduciary duty to the partner because he was no longer a partner and the business-judgment rule shielded the firm members from their alleged negligence. 
  • In affirming the judgment, the court concluded that no tort cause of action existed for the mere negligence of the firm members in their management decisions where there was no allegation that they had acted in bad faith.

The court affirmed the district court's judgment.

Recommended Supplements for Corporations and Business Associations Law

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