Bohatch v. Butler & Binion

Colette Bohatch (plaintiff) was a partner in the Washington, D.C. office of the law firm Butler & Binion. The office had two other attorneys, McDonald and Powers, both partners. Almost all of the D.C. office’s work was done for Pennzoil. In 1990, based on her review of billing reports and time records, Bohatch began to suspect that McDonald was overbilling Pennzoil. She reported her concerns to Powers, and to other partners and members of Butler & Binion’s management committee. The management committee investigated the allegations. Pennzoil’s in-house counsel told committee members that Pennzoil believed McDonald’s bills to be reasonable. The management committee determined that there was no basis for Bohatch’s allegation that McDonald was overbilling. In January 1991 Butler & Binion denied Bohatch her year-end partnership distribution, and reduced her tentative distribution share for 1991 to zero. It continued to pay Bohatch her monthly draw until June 1991. On October 21, 1991 the firm voted to expel Bohatch from the partnership. Bohatch brought claims against Butler & Binion and its partners (the firm) (defendants) for breach of fiduciary duty and breach of contract. The jury found that the firm breached the partnership agreement and its fiduciary duty, and awarded damages. The court of appeals found that the firm’s only duty to Bohatch was not to expel her in bad faith, that is, for self-gain. Finding no evidence that the firm had expelled her for self-gain, the court of appeals found that Bohatch could not recover on the breach of fiduciary duty claim. The court of appeals also found that the firm breached the partnership agreement by reducing Bohatch’s tentative distribution for 1991 to zero without notice, and for terminating her monthly draw three months before she left the firm.