## Facts

- Patricia Holmes and Sandra Kruger Lerner, friends, discussed creating an unconventional cosmetics line and selected the brand name “Urban Decay” during a July 31, 1995 meeting.
- Holmes alleged the parties formed an oral partnership to create and operate Urban Decay as a business for profit.
- Holmes performed substantial creative and operational work, including developing product concepts and names, attending business meetings, and working in the warehouse without salary.
- Lerner provided business infrastructure and access to financing; a venture-capital entity associated with Lerner and David Soward committed roughly $500,000 to the venture.
- Holmes sought documentation of her ownership role, received limited corporate materials, and discovered her name was omitted from internal organizational materials.
- Soward offered Holmes a one percent interest in the entity formed to own the business, which Holmes rejected as inconsistent with her claimed partner status.
- Holmes was eventually excluded from the business and barred from the premises.

## Issues

1. Whether an enforceable oral partnership existed even though the parties did not expressly agree on how profits would be divided.
2. Whether the oral agreement was too indefinite to enforce.
3. Whether Soward could be liable for intentional interference with contract given the jury’s finding that Lerner never intended to perform the agreement with Holmes.
4. Whether the trial court properly granted nonsuit on Holmes’s claims against Soward for aiding and abetting and conspiracy tied to fraud, breach of fiduciary duty, and constructive fraud.
5. Whether compensatory damages were properly imposed jointly and severally where multiple theories sought recovery for a single economic loss.

## Decision

- The court affirmed the judgment that an oral partnership existed between Holmes and Lerner and that Lerner breached partnership obligations.
- The court held that an express agreement to divide profits is not required to prove a partnership; intent to carry on as co-owners a business for profit may be inferred from conduct and circumstances.
- The court reversed the judgment against Soward for intentional interference with contract because the jury’s finding that Lerner never intended to perform precluded interference with a valid, existing contract in the manner found.
- The court reversed the nonsuit on Holmes’s aiding-and-abetting and conspiracy claims against Soward related to fraud, breach of fiduciary duty, and constructive fraud, permitting those claims to proceed.
- The court affirmed joint and several liability for compensatory damages because only one item of economic harm was sought and proven despite differing theories of liability.

## Legal Principles

- A partnership may be established by an association to carry on as co-owners a business for profit; the parties’ intent may be inferred from conduct and surrounding circumstances.
- An express agreement specifying a profit-sharing ratio is not a prerequisite to finding a partnership under California partnership law.
- An oral partnership agreement may be enforceable even if all details are not finalized, so long as essential terms show a business-for-profit association and the agreement is sufficiently definite for enforcement.
- An intentional interference claim requires a valid contractual relationship in the sense necessary to support the asserted interference; a factfinder’s determination that a contracting party never intended to perform can defeat the specific interference theory proven.
- Joint and several compensatory liability may apply where multiple defendants or theories relate to a single, indivisible economic loss.

## Conclusion

The court upheld liability for breach of an oral partnership based on the parties’ conduct in forming and operating a business for profit despite no express profit-split term, reversed the interference verdict against the venture capitalist, reinstated certain fraud-related secondary-liability claims against him, and affirmed joint and several compensatory damages for a single proven economic injury.


Holmes v. Lerner, 74 Cal. App. 4th 442 (Cal. Ct. App. 1999)