Brief Fact Summary. Plaintiffs, Robert Young et al., relied on an unqualified audit letter from one of the Defendants, Price Waterhouse-Bahamas (“PW-Bahamas”), and placed $550,000 with a South Carolina bank. The investment was not accounted for, and Plaintiffs brought this action against Defendants.
Synopsis of Rule of Law. Partnership by estoppel creates a liability to third parties who rely upon representations that a partnership exists.
Issue. The issue is whether a partnership by estoppel was established between PW-Bahamas and PW-US to hold PW-US liable for the missing investment money.
Held. There was no partnership by estoppel because there was no proof that Plaintiffs relied upon any acts or statements by Defendants that a partnership existed between PW-Bahamas and PW-US. Plaintiffs never made any assertions that they extended the credit based upon a perceived partnership between Defendants and therefore can not rely upon the doctrine of partnership by estoppel.
Discussion. Plaintiffs could not prove that an actual partnership existed and alternatively pleaded that a partnership by estoppel existed. Plaintiffs lacked jurisdiction to directly bring an action against PW-Bahamas so it was critical to establish the partnership.