Trial court ruled that plaintiff had claim unless the parties had an agreement requiring fair market rents.
As merely furthering one's interest does not constitute a breach of his duty of loyalty, one can lease partnership property to himself. However, he is not allowed to do so at the expense of the partner. Defendants could have leased the property to themselves at market value, but doing so at below market value is benefiting themselves at the partnership's expense. Even the partnership's primary purpose was to hold the property while its value appreciated, defendants still deprived it of the opportunity to rent the space at market rates in the mean time. It does not have to be the primary purpose of the partnership for it to have a right to it.
Nowhere does the law say that partners only owe duties that that they explicit contract for. The fiduciary duties at issue here are implied by law.