Legal Question in Business Law in California

Your partner is making stuff up and probably just mad that you want to part ways so soon. There is no such rule and you already said that you didn't sign a noncomplete clause in a contract.

Three years sounds like the statute of limitations for certain lawsuits, e.g., suits based upon certain torts. I can't think of any other three-year rule nor can I imagine why letting a statute of limitations run out would have any effect on dissolution and re-opening of a partnership business.

Having said that, I should point out that dissolution of partnerships can be a somewhat tricky business and partnership statutes have some fairly important things to say about the rights of the soon-to-be former partners and how the process can, should or must be carried out.

Possibly you can get by with just closing down the partnership "any old way" and re-starting the same business as your sole proprietorship (or as a one-owner corporation or LLC). However, with a partner who thinks he knows the law and who doesn't seem happy about being left out, your best bet might be to obtain the assistance of an attorney who understands partnership law and following the partnership dissolution procedures set out in the Corporations Code as part of the Revised Uniform Partnership Act. See in particular sections 16401-16406 re relations of partners to each other and to the partnership; 16501-16504 re transferees and creditors of a partner; 16601 to 16603 re partner's dissociation; 16701-16705 re partner's dissociation when business not wound up (probably doesn't apply here, however); and 16801 to 16807 covering winding up the business of a partnership.