20 N.Y.3d 534
N.Y.2013Background
- Gelman and Buehler formed an oral partnership in 2007 to pursue a search fund and raise investments for acquiring a business with a liquidity event as the goal.
- They expected to raise $600,000 from investors and possibly additional funds to pay the target purchase price, with profits shared after the liquidity event.
- The plan contemplated an open-ended timeline (four to seven years) to reach the liquidity event and then sell the business for profit.
- Buehler withdrew from the venture after Gelman refused to grant him majority ownership.
- Gelman sued Buehler for breach of contract, arguing Buehler could not unilaterally terminate obligations; the trial court dismissed, citing § 62(1)(b) due to lack of definite term or particular undertaking.
- The Appellate Division reinstated the breach claim, but the Court of Appeals reversed, holding the partnership was dissolvable at will under § 62(1)(b) because there was no definite term or particular undertaking.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the partnership had a definite term or particular undertaking | Gelman argues the liquidity event and ongoing plan constitute definite term/undertaking | Buehler contends the oral agreement lacks a definite term or particular undertaking | No definite term or particular undertaking existed; dissolution at will permitted |
| Whether the complaint plausibly alleges a definite term or particular undertaking under § 62(1)(b) | Gelman contends the complaint describes a structured plan with a liquidity event | Buehler asserts the plan is amorphous and indefinite | Complaint fails to allege a definite term or particular undertaking |
Key Cases Cited
- Scholastic, Inc. v Harris, 259 F.3d 73 (2d Cir 2001) (definite term narrows to identifiable termination date; particular undertaking requires a concrete objective)
- Tropeano v Dorman, 441 F.3d 69 (1st Cir 2006) (business activities that may continue indefinitely are not particular undertakings)
- St. Lawrence Factory Stores v Ogdensburg Bridge & Port Auth., 202 AD2d 844 (3d Dept 1994) (particular undertaking found where specific project and property identified)
- Fischer v Fischer, 197 SW3d 98 (Ky 2006) (requires a definite or specific undertaking within partnership context)
- Sanley Co. v Louis, 197 AD2d 412 (1st Dept 1993) (illustrates evaluation of partnership purpose and undertakings)
- Nicholes v Hunt, 273 Or 255 (1975) (definite term and particular undertaking analyzed in state context)
- Willman v Beheler, 499 S.W.2d 770 (Mo 1973) (deathless theme of term/undertaking in partnership dissolution)
- Harshman v Pantaleoni, 294 AD2d 687 (3d Dept 2002) (illustrates standards for particular undertaking in partnerships)
- Scholastic, Inc. v Harris, 259 F3d 73 (2d Cir 2001) (reiterated doctrine on definite term vs. indefinite partnership)