2018 Ohio 666
Ohio Ct. App.2018Background
- LublinSussman Group LLP (partnership) amended its partnership agreement in 2010; Terri S. Lee was a partner.
- In Sept. 2014, remaining partners (unanimously, without notifying Lee) voted to remove Lee effective Nov. 16, 2014. Lee thereafter started her own practice and took some former clients.
- LublinSussman asserted the partnership agreement treated a partner removed by unanimous vote as if that partner had voluntarily withdrawn, and asserted setoffs and reductions that yielded an alleged debt of $201,907.
- Lee counterclaimed for wrongful expulsion, breach of fiduciary duty, improper set-off, and declaratory relief; she sought full payment of her ABC and RV accounts.
- Trial court granted summary judgment to Lee on LublinSussman’s breach claim and on Lee’s wrongful-termination and breach claims (but left calculation of amounts to be determined). Appeal followed; this decision affirms in part and reverses in part and remands for determination of net amounts due.
Issues
| Issue | Plaintiff's Argument (LublinSussman) | Defendant's Argument (Lee) | Held |
|---|---|---|---|
| Whether removal by unanimous vote is treated as a voluntary withdrawal for purposes of ABC/RV reductions and setoffs | Paragraph 18.A.(1) deems removal "an election to withdraw" so removed partner is treated as voluntarily withdrawn and subject to Paragraphs 11 and 19 reductions | Removal was involuntary; Paragraph 19 distinguishes voluntary/involuntary withdrawals and does not permit the reductions claimed | Ambiguous language construed against drafter (partnership). Removal is an involuntary withdrawal; Lee entitled to ABC and RV in full but subject to offset for clients/accounts she took under Paragraph 19.B.; remanded to calculate net amounts |
| Whether Lee breached the partnership agreement by taking clients after removal and thereby owes monies | Treated as voluntary-withdrawal rules, so ABC reduction and required payments for client accounts apply | Even if she took clients, Paragraph 19.B governs post-withdrawal transfers and reductions; she is entitled to full ABC/RV then reduced by value of accounts taken | Court held Lee did breach to extent she owes sums under Paragraph 19.B; she remains entitled to ABC/RV amounts reduced by value of clients/accounts she took; remand to quantify |
| Whether Lee was wrongfully terminated (counterclaim) | Removal was justified by performance problems (affidavit evidence) | Lee lacked notice/invitation to special meeting and thus was wrongfully expelled | Summary judgment for LublinSussman on wrongful-termination claim (Lee did not present evidence to defeat summary judgment) |
| Whether appellant breached contract by failing to pay Lee her partnership interest on withdrawal | N/A (appellee’s counterclaim) | Lee contended partnership failed to pay her ABC/RV per Paragraph 19.A | Lee entitled to summary judgment on breach-of-contract counterclaim for failure to pay withdrawing partner; partnership must pay ABC/RV subject to allowable offsets under Paragraph 19.B. |
Key Cases Cited
- Vahila v. Hall, 77 Ohio St.3d 421, 674 N.E.2d 1164 (Ohio 1997) (summary-judgment burden and Civ.R. 56 principles)
- Dresher v. Burt, 75 Ohio St.3d 280, 662 N.E.2d 264 (Ohio 1996) (moving party’s initial summary-judgment burden)
- Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (standard for whether evidence requires a jury)
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 671 N.E.2d 241 (Ohio 1996) (de novo review of summary judgment)
- Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (Ohio 1978) (contract construction is a question of law)
- Skivolocki v. E. Ohio Gas Co., 38 Ohio St.2d 244, 313 N.E.2d 374 (Ohio 1974) (use of extrinsic evidence when contract ambiguous)
- Mosier v. Parry, 60 Ohio St. 388, 54 N.E. 364 (Ohio 1899) (extrinsic evidence may show parties’ intent and circumstances)