2018 Ohio 666
Oh. Ct. App. 6th Dist. Lucas2018Background
- LublinSussman Group (partnership) amended its partnership agreement in 2010; Terri Lee was a partner.
- In Sept. 2014 partners (excluding Lee) voted unanimously to remove Lee; written notice set removal effective Nov. 16, 2014.
- After removal Lee started her own practice and took some former clients; LublinSussman claimed contractual set-offs and sought about $201,907 under the agreement.
- LublinSussman sued for breach of contract; Lee counterclaimed for wrongful expulsion, fiduciary breach, improper set-off, and declaratory relief.
- Trial court granted summary judgment for Lee on LublinSussman’s breach claim and for Lee on her wrongful-termination claim; parties appealed and the appellate court reviewed contract language and extrinsic evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal by unanimous partner vote may be treated as a voluntary withdrawal for purposes of set-offs and valuation under the partnership agreement | LublinSussman: Paragraph 18.A(1) treats a removal as an "election" to withdraw and thus the removed partner is subject to voluntary-withdrawal set-offs (e.g., ABC reductions, 3-year billing payment) | Lee: Removal was involuntary; Paragraphs 18 and 19 distinguish voluntary vs. involuntary withdrawal and do not permit reducing ABC/RV for involuntary withdrawal | Ambiguity in Paragraph 18.A(1); extrinsic evidence did not resolve intent; ambiguity construed against drafter (LublinSussman). Removal is an involuntary withdrawal; Lee entitled to ABC and RV in full, subject only to reduction by amounts she owes for accounts she took (to be determined on remand). |
| Whether Lee breached the partnership agreement by taking clients after removal and thus owed money under Paragraph 19.B | LublinSussman: Lee’s post-removal client-taking triggered Paragraph 19.B obligations and set-offs, creating indebtedness to the partnership | Lee: As an involuntarily removed partner she should not be treated as a voluntary withdrawer and therefore not subject to the harsher set-offs | Court held Lee did owe amounts for clients/accounts she took; those amounts reduce her ABC/RV receipts; exact sums to be determined on remand. |
| Whether Lee was wrongfully terminated (counterclaim) | LublinSussman: Presented affidavit evidence of poor performance and reasons for removal, showing termination was not wrongful | Lee: Argued she was not invited to the meeting and removal was unfair | Summary judgment reversed for Lee on wrongful-termination claim: Lee failed to produce evidence to support wrongful termination; trial court erred granting summary judgment to Lee on that claim — appellant entitled to summary judgment on wrongful-termination counterclaim. |
| Whether Lee was entitled to summary judgment on breach-of-contract counterclaim for nonpayment of her partnership interest after withdrawal | LublinSussman: Argued set-offs apply and reduced amounts owed to Lee | Lee: Claimed partnership breached by not paying her ABC/RV upon withdrawal | Court held Lee met her burden: partnership breached by not paying her ABC/RV; Lee entitled to those amounts (less reductions for clients/accounts taken). |
Key Cases Cited
- Vahila v. Hall, 77 Ohio St.3d 421 (Ohio 1997) (summary-judgment burdens under Civ.R. 56)
- Dresher v. Burt, 75 Ohio St.3d 280 (Ohio 1996) (moving party’s and nonmoving party’s summary-judgment burdens)
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (Ohio 1996) (de novo review of summary judgment)
- Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241 (Ohio 1978) (contract construction is a question of law)
- Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130 (Ohio 1987) (contracts must be examined as a whole; give effect to words used)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (standard for when conflicting evidence requires jury)