Polites, W. v. Contorchick, D.
Polites, W. v. Contorchick, D. No. 1104 WDA 2016
| Pa. Super. Ct. | Mar 14, 2017Background
- Polites and Contorchick formed a 50/50 partnership, Ace Excavating, under a written 1993 agreement that prohibited transferring partnership property without the other partner's consent.
- The parties agreed to treat December 31, 2006 as the dissolution date, with winding up occurring in 2007; Contorchick continued operating and transferred Ace assets to his new business, Contorchick Excavating.
- Polites sued for breach of the partnership agreement, conversion, and unjust enrichment; after a two-day non-jury trial the trial court found Contorchick wrongfully dissolved the partnership and converted assets.
- The trial court valued partnership assets (tools, a lot, lowboy, heavy equipment) primarily by averaging sale prices from online marketplaces and experts’ figures, credited Polites for intercompany liabilities and unpaid quid pro quo (life insurance/SEP), and disallowed claimed personal-expense offsets.
- Net result at trial: Polites entitled to $48,635.20; trial court vacated an earlier award of costs against Polites for late expert disclosure.
- Contorchick appealed raising valuation, expert and accounting error claims; Superior Court affirmed, finding issues waived or without merit and deferring to trial-court credibility and factfinding.
Issues
| Issue | Plaintiff's Argument (Polites) | Defendant's Argument (Contorchick) | Held |
|---|---|---|---|
| Admissibility/qualification of Polites’ expert (Kirsch) | Kirsch is a licensed CPA qualified to analyze partnership financials and rely on partner-provided asset values | Kirsch not a business‑valuation expert, relied on non‑expert Polites’ data, and report was late | Trial court properly qualified CPA as expert on accounting/valuation methods; reliance on partner data allowed; timing did not warrant exclusion; Superior Court affirmed |
| Admissibility of Polites’ lay testimony valuing assets | As partner and bookkeeper Polites had personal knowledge of tools/small equipment and used reasonable market‑sale averages for heavy equipment | Valuation requires a qualified appraiser; lay valuation improper | Court properly admitted Polites’ testimony for tools (personal knowledge) and accepted his heavy‑equipment method; values were weighed, not excluded |
| Use of fair‑market value vs. liquidation/wholesale value | Fair‑market/retail sale maximizes return to partners; partner who wrongfully dissolved cannot force liquidation/wholesale pricing to benefit himself | Agreement’s liquidation language requires liquidation/wholesale values | Court applied fair‑market/actual sales averages (not wholesale) to avoid awarding a windfall to the wrongful dissector; affirmed under fiduciary duty principles |
| Specific accounting/offset claims (intercompany transfers, SEP/insurance quid pro quo, personal expenses, pass‑through jobs, interest) | Credits for half of intercompany liability and half of insurance premiums (SEP quid pro quo); denied personal‑expense deduction; no interest awarded; pass‑through jobs gave Ace no benefit | Contorchick contested amounts, source of 2007 payments, and claimed other credits | Trial court’s findings on credibility and accounting supported credits of $14,855.96 (intercompany/50%) and $3,861 (SEP/50%), rejected personal‑expense claim for lack of proof, found 2007 payments reduced liabilities, rejected economic benefit for pass‑through jobs, and declined to award interest; Superior Court affirmed |
Key Cases Cited
- Miller v. Brass Rail Tavern, 706 A.2d 525 (Pa. 1995) (liberal standard for qualifying expert witnesses)
- Hankin v. Hankin, 493 A.2d 675 (Pa. 1985) (fiduciary duty during winding up requires obtaining highest possible price for partnership assets)
- Clement v. Clement, 260 A.2d 728 (Pa. 1970) (partners owe high fiduciary loyalty to one another)
- Remic v. Berlin, 426 A.2d 153 (Pa. Super. 1981) (court discretion in awarding interest/damages after wrongful dissolution)
- Commonwealth v. Simmons, 662 A.2d 621 (Pa. 1995) (factfinder can accept/reject all, part, or none of testimony; appellate courts do not reweigh credibility)