Congel v. Malfitano

101 N.E.3d 341 (2018)

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Nature of the Case

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Facts

In 1985, Mafitano (D) and seven others entered into a written agreement to form a general partnership known as 'Poughkeepsie Galleria Company' (Partnership), for the ownership, operation, and management of a shopping mall. D had a 2.25% ownership interest, which increased to 3.08% by the mid-2000s. The Partnership had a majority owner, Moselle Associates, which controlled a little over 56% of the Partnership. The agreement provided that the Partnership 'shall continue until it is terminated as hereinafter provided.' The agreement stated that the Partnership would dissolve upon '[t]he election by the Partners to dissolve the Partnership' or '[t]he happening of any event which makes it unlawful for the business of the Partnership to be carried on or for the Partners to carry it on in Partnership.' All decisions were to be made by the Partners with an affirmative vote of no less than fifty-one percent (51%)' of the partners. Day-to-day control of the Partnership was vested in a three-member Executive Committee. D decided to withdraw from the Partnership. D asserts that certain conduct by Ps related to the Partnership troubled him and that when he challenged Ps, they did not address his concerns. D wrote a letter to his partners: 'In accordance with Section 62(1)(b) of the Partnership Law, and as a general partner of the Partnership I hereby elect to dissolve the Partnership, and by this notice, the Partnership is hereby dissolved.' Section 62(1)(b) states that a partner may unilaterally dissolve a partnership, without violating the partnership agreement, if 'no definite term or particular undertaking is specified' in the agreement and the partnership is therefore 'at will.' Ps ignored D and commenced a breach of contract action, seeking a declaratory ruling that D had wrongfully dissolved the Partnership, as well as damages. Ps moved for summary judgment. The Supreme Court granted summary judgment to Ps, holding that the Partnership was not an 'at-will' partnership, because it specified a 'particular undertaking.' The Appellate Division upheld Supreme Court's ruling on the wrongfulness of the dissolution, albeit on different grounds, finding that the agreement specified a 'definite term' or temporal limit. On remittal in Supreme Court, D moved for partial summary judgment, seeking a declaration that Ps were not entitled to attorneys' fees related to their lawsuit. The Supreme Court ruled that Ps were entitled to attorneys' fees and experts' fees, as part of their damages. This appeal resulted. D contends that the Appellate Division should overturn its 2009 rulings holding that he had wrongfully dissolved the Partnership