Disotell v. Stiltne

Facts

P is an Eagle River resident who develops properties as a general contractor. D is also an Eagle River resident. In 1994 D and his wife purchased Lots 10 and 11 of Block 12 for $275,000. There was a two-story commercial building on the property. D's wife later quitclaimed her interest in the property to him. P and D met in 1997. They discussed the property and agreed to form an equal partnership to develop, construct, and operate a hotel on the property. They never entered into a written partnership agreement. They intended to convert the two-story commercial building on the property into a hotel that would open for business by May 15, 1998. D's construction company was to serve as general contractor; it was to provide its services on a cost-only basis. D was to use his experience as a developer to plan the project and obtain the necessary permits and licenses. D would purchase a one-half interest in the hotel property for $137,500. The funds to purchase would come only from the profits of the hotel. After D had recovered his original cost basis in the property and certain other costs, he and P were to share profits on a fifty/fifty basis. The parties dispute what those other costs included. P argues that they included the costs of art and equipment owned by D that they had planned to use in the hotel and the cash required to develop and construct the hotel. D asserts that they only included the former. D quitclaimed one-half of his interest in the hotel property to P. The parties disputed who was obligated to put up the cash for the project. P testified that D was to have provided all of the cash for the project; D claimed they were to contribute equally to the expenses. The superior court later found that the partners jointly would provide for the project's cash needs. P and D then learned they could acquire a liquor license free of charge for a hotel of fifty or more rooms. They agreed to convert the two-story building into a four-story hotel, bar, and restaurant. The partnership hired an architect, structural engineer, and a civil engineering firm. P testified that he contributed hundreds of hours to developing the project. The partnership decided to purchase a parking lot for the hotel. The lot was purchased in P's name, but D provided the earnest money and down payment, totaling $50,000. D also paid the mortgage for May through October 1998 and made one property tax payment. P paid the mortgage from November 1998 through July 2001 and made several tax payments. Eventually, they disagreed over a sewer line requirement, and D denied P building access needed to assess the mechanical, electrical, and other systems. D also refused to remove his personal property from the building. The superior court later found that 'a complete breakdown in the relationship occurred in May 1998, after which D refused to continue the project. They never produced a profit. D has exclusively possessed the hotel property since May 15, 1998. He testified that he occupies the premises as his residence and has stored his personal possessions there. P filed suit in the superior court, seeking dissolution of the partnership, judicially supervised windup of partnership affairs, appointment of a receiver, and damages. D sought rescission of the partnership agreement. After a two-day bench trial, the court entered final judgment on February 7, 2003. P appeals. P argues that the superior court failed to follow the Act when the court gave D the option to purchase P's partnership interest for $73,213.50, the value of P's interest as calculated by the court. If D had insufficient funds to pay P; the court would then 'appoint a receiver to take possession of and to sell the partnership property, to pay the costs of the receiver, and distribute the remaining proceeds according to its findings of fact and conclusions of law.' P claims that the Uniform Partnership Act made liquidation a matter of right. He argues that any partner who has not wrongfully caused dissolution of the partnership may demand liquidation. He asserts that the superior court erred when it concluded that 'liquidation is not mandatory.'

Issues

Rule of Law

Holding and Decision

Legal Analysis

© 2007-2024 ABN Study Partner.