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Keywords

attorneytrialpartnership
trialpartnership

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G & S Investments v. Belman, 145 Ariz. 258, 700 P.2d 1358

Facts

G & S Investments and Thomas N. Nordale were general partners in a limited partnership that owned a 62-unit apartment complex. Nordale's behavior deteriorated due to drug use, leading to significant management disputes and misconduct, including threats to other partners and inappropriate behavior towards tenants. In 1981, G & S Investments sought judicial dissolution of the partnership, and after Nordale's death in 1982, they filed a supplemental complaint to continue the partnership and acquire Nordale's interest.

In 1979 Nordale began using cocaine, which caused a personality change. He became suspicious of his partners and other people, and he could not communicate with other people. He stopped going to work and stopped keeping normal business hours.

Issue

Whether the surviving general partner is entitled to continue the partnership after the death of Nordale and how the value of Nordale's interest in partnership property is to be computed.

Whether the surviving general partner, G & S Investments, is entitled to continue the partnership after the death of Nordale, and how the value of Nordale's interest in partnership property is to be computed.

Rule

The court held that the mere filing of a complaint does not dissolve a partnership, and the surviving partners may continue the business without the consent of the deceased partner's estate. The buy-out provision in the partnership agreement is enforceable based on the capital account as recorded in the partnership's books.

The mere filing of original complaint did not act as dissolution of partnership, requiring liquidation of assets and distribution of net proceeds to partner.

Analysis

The court determined that Nordale's wrongful conduct justified the continuation of the partnership by the surviving partners. It found that the buy-out provision was valid and that the value of Nordale's interest should be calculated based on his capital account, which showed a negative balance, rather than the fair market value of the partnership's assets.

The trial court, after making findings of fact and conclusions of law, entered judgment in favor of G & S Investments, finding that it had the right to continue the partnership and that the estate was owed $4,867.57.

Conclusion

The court affirmed the trial court's judgment in favor of G & S Investments, allowing them to continue the partnership and buy out Nordale's interest based on the capital account. The court also upheld the trial court's decision to deny G & S Investments' request for attorney's fees.

Affirmed.

Who won?

G & S Investments prevailed in the case because the court found that they had the right to continue the partnership and that Nordale's estate was owed a specific amount based on the partnership's capital account.

G & S Investments prevailed in the case because the court found that they had the right to continue the partnership and that Nordale's estate was owed a specific amount based on the partnership's capital account.

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