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07/26/90 ROBERT M. BECKMAN v. DONALD A. FARMER

July 26, 1990

ROBERT M. BECKMAN, DAVID M. KIRSTEIN, APPELLANTS
v.
DONALD A. FARMER, APPELLEE



Appeals from the Superior Court of the District of Columbia; Hon. Gladys Kessler, Motions Judge; Hon. Frederick H. Weisberg, Trial Judge.

Rogers, Chief Judge, and Steadman and Farrell, Associate Judges. Opinion for the court by Associate Judge Farrell. Concurring opinion by Associate Judge Steadman, at p. 87.

The opinion of the court was delivered by: Farrell

This is a consolidated appeal from a jury verdict in a complex civil action involving the dissolution of a three-person law practice and a dispute over a large contingent fee received by two of the three lawyers who continued to practice together. The court below trifurcated the issues and tried them separately. First, on the threshold issue of whether the joint practice was a partnership and plaintiff (Farmer) a partner in it, the court granted Farmer's cross-motion for summary judgment. The court next established the value of Farmer's interest as a partner in certain firm assets, including the disputed fee, in an accounting in equity with the aid of a special master. Finally, after directing a verdict for appellants on counts alleging civil conspiracy, fraud and conversion, the court conducted a jury trial on remaining claims of breach of fiduciary duty in the failure to wind up the partnership and account to Farmer, and specifically on appellants' defense that Farmer had waived any share in the disputed contingent fee by entering into a separation of practice agreement.

On appeal, after conducting our own independent review of the record, we hold that appellants raised genuine issues of material fact concerning the existence of a partnership, and hence summary judgment was inappropriate. With regard to the jury trial, we conclude that the trial court erred in admitting into evidence an offer of compromise made by appellants, and that the error was not harmless. We therefore remand for a trial combining the issue of partnership and the issues previously submitted to the jury. We reject all of appellants' remaining claims. *fn1

FACTUAL BACKGROUND

In the Summer of 1981, Robert Beckman and Donald Farmer, Jr. agreed to form a joint law practice called "Beckman & Farmer." Beckman had practiced civil aviation law for a number of years and was a sole practitioner at the time. Most of the clients of the new firm were his. The two men mailed out engraved notices announcing the "formation of a partnership for the practice of law."

While drafts of formal partnership agreements were exchanged during negotiations, the two men never executed a contract defining the nature of their association and respective rights and duties. *fn2 They did, however, memorialize in writing an agreement that Farmer would receive a guaranteed "draw" of $85,000 annually, payable monthly, and certain percentages of firm profits if net annual profits exceeded specified amounts. The document further stated Beckman would provide financing as required, and would be reimbursed by the firm for expenses he covered. He was also to receive a monthly payment as rent for furnishings and equipment used in the joint practice but owned by him.

Effective January 1, 1983, David Kirstein joined the firm. He also executed no formal agreement defining his status, but a document dated October 27, 1982, captioned "Re: Partnership Agreement," set out a revised agreement on division of net profits reflecting his participation. Kirstein was to receive a "draw" of $80,000 annually "guaranteed" by Beckman and a share of profits once certain levels of net firm profits were reached. After October 1982 the firm practiced under the name of Beckman, Farmer & Kirstein.

Because firm expenses outstripped revenues from work billed in the early months of the firm's existence, Beckman & Farmer showed a loss for the four-month period from September 1 to December 31, 1981. Beckman advanced funds to cover this shortfall, and the loss was not carried over to the following year on the firm's books and tax returns. From time to time thereafter, Beckman made other similar advances, all of which the firm eventually repaid, including the 1981 advance. In various internal documents and memoranda Beckman referred to the entity as a partnership, *fn3 and from September 1, 1981 until the relationship with Farmer soured in 1984, the bank accounts, books, and records of both Beckman & Farmer and Beckman, Farmer & Kirstein were maintained as if the firm was a partnership. Similarly, the firm's accountant prepared, and until 1984 Beckman signed, partners ship tax returns, and the firm filed Schedule K-1 forms identifying Beckman, Farmer and Kirstein as partners. When the firm needed operating capital, its practice was to make loans with a bank secured by a certificate of deposit owned by Beckman and his wife of sufficient value to cover the debt in case of default by the firm. The loans were made in the firm's name, however, and Farmer signed promissory notes as a partner making him liable on the obligations if the Bank was unable to foreclose on the collateral pledged by the Beckmans.

Among Beckman's clients were Sir Freddy Laker and Laker Airways, Ltd. (Laker), a British airline offering low fare, no-frills transatlantic flights. During the early period of the Beckman-Farmer association, the firm performed substantial work for Laker payable on an hourly basis. In early 1982, Laker was placed in receivership and Christopher Morris was appointed liquidator, the British equivalent of a trustee in bankruptcy. Following the liquidation, Beckman & Farmer, in association with Metzger, Shadyac & Schwarz, another firm retained as trial specialists, brought a multi-million dollar antitrust suit in federal court against a number of international air carriers on Morris' behalf. Post-liquidation legal services were to be compensated under a contract providing for payment of fees contingent on the outcome of the suit and reimbursement of expenses as they were incurred. Shortly after suit was filed, Farmer screened himself from participating in the Laker case to avoid disqualifying the firm as a result of Farmer's former position at the Civil Aeronautics Board, *fn4 and performed no further services for Morris. After the suit was filed some of the antitrust defendants, including McDonnell-Douglas Corporation, filed a counterclaim. Beckman, Farmer & Kirstein performed substantial work on the counterclaim, which was payable on an hourly basis distinct from the contingent fee work.

One of the antitrust defendants made settlement overtures as early as late 1983 or early 1984. By March 1984 Beckman had grown dissatisfied with the way Metzger, Shadyac & Schwarz was handling the case and sought to assert control of the litigation. In December 1984 Morris became convinced that Beckman was no longer acting in the liquidator's best interest, which was primarily to see that all Laker creditors were satisfied, because of Beckman's own interest in the contingent fee and his relationship with Sir Freddy Laker. Beginning in January 1985 another lawyer, Michael Nussbaum, originally retained by Morris to monitor the progress of the litigation, assumed an active role in settlement negotiations with the antitrust defendants. Urgent settlement talks with British Airways, one of the principal antitrust defendants, opened in December 1984 after it became known in June that the airline, formerly held by the British government, sought to go public.

A settlement was reached on June 12, 1985, which disposed of all claims except those of the lawyers for the Laker liquidator for the work they had done. On July 12, 1985, agreement was reached that $12.5 million would be split equally between Beckman's firm and Metzger, Shadyac & Schwarz in release of all claims arising from the fee agreement with Morris regarding the antitrust suit, and that Beckman's firm would receive an additional $340,000 in fees for work performed for Laker before liquidation. By this time, however, Farmer was no longer associated with Beckman and Kirstein.

In late Spring 1983, the firm apparently experienced cash flow problems owing to the loss of an important client and its preoccupation with the Laker contingent fee case and other non-billable work. On June 8, 1983 Beckman sent a letter to Farmer and Kirstein entitled "Firm Finances" which described the situation and informed them that the firm was increasing its loan obligation, which Beckman would secure by pledging his own assets. He also "proposed" that the firm cease leasing his and Farmer's cars and stop paying "advance draws" *fn5 until its cash position improved, and advised that the partners should be prepared to reimburse the firm for advance draws received since January 1 of that year. Beckman had grown dissatisfied with the manner in which Farmer was handling clients. In May 1984, he told Farmer that he wanted to terminate the association and that Farmer should begin making arrangements to practice elsewhere. In June 1984, after returning from a trip to England to meet with the Laker liquidator, Beckman confronted Farmer and insisted in sharper terms that he leave immediately. The two began negotiating the terms of Farmer's departure. Beckman proposed paying Farmer six months' compensation at the agreed annual rate of $85,000 and allowing him to use the firm's office "with the letterhead and telephone being retained in [the firm's] name for nominal purposes." Under this proposal, Farmer was to cease all work and do nothing for any client without Beckman's prior approval, and the parties were to execute a mutual release of all claims. Farmer responded with a hand-delivered document dated June 26, 1984, entitled "Re: Winding up of Partnership," which proposed that the firm's books be closed as of June 30, 1984, and that a final accounting be conducted by a mutually acceptable accountant. Farmer proposed that the parties enter a winding up agreement terminating the existence of Beckman, Farmer & Kirstein, authorizing Beckman and Kirstein to continue the business, and distributing to Farmer a share of various firm assets, including the Laker contingent fee not yet received.

Negotiations turned from a final winding up to the immediate matter of separating Farmer's practice from Beckman's and Kirstein's. On July 2, 1984 Farmer delivered a memorandum to Beckman and Kirstein entitled "Re: Separation of Practice," pointing out that Beckman had not responded to Farmer's June 26 winding up proposal and explicitly reserving winding up issues for further negotiations. To address the immediate "crisis", *fn6 it set out a proposal for directing client telephone calls and correspondence to the respective attorneys, informing clients of the separation of practices and asking them which attorneys should retain their files, billing for work performed after July 1, 1984, and treatment of Farmer's expenses and insurance premiums. Beckman, in response to a suggestion by Farmer that he might seek an injunction "freezing" the firm's assets, took steps to transfer all funds in the partnership bank accounts, as well as incoming funds deposited by Morris for the Laker counterclaim work, to his personal accounts and to revoke Farmer's authority to use the firm's accounts. He instructed his wife, as firm comptroller, that this was to be done without Farmer's knowledge and asked the bank to hold the matter in strictest confidence. Later Beckman opened new accounts in the name of "Beckman & Kirstein," which he insisted be designated "proprietorship" accounts. Kirstein was in Sweden during this period but received copies of correspondence effecting the transfers and eventually signed new signature cards authorizing him to transact business on the "proprietorship" accounts.

Extensive negotiations culminated in an agreement styled "Separation of Practice Agreement" signed on July 6, 1984, and discussed in Section II (B)(3), infra. Following execution of this agreement, Farmer delivered successive memos to Beckman and Kirstein making increasingly more urgent demands for a final winding up and accounting. They set out Farmer's proposed distribution of firm assets and profits, and discussed accounts receivable and payable in general and the Laker contingent fee case specifically. Later memos complained of Beckman's and Kirstein's refusal to account, and demanded a prompt winding up of partnership business.

Farmer had since retained counsel, and on July 26, 1985, sometime before Beckman and Kirstein received the Laker contingent fee, he filed suit in Superior Court naming them as defendants and seeking damages, an accounting, and injunctive relief for fraud, conversion, breach of fiduciary duty and breach of partnership agreement. In essence, Farmer alleged that Beckman and Kirstein had conspired to deprive him of a rightful share of the Laker fee by forcing him out of the partnership by fraud, breach of fiduciary duty, and a refusal to acknowledge Farmer's partnership rights. During the trial, Farmer alleged that the fiduciary breach was continuing in nature, referring primarily to the defendants' persistent refusal to conduct a final accounting in the manner sought by Farmer.

After the court granted the defendants' motion to trifurcate the issues in the case, the parties filed cross-motions for summary judgment on the existence of a partnership.

Discussion

I. Summary Judgment on the Issue of Partnership

As submitted to the jury, Farmer's lawsuit consisted of the claim of breach of fiduciary duty by Beckman and Kirstein in their failure to wind up the partnership and account to Farmer for his share of the partnership property. The predicate of this claim was that a partnership had existed. Throughout the summary judgment phase, the parties took the position that the issue of partnership could be resolved as a matter of law. Neither filed a statement of material facts in dispute in opposing the other's motion, and each argued to the court that no material facts were in dispute. Farmer urged that undisputed facts demonstrated he was a partner, while Beckman argued that the same and additional facts showed Farmer was at most a profit-sharing employee.

The trial court granted summary judgment in favor of Farmer, concluding that appellants had advanced

virtually no record evidence to substantiate allegations other than the bare conclusory denials contained in [Beckman's] lengthy affidavit. In the Court's view, those denials -- unsupported as they are by facts -- cannot defeat the very substantial evidence -- based on evidence such as leases, bank accounts, tax returns, partnership announcements, etc. -- submitted by the Plaintiff to establish the existence of a partnership and co-ownership of their legal practice.

Citing Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986), the court concluded that appellants' case presented little more than a "metaphysical doubt" about material facts, and that they had failed to carry their burden under Super. Ct. Civ. R. 56 to adduce affirmative evidence of specific facts negating the Conclusion that the parties had intended "to do thing which in law constitute a partnership." 68 C.J.S. Partnership § 10 at 416 (1950).

We are compelled to disagree. Farmer did indeed present very substantial evidence that the participants characterized their relationship inter se and in dealings with third parties as a partnership. We can even conjecture that it is likely a jury would find that evidence dispositive. But on summary judgment a court cannot substitute its own opinion as to likely outcome for a precise determination whether appellants, in opposing the motion, raised genuine issues of material fact requiring jury resolution. As the following Discussion reveals, appellants proffered evidence on key issues of right of control and liability for losses that raised more than a "metaphysical doubt" whether jurors reasonably would have to find that Farmer was a partner rather than a paid employee. In these circumstances, and on an issue as to which the intent of the parties is paramount and must be inferred from their entire conduct (there being no express partnership agreement), we conclude that summary judgment was inappropriate.

A. The Applicable Law

1. Summary Judgment

A party moving for summary judgment bears the burden of showing an absence of disputed material facts and establishing entitlement to judgment as a matter of law. Super. Ct. Civ. R. 56 (c) (1989); Williams v. Gerstenfeld, 514 A.2d 1172, 1176 (D.C.1986). To discharge this burden the party must demonstrate that, "if the case proceeded to trial [,] his opponent could produce no competent evidence to support a contrary position." Nader v. de Toledano, 408 A.2d 31, 48 (D.C.1979), cert. denied, 444 U.S. 1078, 100 S. Ct. 1028, 62 L. Ed. 2d 761 (1980). Once the movant carries this initial burden, to survive the motion the non-movant must rebut the showing with specific evidence alleging a material factual issue that requires a jury to resolve the parties' differing versions of the truth. Thompson v. Seton Inv., 533 A.2d 1255, 1257 (D.C.1987); Phenix-Georgetown, Inc. v. Chas. H. Tompkins Co., 477 A.2d 215, 221 (D.C.1984).

In reviewing a grant of summary judgment, this court applies a standard of review identical to that used by the trial court in initially ruling on the motion. Holland v. Hannan, 456 A.2d 807, 814 (D.C.1983). The court must independently review the record to determine whether genuine issues of material fact exist and whether the movant is entitled to judgment as a matter of law. District of Columbia v. Pierce Assoc., 527 A.2d 306, 312 (D.C.1987). It must "view the record in the light most favorable to the party who opposes summary judgment and thus resolve any doubt as to the existence of a factual dispute against the moving party." Davis v. Gulf Oil Corp., 485 A.2d 160, 164 (D.C.1984).

2. The Law of Partnership

Upon review of the record for disputed facts, the substantive law of partnership defines which facts are material. United States v. Rollinson, 275 U.S.App.D.C. 345, 347, 866 F.2d 1463, 1465, cert. denied, 493 U.S. 818, 110 S. Ct. 71, 107 L. Ed. 2d 37 (1989) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). While the partnership relation has been variously defined, traditionally it is formed "when two or more competent persons to place their money, effects, labor, and skill or some or all of them, in lawful commerce or business, and to divide profit and bear the loss in certain proportions." Georgia Casualty Co. v. Hoage, 61 App.D.C. 195, 197, 59 F.2d 870, 872 (1932). The District of Columbia Uniform Partnership Act, D.C. Code §§ 41-101 to -142 (1986) (Partnership Act), similarly defines a partnership as "an association of 2 or more persons to carry on as co-owners of a business for profit." Id. § 41-105 (a). Thus, for a partnership to arise in law, two or more persons must intend to associate together to carry on as co-owners for profit. Gangl v. Gangl, 281 N.W.2d 574, 579 (N.D.1979). Although the rights and duties of partnership in respect to third parties can arise by law even though the parties do not intend to become partners, Robinson v. Parker, 11 App.D.C. 132, 140 (1897); see D.C. Code § 41-115 (a) (partnership by estoppel), as between partners themselves the relationship is consensual. Garner v. Garner, 31 Md.App. 641, , 358 A.2d 583, 588 (1976) ("partnership inter sese cannot exist against the consent and intention of the parties. . . ."). And although the manner in which the partie's themselves characterize the relationship is probative, the question ultimately is objective: did the parties intend "to do the acts that in law constitute partnership"? A. BROMBERG & L. RIBSTEIN, BROMBERG AND RIBSTEIN ON PARTNERSHIP § 2.05 (c), at 2:36 (1988) (citations omitted). "In general, the courts, in determining objective partnership intent, look for the presence or absence of the attributes of co-ownership, including profit and loss sharing, control, and capital contributions." Id.; see also 68 C.J.S. Partnership § 10 (1950).

The customary attributes of partnership such as profit and loss sharing and joint control of decisionmaking are necessary guidepoints of inquiry, but none is conclusive. For example, D.C. Code § 41-106 (4) creates, in effect, a statutory presumption of partnership from evidence that a party shared in the profits of the business. *fn7 An exception is made, however, if -- for instance -- the profits are received "in payment . . . s wages of an employee . . . ." Id. § 41-106 (4)(B). See also Farrow v. Cahill, 214 U.S.App.D.C. 24, 28 & n.17, 663 F.2d 201, 205 & n.17 (1980). Similarly, while a right of joint control is ordinarily key to partnership, *fn8 the statute recognizes that one partner may cede the power to manage and control the business to one or more of his associates. See D.C. Code § 41-117. *fn9 "A person may be a partner even though he has entrusted control of the business exclusively to his associates. The question then becomes whether or not the participant had the right to exercise control in the management of the business." Gangl v. Gangl, supra, 281 N.W.2d at 580 (emphasis in original).

Finally, a partner "must contribute toward the losses, whether of capital or but again the parties may agree to the contrary, D.C. Code § 41-117 (1); A. BROMBERG & L. RIBSTEIN, supra, § 2.07 (d), at 2:67-68 (partnership may exist if the purported partners expressly so agree, even if some of the parties guaranteed the others against loss). As these authors recognize, loss sharing -- like profit sharing and control -- "takes on greater or lesser importance as an independent element of partnership depending on the extent to which there is other evidence supporting partnership." Id. at 2:68-69. Ultimately, then, whether a partnership exists is an issue of fact, Jonathan Woodner Co. v. Laufer, 531 A.2d 280, 285 & n.7 (D.C.1987), turning less on the presence or absence of legal essentials than on the intent of the parties gathered from their agreement, conduct, and the circumstances surrounding their transactions. In re Washington Communications Group, 18 Bankr. 437, 442 & n.6 (Bankr. D.C. 1982).

B. Farmer's Entitlement to Summary Judgment

1. Farmer's Prima Facie Case

We conclude that Farmer satisfied his initial burden to show undisputed material facts demonstrating the existence of a partnership. In support of his motion, Farmer submitted a statement of material facts not in dispute demonstrating that: (a) Beckman and Farmer shared profits after a certain level of firm income was reached; (b) in internal correspondence, documents and memoranda Beckman consistently referred to the firm as a "partnership", to Farmer and Kirstein as "partners", and to the agreement among them as the "partnership agreement"; and (c) the firm held itself out to tax authorities, lessors, creditors, banks, clients and even its own accountant as a partnership. *fn10

Farmer also advanced sufficient evidence to establish that he shared the right of ultimate control. For example, internal correspondence from Beckman to the other attorneys discussing management matters, including acquisition of operating capital, invariably used verbs such as "propose" and indicated that the lawyers had "agreed" on certain courses of action -- terms incompatible with unshared control rights. Appellants do not dispute that until Beckman transferred the bank accounts after relations with Farmer soured, each of the three attorneys had the right to transact business on the firm's bank accounts on his own signature. The undisputed fact that the lease on office space, see note 3, (supra) , was entered on behalf of the firm after Beckman proposed it be held by a corporation and leased back to the firm indicates that Farmer and Kirstein had veto authority in important matters. Indeed, throughout his depositions Beckman conceded that decisions were made in consultation with Farmer and Kirstein.

Finally, to demonstrate that he bore a share of firm liabilities, Farmer referred to the lease and certain promissory notes securing bank loans to the firm, both of which he executed. Beckman conceded in his deposition that Farmer was "technically" liable on the bank loans. As the trial court pointed out, moreover, Beckman did not dispute that Farmer would be liable as a partner to third party creditors of the firm because of the manner in which he was held out. *fn11

We conclude Farmer's proffer of undisputed facts was sufficient as a matter of law to establish that the parties associated together with the intent to carry on the business as co-owners for profit. Farmer carried his initial burden under Super. Ct. Civ. R. 56 (c).

2. Appellants' Rebuttal

Because lack of control rights and sharing in losses and liabilities are probative of non-partnership, see Section I (A)(2), supra, if appellants' rebuttal showing raised any factual disputes on these issues, it necessarily raised material issues of fact bearing on the ultimate question which preclude summary judgment. *fn12 We conclude that it did.

Generally, "the court may assume that facts as claimed by the moving party are admitted to exist without controversy except as and to the extent that such facts are asserted to be actually in good faith controverted in a statement filed in opposition to the motion." Super. Ct. Civ. R. 12-I (k). The non-movant's failure to assert issues of fact as provided in Rule 12-I (k) or to support contentions of factual disputes as provided in Rule 56 *fn13 will result in acceptance of a movant's statement as undisputed unless there is clear support for such contentions in the record. Vessels v. District of Columbia, 531 A.2d 1016, 1018 (D.C.1987); Williams v. Gerstenfeld, supra, 514 A.2d at 1176-77 (citations omitted). Appellants filed no Rule 12-I (k) statement opposing Farmer's motion, but did submit a statement of undisputed material facts in support of their own cross-motion which referred to an affidavit of Beckman and included citations to the record. This procedural posture led Judge Kessler to write that, "aving argued vigorously for a decision on the basis of the motions, it is assumed that the losing party has waived any further arguments (either to this Court, or to the Court of Appeals) that existing disputes over material facts preclude Disposition via summary judgment." She characterized the issue before her as "centered on the legal Conclusions to be drawn from facts which were already well established in the record."

Our decisions do indicate that presentation of an issue on cross-motions for summary judgment may signal that there acre no material facts in dispute, allowing the Judge to resolve the question as a matter of law. See Read v. Legg, 493 A.2d 1013, 1016 (D.C.1985); Holland v. Hannan, supra, 456 A.2d at 814 n.9. This Disposition is appropriate, however, only in narrow circumstances when the motions "are based on the same material facts and address the same legal issues." Read, supra, 493 A.2d at 1016, quoting Holland, 456 A.2d at 814 n.9. It is not appropriate when, as here, the parties rely on the same primary facts but argue critically different inferences from them. Warrior Tombigbee Trans. Co. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir. 1983); Turnbull v. Andrew Crowe & Sons, 572 F. Supp. 1254, 1255 (D.Mich.1983). *fn14 The trial court correctly recognized the central issue as whether the parties, despite the absence of an express partnership agreement, intended to carry on the business as co-owners for profit, D.C. Code § 41-105 (a), and that their intent must be inferred from their conduct and dealings with each other. See Cooper v. Saunders-Hunt, 365 A.2d 626, 628 (D.C.1976) ("partnership contract may be oral and may be inferred from the conduct of the parties"). Our decisions have repeatedly expressed a preference for trial on the merits when interpretation of an ambiguous agreement "depends on the credibility of extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic evidence." Jessamy Fort & Ogletree v. Lenkin, 551 A.2d 830, 831 (D.C. 1988) (citation omitted); see also Dodek v. CF 16 Corp., 537 A.2d 1086, 1093 (D.C.1988); Kurth v. Dobricky, 487 A.2d 220, 223 (D.C.1985). These contract interpretation cases reflect the general principal that summary judgment is likely to be inappropriate and should be used sparingly in cases where motive or intent are material. See Spellman, supra note 14, 504 A.2d at 1122; Wyman v. Roesner, 439 A.2d 516, 519 (D.C.1981); International Bhd. of Painters & Allied Trades v. Hartford Accident & Indemnity Co., 388 A.2d 36, 42-44 (D.C.1978).

The legal relationship between the parties in this case turns on their intent, as reflected partly in written agreements among Beckman, Farmer and Kirstein. These documents are susceptible of varying interpretations on the central issue. See Dodek, supra, 537 A.2d at 1092.

They clearly provide for profit-sharing, which is prima facie evidence of partnerships. Yet they also provide for payment of guaranteed compensation in the nature of a monthly salary, and that Beckman would meet all firm expenses and capitalization requirements -- evidence of non-partnership. Because of this ambiguity, the court must resort to inferences from extrinsic evidence of the parties' conduct and course of dealings to determine their legal relationship inter se. In these circumstances, the trial court's Conclusion that the issue of partnership vel non could be resolved as a matter of law bears a heavy burden of justification.

In concluding that appellants had failed to raise a genuine issue of material fact, the court relied on "the bare conclusory denials contained in [Beckman's] lengthy affidavit." It is true that materials lodged in opposition to a summary judgment motion must contain more than "bare conclusory denials," and must cite specific facts of record showing a genuine issue for trial. Press v. Howard Univ., 540 A.2d 733, 735 n.4 (D.C.1988); Miller v. American Coalition of Citizens with Disabilities, 485 A.2d 186, 191 (D.C.1984). But while we agree that Beckman's affidavit is rife with denials and Conclusions, our review reveals that it contains some specific factual allegations lending credence to his more Conclusionary statements, and that these assertions are supported in material respects by his and Kirstein's deposition testimony. *fn15

In the category of conclusory assertions fall Beckman's general averments that he and Farmer agreed to form an employer/employee relationship, that at no time did Farmer share in losses or liabilities, and that Beckman had absolute authority over all business and professional decisions. But Beckman also described some specific incidents and events supporting these allegations. As to risk of loss, for example, he alleged that Farmer in early negotiations had expressed inability to assume any joint liability for firm obligations, that Beckman alone bore the entire operating loss incurred in 1981, and that Beckman alone agreed to assume full responsibility for the lease obligation, which he avers the landlord entered on the basis of Beckman's personal solvency alone. With regard to control rights, Beckman asserted that the lease was entered by Kirstein on Beckman's behalf and at Beckman's direction.

Moreover, after Beckman alleged in his affidavit that he had sole control and management authority, the court propounded five questions concerning the allocation of management responsibility and directed Farmer to supply supplemental record citations in response. Beckman also filed a response and proffered deposition citations of his own. In addition to general and conclusory allegations consistent with those in his affidavit, the testimony he cited identified specific instances where Beckman alleged he had exercised sole authority.

For example, he and Kirstein testified that Beckman had unilaterally decided not to invoice clients for certain hours billed by Farmer which Beckman thought to be excessive or unjustified. Regarding personnel matters, Beckman testified that he alone had decided to bring Kirstein and a Janet L. Kuhn into the firm. Beckman and Kirstein testified that Beckman decided to fire Farmer's secretary to conserve firm resources, and that Beckman decided to increase Kirstein's guaranteed compensation in 1983. Beckman also testified that, in general, all decisions concerning work for clients were subject to his approval, and that Farmer was obliged to report to him in performing services for clients. He further stated that nearly all of the firm's clients were his and that neither Farmer nor Kirstein had any responsibility to generate business. *fn16

On the issue of who controlled the practice on a day-to-day basis, Judge Kessler wrote: "he only finding that the Court can make is a negative one, namely, that the record is not clear enough to support Mr. Beckman's assertions of total and complete control over all aspects of the firm's operations." Because the issue was presented on cross-motions, the Judge may have confused appellants' failure to establish that Beckman alone controlled the practice (necessary to sustain his own motion for summary judgment) with their lesser burden of raising an issue whether Farmer had a joint right of control. On cross-motions for summary judgment, "he fact that one party fails to satisfy burden on his own Rule 56 motion does not automatically indicate that the opposing party. . . should be granted summary judgment on the other motion." 10A C. WRIGHT, A. MILLER, M. KANE, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2d § 2720 & n.11 (1983).

On the issue of responsibility for firm losses and liabilities, Beckman asserted by affidavit that Farmer contributed nothing but his personal services to the firm, bore no risk of partnership losses, received guaranteed compensation whether the firm showed a profit or not, and had no ownership interest in property used by the firm even though Beckman had afforded him an opportunity to acquire such an interest. If certain documents cited by Beckman are viewed in a light favorable to him, they lend support to these assertions. For example, partnership tax returns and the profit-sharing agreements support Beckman's contention that Farmer was guaranteed compensation for his services, whether the firm showed a profit or not. Promissory notes in the name of the partnership secured by Beckman's personal assets *fn17 and the profit-sharing agreement provisions obliging Beckman to pay all firm expenses and to provide operating capital bolster the contention that Farmer would not be liable for operating losses or to firm creditors. Tax returns and internal correspondence showing that Beckman leased furnishings and equipment to the firm over a long period are consistent with Beckman's assertion that Farmer declined an opportunity to purchase an ownership interest in these physical assets. While not necessarily incompatible with the existence of a partnership, these documented facts weigh against Farmer's co-ownership interest in the enterprise, if inferences and doubt are resolved in Beckman's favor as they must be. See Phenix-Georgetown, supra, 477 A.2d at 221; Murphy v. Army Distaff Found., 458 A.2d 61, 62 (D.C.1983). *fn18

Although Beckman did not dispute that Farmer would be liable as a partner to third party creditors of the firm because of the manner in which Farmer was held out to such persons, this does not preclude the existence of an agreement between the attorneys inter se by which Beckman assumed all risk of operating losses and liabilities. All told, inferences from the documentary evidence, deposition testimony and Beckman's affidavit adequately, though far from overwhelmingly, support appellants' contention that the parties agreed that Farmer would bear no losses or liabilities, thereby raising a genuine issue of material fact.

3. Conclusion

" party . . . is not entitled to a judgment merely because the facts he offers appear more plausible than those tendered in opposition, or because it appears that the adversary is unlikely to prevail at trial. This is true even though both parties move for summary judgment." 10A C. WRIGHT, A. MILLER, M. KANE, (supra) , § 2725 & nn.36, 37. Accord, Robinson v. Evans, supra note 15, 554 A.2d at 337. Appellants' case for summary judgment raised genuine issues of material fact concerning control rights and risk of loss, and thus summary judgment in Farmer's favor was inappropriate.

II. The Accounting

Appellants mount a multi-pronged attack on the accounting procedure followed by the trial court (employing a special master) after concluding that Farmer was a partner entitled to an accounting in equity of his share in the partnership's assets. *fn19 Appellants assert, first, that the court erred in awarding Farmer a full share of fees received after the partnership had dissolved and the parties had agreed on a division of firm assets in the July 1984 Separation of Practice Agreement, and in failing to reduce the Laker contingent fee to its value as of the date of dissolution. Because we conclude that this argument is based upon a faulty interpretation of partnership law as applied to the facts of this case, we reject it. Also relying on the July 6 agreement, and on the manner in which the partners' accounts were settled prior to dissolution, appellants further argue that the parties intended to conduct the final partnership accounting using a cash method, and not the accrual method used by the master. We conclude the Judge did not err in adopting the master's findings, which reflected inclusion of accounts receivable in its calculations.

A. Proceedings Below

Following summary judgment in Farmer's favor on the existence of the partnership, the parties agreed that the next phase of the case -- the accounting -- would require appointment of a special master. *fn20 The court instructed the parties to reach agreement on a qualified professional to conduct the accounting, but if unable to do so, to identify four individuals one of whom the Judge would appoint. The parties were encouraged to submit a mutually agreeable order detailing the master's powers.

The parties submitted a proposed consent order but were unable to agree on the special master and on three other issues. Hence they submitted four names as requested and alternative provisions of the order stating their positions on the matters they could not resolve. On February 9 the court appointed an accountant as special master and, after resolving each of the controverted provisions in the defendants' favor, adopted the parties' consent order. The order directed the master to perform a number of detailed calculations, and authorized him to order parties and trial witnesses to testify and produce books, records and documents. The order contained a general disclaimer:

It is understood by the parties that by consenting to this Order no party agrees that the calculations are appropriate or waives his right to challenge the basis in law and fact as to the calculations, and the parties reserve the right to disagree that any of the calculations reflect what the plaintiff is entitled to receive in an accounting.

The parties submitted documents to the master, who conducted hearings in March 1988, taking testimony from Beckman Kirstein, Farmer, accountant Stanley Tralins, and Mrs. Beckman. Following submission of his report, the parties filed exceptions upon which Judge Weisberg conducted three days of hearings, taking testimony and hearing extensive oral argument. Adopting the findings of the master, the court concluded that: (a) Farmer's share of the firm's profits as of May 31, 1984 was $107,873; (b) his share of the Laker fee received after May 31, 1984, and after deducting Beckman's and Kirstein's expenses incurred in collecting the fee but not compensation for the attorneys' own time, was $2,451,581, which included $80,177 for work for Laker Airways ...


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