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SINGER v. SCHER

February 20, 1991

NORMAN H. SINGER, Plaintiff,
v.
GERALD SCHER, Defendant



The opinion of the court was delivered by: SPORKIN

 STANLEY SPORKIN, UNITED STATES DISTRICT JUDGE

 This case involves a dispute between the two partners of a now-defunct law firm. At issue are claims by the plaintiff Norman Singer to (1) one-half the proceeds realized by defendant Gerald Scher from the sale of certain stock options, and (2) one-half of certain equity securities purchased and held by Mr. Scher. These transactions occurred during the period that the plaintiff and the defendant were partners in a law firm.

 This case was tried before the Court without a jury. After hearing the arguments of counsel, and after considering the entire record in the case, I am prepared to enter my findings of fact and conclusions of law.

 Background

 The litigants in this case were associated professionally from 1970 through 1988. Their professional association experienced four distinct stages. In 1970, the plaintiff, Mr. Singer, joined the law firm of Amram, Hahn & Sundlun as an associate. The defendant, Mr. Scher, was already employed by Amram, Hahn at that time, also as an associate.

 In 1972, the Amram, Hahn firm was dissolved. Two of the partners of that firm, Bruce Sundlun and Bardyl Tirana, along with Mr. Scher, formed a new firm, called Sundlun, Tirana & Scher. Mr. Singer went to work for the new firm as an associate.

 In 1977, both Mr. Sundlun and Mr. Tirana left the firm. Mr. Singer and Mr. Scher continued to practice as partners, with each having equal, one-half shares in the partnership. The new firm was called Sundlun, Scher & Singer. Even though Mr. Sundlun no longer retained a financial interest in the firm, he continued to be affiliated with the firm in an "of counsel" capacity, and his name remained in the firm name.

 Mr. Singer and Mr. Scher continued to practice law together until 1988. With the exception of one ten-month interval in which the firm added a third partner, Mr. Scher and Mr. Singer constituted the entire Sundlun, Scher & Singer partnership throughout this period. In 1988, the partnership was dissolved.

 Throughout their association, the professional fortunes of both Mr. Scher and Mr. Singer were tied closely to Mr. Sundlun. Mr. Sundlun was clearly the dominant partner in the Sundlun, Tirana & Scher firm. The firm's major clients were his clients. He spent very little time, however, actually practicing law for the firm. Instead, he was primarily engaged as an executive for the firm's two major clients -- The Outlet Company ("Outlet") and Executive Jet Aviation ("EJA"). Mr. Sundlun was a director of each of these companies, he held significant management positions with each, and he had a substantial ownership interest in each. While the Sundlun, Tirana & Scher firm had clients other than these companies, in large part the firm functioned as an outside legal department for companies controlled in part or in whole by Mr. Sundlun. Mr. Tirana did corporate work for EJA, while Mr. Scher primarily represented Outlet. Mr. Singer was a litigator and represented both clients. In addition, he became the partner primarily responsible for Quest Corporation. Quest, which was the firm's third largest client, was also brought to the firm by Mr. Sundlun.

 The dispute in this case centers on stock and stock options in Outlet obtained by Mr. Scher during the period he was a partner with Mr. Singer. Throughout this period, Mr. Scher served as a corporate officer of Outlet. Each year, Outlet offered stock options to certain key management employees. Mr. Scher had received such options prior to the formation of Sundlun, Scher & Singer, and he continued to receive them annually until 1983. He sold these options in 1984 and realized a profit of $ 92,748.86. In addition to these options, Mr. Scher purchased 35,200 shares of Outlet stock in 1986. These shares were purchased in connection with a leveraged buyout of Outlet organized by Mr. Sundlun and the Outlet management. Mr. Scher still holds these shares. Mr. Singer claims that both the stock options and the stock were partnership property that should have been divided between the two partners. Specifically, he seeks $ 46,374.43 from the profits realized by Mr. Scher on the stock options, and 17,600 shares of the Outlet stock.

 The Understanding Among the Sundlun, Tirana & Scher Partners

 Relationships among partners are governed above all by the intentions of the partners. D.C. Code § 41-117. Both the common law, see, e.g. Day v. Avery, 179 U.S. App. D.C. 63, 548 F.2d 1018 (D.C.Cir. 1976), and the Uniform Partnership Act, D.C. Code §§ 41-117 through 41-123, establish a framework in which partners owe each other the duty of fairness and sharing. Within this framework, however, partners are free to set the specific rules of their partnership according to ...


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