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Fraser v. Gottfried

January 31, 1994

WILLIAM A. FRASER, APPELLANT
v.
PHILIP M. GOTTFRIED AND GRAEME W. BUSH, APPELLEES



Appeal from the Superior Court of the District of Columbia; (Hon. Rufus G. King, III, Trial Judge)

Before Rogers, Chief Judge, and Terry and Sullivan, Associate Judges.

The opinion of the court was delivered by: Terry

TERRY, Associate Judge: William Fraser appeals from an order dismissing his amended complaint under Super. Ct. Civ. R. 12 (b)(6) for failure to state a claim upon which relief could be granted. Fraser had sued appellees Gottfried and Bush for an accounting, money damages, and other relief based on appellees' supposed breach of a partnership agreement, but the trial court ruled that the complaint failed to allege the existence of a partnership. *fn1 We disagree and, accordingly, reverse and remand for further proceedings.

I

Because this appeal entails review of a motion to dismiss under Rule 12 (b)(6), we construe the complaint in the light most favorable to appellant, accepting its allegations as true. See, e.g., Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); McBryde v. Amoco Oil Co. 404 A.2d 200, 202 (D.C. 1979). Our summary of the facts, therefore, is based on the allegations in appellant's amended complaint.

The dispute between the parties stems from an effort to buy and subdivide a parcel of land in the District of Columbia. Delia Kuhn owned a piece of property on Audubon Terrace, N.W. After Mrs. Kuhn's death in 1990, several of her neighbors, including appellant -- and, eventually, appellees as well -- became interested in buying the land. Between April and July of 1990, appellant discussed the purchase of the Kuhn property with three neighbors. *fn2 On July 1 appellant Fraser, appellees Gottfried and Bush, and two of the other three neighbors who remained interested in the property (Newmeyer and Brown) met to discuss buying it. *fn3 Fraser, Gottfried, Bush, and Brown agreed to make a bid. The next day they submitted a letter to Mrs. Kuhn's personal representative offering to buy the property, but he rejected their offer. Brown then withdrew from the group, leaving Fraser, Gottfried, and Bush as its only members.

According to the complaint, the parties then entered into an oral partnership agreement. The partnership's business was to be the purchase, development, and resale of the Kuhn property. Each partner was (1) to contribute equally to the partnership's capital, (2) to be an equal co-owner and to have equal control of the business, (3) to share equally in any profits or losses, and (4) to have the right to receive title to a particular lot that would be created by subdivision of the property.

On several occasions between July 2 and July 20, the parties conferred with one another and with a representative of the Kuhn estate about their plans to buy the property. They discussed purchase prices and payment terms, possible financing for its development, and subdivision of the property into lots. They also met with potential buyers of these lots and paid for legal advice rendered earlier to the group of neighbors who initially had been interested in buying the land. Appellant Fraser maintains that these activities showed the existence of a partnership under District of Columbia law.

The complaint alleged that the partnership was wrongfully dissolved by Gottfried and Bush between July 20 and September 6, 1990. They told Fraser on July 20 that they no longer wished him to participate with them in the purchase and development of the property, and after July 20 they began to exclude him in large part from the partnership's business, causing him to be involuntarily expelled from the partnership. In the weeks that followed, until about the middle of October, Gottfried and Bush negotiated with Fraser about the terms of the partnership's dissolution. In the course of those negotiations, Fraser asked Gottfried and Bush to put in writing his right to receive title to one of the subdivided lots (Lot 10). Gottfried and Bush "promised to provide such a writing at a later time" and asked Fraser to "trust" them. No such writing was ever delivered, however, and Gottfried and Bush refused to allow Fraser to exercise his right to take title to Lot 10. Fraser asserted that the dissolution of the partnership and his exclusion from it were wrongful and contrary to the partnership agreement, which contemplated the purchase, development, and resale of the property, an undertaking that had not been completed when the dissolution began.

Fraser also alleged "on information and belief" that even before July 20 Gottfried and Bush had separately negotiated with the Kuhn estate to buy the property, that they had arranged financing independently of his agreement to contribute to the purchase, and that they had even negotiated the sale of one of the lots to provide the money needed to buy the land without Fraser's help. The complaint alleged that these actions gave Gottfried and Bush de facto control of the property when dissolution of the partnership began and de jure control during the dissolution. From May to July 1991 Fraser repeatedly requested an accounting of the partnership's operations, which Gottfried and Bush refused to provide.

Fraser filed this suit against Gottfried and Bush on August 16, 1991. Gottfried and Bush moved to dismiss his complaint under Rule 12 (b)(6) for failure to state a claim, arguing inter alia that Fraser had failed to allege sufficient facts to show that a partnership had ever existed or that the parties had agreed to any set of mutually binding obligations. They argued that the facts alleged in the complaint "show simply that the parties were mutually interested in the purchase or development of the land, and that between July 1, 1990, and September 6, 1990, they took some joint steps to facilitate their mutual interest," and that "on July 20, 1990, the defendants specifically informed that they did not wish to participate with him in the proposed purchase and development of the land" (emphasis in original).

The trial court, after a hearing on the motion to dismiss, stated that "the problem is one of frustrated expectations." The court found that by July 20, 1990, "there was no meeting of the minds" and that the partnership "never ripened. The deal fell apart." The court thereupon ruled that "the motion should be granted."

Fraser, however, requested and was granted leave to file an amended complaint. After he did so, Gottfried and Bush moved once again to dismiss under Rule 12 (b)(6) for failure to state a claim. At a hearing on that motion, their counsel argued that the amended complaint should be dismissed because there was no explicit agreement and there was "no partnership through conduct," no "implicit agreement" as was asserted in Beckman v. Farmer, 579 A.2d 618 (D.C. 1990). Fraser's counsel replied that his opponent was confusing the issue:

This is not a motion for summary judgment. . . . This is not the purpose of the exercise. It is whether or not an agreement has been alleged and whether or not the elements of ...


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