Fischer v. Fischer
undisclosed (2006)
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Rule of Law:
A partnership agreement whose stated purpose is the purchasing, leasing, and eventual selling of a specific, identified parcel of real estate constitutes a partnership for a 'particular undertaking.' Consequently, a partner cannot unilaterally dissolve such a partnership at will; the partnership agreement remains enforceable until the undertaking is completed or the partnership is otherwise dissolved according to the agreement's terms, such as by the death of a partner.
Facts:
- On November 1, 1994, Richard Fischer and his son, Todd A. Fischer, formed a partnership named D & T Enterprises, governed by a written agreement.
- The initial agreement included a provision allowing a surviving partner the option to purchase a deceased partner's interest.
- On June 19, 1995, the parties signed an amended agreement, which stated the partnership's purpose was 'the purchasing, leasing, and selling of real estate at 8415 U.S. 42, Florence, Kentucky.'
- The amended agreement changed the buy-sell provision to be mandatory, requiring the surviving partner to purchase the decedent's interest for a fixed price of $50,000.
- After learning he was terminally ill, Richard Fischer, through his attorney, sent a letter on July 27, 2000, to Todd purporting to dissolve the partnership at will, citing the 'grossly unfair' buy-sell provision.
- Despite the letter, Richard requested that partnership tax returns continue to be filed, and the property remained titled in the partnership's name.
- Richard Fischer died on June 28, 2001.
Procedural Posture:
- Jacquelyn Fischer, as executrix of Richard Fischer's estate, filed suit against Todd A. Fischer in the Boone Circuit Court (the trial court).
- Todd Fischer moved for partial summary judgment to enforce the buy-sell provision of the partnership agreement.
- The trial court granted summary judgment in favor of Todd Fischer, holding the buy-sell agreement was enforceable.
- Jacquelyn Fischer (as appellant) appealed to the Kentucky Court of Appeals.
- The Court of Appeals reversed the trial court's decision, finding that Richard's letter had dissolved the partnership and rendered the buy-sell provision unenforceable.
- Todd Fischer (as appellant) was granted discretionary review by the Supreme Court of Kentucky.
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Issue:
Does a partnership agreement stating its purpose as the 'purchasing, leasing, and selling' of a specific parcel of real estate create a partnership for a 'particular undertaking,' thereby preventing one partner's unilateral attempt to dissolve it at will and keeping a mandatory buy-sell provision enforceable upon that partner's death?
Opinions:
Majority - Lambert, C.J.
Yes. A partnership formed for the purpose of purchasing, leasing, and selling a specific parcel of real estate is a partnership for a 'particular undertaking,' not a partnership 'at will.' Therefore, Richard Fischer’s unilateral attempt to dissolve the partnership was ineffective, and the buy-sell provision of the partnership agreement remained in full force and was triggered by his death. The court reasoned that the agreement's language, which specified a unique parcel of land and included the ultimate goal of 'selling' it, created a definite objective that must be accomplished. This specificity distinguishes it from a general business that could continue indefinitely. Since the partnership was for a particular undertaking, Richard could not dissolve it at will under the applicable statute (KRS 362.300(1)(b)). His letter was an invalid attempt to circumvent the contract, meaning the partnership was only dissolved by his death, which activated the mandatory buy-sell clause.
Concurring - Cooper, J.
Yes, the buy-sell provision is enforceable, but for a different reason. This opinion disagrees that the partnership was for a particular undertaking, viewing its primary purpose as leasing, which is indefinite. Therefore, Richard Fischer did have the statutory right to dissolve the partnership at will. However, dissolution merely commences the 'winding up' process; it does not terminate the partnership. Because the partnership's affairs were never wound up before Richard's death, the partnership and its governing agreement were still legally in effect. Consequently, his death triggered the buy-sell provision.
Analysis:
This decision provides critical clarification on the distinction between a partnership 'at will' and one for a 'particular undertaking' under the Uniform Partnership Act. It establishes that the inclusion of a specific asset and a terminal objective (like a sale) in the purpose clause can transform a potentially at-will partnership into one for a particular undertaking. This holding enhances the enforceability of partnership agreements, particularly buy-sell provisions, by limiting a partner's ability to unilaterally dissolve the entity to escape what has become an unfavorable term. The case serves as a strong precedent for interpreting the scope and duration of a partnership based on the specific language of its purpose clause.
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