Ingram v. Deere
2009 Tex. LEXIS 473, 288 S.W.3d 886, 52 Tex. Sup. Ct. J. 1030 (2009)
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Rule of Law:
The existence of a partnership under the Texas Revised Partnership Act (TRPA) is determined by examining the totality of the circumstances, considering five statutory factors, with no single factor being either necessary or sufficient to prove a partnership's formation.
Facts:
- In 1997, Dr. Jesse Ingram, a psychologist, and Dr. Louis Deere, a psychiatrist, entered into an oral agreement for Deere to serve as the medical director for Ingram's pain clinic.
- Deere contended they agreed to a three-way split of clinic revenues: one-third for Ingram, one-third for Deere, and one-third for expenses.
- Ingram contended the agreement was only that Deere would receive one-third of the clinic's gross revenues as compensation.
- Deere testified that during their initial discussions, Ingram stated their work 'was a joint venture, or [they] were partners, or [they] were doing this together.'
- Throughout his time at the clinic, Deere did not contribute money, participate in hiring employees, have his name on the clinic's bank account or lease, or purchase any clinic equipment.
- Fourteen months after they began working together, Ingram presented Deere with a written 'Physician Contractual Employment Agreement' which identified Ingram as the 'sole owner' of the clinic.
- Deere refused to sign the written agreement, claiming it contradicted their initial oral arrangement, and immediately ceased working at the clinic.
Procedural Posture:
- Deere sued Ingram in a Texas state trial court, alleging breach of a partnership agreement and other claims.
- A jury found that a partnership existed and awarded Deere damages for breach of contract and breach of fiduciary duty.
- Ingram filed a motion for judgment notwithstanding the verdict (JNOV), which a first judge partially granted by reducing the damages award.
- After the first judge recused himself, Ingram filed a second motion for JNOV, which a new judge granted, rendering a take-nothing judgment in Ingram's favor.
- Deere, as appellant, appealed to the Texas court of appeals.
- The court of appeals reversed the trial court's take-nothing judgment, reinstating the jury's finding of a partnership but affirming the trial court's ruling that no fiduciary duty existed.
- Ingram, as petitioner, sought review from the Supreme Court of Texas.
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Issue:
Is the evidence legally sufficient to establish that a partnership was formed between Ingram and Deere under the five-factor test of the Texas Revised Partnership Act?
Opinions:
Majority - Justice Wainwright
No, the evidence is legally insufficient to establish that a partnership was formed. To determine if a partnership exists under the Texas Revised Partnership Act (TRPA), courts must apply a totality-of-the-circumstances test, weighing five statutory factors: (1) profit sharing, (2) expression of intent, (3) control, (4) loss sharing, and (5) contribution of money or property. Here, there was legally insufficient evidence of any of the five factors. Deere's compensation was a share of gross revenue, not profits, and was characterized as 'contract labor.' Ingram's alleged statement about being 'partners' was too vague and colloquial to constitute a legally significant expression of intent. Deere exercised no control over the business's executive decisions, there was no agreement to share losses, and his alleged contribution of his 'reputation' was unsubstantiated and indistinguishable from the services of an employee.
Concurring - Justice Johnson
No, the evidence is legally insufficient, but for a more specific reason than the majority states. While the majority found no evidence of intent, Deere's testimony about Ingram calling them partners could have been legally sufficient for a jury to find an expression of intent. However, Deere failed to carry his burden of proof as measured by the specific jury charge given at trial. The jury was asked if the parties formed a joint venture where they 'would each own 50%.' Deere presented no evidence whatsoever that an agreement for 50/50 ownership was ever discussed or reached, making the evidence legally insufficient to support the jury's affirmative answer to that specific question.
Analysis:
This decision establishes the 'totality of the circumstances' as the definitive test for partnership formation under the Texas Revised Partnership Act, moving away from the more rigid common law approach that required proof of all factors. The court clarifies that while flexible, the test is not toothless; a complete absence of evidence for any of the five statutory factors will preclude a finding of a partnership. The opinion provides crucial guidance on the quality of evidence required for each factor, such as distinguishing profit sharing from revenue sharing and differentiating colloquial uses of 'partner' from legally significant expressions of intent.
