Walker v. Walker

Majority - Kopf, District Judge

Yes, equitable dissolution is appropriate given the irreconcilable disagreements between Harry and Joe. Harry and Joe are the only partners, holding 80% and 20% equity interests respectively, and the Elizabeth L. Walker Trust is not a partner. Joe is entitled to some unpaid management fees, and partners' cash advances constitute partnership liabilities, with Harry obligated to contribute to cover Joe's excess advances if WLC assets are insufficient, but such advances do not accrue interest due to the partnership agreement. Furthermore, Harry's pro se counterclaim violated Rule 11, but his motion for change of venue did not. The court found dissolution, winding up, and accounting necessary under Neb.Rev.Stat. §§ 67-332(1)(f), 67-337, and 67-343 because the partners could not agree. The Elizabeth L. Walker Trust was not a partner because there was no evidence Harry bound the trust to the partnership agreement, no formal change in membership documented as required by the agreement, and no detrimental reliance to establish partnership by estoppel under Neb.Rev.Stat. § 67-316. The partnership's accounting records, maintained by an unbiased CPA on a cash basis, were deemed adequate, particularly since Harry never questioned them until 1993, and the partnership agreement stated accountings were conclusive if not protested within two years for “manifest error,” which Harry failed to demonstrate. Regarding management fees, the court applied Neb.Rev.Stat. § 67-318(f) (partner not entitled to remuneration absent agreement) and the partnership agreement (§ 30 ¶ 10.1, contemplating “agreed upon” salary). A “course of dealing” for 1977-1983, evidenced by past payments and a jointly used 1983 report, established Joe's entitlement to $21,432 in fees for that period. However, no such agreement or course of dealing was found for 1984-1993. After crediting a 1993 payment, Joe was owed $12,432. The partnership agreement expressly limited salary obligations to partnership assets, absolving Harry of personal liability for fees. Concerning cash advances, both partners made substantial contributions. Under Neb.Rev.Stat. §§ 67-318(a) and 67-340(f), partners are repaid contributions, and those who pay in excess of their share can enforce contributions from other partners if partnership assets are insufficient. Joe contributed $46,128.78 more than his 20% share, and Harry contributed that amount less than his 80% share. The partnership agreement (§ 30 ¶ 8.2) also required partners to hold each other harmless for excess obligations. Harry was ordered to contribute up to $46,128.78 to WLC if assets couldn't cover Joe's advances. However, no interest was awarded on advances because the partnership agreement (§ 30 ¶ 5.4) explicitly required “written approval” for interest-bearing advances, which was not obtained (especially for a lost note). Harry's pro se counterclaim, asserting fraud and conversion, violated Rule 11 (pre-1993 amendment) because he swore to factual allegations based on “personal knowledge” without a reasonable prefiling inquiry or factual basis. While pro se litigants are judged generously, this does not excuse assertions of facts without foundation. A monetary sanction of $1,000 was imposed to deter litigation abuse. Harry's motion to change venue did not violate Rule 11, as his residency was in Nevada, and a pro se litigant's legal understanding of venue should be judged generously. A receiver was appointed to wind up WLC's affairs, with winding-up costs and taxable court costs allocated 20% to Joe and 80% to Harry, proportionate to their equity interests.