548 F.2d 1018 (D.C. Cir. 1976), 75-1744, Day v. Avery

Docket Nº:75-1744.
Citation:548 F.2d 1018
Party Name:J. Edward DAY, Appellant, v. William H. AVERY et al.
Case Date:November 10, 1976
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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548 F.2d 1018 (D.C. Cir. 1976)

J. Edward DAY, Appellant,

v.

William H. AVERY et al.

No. 75-1744.

United States Court of Appeals, District of Columbia Circuit

November 10, 1976

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Argued March 30, 1976.

Rehearing Denied Dec. 8, 1976.

Certiorari Denied April 25, 1977.

See 97 S.Ct. 1706.

Austin F. Canfield, Jr., Washington, D.C., with whom Edward J. Gorman, Jr., Washington D.C., was on the brief for appellant.

James J. Bierbower, Washington, D.C., with whom Alvin B. Davis, Washington, D.C., was on the brief for appellees.

Before TAMM, ROBINSON and WILKEY, Circuit Judges.

PER CURIAM:

Appellant J. Edward Day brought suit in the Superior Court of the District of Columbia against Sidley & Austin (S&A), a prominent Chicago law firm, and the partners composing its executive committee, as the upshot of a dispute engendered by S&A's merger with another law firm in 1972. In separate counts of his complaint, appellant alleged, inter alia, breach of contract and misrepresentation. Service of process on the partnership was quashed and the case was thereafter removed to the United States District Court for the District of Columbia, which entered summary judgment for the individual defendants on all counts. 1 That judgment is now appealed on the merits of each claim for relief, as well as the propriety of the removal. We affirm the judgment in all respects.

I. THE FACTUAL BACKGROUND

In 1963, appellant and S&A agreed that appellant would, upon his resignation as Postmaster General of the United States, establish an office of S&A in Washington, D.C. He did so, securing office space and supporting personnel for himself and for the small group of S&A attorneys who staffed the office. At the same time, appellant became an underwriting partner in the firm and chairman of its Washington office committee. He did not, however, become a member of the firm's executive committee, which under S&A's partnership agreement had plenary control over most of the firm's affairs calling for policy- or decision-making. 2 Appellant's role as chairman of the Washington office committee was principally that of liaison with and agent for the executive committee, rather than that of independent decision-maker.

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Early in 1972, S&A's executive committee was approached by partners of another law firm Liebman, Williams, Bennett, Baird & Minow (Liebman) with an eye toward merger. Like S&A, Liebman was Chicago-based but maintained an office in Washington. Without then notifying other partners, 3 representatives of Liebman and S&A's executive committee explored the idea and thrashed out a tentative proposal. The possibility of merger was first broached to appellant and the other underwriting partners at a meeting on July 17, 1972, when the proposal was presented to them for consideration. In the course of the discussions, according to appellant, the executive committee made a series of statements to the underwriting partners about the contemplated merger, including a representation that no one of them would be "worse off" in any way as a result. 4

Each underwriting partner, including appellant, voiced approval of the project, and commissioned the executive committee to devise a final-form merger agreement and submit it to the partners for adoption. Several other meetings were held to resolve merger issues during September and, although appellant found himself unable to attend any of them, one clause of the agreement was revised at his suggestion. A memorandum purporting to summarize the benefits of the merger was circulated under the aegis of the executive committee to all S&A partners on September 26, and that memorandum contained the statement that no partner would be "worse off" financially "solely as a result of the consolidation, than he or she was before the event." 5 After circulation and approval of a memorandum of understanding incorporating the details of the merger, a final amended partnership agreement consummating the merger was executed on October 16, 1972, by all partners of S&A, including appellant.

That same day, the executive committee of the new firm which took the name of "Sidley & Austin" decided to consolidate the Washington offices of its predecessors. To this end, appellant and the head of the premerger Liebman Washington office committee, who was also a member of the post-merger executive committee, were named co-chairmen of the consolidated Washington office committee. 6 It was at this point that trouble began. Members of the post-merger Washington office committee, in combination with appellant's co-head, took actions that seemed to appellant to be in disregard of his role as co-chairman and in studied neglect of his wishes. The principal step was the relocation of the consolidated offices to another building in Washington, a move to which appellant was opposed. Appellant considered this course contumelious and alleges that it was motivated by opposition to his political leanings. These events, as well as the appointment of co-chairmen simpliciter, made continued service with the firm distasteful to appellant, who resigned and instituted the instant litigation.

II. REMOVAL OF THE ACTION

Appellant first challenges the District Court's jurisdiction. Removal of the case from the Superior Court of the District of Columbia rested on the theory that the S&A firm was not suable as an entity in the District of Columbia; that there was complete diversity of citizenship between appellant on the one hand and the defendant partners on the other; that the amount in controversy, exclusive of interest and costs, exceeded $10,000; and that since appellant's

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action might originally have been brought in the District Court, 7 it was properly removable thereto. 8 Since, however, an action involving no federal question cannot be removed to a federal court if any defendant is a resident of the forum state, 9 appellant contends that removal in this instance was improper. His premise is that even though none of the partners sued individually resides in the District of Columbia, S&A, qua partnership, does so reside by virtue of its business activity here.

Federal Civil Rule 17(b) 10 provides that in cases not seeking enforcement of a substantive right 11 existing under the constitution or a federal law, capacity of a partnership to sue or be sued is determined by reference to the law of the forum state in this case, the District. 12 Since there is no statute in the District permitting suit by or against a partnership in its common name, and since by the common law of the District a partnership is not a jural entity capable of suing or being sued, 13 this argument would appear to be

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foreclosed. Appellant maintains, however, that Section 13-421 of the District of Columbia Code impliedly overrules the case law on this point by conferring personal jurisdiction over partnerships and other unincorporated associations meeting certain minimum contacts requirements. 14

We note initially that the fact of personal jurisdiction does not ineluctably bestow legal capacity to be sued; infants and incompetents, for instance, were at common law incapacitated from suing or being sued, 15 and the fact that they were subject to personal jurisdiction did not alter the necessity of appointing a guardian ad litem. 16 More importantly, the genealogy of the District of Columbia's long-arm statute gives no indication that it was intended to do anything but "codify recent case law with respect to extraterritorial jurisdiction over and service upon persons in civil litigation." 17 It was adapted by Congress from the Uniform Interstate and International Procedure Act, 18 which in its pertinent comments assures that its adoption effects "no change" of rules "stating which persons have to be served in order to acquire jurisdiction," and that "thus, local law that all members of an unincorporated association must be joined and served . . . remains unchanged." 19 Since both the Uniform Act and its District of Columbia counterpart accord identical treatment to partnerships and unincorporated associations, 20 the law governing service on partnerships remains unchanged: the partnership entity is never to be served; rather, service must be made on all partners. 21

A fortiori, then, the District's preexisting rules of suability are unaltered by the enactment of Section 13-421. In this connection, it is worth noting that one of Congress' purposes in adopting its provisions was closely to assimilate District law on jurisdiction to that of the neighboring

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states of Virginia and Maryland. 22 Virginia, though it has a nearly identical statute, denies partnerships capacity to sue or be sued, 23 as does at least one other state that has adopted the Uniform Act. 24 We conclude, then, that appellant's contention must be rejected and that removal was proper in the circumstances. 25

III. THE BREACH OF CONTRACT CLAIM

Appellant disputes the District Court's finding, on which the breach-of-contract count of his complaint was held wanting, that he had no contractual right "to maintain his authority over the Washington office." 26 That effort, too, must fail. Neither S&A's pre-merger partnership agreement nor the amended partnership agreement governing post-merger operations refers to the Washington office committee or to appellant's position thereon. The pre-merger agreement, however, does provide that "(a)ll questions of Firm policy," except for certain enumerated matters not here relevant, shall be decided by the executive committee, which "shall advise and consult with other Partners to such an extent as the Committee may deem advisable." 27 Clearly the...

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