Altman v. Altman

• Decision Date: 29 June 1981
• Docket Number: No. 80-2106,80-2106
• Citation: 653 F.2d 755
• Parties: ALTMAN, Sydney A., Appellee, v. ALTMAN, Ashley J. and Altman, Ashley J., Executor of the Estate of Altman, Sandra S., deceased. Appeal of Ashley J. ALTMAN, Individually and as Executor of the Estate of Sandra S. Altman.
• Court: U.S. Court of Appeals — Third Circuit

Page 755

653 F.2d 755

ALTMAN, Sydney A., Appellee, v. ALTMAN, Ashley J. and Altman, Ashley J., Executor of the Estate of Altman, Sandra S., deceased Appeal of Ashley J. ALTMAN, Individually and as Executor of the Estate of Sandra S. Altman.

No. 80-2106.

United States Court of Appeals, Third Circuit.

Argued Jan. 15, 1981.

Resubmitted April 16, 1981.

Decided June 29, 1981.

Philip M. Hammett, James D. Crawford (argued), David S. Petkun, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., for appellant.

H. Robert Fiebach (argued), Norman Goldberger, Wolf, Block, Schorr & Solis- Cohen, Philadelphia, Pa., for appellee.

Before SEITZ, Chief Judge, and ROSENN and SLOVITER, Circuit Judges.

OPINION OF THE COURT

SEITZ, Chief Judge.

Ashley Altman appeals from a judgment of the district court ordering the dissolution of five partnerships and directing that the assets of the partnerships be liquidated and distributed to the partners. Pennsylvania law governs the disposition of this diversity action.

I.

From 1952 to 1973, Sydney Altman and Ashley Altman operated a number of partnerships engaged in real estate construction and management in southeastern Pennsylvania. During this period the two brothers shared equally in the management and control of the partnerships, and through their joint efforts they built the businesses into very profitable and substantial enterprises. Sydney and Ashley received identical salaries, and each brother was permitted to charge certain personal expenses to the partnerships. The brothers agreed that the amount of such expenses would be equal. Therefore, if one brother charged more personal expenses to the partnerships, he would pay to the other brother one-half the amount by which his personal expenses exceeded those of his brother.

In January 1973, Sydney moved to Florida to establish residency in that state for the purpose of obtaining a divorce. The brothers discussed Sydney's move at this time, and they agreed that Sydney would return to Pennsylvania after his divorce and resume full-time duties with the partnerships. During the first six months after he moved to Florida, Sydney commuted to Pennsylvania every week to work for two to three days. In July 1973, Ashley suggested that Sydney need only return to Pennsylvania once a month until his divorce became final. Sydney's attorney subsequently advised him not to return to Pennsylvania until his marital problems were resolved.

Sydney told Ashley in November 1973 that he was considering retiring from the Altman businesses and remaining in Florida permanently. The brothers discussed Sydney's retirement in general terms, and Ashley agreed to consult with their Philadelphia accountant in an effort to develop a satisfactory retirement agreement. The brothers disagreed on the events that occurred after this conversation. Ashley claimed that Sydney accepted the accountant's recommendations, and that Sydney's retirement was implemented on the partnerships' books as of December 31, 1973. Sydney, however, maintained that the brothers never progressed beyond preliminary discussions until the fall of 1974, when he received a one-sided retirement proposal prepared at Ashley's direction by the partnerships' attorney.

When an agreement could not be reached, Sydney brought this action in the district court seeking judicial dissolution of the partnerships. He alleged that Ashley had violated the partnership agreements, misappropriated partnership assets, and excluded Sydney from the businesses. Ashley maintained that the partnerships had been dissolved as of December 31, 1973 because Sydney had retired on that date.

After a nonjury trial, the district court held that neither the conduct of Sydney nor that of Ashley had dissolved the partnerships prior to the institution of this suit. The court stated that under Pennsylvania law the retirement of a partner causes a dissolution only when it is tantamount to a "definite and unequivocal" expression of a will to dissolve the partnership. The court found that Sydney's desire to retire "never progressed beyond a vague general proposal," and that his absence from Pennsylvania was with Ashley's consent. In addition, the court found that Ashley's alleged exclusion of Sydney from the partnerships did not cause a dissolution because Ashley intended to retain Sydney as a partner "at least to the extent that the partnerships would continue to take full advantage of Sydney's capital interest."

The district court held, however, that Sydney was entitled to a judicial dissolution of the partnerships because Ashley violated the partnership agreements and Pennsylvania law by unilaterally paying himself certain salaries. The court found that Ashley's conduct had "progressed to a point which makes it impracticable for the partnerships to continue," and dissolution was ordered as of June 6, 1977, the date of the court's decision. In addition, Ashley was directed to pay Sydney $153,750.67 to equalize partnership distributions, salaries, and reimbursed personal expenses. Finally, the court appointed a master to liquidate the partnerships' assets and to distribute the net proceeds to the partners.

II.

Ashley argues that the district court erred in finding that the partnerships had not been dissolved as of December 31, 1973. This argument is based upon three contentions: (1) that sworn statements made by Sydney during the Florida divorce proceedings estopped him from denying he had not retired; (2) that the district court's findings of fact concerning Sydney's retirement were clearly erroneous; and (3) that the district court incorrectly interpreted Pennsylvania law.

A.

During the course of the Florida divorce proceedings, Sydney stated three times under oath that he had retired from the partnerships. In addition, Sydney's Florida counsel represented to the Florida court that it was undisputed that Sydney "has retired and severed his business relationship with his brother in Pennsylvania." Ashley argues on appeal that the district court should have held that Sydney is estopped by these statements from denying that he had retired from the partnerships. Citing this court's decisions in Scarano v. Central Railroad, 203 F.2d 510 (3d Cir. 1953), and United States v. Webber, 396 F.2d 381 (3d Cir. 1968), Ashley asserts that "a party who obtained a material advantage from his sworn representations in a court of law, will not be heard in a second proceeding to contradict his earlier sworn statement of the facts for a new material benefit." Ashley maintains that judicial estoppel can be applied even though the proceedings take place in different courts and involve different parties.

Our review of the record reveals that Ashley did not raise this issue in the district court. He did not plead judicial estoppel or argue to the court that Sydney should be estopped from denying he had retired by his statements in the Florida proceedings. ¹ We have emphasized that "absent exceptional circumstances, an issue not raised in the district court will not be heard on appeal." Franki Foundation Co. v. Alger-Rau & Associates, Inc., 513 F.2d 581, 586 (3d Cir. 1975). Exceptional circumstances have been recognized when the public interest requires that the issue be heard or when manifest injustice would result from the failure to consider the new issue. Id.; see Princeton Community Phone Book, Inc. v. Bate, 582 F.2d 706, 708 n.1 (3d Cir.), cert. denied, 439 U.S. 966, 99 S.Ct. 454, 58 L.Ed.2d 424 (1978) (first amendment issue not raised in district court considered on appeal because of great public interest); Richerson v. Jones, 572 F.2d 89, 97 (3d Cir. 1978) (public interest served by hearing on appeal issue concerning exhaustion of administrative remedies under title VII). In addition, we have considered the merits of an issue raised for the first time on appeal when the new theory was advanced to affirm the district court and prejudice would not result to the other party. ² See Jurinko v. Edwin L. Wiegand Co., 477 F.2d 1038 (3d Cir.), vacated on other grounds, 414 U.S. 970, 94 S.Ct. 293, 38 L.Ed.2d 214 (1973); cf. Walker v. Sinclair Refining Co., 320 F.2d 302, 305 (3d Cir. 1963) (district court should not be reversed on grounds not argued before it).

We find no exceptional circumstances in this case that would allow Ashley to raise judicial estoppel on appeal. No great public interest would be advanced by consideration of this issue. Moreover, Ashley offers no explanation for his failure to raise judicial estoppel in the district court, and we are not aware of any obstacles that prevented him from doing so. Cf. Princeton Community Phone Book, 582 F.2d at 708 n.1 (first amendment issue heard for first time on appeal because controlling Supreme Court case decided after district court's decision). Therefore, no manifest injustice to Ashley would result if we do not consider this issue. In addition, the new issue raised on appeal is presented as a ground for reversing the district court. As a result, we find that the rule barring a party from raising new issues on appeal precludes our consideration of Ashley's judicial estoppel argument.

B.

Ashley argues that the factual findings of the district court relating to Sydney's intention to retire and the reasons for his absence from Pennsylvania are clearly erroneous. ³ In support of this argument Ashley directs our attention to evidence in the record indicating that Sydney not only intended to retire but in fact had done so. Ashley notes that Sydney did not return to the partnerships' office from October 1973 until after filing this suit in September 1975, leaving Ashley with the responsibility for operating the businesses. According to Ashley, the district court's finding that this absence was with Ashley's consent is unsupported by the record. Ashley also emphasizes that two "disinterested" witnesses testified that Sydney told them he was staying in Florida on a permanent basis and...