Capizzi v. Brown Chiari LLP

• Decision Date: 07 May 2021
• Docket Number: 1028,CA 19-01828
• Citation: 194 A.D.3d 1457,148 N.Y.S.3d 780
• Court: New York Supreme Court — Appellate Division
• Parties: Samuel J. CAPIZZI, Plaintiff-Respondent, v. BROWN CHIARI LLP, James E. Brown and Donald P. Chiari, Defendants-Appellants. (Appeal No. 1.)

194 A.D.3d 1457

148 N.Y.S.3d 780

Samuel J. CAPIZZI, Plaintiff-Respondent,

v.BROWN CHIARI LLP, James E. Brown and Donald P. Chiari, Defendants-Appellants. (Appeal No. 1.)

1028

CA 19-01828

Supreme Court, Appellate Division, Fourth Department, New York.

Entered: May 7, 2021

RUPP BAASE PFALZGRAF CUNNINGHAM LLC, BUFFALO (R. ANTHONY RUPP, III, OF COUNSEL), FOR DEFENDANTS-APPELLANTS BROWN CHIARI LLP AND DONALD P. CHIARI.

HODGSON RUSS LLP, BUFFALO (BENJAMIN M. ZUFFRANIERI, JR., OF COUNSEL), FOR DEFENDANT-APPELLANT JAMES E. BROWN.

WEBSTER SZANYI LLP, BUFFALO (KEVIN A. SZANYI OF COUNSEL), FOR PLAINTIFF-RESPONDENT.

PRESENT: CENTRA, J.P., LINDLEY, NEMOYER, TROUTMAN, AND WINSLOW, JJ.

MEMORANDUM AND ORDER

It is hereby ORDERED that the judgment so appealed from is unanimously affirmed without costs.

Memorandum: After resigning from defendant law firm Brown Chiari LLP (firm or defendant firm), plaintiff attorney commenced this action seeking, among other things, a declaration that the firm was dissolved and money damages, including profits that he alleged had been wrongfully withheld from him. Defendants James E. Brown and Donald P. Chiari have maintained that they were the only partners in the firm and that plaintiff is not entitled to relief because he was not a partner.

This is not the first time the business relationship of plaintiff, Brown, and Chiari has been the subject of litigation. Those parties were previously defendants in an action brought by a fourth attorney upon that attorney's resignation from a prior incarnation of the law firm of "Brown Chiari" (prior firm). After a nonjury trial in the prior litigation, Supreme Court determined that all four attorneys were partners in the prior firm (Frascogna v. Brown, Chiari, Capizzi & Frascogna, LLP , Sup Ct, Erie County, Dec. 22, 2006, Eugene M. Fahey, J., index No. 2004/8335), despite the testimony of plaintiff and Chiari that they did not consider themselves partners in the prior firm. Among the facts noted by the court were that each of the four attorneys received a percentage of the prior firm's income; the prior firm's tax returns identified each as a partner; each received a Schedule K-1 with a capital account; each personally guaranteed a line of credit; and banking resolutions were signed by each, giving them broad authority to transact on behalf of the prior firm. The court highlighted those facts as supporting the existence of a four-person partnership. Consequently, the prior firm was dissolved. Defendant firm was formed shortly thereafter.

After a nonjury trial in the instant matter, Supreme Court (Timothy J. Walker, A.J.) issued two judgments (denominated decisions and orders). The judgment on appeal in appeal No. 1 declared that plaintiff was an equity partner in defendant firm when he resigned from it. The judgment on appeal in appeal No. 2 declared that the firm had been dissolved upon plaintiff's resignation. We affirm in each appeal.

Our scope of review after a nonjury trial is as broad as that of the trial court (see Howard v. Pooler , 184 A.D.3d 1160, 1163, 126 N.Y.S.3d 824 [4th Dept. 2020] ; Matter of City of Syracuse Indus. Dev. Agency [Alterm, Inc.] , 20 A.D.3d 168, 170, 796 N.Y.S.2d 503 [4th Dept. 2005] ), and we have "virtually plenary power to ‘render the judgment [we] find[ ] warranted by the facts’ " ( Baba-Ali v. State of New York , 19 N.Y.3d 627, 640, 951 N.Y.S.2d 94, 975 N.E.2d 475 [2012], quoting Northern Westchester Professional Park Assoc. v. Town of Bedford , 60 N.Y.2d 492, 499, 470 N.Y.S.2d 350, 458 N.E.2d 809 [1983] ). In conducting our review, we weigh the evidence presented and award judgment as warranted by the record, giving due deference to the court's evaluation of the credibility of the witnesses and the quality of proof (see City of Syracuse Indus. Dev. Agency , 20 A.D.3d at 170, 796 N.Y.S.2d 503 ; see also Mosley v. State of New York , 150 A.D.3d 1659, 1660, 55 N.Y.S.3d 554 [4th Dept. 2017] ).

We perceive no basis for disturbing the court's determination that plaintiff was a partner in the firm. "A partnership is an association of two or more persons to carry on as co-owners a business for profit" ( Partnership Law § 10 [1] ). Where, as here, there is no written partnership agreement in place, the provisions of the Partnership Law apply (see Congel v. Malfitano , 31 N.Y.3d 272, 287-288, 76 N.Y.S.3d 873, 101 N.E.3d 341 [2018] ). Although, under the Partnership Law, "the sharing of business profits constitutes prima facie evidence of the existence of a partnership ..., it is not dispositive" ( Fasolo v. Scarafile , 120 A.D.3d 929, 931, 991 N.Y.S.2d 820 [4th Dept. 2014], lv dismissed 24 N.Y.3d 992, 997 N.Y.S.2d 103, 21 N.E.3d 554 [2014] ; see § 11 [4]). Rather, we look to the parties’ conduct, intent, and relationship to determine whether a partnership existed in fact (see Hammond v. Smith , 151 A.D.3d 1896, 1897, 57 N.Y.S.3d 832 [4th Dept. 2017] ). "The relevant factors are (1) the parties’ intent, whether express or implied; (2) whether there was joint control and management of the business; (3) whether the parties shared both profits and losses; and (4) whether the parties combined their property, skill, or knowledge ... No single factor is determinative; a court considers the parties’ relationship as a whole" ( id. ).

With respect to the first factor of the analysis, the parties’ intent to establish a three-person partnership is evident from the manner in which they structured defendant firm in the wake of the Frascogna decision. If Brown and Chiari—two highly experienced and capable attorneys—intended at that time to form a partnership that excluded plaintiff, they had the benefit of that decision to serve as a guide. Brown and Chiari could have executed a written partnership agreement detailing the terms of partnership, or they could have structured defendant firm differently from the prior firm by eliminating or substantially limiting the business practices that were identified by the Frascogna decision as indicia of...