Della Ratta v. Dixon

• Decision Date: 14 November 1980
• Docket Number: No. 281,281
• Citation: 422 A.2d 409,47 Md.App. 270
• Parties: Joseph M. DELLA RATTA v. William E. DIXON et al.
• Court: Court of Special Appeals of Maryland

Page 270

47 Md.App. 270

422 A.2d 409

Joseph M. DELLA RATTA v.William E. DIXON et al.

No. 281.

Court of Special Appeals of Maryland.

Nov. 14, 1980.

Roy Niedermayer, Washington, D.C., with whom was Daniel M. Litt, Chevy Chase, on brief, for appellant.

Timothy E. Meredith, Severna Park, with whom were Robert W. Warfield and Corbin, Heller & Warfield, Chartered, Severna Park, on brief, for appellees.

Argued before THOMPSON, MOORE and WILNER, JJ.

WILNER, Judge.

On September 18, 1973, Joseph Della Ratta(appellant), William Dixon, Thomas Baldwin, and John Dixon(appellees) entered into a written agreement creating a general partnership known as OTC Associates.William Dixon, Baldwin, and Della Ratta were each to have a 30% interest in the company; John Dixon was to have the remaining 10%.

The purpose of the venture was to acquire and develop certain property in the Odenton Town Center, in Anne Arundel County.In furtherance of that aim, OTC, in fact, purchased certain real estate, borrowed $2,000,000 from Maryland National Realty Investors, Inc.(MNRI) to pay for it, and mortgaged the property to MNRI as security for the loan.The mortgage called for monthly amortization payments.

The pertinent parts of the partnership agreement, in terms of this case, are found in paragraphs 5, 4, 8, and 9.Paragraph 5 merely sets out the percentages noted above, according to which the profits would be divided.

Paragraph 4 dealt with capital contributions.It provided, among other things, that:

(1) Each partner agreed "to contribute a percentage of all capital deemed to be necessary to the operation of the partnership business," in accordance with the percentages set forth in paragraph 5.

(2) Each partner "shall be responsible for contributing his respective percentage of any additional capital that may be deemed to be necessary to the operation of the partnership business within ten (10) days after receipt of notice of such additional capital requirement."(Emphasis supplied.)

(3) If a partner failed to contribute his respective share of additional capital contribution within the 10-day period, he"shall be in default."

(4) In the event of a default, the defaulting partner's interest could be purchased by any of the other partners at a price fixed by the agreement.In the absence of such a purchase, however, the agreement provided that "any and all additional capital contributions then due shall be due and payable and the partnership shall be entitled to collect from the defaulting partner by legal process the entire amount of all additional capital contribution or contributions then due" together with interest at 8%, court costs, and reasonable attorney's fees incident to the collection.(Emphasis supplied.)

Paragraph 8 provided that the "death, insanity, or withdrawal" of a partner shall "work an immediate dissolution of the partnership; however, the dissolution of the partnership shall not terminate the partnership but the partnership shall continue until the winding up of the partnership affairs is completed and the liquidating of the partnership assets as provided for hereinafter is completed."

Finally, paragraph 9 dealt with termination.It provided that:

(1) Any partner may terminate the partnership prior to the end of the stated term (September 18, 1999) by giving 30 days notice of his intention to so terminate the partnership; and

(2)"In the event of a termination pursuant to this paragraph, or in the event of death, insanity or withdrawal of a partner, the remaining partners shall wind up the partnership affairs and liquidate the partnership assets" either by selling the assets and distributing the proceeds or by distributing the assets in kind.

No specific time limit was set on the winding-up and liquidation process.

On November 8, 1977, the partners amended the basic agreement to provide that,

(1) No requirement shall be made of any of the partners for capital contributions "for any purpose other than debt service on obligations secured by liens against the property of this Partnership and real estate taxes thereon unless and until each of the partners shall otherwise agree."

(2) For the period ending December 31, 1978, not more than $50,000 may be expended for partnership purposes in excess of requirements for debt service and real estate taxes without the further approval of the individual partners, and "(n)o partner shall be liable for additional capital contributions through the period ending December 31, 1978, for any purpose other than for his proportionate share of debt service and real estate taxes as aforesaid and of said sum of $50,000.00."

(3) The books of the partnership "shall be restated" to provide that all sums theretofore advanced by the partners "shall be designated as capital contributions ...."

(4) The partners "will make such additional capital contributions to the Partnership, not later than December 31, 1977, as shall be required to bring the total restated paid-in capital of the Partnership to $135,000.00."

The amendment made no reference to any period beyond December 31, 1978.

On November 7, 1978, appellant wrote to his co-partners William Dixon and Thomas Baldwin(but not to John Dixon) a letter "under the terms of Paragraph 9 of the Partnership Agreement ... providing you with thirty (30) days written notice that it is my desire and intention to terminate the Partnership."The letter concluded, "You gentlemen, as remaining Partners, have the option to liquidate the Partnership assets by following either of the procedures stated in Paragraph 9(a) or Paragraph 9(b)."¹

Notwithstanding this letter, appellant continued to contribute, in monthly amounts of $3,307.50, his percentage share of the additional capital needed to defray the debt service requirements of the partnership.This ceased, however, in May, 1979; no further contributions were made by appellant thereafter, either with respect to debt service or other expenses of the partnership, and, whether coincidentally or not, no payments on the mortgage were made in June or July, 1979.On July 19, 1979, MNRI declared a default on the loan and demanded immediate payment of the accelerated principal and accrued interest.

Appellant commenced this action on June 11, 1979, with a bill of complaint in the Circuit Court for Anne Arundel County seeking an order declaring a dissolution of the partnership, ordering an accounting, winding-up, and termination of the partnership, appointing appellant to conduct the winding-up and termination, and restraining appellees from interfering with the partnership property or with appellant in his winding-up and termination of the partnership.

Appellees answered the bill, asserting that they had actively sought buyers for the partnership property in an effort to wind up the partnership, but had been unsuccessful.They also filed a counterclaim seeking multiple forms of relief.They referred to appellant's obligation under the 1977amendment to contribute a 30% share toward the restated capital of $135,000, and alleged a deficiency on his part of $6,909.16.²They also noted his obligation to contribute toward not more than $50,000 of the general expenses of the partnership for the period ending December 31, 1978, and alleged his failure to make that contribution.Finally, they referred to his duty under the 1973 agreement to contribute a monthly sum of $3,307.50 toward the partnership's debt service obligation and claimed a default in that as well, thereby causing the partnership to become in default of its obligation.By these "willful and wrongful" failures, they claimed, appellant had "breached his fiduciary duties as a general partner."

Upon these allegations, they asked the court to (1) order a winding-up of the partnership affairs, (2) appoint them, as remaining partners, to conduct the winding-up, (3) require appellant to contribute his proportional share "for other partnership expenses which have been incurred, and will be incurred during the period required for winding up the partnership affairs,"(4) enjoin appellant from interfering with the partnership property or with the winding-up of partnership affairs, (5) award appellees"ancillary damages for any losses they may have suffered as a result of (appellant's) wrongful acts and breach of fiduciary duties," and (6) grant other relief as the case may warrant.

Following the counterclaim, cross motions for partial summary judgment were filed.Appellees' motion, as viewed by the court, asked for an order requiring appellant to contribute his proportionate share of debt service requirements, a judgment of $26,460 for the eight-month existing deficiency in those debt service contributions (June, 1979, through January, 1980), and an order requiring appellant to contribute his proportionate share of other partnership expenses.After hearing argument of counsel, the court granted part of the partial relief sought by appellees.On January 29, 1980, it entered an order designating appellees to wind up the affairs of the partnership and recording a judgment against appellant for $26,460.

Although finding that appellant had a continuing obligation to contribute his share of the debt service requirements, it issued no order requiring such payments in the future, as requested by appellees.Nor did the court consider the question of appellant's obligation to contribute toward the other (non-debt service) expenses of the partnership, finding the matter to be in dispute.Nothing was said about ancillary damages, and no accounting was ordered.No injunctions of any kind were issued.

Appellant has appealed from this partial summary judgment, arguing that the court erred in entering a monetary judgment in advance of an accounting and in excluding him from participation in the winding-up process.

Interesting as these questions might be, they are not properly before us.

Maryland Rule 605 a provides:

"Where more than one claim...