Dorr, Keller, Bentley & Pecha v. Dorr, Bentley & Pecha

• Citation: 841 P.2d 811
• Decision Date: 14 August 1992
• Docket Number: No. 91-32,91-32
• Parties: DORR, KELLER, BENTLEY & PECHA; Smith, Keller & Associates; and G. Kevin Keller, Appellants, (Plaintiffs/Defendants), v. DORR, BENTLEY & PECHA; Mark Dorr; and Thomas J. Hogan, Appellees (Defendants).
• Court: United States State Supreme Court of Wyoming

Page 811

841 P.2d 811

DORR, KELLER, BENTLEY & PECHA; Smith, Keller & Associates; and G. Kevin Keller, Appellants, (Plaintiffs/Defendants), v. DORR, BENTLEY & PECHA; Mark Dorr; and Thomas J. Hogan, Appellees (Defendants).

No. 91-32.

Supreme Court of Wyoming.

Aug. 14, 1992.

Rehearing Denied Sept. 22, 1992.

Don W. Riske, of Riske & Arnold, Cheyenne, for appellants.

Greg L. Goddard of Goddard, Perry & Vogel, Buffalo, and Cherie Shelton Norman of Skiles, Hageman & Butler, Laramie, for appellees.

Before THOMAS, CARDINE and GOLDEN, JJ., and ROONEY and BROWN, JJ. (Retired).

BROWN, Justice, Retired.

This case involves dissolution of an accounting partnership and the submission of disputes to binding arbitration.

Appellants suggest seven issue for our review:

1. Whether the December 14, 1990 dismissal order is void.

2. Whether the district court had jurisdiction to determine that the partnership was terminated when the partners had previously stipulated that all matters arising out of the partnership agreement be submitted to arbitration.

3. Whether the action below could continue after the district court realigned the parties so that both partners of the partnership were defendants.

4. Whether the district court committed reversible error by terminating a partnership that was still a party in litigation, had unpaid creditors, unsettled capital accounts and had uncompleted, unfiled federal tax returns.

5. Whether the district court committed reversible error by finding that the issuance of the arbitration award resulted in the appellant SK & A becoming a creditor of the other partner and not a creditor of the partnership.

6. Whether the district court committed reversible error in prohibiting appellant SK & A from bringing an action in the name of the partnership as the liquidating partner.

7. Whether the district court committed reversible error in finding that the subject partnership was dissolved and terminated on August 24, 1989, the date on which the findings, conclusions and award were entered by the arbitration panel.

Appellees state that the only issue is whether:

The trial court correctly determined that the partnership of Dorr, Keller, Bentley & Pecha (DKBP) terminated upon the entry of the arbitration panel's "Findings, Conclusion and Award" on August 24, 1989.

We will remand with instructions.

On January 1, 1988, Dorr and Associates (D & A), a CPA firm operating in Gillette, Wyoming and consisting of individual partners Mark A. Dorr, Barbara E. Dorr, Steven K. Bentley and Stephen H. Pecha, joined with Smith, Keller & Associates (SK & A), a CPA firm operating in Cheyenne, Wyoming and consisting of general partners G. Kevin Keller and Robert Smith, to form the accounting firm of Dorr, Keller, Bentley & Pecha (DKBP). The partners in the DKBP partnership were D & A and SK & A. During the course of the partnership, disputes arose and, on April 3, 1989, SK & A gave notice of its intention to dissolve the partnership as of May 4, 1989. The notice effectively ended the participation of SK & A in the business operation of DKBP.

Subsequently, appellant SK & A brought suit in Laramie County District Court seeking, among other things, recovery of the accounting practice and damages. The Honorable Gary Hartman, sitting in Laramie County District Court, dismissed this lawsuit and ruled that the arbitration provisions of the partnership agreement applied and that the parties must submit their differences to arbitration.

On August 7 and 8, 1989, an arbitration panel was convened and heard testimony and evidence regarding disputed matters. On August 24, 1989, in a two-to-one decision, the arbitration panel announced its "Findings of Fact, Conclusions of Law and Award." ¹ On August 29, 1989, SK & A filed an action to confirm the arbitration award, in Civil Docket No. 121-106 in the First Judicial District Court, Laramie County, Wyoming. On January 29, 1990, the court issued an opinion letter stating it would confirm the arbitration award and directed counsel to prepare the appropriate judgment.

On February 1, 1990, D & A filed a Chapter 11 bankruptcy. On March 27, 1990, D & A converted from a Chapter 11 bankruptcy to a Chapter 7 bankruptcy and on March 29, 1990, an independent trustee, Thomas Hogan, was appointed by the court to be the legal representative of the estate.

On March 23, 1990, Barbara Elizabeth Dorr and Stephen Harold Pecha, two of the three general partners of D & A, filed In an ostensible effort to determine the legal status of the partnership following the arbitration award, D & A filed a declaratory judgment action on April 30, 1990, in the Sixth Judicial District Court, No. 17330. On May 11, 1991, SK & A filed an action in Laramie County District Court, Civil Docket 123 No. 445, seeking, among other things, damages and an accounting. Those two actions were then consolidated before the Honorable Terrence O'Brien in the Sixth Judicial District. Neither party obtained relief from the automatic stay before filing their actions in the Sixth Judicial District Court and the First Judicial District Court. Mr. Hogan, the Chapter 7 trustee for D & A, did not authorize the filing of Case No. 17330 in Campbell County. Furthermore, he did not authorize appellees' attorney to represent the trustee, the estate, or any interest in the estate. The automatic stay was not lifted until June 25, 1990.

voluntary petitions for relief under Chapter 7 of the Bankruptcy Code.

Judge O'Brien ruled that the parties had agreed to arbitration to settle all of their differences in the dissolution of the partnership of DKBP; that the arbitration panel considered testimony and evidence, conducted an accounting and entered an award; that the arbitration award settled all disputes between the parties; and that those issues could not be re-litigated. If the court had stopped at this point, its ruling would have been correct if we disregard the fact that neither action should have been before the court in the first instance. However, it ruled further that the partnership of DKBP was dissolved and terminated on August 24, 1989, the date the Findings, Conclusions and Award was entered by the arbitration panel; and that SK & A was not the liquidating partner of DKBP. ²

On August 31, 1990, SK & A and Mr. Hogan, acting in his capacity as Chapter 7 trustee of the estate of D & A filed a "Joint Motion for Order Confirming Arbitration Award and Granting Judgment" in Doc. 121 No. 106 in the District Court, First Judicial District, Laramie County, Wyoming (apparently this matter had been in limbo since the petition to confirm was filed in August 1989). ³ This joint motion cited the June 26, 1990 order granting relief from stay and asked that the district court judge proceed to confirm the judgment. On December 5, 1990, the district court filed an order confirming arbitration in civil case No. 121-106.

On December 13, 1990, the attorney for appellees here filed a document styled "Motion to Set Aside Order Confirming Arbitration Order" in the Laramie County District Court suit. (Civil No. 121-106). Mr. Goddard, attorney for D & A, purported to file this document on behalf of several entities, including "Dorr & Associates, a partnership."

Apparently in a letter dated April 3, 1991, the court informed the parties that it would set aside the December 5, 1990 order confirming the arbitration award and transfer the case to be consolidated with the action still pending in Campbell County.

We have had considerable difficulty in this case reconciling the record with what is represented in the briefs. It appears that counsel cleaned out their files and put

random documents in the record, without regard to relevancy or sequence. Some materials are in the record three times; other materials referred to in the briefs are not in the record. Some documents are attached to other documents and are therefore not indexed. We permitted the original record to be supplemented by adding the United States Bankruptcy Court's order dated September 6, 1991. The recitations in this order filled in some of the holes in the original record.

I

A determination of the proper representative of D & A when in Chapter 7 bankruptcy will effectively dispose of this appeal. ⁴

The filing of the petition in the bankruptcy court on February 1, 1990, created an estate. That estate consisted of "all legal or equitable interests of the debtor [D & A] in property" wherever located and by whomever held. 11 U.S.C. § 541 (1988) (emphasis added). This includes any and all causes of action existing on the petition date. Delgado Oil, Inc. v. Torres, 785 F.2d 857 (10th Cir.1986).

Property of the estate includes all of the debtor's inchoate and unliquidated interests. United States v. Whiting Pools, Inc.,, 462 U.S. 198, 204-05 n. 8, 103 S.Ct. 2309, 76 L.Ed.2d 515 (1983) (Estate succeeds to no more or greater causes of action against third parties than those held by the debtor.) Property of the estate includes "[a]ny interest in property that the estate acquires after the commencement of the case. 11 U.S.C. § 541(a)(7). Property of the estate in a Chapter 7 case of a non-individual includes all property, income, receivables, causes of action, etc., generated or acquired during a preceding Chapter 11 case. Id.

As a partner in DKBP, D & A had an interest in managing that partnership. See, e.g., Wyo.Stat. § 17-13-501(iii) (1989). That management interest passed to the estate when D & A filed for bankruptcy. In re Cardinal Industries, Inc., 105 B.R. 834, supplemented 109 B.R. 743 (Bankr.S.D.Ohio 1989).

When a cause of action accrues before the bankruptcy petition, that claim is property of the estate, regardless of whether or not a lawsuit based upon that cause of action had been commenced. In re James, 120 B.R. 802 (E.D.Pa.1990); In re E.F. Hutton Southwest Properties, II, Ltd., 103 B.R. 808 (N.D.Tex.1989); In re Johns-Manville Corporation, 57 B.R. 680 (S.D.N.Y.1986).

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