Hammond v. Smith

• Decision Date: 30 June 2017
• Parties: Peter HAMMOND, Plaintiff–Appellant, v. Bruce W. SMITH, Defendant–Respondent.
• Court: New York Supreme Court — Appellate Division

151 A.D.3d 1896
57 N.Y.S.3d 832

Peter HAMMOND, Plaintiff–Appellant,
v.
Bruce W. SMITH, Defendant–Respondent.

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

June 30, 2017.

57 N.Y.S.3d 834

Harris Beach PLLC, Pittsford (Douglas A. Foss of Counsel), for Plaintiff–Appellant.

Barclay Damon, LLP, Rochester (Mark T. Whitford, Jr., of Counsel), for Defendant–Respondent.

PRESENT: WHALEN, P.J., CENTRA, LINDLEY, TROUTMAN, AND SCUDDER, JJ.

MEMORANDUM:

Plaintiff commenced this action seeking, inter alia, damages for breach of an alleged oral partnership between the parties to develop and market a new lithographic tool. Plaintiff appeals from an order that granted defendant's motion for summary judgment dismissing the complaint on the ground that no partnership existed between the parties. We affirm.

We conclude that defendant met his initial burden of establishing that no partnership existed (see Fasolo v. Scarafile, 120 A.D.3d 929, 930, 991 N.Y.S.2d 820, lv. dismissed 24 N.Y.3d 992, 997 N.Y.S.2d 103, 21 N.E.3d 554 ; see generally Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 ). "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 between the parties, a court looks to the parties' conduct, intent, and relationship to determine whether a partnership existed in fact (see Fasolo, 120 A.D.3d at 929–930, 991 N.Y.S.2d 820 ). 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 (see Griffith Energy, Inc. v. Evans, 85 A.D.3d 1564, 1565, 925 N.Y.S.2d 282 ; Kyle v. Ford, 184 A.D.2d 1036, 1036–1037, 584 N.Y.S.2d 698 ). No single factor is determinative; a court considers the parties' relationship as a whole (see Fasolo, 120 A.D.3d at 930, 991 N.Y.S.2d 820 ; Griffith Energy, Inc., 85 A.D.3d at 1565, 925 N.Y.S.2d 282 ).

With respect to the first factor, we must consider whether the parties expressly or implicitly intended to become partners (see generally Fasolo, 120 A.D.3d at 930, 991 N.Y.S.2d 820 ). Evidence concerning the parties' preliminary negotiations bears directly on their intent (see Boyarsky v. Froccaro, 131 A.D.2d 710, 713, 516 N.Y.S.2d 775 ). In support of his motion, defendant submitted, inter alia, the deposition testimony of plaintiff, the affidavit of defendant, invoices, a lease, and the parties' correspondence documenting their contract negotiations. That evidence establishes that the parties never shared the intent to become partners. In June 2004, defendant wrote an email to plaintiff suggesting that they discuss "how [they] might be able to work together." Plaintiff responded that a partnership "might

57 N.Y.S.3d 835

work" and expressed hope that the parties could come to a "workable agreement." Thereafter, the parties met in person and plaintiff explained that he wanted a 50% share in a partnership. Plaintiff later testified at his deposition that, upon hearing that proposal, defendant had "a look on his face like maybe he wasn't expecting that," and did not respond.

Although plaintiff testified that he interpreted defendant's silence as an agreement to an equal partnership, the documentary evidence undermines any such assumption. In late September 2004, prior to meeting with defendant's attorney, plaintiff wrote an email to defendant stating: "I think we need to nail down the key terms of our agreement ... Our attorney[s] and advisors should be able to help us come to a fair and equitable agreement." Defendant responded: "We should also keep open other ways to structure things. We initially discussed that your company might contract to build tools for my company. This could also be an option. Others may also exist." According to plaintiff's deposition testimony, the resulting meeting with defendant's attorney in October 2004 did not further the parties' business negotiations, and plaintiff left that meeting discouraged. Thereafter, plaintiff approached defendant and offered to take a reduced, 20% share in a partnership agreement, ostensibly to be a "good partner," further undermining any suggestion that the parties already had agreed to enter into an equal partnership. When plaintiff later testified about defendant's response to that proposal, plaintiff did not testify that defendant agreed to a partnership under the proposed terms; rather, he testified only that defendant appeared "happy" with plaintiff's change of heart. In May 2005, plaintiff wrote one last email to defendant asking to "finalize [their] business deal," but the parties ended their business relationship in or around August 2005 without having reduced it to writing. Thus, the evidence demonstrates that the parties never shared the intent to enter into a partnership, although they initially had explored the possibility of one.

We respectfully disagree with our dissenting colleague's view that plaintiff's deposition testimony raised triable issues of fact whether a partnership existed. Although plaintiff referred to the parties' business relationship as a partnership and testified that defendant acquiesced in plaintiff's initial proposal, it is well settled that "mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" to create a material issue of fact ( Zuckerman, 49 N.Y.2d at 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 ).

With respect to the second factor, we must consider whether there was joint control and management, e.g., shared supervision of business operations and shared responsibility for handling financial affairs (see Griffith Energy, Inc., 85 A.D.3d at 1566, 925 N.Y.S.2d 282 ; Kyle, 184 A.D.2d at 1037, 584 N.Y.S.2d 698 ). In his affidavit, defendant averred that he hired nine engineers, a technical writer, and a bookkeeper, contracted with a payroll company and an accounting firm, paid bills, established relationships with vendors, developed management protocols, and directed all assembly and engineering decisions, and plaintiff's deposition testimony raised no issues of fact in that regard. In contrast, plaintiff contributed the services of one engineer whom he employed and paid, and defendant reimbursed...