Message
×
loading..

Horowitz v. Greenberg ( 2024 )


Menu:
  • IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND * ROBERT HOROWITZ, . Plaintiff, . * . . v. * Civil No. 22-00139-BAH CROSSROADS ADVISORS, LLC ET AL., * Defendants. * □ * - * * . * * * * _ o* * * * * * MEMORANDUM OPINION - □□ Plaintiff Robert Horowitz (“Plaintift” or “Horowitz’) brings breach of contract and unjust enrichment claims against Alexander Greenberg; Crossroads Advisors, LLC; Crossroads Investments, LP; Crossroads Partners, LP; Crossroads Investments, LLC; and Crossroads Assets, LLC (collectively “Defendants”). ECF 1; ECF 37 (amended complaint). Pending before the Court are Plaintiffs Motion for Partial Summary Judgment to Establish Liability Under Count I (“Plaintiff's Motion”), ECF 161, and Defendants’ Motion for Summary Judgment, ECF 164 (“Defendants’ Motion”). Both parties filed oppositions, ECFs 164, 169, and replies, ECFs 169, 170. All filings include memoranda of law and exhibits.!. The Court has reviewed all relevant filings and finds that no hearing is necessary. See Loc. R. 105.6 (D. Md. 2023). Accordingly, for the reasons stated below, Plaintiff's Motion is DENIED, and Defendants’ Motion is GRANTED in part and DENIED in part. _ | The Court references all filings by their respective ECF numbers and page numbers by the ECF-generated page numbers at the top of the page. BACKGROUND This case concerns an alleged oral contract between two longtime business contacts and a subsequent business relationship that soured. A. Factual Background Greenberg is the Founder of Crossroads Partners, LP (the ‘“Fund”), a hedge fund established in 2003. ECF 175-13, at 2 § 2. The Fund has four affiliated corporate entities: Crossroads Advisors, LLC; Crossroads Investments, LP; Crossroads Investments, LLC; and Crossroads Assets, LLC.? Jd. at 3-4 § 12. ‘Greenberg owns and controls each of the entities that □ manages the Fund. /d@ at 14 7 12(f). Furthermore, Greenberg “has adhered to a lean operating . model, with only a few employees at any given time, and from 2009 through 2011 [Greenberg] worked alone.” /d. at 8 | 23, “Since 2005, the Crossroads Entities have three potential revenue streams”: (1) The Fund pays Crossroads Investments, LP an annual management fee, id. at 4 J 15{a); (2) Crossroads | Advisors, LLC earns a 20% incentive fee if “Unaffiliated Assets appreciate in value ... by the end of the year,” id. at 5 J 15(b); and Wexford Spectrum (“Wex”), a third-party investment fund that invests capital to be managed by Crossroads Investments, LP also offers an incentive fee to Crossroads Investments, LP equal to 10% of the growth, id. { 15{c). 1. Greenberg’s and -Horowitz’s Business Relationship Develops. Greenberg and Horowitz became acquainted around 1993 or 1994, when Greenberg was introduced to Horowitz’s father and, soon after, Horowitz by a colleague. ECF 175-13, at8 925. 2 Crossroads Advisors, LLC “is the General Partner of the Fund.” ECF 175-13, at 4 § 12(b). Crossroads Investments, LP “is the management company to which Crossroads Advisors, LLC has delegated the authority to manage and direct the investments of the Fund.” Jd. J 12(c). Crossroads Investments, LLC “is the General Partner of Crossroads Investments, LP.” Jd § 12(d). Crossroads Assets, LLC “is the Limited Partner of Crossroads Investments, LP.” fd □□ 12(e). Horowitz’s father, Dick Horowitz, owned Insiders Edge (“IE”), a market intelligence publication and research service, id. at 8 J 27, that “provides alerts based on reviews of publicly disclosed SEC filings by insiders making trades.” Jd. at 8 | 25.. Greenberg restarted his subscription with IE in 2012, .which was run by Horowitz after Dick Horowitz’s retirement in 2008. /d. at □□□ 0 Thus, in 2012, Greenberg became a client of IE, agreeing to pay $25,000 for an annual subscription to IE.. See ECF 175-2, at 62 (providing a $12,500 invoice. for January 1—June 3, 2013, paid semiannually). In 2016, Greenberg offered to increase his fee to $35,000. ECF 175- 2, at 91 (“P.S. I am putting through a $10,000 per year increase on my subscription at the next renewal. I hope I can put through more soon.”); see also ECF 175-2, at 93 (providing an invoice for July 1-December 31, 2017, reflecting the increased semiannual bill of $17,500). Horowitz testifies that Greenberg “hinted at some kind of future collaboration” with Horowitz and “promise[d]” that “when Crossroads got big enough” Greenberg would “make [Horowitz or IE] □ ‘exclusive’ or ‘at least semi exclusive.’” ECF 175-10, at 2 44 3-4. Greenberg denies making such a promise. ECF 175-13, at 9 29-30, - Towards the end of 2017, Greenberg sought to expand his business’ audience and “needed to spend less time on insider analysis and more time on building Crossroads’ client base.” ECF 175-13, at 931. Greenberg testifies he “decided to explore the possibility of engaging Insiders Edge to take some of that responsibility away from [him] so that [he] could concentrate on attracting new investors.” Jd. § 31. □ On November 30, 2017, Greenberg sent Horowitz an email stating in part: Can/should we further expand/integrate our business relationship? More active. consulting Partnership? Leave things as they are? 3 . Crossroads has a long, good track record. It’s now marketable (long track-record, clear focus, $65 million in AUM, small team). I have spoken with my four largest investors and believe they will all significantly increase their capital commitments now. ECF 175-2, at 94. Greenberg testifies that he “envisioned 2018 as an opportunity to test out an increased consulting relationship before making any longer-term commitments.” ECF 175-13, at 10 32. He testifies that he “would not consider offering Horowitz an ownership stake in [his] business” without “such a trial period.” Jd. Horowitz, however, testifies that Greenberg made a “specific offer of partnership,” ECF 175-10, at 9 § 22, which Horowitz accepted without negotiation, id. § . . 2. Greenberg and Horowitz Discuss Expanding or Integrating their Business Relationship. After Greenberg’s email about integrating their business relationship in November 2017, Horowitz and Greenberg spoke by phone on December 4, 2017, and in person on December'19, 2017. ECF 175-13, at 10 33-34. It was during these conversations that Horowitz testifies he was offered, and subsequently accepted, the opportunity to become Greenberg’s “first ~ investment management partner.” ECF 175-10, at 3 | 5; see also id. at 9 J] 22-23. Specifically, Horowitz alleges that on December 4, 2017, the two spoke by phone and Greenberg agreed to “pursue the partnership option.” ECF 161, at 5; see also ECF 175-13, at | 33 (agreeing the pair spoke by phone but denying that Greenberg agreed to “pursue the partnership option”). Greenberg and Horowitz met in person on December 19, 2017, to discuss their business relationship. ECF 175-13, at 10 § 34; ECF 175-10, at 3 5. The two met in Philadelphia and spent approximately four hours discussing a more integrated business relationship. ECF 175-13, at 10 7 34; ECF 175-10, at 3 75; id at 9-10 23. Horowitz provides many details from the conversation regarding Crossroads’ revenue structure, ECF 175-10, at 3 □ . ke 6, team structure, id. at 3-4] 7, investment approach, id. J§ 8-9; and short- and long-term strategies and goals, id. at 5 □□ 10-11. □ Horowitz states that Greenberg made a “specific offer of partnership,” /d. at 9922. This included a proposal that (1) the Fund’s management fees would cover operating expenses, and surpluses would go to future operating expenses; (2) half of the Wex incentive compensation would be a cushion for the operating budget; and (3) any remaining profits (half of the Wex incentive compensation and the incentive compensation from the Fund) “would be split between the partners,” with an initial agreement that 80% would go to Greenberg and 20% would go to Horowitz. Jd. 4 22. In other words, in total, Horowitz’s share would be 20% of the incentive compensation from the Fund, and 10% of the Wex incentive compensation. Horowitz testifies that Greenberg “said that [Horowitz’s] share would only £0 up, including in 2019, and that there would be a path to full 50% partnership for [Horowitz] upon [Greenberg’s] retirement, or sooner.” Jd. | 23. Horowitz states that his partnership would provide Crossroads “customized advice on the advisability of specific potential investments, as well as timing and size of positions along with specific recommendations for Crossroads’ asset allocation.” Id. at 69 13 (testifying that IE “does not give investment advice”). In stark contrast to Horowitz’s description of the in-person meeting, Greenberg testifies that “[p]artnership was not discussed at this meeting.” ECF 175-13, at 10 | 34. Greenberg states the goal of the meeting was “to discuss the potential of additional consulting services on insider trading activity” but that no agreement was reached, other than to continue discussing IE “providing additional services for additional compensation.” Id 4] 34 (noting neither party took notes and neither party shared a written summary afterwards). Greenberg testifies that: At no point did I offer Mr. Horowitz, orally or in writing, a partnership stake (either directly or indirectly) in the Crossroads entities, or any type of partnership with me. Contrary to Horowitz Aff. { 5, I did not offer to make him my “first investment management partner” on December 19, 2017—or at any other time. Id. 4 35 (emphasis in original); see also id. at 11 § 39 (“J never made an ‘offer of partnership’ at the December 19, 2017 meeting|—or at any other time.”). Greenberg denies agreeing to pay Horowitz 20% ofthe Wex incentive fee” and denies agreeing “that Horowitz would have any interest, directly or indirectly, in the annual Management Fee paid by the Fund to Crossroads Investments, LP Id. 40. Greenberg testifies that “discussions were ongoing as to what the new arrangement would be” in early 2018. /d 4 41. On January 5, 2018, Greenberg emailed Horowitz: “I envision us being real economic partners. Together we will craft an arrangement the covers both the joyous upside and the possibility of downside. We need think through the steps now. Starting to think deeply here.” Jd. J 41 (citing ECF 175-2, at 178). Greenberg states that when he used the term “real economic partners,” he was “referring to the incentive compensation structure designed to motivate additional insider analysis.” See id (“J was not referring to an offer to hand him a portion of my business for free in the near term, and my entire business in the long term for no compensation, as he has alleged.”). By the beginning of February 2018, Greenberg “had agreed to increase [[E’s] base fee to $70,000 for the year in exchange for [IE, or Horowitz] providing more analysis of insider behavior.” ECF 175-13, at 11-12 42. On February 2, 2018, Greenberg emailed Horowitz stating in part, “please invoice [Crossroads] $35,000 for the first six-months of 2018. After I get back fTrom] Florida—will begin work on a term sheet defining this year and beyond.” Jd. at 12 □ 43 (citing ECF 175-3, at 68). IE issued two invoices in 2018 to Crossroads Investments, one for January 1—June 30, 2018, in the amount of $35,000, ECF 175-38, at 2, and a second for July 1- December 31, 2018, in the amount of $35,000, ECF 175-2, at 185. - In addition to the base fee of $70,000 for 2018, Greenberg agreed to an incentive fee, memorialized-in a December 5, 2018, letter. ECF 175-27, at3. Itsaid: This confirms that Crossroads Advisors, LLC (“Advisors”) has agreed to pay you 20% of the Incentive Fee received by it for 2018 from Crossroads Partners, LP and 10% of the Incentive Fee for 2018 received by Advisors from the account it manages for [Wex]. We will pay you the foregoing amounts within five business days after receipt by Advisors, which we expect to occur during the first half of 2019. Advisors has previously paid you $70,000 which will not be credited against amounts due hereunder.... Please signify your acceptance to the foregoing and acknowledge that this letter represents our only agreement with respect to the subject matter hereof. ECF 175-13, at 13-14 § 46 (citing ECF 175-27, at 3). Greenberg emailed this to Horowitz with the Subject: “Letter Agreement—finally attached...” and wrote: “Here’s the agreement for this year. Let me know if anything seems incorrect? Been a hard year, but also been very rewarding working more closely together. Looking forward to finishing this year and starting again in 2019.” ECF 175-27, at 2. Horowitz executed the agreement and replied: . Thank you Alex! Of course everything is good and I’ve signed and attached. I was surprised to see this ... while I admit it felt good to open it, as I have indicated previously this is a level of formality that I don’t feel is necessary—a testament to the quality of the relationship and your character. It’s a pleasure working with you, and I feel very fortunate and truly value our friendship. id. This was the only written agreement between the parties. Due to the oral nature of the remaining agreements (i.e., the purported partnership agreement reached on December 19, 2017,’ and an agreement about 2019’s annual base fee, discussed infra), the conduct between the parties throughout 2018 and into 2019 is relevant to the parties’ legal arguments about partnership and contract formation. 3. The Parties Dispute Whether Their Conduct in 2018 Constitutes Indicia of Joint Management and Decision Making. Greenberg testifies that “Horowitz had no authority or control over any decision.” ECF 175-13, at 15. Greenberg testifies that Horowitz never paid any money or made capital contributions to any Crossroads Entities, id. 7 56; Horowitz did not offer to invest in the Fund and become a Limited Partner therein, id. 9 57; Horowitz did not know the names of the Fund’s Limited Partners, id. at 16 { 58, Horowitz never met Greenberg’s legal or accounting team, id. § 60; Greenberg was the “sole portfolio manager” and had “full control over trading decisions, id. | 62; and Greenberg denies that he sought Horowitz’s feedback on personnel matters, id. at 17 66. Horowitz, ‘by contrast, testifies that on at least one occasion, on February 23, 2018, he provided input on the hiring of Mike Trapanese and “agreed to hire Mike” on a “trial basis.” ECF 175-10, at 11-12 § 29. Additionally, Horowitz describes other indicia of his purported co- ownership. For instance, during 2018, Horowitz received a Crossroads email address, ECF 175- 3, at 277 (created on or around July 26, 2018), Horowitz was featured on slide decks presented to _ investors, as a “investor analyst,” ECF 175-5, at 77, 296:7-297:15; ECF 175-3, at 206 (highlighting Horowitz as one of five members on the “Crossroads Team”); id. at 257 (asking □ Horowitz “do you want to be, and/or can you be, mentioned in our materials or next quarterly letter? To what'extent?”); Horowitz was involved in identifying and procuring a new office space, see ECF 175-3, at 228-36 (forwarding Horowitz photographs of a prospective □□□□□□□ space); id. at 237 (asking Horowitz,to “see a potential new office space”); and Horowitz. notes that on one occasion he met with experienced investors in Atlanta, and Crossroads paid for his travel and accommodations for this meeting. ECE 175-5, at 62-63, 237:18-238:3; ECF 175-3, at 268-270. Finally, Horowitz received incentive payments for 2018 in 2019, which identified the allocation as “your share of the 2018 profits.” / ECF 175-3, at 285. These detailed the total “Crossroads share” multiplied by 20% and the total “Wex share” multiplied by (10%) and the total of those two sums combined. Jd. 4. In-2018, There is an Agreement to Keep JE’s Compensation at $70,000 Prior to the breakdown in the business relationship between the parties and “[s]ometime near the end-of 201 8, [Greenberg] offered to keep [IE]’s compensation for 2019 at the same level described in the 2018 Letter Agreement [and] Horowitz agreed.” ECF 175-13, at 17 69. According to Horowitz this conversation occurred in October 2018. See ECF 175-34, at 2 (including email communication sent by Horowitz to Greenberg in March 2019 stating □□□□□ October, you said “we'll keep things the same” in 2019 [and] I agreed”). Thereafter, on January 8, 2019, Horowitz emailed, “Por our conversation, attached is the latest invoice. This also confirms our acceptance of your offer to maintain the 2018 compensation formula for 2019.” ECE 175-37, at 2. The Invoice attached was for January 1—June 30, 2019, in the amount of $35,000 and was “payable upon receipt of this invoice.” Id. at 3. It appears from the record that Greenberg did not immediately pay the invoice, as he wished to renegotiate the 2019 fee structure. See infra Section I.A.5. . 5. In 2019, Greenberg Indicates a Desire to Go Back to Their Prior Less Integrated Business Relationship. By January 2019, the working relationship between Horowitz and Greenberg began to breakdown. See ECF 175-13, at 17 (referring to Horowitz as “a distraction”). Greenberg testifies that “Ta]t the end of 2018 and into the beginning of 2019, Horowitz became increasingly forceful and quarrelsome regarding [Greenberg’s], investment decisions” and Greenberg felt □ Horowitz’s investment advice was “increasingly colored by his personal desire to maximize incentive fees, and his lack of exposure to potential losses.” Jd. at 17-18 { 70. Greenberg emailed Horowitz on January 22, 2019, about scheduling an in-person meeting in Philadelphia. ECF 175-39, at 2. Due to scheduling difficulties Horowitz responded in part, writing “[i]t’s looking now as though we'll be well into the year before we can get - together. Would a written proposal on the business arrangement be feasible instead?” Id. Greenberg replied, “[t]he formal framework/document is very important but in my mind follows from a softer understanding and high level agreement on direction. Let’s speak when I get back in the office Thursday. I can rally for in person as well. But let’s have a good call first.” Jd. The pair spoke by phone on February 6, 2019. ECF 175-13, at 18 | 74; ECF 175-10, at 12 31. Horowitz testifies that Greenberg “clearly stated his intention to terminate the partnership.” ECF 175-10, at 12 q 31. Greenberg denies referring to their agreement as a partnership and therefore, denies terminating such a relationship. ECF 175-13, at 28 | 74. The parties “agreed to keep dialogue open and try to negotiate, but [Horowitz] told [Greenberg] [that he] was ending all services unless or until this could be resolved.” Jd. On February 14, 2019, Greenberg emailed Horowitz to tell him the 2018 incentive ‘payment was in the mail. See ECF 175-42, at 2 (“Hi Bob, Everything OK? Are you on vacation—not sure? ... Let me know when you’re around to continue to iron out an. understanding for both 2019 and beyond that covers both financial and operating issues. I am in Texas (Austin/San Antonio) 2/16-2/20 but am easy reachable.”). Then, on February 28, 2019, Greenberg proposed altering the compensation structure and . wrote: | | 10 After sorting through all of the cross-currents, I think it is: most mutually beneficial if we can continue to productively work together this year (and beyond) —as we have for most of the past 15+ years. I believe a defined financial arrangement—that we can adjust periodically—will make us both most satisfied and most productive. For 2019, I propose the following: Base Fee: $50,000 cash (paid semiannually) □□□ . Incentive Fee: an additional $50,000 if the year-end fund performance is 15% or greater; and a further $100,000 if the year-end fund. performance is 20% or greater. If this is agreeable to you, I will ask our lawyer to draft a contract for your review. This proposal is subject to the execution of a mutually agreeable written contract. Let me know your thoughts. ECF 175-34, at 4. . Horowitz replied on March 3, 2019, writing “I see no justification for one-way =~ modification to our agreement.. Jd. at 2. He wrote “By objective measures, 2018 was Crossroads’ most successful performance in its 15-year existence” and Horowitz wrote that he “frankly d[id] not understand this focus on reducing our piece of the pie.” Jd at 2-3. Nevertheless, Horowitz wrote “I am open to negotiating reciprocal priorities.” See id. at 3 (“[W]e remain prepared to resume performance, once the same can be confirmed for Crossroads.”). Horowitz wrote that “[hJopefully, we can get our satisfying, productive partnership back on track as soon as possible.” Jd. Greenberg responded on March 13, 2019: Currently all of the financial and operational risk and most of the reputational risk resides with me. As I’ve expressed to you, I want to revert to our prior business relationship. Last year was an experiment. I propose the consulting arrangement we had pre-2018—but have offered to pay quite a bit more than I was paying in the past. Let me know what you think. Id, at 2. Horowitz responded one day later, writing: We have taken substantial risks, When a money manager utilizes outside research _as its core input, the researcher must receive a fair piece of the pie. Last year. 11 wasn’t an experiment. It was a next step in fulfilling the promise made six years ago to align our compensation accordingly. In October, you said “we'll keep . things the same” in 2019. I agreed, and then we performed to the considerable _ benefit of Crossroads this year. Our agreement is fair, particularly in light of the progress laid-out below. We have also offered reasonable options to address other respective priorities. Let me know. Regards, Bob Finally, Greenberg responded on March 18, 2019: Based on our email exchanges over the past month or so, it has becomie clear that you and J are not on the same page about either the past or future. While we have each benefitted from our business arrangement over the past 15 years or so, it is now time for us to discontinue any such relationship. You have not sent us any reports this year and I want to formally advise we no longer want to receive them. I consider you to be fully paid for all prior reports or services and wish you well in your future endeavors. Id. B. Procedural History Horowitz filed the present suit on January 18, 2022. ECF 1. Horowitz’s initial complaint brought two counts: (1) breach of contract; and (2) unjust enrichment. Jd. at 8-10. Thereafter, on June 13, 2022, Plaintiff filed an amended complaint and added two additional counts: (3) accounting and (4) breach of fiduciary duty. ECF 37, at 12-14. Defendants filed a motion to dismiss, and the Court dismissed Counts III and IV. See ECF 49, at 11-12. Additionally, the □ Court narrowed Count I by concluding that Count I may proceed only against Greenberg, and only under the theory that Horowitz and Greenberg entered into an unincorporated oral partnership agreement. See id. at 9-11. Additionally, Count II may proceed only as to compensation for 2019—not for payments allegedly owed in 2018 because a written contract covered the latter payments. See id at 13. The parties filed cross motions for summary judgment, with Horowitz moving for summary judgment on Count I, ECF 161, and Defendants moving for summary judgment on both counts, ECF 164. The motions are fully briefed and ripe for disposition. | | 12 Il. . LEGAL STANDARD. . Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant □□ entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The relevant inquiry is “whether the evidence presents a sufficient disagreement to require submission to a [trier of fact] or - whether it is so one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S, 242, 251-52 (1986). © “A dispute is genuine if ‘a reasonable jury could return.a verdict for the nonmoving party.’” Libertarian Party of Va vy. Judd, 718 F.3d 308, 313 (4th Cir. 2013) (quoting Dulaney v. Packaging Corp. of Am., 673 F.3d 323, 330 (4th Cir. 2012)). “A fact is material if it ‘might _ affect the outcome of the suit under the governing law.’” Jd (quoting Anderson, 477 US. at 248), Accordingly, “the mere existence of some alleged factual dispute between the parties will □ not defeat an otherwise properly supported motion for summary judgment... Anderson, 477 U.S. at 247-48 (emphasis in original). □ The Court must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party’s favor, Tolan v. Cotton, 572 U.S. 650, 657 (2014) (per curiam); Scott v. Harris, 550 U.S. 372, 378 (2007), and the Court cannot weigh evidence, Robinson v. Priority Auto. Huntersville, inc., 70 F.4th 776, 780 (4th Cir. 2023) (citing Variety Stores, Inc. v. Wal-Mart Stores, Inc., 888 F.3d 651, 659-60 (4th Cir. 2018)). For this reason, summary judgment ordinarily is inappropriate when there is conflicting evidence because it is the function of the factfinder to resolve factual disputes, including matters of witness credibility. See Black & Decker Corp. v. United States, 436 F.3d 431, 442 (4th Cir. 2006); Dennis □□□ Columbia Colleton Med. Ctr, Inc., 290 F.3d 639, 644-45 (4th Cir. 2002), At the same time, the Court must “prevent factually unsupported claims and defenses from proceeding to trial.” 13 Bouchat v. Balt. Ravens Footbail Club, Inc., 346 F.3d 514, 526 (4th Cir. 2003) (quoting Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 2003). Finally, “[w]hen considering cross-motions for- summary judgment, the court □□□□ consider ‘each motion ... individually’ and view ‘the facts relevant to each... in the light most favorable to the nonmovant.’” Hunt v. Kadlick, 972 F. Supp. 2d 772, 775 (D. Md. 2013) (quoting Mellen v. Bunting, 327 F.3d 355, 363 (4th Cir. 2003)). I. ANALYSIS A. Maryland Law Applies to Determine the Existence of a Partnership. “A federal court exercising diversity jurisdiction ... applies the choice-of-law rules of the state in which it sits.” M.D. Russell Constr. Inc. v. Consol. Staffing, Inc., No. 22-1420, 2023 WL 8798086, at *4 (4th Cir, Dec. 20, 2023) (citing Volvo Constr. Equip. N. Am., Inc. vy. CLM Equip. Co., 386 F.3d 581, 599-600 (4th Cir. 2004)). Maryland’s choice-of-law rules determine which state’s substantive law governs the contractual dispute. For contract claims, “Maryland applies the law of the state where the contract was made (“lex loci contractus”), unless the patties to the contract agreed to be bound by the law of another state.” Cotton Patch Cafe, Inc. v. Micros Sys., Inc., Civ. No. MJG-09-3242, 2012 WL 13005673, at #3 (D. Md. Apr. 11, 2012) (citing Am. Motorists Ins. Co. v. ARTRA Group, Inc., 659 A.2d 1295, 1301 (Md. 1995)); see also Macsherry v. Sparrows Point, LLC, Civ. No. ELH-15-22, 2017 WL 3315262, at *11 (D. Mad. Aug. 3, 2017) (noting “Maryland applies the doctrine of lex loci contractus to claims for unjust enrichment” (citing Konover Prop. Trust, Inc. v. WHE Assocs., Inc., 790 A.2d 720, 728-29 (Md. App. 2002))). At the motion to dismiss stage, the Court by prior order determined Maryland law applied because Plaintiff's complaint alleged that “[flinal formation of the agreement at issue and the vast majority of the services provided ... which establish the causes of action ... were 14 completed and performed by’ [Horowitz] while in... Maryland and Montgomery County.” ECF 49, at 6-7 (citing ECF 37, □□ While the Court recognizes that parties “may not be able to make appropriate and persuasive choice-of-law arguménts without the benefit of discovery” and sometimes such “fact- - intensive” arguments warrant deferral to the end of discovery, MD. Russell Constr., Inc., 2023 WL 8798086, at *3, Horowitz has not alleged that there were new facts shedding light on the choice of law determination that would justify the Court reconsidering its prior determination Maryland law applies, see ECF 161, at 26. Rather, Horowitz argues that under Maryland law, New York law applies. ECF 161, at 26 (citing Md. Code Ann., Corps. & Ass’ns § 9A- 106(a)). Horowitz cites the Maryland Revised Uniform Partnership Act (“RUPA”), which states “the law of the jurisdiction in which a partnership has its chief executive office governs relations among the partners and between the partners and the partnership.” Md. Code Ann., Corps. & _ Ass’ns § 9A-106(a) (emphasis added). However, application of this section comes only after — and only if — the Court concludes the parties created a partnership. See id Horowitz does not identify any support for § 9A-106(a) governing partnership formation. Therefore, in assessing the question of partnership formation, like any. oral contract, the Court will apply ‘Maryland law for the reasons articulated by its prior memorandum. ECF 49, at 6-7. B. Maryland Law on the Existence of a Partnership - A partnership is a form of business association, “defined as ‘the unincorporated - association of two or more persons to carry on as co-owners a business for profit ....°” MAS Assocs., LLC v. Korotki, 214 A.3d 1076, 1087 (Md. 2019) (quoting Md. Code Ann., Corps. □ □□ Ass’ns § 9A-202(a)). RUPA governs such business associations. /d. There are no formal requirements for the establishment of a partnership, and they are formed whenever two or more 15 individuals expressly “intend to form a partnership ... whether or not the association is called ‘partnership,’ ‘joint venture,’ or any other name.” Jd..§ 9A-202(a). _ “In the absence of formal agreement, ‘the existence of a partnership depends on the intent of the purported partners.’” MAS Assoes., LLC, 214 A.3d at 1087 (quoting Christine Hurt, D. Gordon Smith, Alan R. Bromberg & Larry E. Ribstein, Bromberg & Ribstein on Partnership § 2.04[A], at 2-29 (2d ed. 2019)). Intent to form a partnership can either be proved by “express agreement or inferred from . .. acts and conduct.” Id. (quoting Morgart v. Smouse, 63 A. 1070, 1071 (Md. 1906)), Accordingly, “[t]he existence of a partnership based on the intent of the parties is an issue of fact[.]” fd. at 1086. “The existence of a partnership will not be presumed, but must be proved, with the burden of proving such existence resting upon the party having the affirmative of that issue.” fd. (quoting Miller v. Salabes, 169 A.2d 671 (Md. 1961) (internal , citations omitted)). In this case, that ultimate burden rests on Horowitz. In Maryland “any person receiving ‘a share of the profits of a business is presumed to be a partner,’ unless such share is received in the payment of debt, wages or services rendered, rent, annuity or benefit, interest on a loan, or sale of a business or property.” /d. at 1087 (quoting Corps. & Ass’ns § 9A-202(d)(1)(3)); see also Miller, 169 A.2d at 672 (‘The receipt by a person of a share of the profits of a partnership business ... is prima facie evidence that he is a partner in the business.”) see also id. (“The probative force of the sharing of profits is not conclusive on the question of the existence of a partnership, but may be rebutted by a showing of fact to the contrary.”). Another “factor courts commonly look at to evaluate partnership intent is the management and control of the entity.” MAS Assoes., LLC, 214 A3d at 1090 (citing Hurt, Bromberg & Ribstein on Partnership § 2.06[C], at 2-81)). Ultimately, “[t]he evidence demonstrating a partnership must ‘rise above surmise or speculation and reach the level of □□ 16 : reasonable probability.”” id. at 1087 (quoting Geo. Bert. Crapper, Inc. v. Wisterco Invs., Inc., 399 A.2d 585, 596 (Md. 1979)). C. Plaintiff’s Motion for Partial Summary Judgment □ Horowitz moves for summary judgment on Count I. ECF 161. To carry his burden, Horowitz must demonstrate that there is no genuine dispute of material ‘fact such that a partnership was formed as a matter of law. Fed. R. Civ. P. 56(a); Libertarian Party of Va., 718 F.3d at 313 (“A dispute is genuine if ‘a reasonable jury could return a verdict for the nonmoving party.’”). Horowitz has not met this burden. As an initial matter, Horowitz only cites to New York law in his Motion, see ECF 161, which the Court finds inapplicable to the question of partnership formation. See supra Section TILA. Nevertheless, the Court recognizes that Horowitz is pro se, and that the Court is obligated to construe Horowitz’s papers liberally. See Sadu v. Leland Mem’l Hosp., 933 F. Supp. 490, 493 - (D. Md. 1996) (“Generally speaking, pro sé litigants are held to a less stringent standard than trained attorneys; the Court must afford a pro se complaint generous construction.” (emphasis omitted) (citing Haines v. Kerner, 404 U.S. 519, 520 (1972))), aff'd, 103 F.3d 120 (4th Cir, 1996);-see also Beaudett v. City of Hampton, 775 F.2d 1274, 1276 (4th Cir. 1985) (“Though [pro se] litigants cannot, of course, be expected to frame legal issues with the clarity and precision ‘ideally evident in the work. of those trained in law, neither can district courts be required to conjure up and decide issues never fairly presented to them.”). Accordingly, the Court will construe Horowitz’s arguments as asserting a claim under Maryland law to the extent practicable. Construing Horowitz’s arguments as such, Horowitz essentially argues that he has provided sufficient evidence to demonstrate the existence ofa partnership, and that he is entitled to judgment on Count I as a matter of law. See ECF 161, at 33 (“Facts which cannot be legitimately disputed show that from the beginning of 2018 Greenberg and I had orally agreed to 17 share profits for carrying on the specific undertaking of managing two investment funds □□□ growing that business”), Greenberg argues that material disputes of fact bar summary judgment in Plaintiff ’s favor on Count I. ECF 164-1, at 28-34. Additionally, Greenberg argues the Court □ should deny Plaintift’s Motion based on the affirmative defense of fraudulent concealment. ECF 164-1, at 34. Because the Court finds that genuine disputes of material fact preclude summary judgment in Horowitz’s favor, the Court need not address Greenberg’s alternative argument in the context of Plaintiff's Motion. As noted above, see supra Section IIIB, in the absence of a written partnership agreement, a partnership is formed if two or more individuals agree to carry on a business as co- owners. MAS Assocs., LLC v. Korotki, 214 A.3d 1076, 1087 (Md. 2019) (quoting Md. Code Ann., Corps. & Ass’ns § 9A-202(a)). The parties dispute whether Greenberg offered to make Horowitz an

Document Info

Docket Number: 8:22-cv-00139

Filed Date: 9/26/2024

Precedential Status: Precedential

Modified Date: 11/1/2024