GRIFFITH ENERGY, INC. v. EVANS, JOANN ( 2011 )

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
651
CA 10-02182
PRESENT: SCUDDER, P.J., FAHEY, LINDLEY, GREEN, AND GORSKI, JJ.
GRIFFITH ENERGY, INC., PLAINTIFF-RESPONDENT,
V MEMORANDUM AND ORDER
JOANN EVANS, DEFENDANT-APPELLANT.
PHILLIPS LYTLE LLP, ROCHESTER (CHAD W. FLANSBURG OF COUNSEL), FOR
DEFENDANT-APPELLANT.
LECLAIR KORONA GIORDANO COLE LLP, ROCHESTER (STEVEN E. COLE OF
COUNSEL), FOR PLAINTIFF-RESPONDENT.
Appeal from an order and judgment (one paper) of the Supreme
Court, Monroe County (Harold L. Galloway, J.), entered February 11,
2010 in a breach of contract action. The order and judgment awarded
plaintiff money damages upon a nonjury verdict.
It is hereby ORDERED that the order and judgment so appealed from
is unanimously affirmed without costs.
Memorandum: Plaintiff entered into a retailer-dealer agreement
(agreement) and commercial lease (lease) with defendant’s husband,
Norman Evans, on July 1, 1997. Both contracts pertained to the
operation of a gasoline station and automobile repair shop (gas
station) in Geneseo. The agreement referred to defendant’s husband as
“Norm Evans d/b/a WINTON-HUMBOLDT SUNOCO) [sic] SOUTH” (hereafter,
Winton South). After defendant’s husband failed to adhere to his
obligations under those contracts, plaintiff commenced an action
against him with respect to each contract and obtained default
judgments totaling $101,043.20. Plaintiff was unable to collect on
its judgments against defendant’s husband, and it subsequently
commenced this action seeking to collect on those judgments from
defendant, alleging, inter alia, that the gas station operated as a
common-law partnership or joint venture between defendant and her
husband. Following a nonjury trial, Supreme Court concluded that the
gas station was such a partnership or joint venture and awarded
plaintiff, inter alia, damages in the amount of the prior judgments
against defendant’s husband. We affirm.
Partnerships are governed by the law of agency (see Partnership
Law § 4 [3]) and, pursuant to Partnership Law § 26 (a) (2), “all
partners are liable . . . [j]ointly for all . . . debts and
obligations of the partnership . . . .” As the agent of a
partnership, a partner’s “ ‘acts may be adopted and enforced by the
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CA 10-02182
partnership as its own’ ” (Beizer v Bunsis, 38 AD3d 813, 814; see § 20
[1]). Partnership Law § 10 (1) defines a partnership as “an
association of two or more persons to carry on as co-owners a business
for profit . . . .”
Where, as here, “there is no written partnership agreement
between the [individuals in question], the court must determine
whether a partnership in fact existed from the conduct, intention[]
and relationship between [them]” (Czernicki v Lawniczak, 74 AD3d 1121,
1124). “In deciding whether a partnership exists, ‘the factors to be
considered are the intent of [those individuals] (express or implied),
whether there was joint control and management of the business,
whether there was a sharing of the profits as well as a sharing of the
losses[] and whether there was a combination of property, skill or
knowledge’ . . . No one factor is determinative; it is necessary to
examine the . . . relationship as a whole” (Kyle v Ford, 184 AD2d
1036, 1036-1037).
Viewing the evidence in the light most favorable to plaintiff,
the prevailing party, we conclude that the court’s determination is
supported by a fair interpretation of the evidence (see generally
Matter of City of Syracuse Indus. Dev. Agency [Alterm, Inc.], 20 AD3d
168, 170). With respect to the first factor to be considered in
determining whether a partnership existed, i.e., the intent of
defendant and her husband, the evidence presented at trial included
their tax returns and bankruptcy filings. Those documents repeatedly
referred to defendant as the proprietor of Winton South. Indeed,
defendant testified at trial that she filed a certificate of doing
business under an assumed name in June 1997, reflecting her intent to
conduct a business in Geneseo so that her husband could operate that
business. Moreover, defendant’s husband testified that he had
significant financial problems that prevented him from acquiring
assets in his own name. Consequently, he admitted that Winton South
was created in defendant’s name and that he contributed his experience
and labor to that business.
With respect to the second factor, i.e., whether there was joint
control and management of the business, the evidence presented at
trial by plaintiff established that defendant was involved in Winton
South at least to the extent that she made the decision to close that
business. The evidence presented by defendant demonstrated that her
husband either ran or oversaw Winton South’s day-to-day affairs and
that defendant participated in the financial side of that business to
the extent that her signature appeared on payroll and vendor checks.
With respect to the third factor, i.e., whether there was a
sharing of the profits as well as a sharing of the losses, the record
is unclear concerning the extent to which income and expenses were
shared between defendant and her husband. Inasmuch as defendant and
her husband concentrated their joint assets in defendant’s name to
avoid paying on the judgment entered in a civil action arising from an
assault committed by her husband, we nevertheless conclude that the
minimal evidence of profit and loss is not dispositive.
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CA 10-02182
With respect to the fourth factor, i.e., whether there was a
combination of property, skill or knowledge, we revisit our analysis
with respect to the first factor. The explanation of defendant’s
financial contribution to Winton South and her husband’s input of
expertise and labor offered with respect to the first factor applies
equally to this factor and demonstrates that the business functioned
as a result of the combination of defendant’s financial standing and
the expertise of her husband.
Defendant contends that the statute of frauds bars enforcement of
the agreement and the lease (see General Obligations Law § 5-701 [a]
[1]). The statute of frauds is an affirmative defense (see CPLR 3018
[b]), and defendant waived that affirmative defense by not pleading it
in the amended answer (see generally Killeen v Crosson, 284 AD2d 926).
In any event, it is of no moment whether the agreement and lease are
barred by the statute of frauds inasmuch as this action and appeal
concern whether defendant and her husband had a partnership that bound
defendant with respect to the agreement and the lease, not whether
plaintiff can enforce an oral agreement with defendant.
Entered: June 10, 2011 Patricia L. Morgan
Clerk of the Court