Mulugeta Abebe v. Solomon Haile Birhane ( 2012 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
June 26, 2012 Session
MULUGETA ABEBE, ET AL. v. SOLOMON HAILE BIRHANE, ET AL.
Appeal from the Chancery Court for Davidson County
No. 07-2105-I Claudia C. Bonnyman, Chancellor
No. M2011-01987-COA-R3-CV - Filed October 29, 2012
Mulugeta Abebe1 , Eshetu Yalemwossen, and Girma Ejegu (“Plaintiffs”) sued Solomon Haile
Birhane2 and Frehiwot Tesfagzi (“Defendants”) seeking, in part, a declaration of the parties’
rights with regard to a Raceway Service Station (“the Raceway Store”) located in Hermitage,
Tennessee. After a trial, the Trial Court entered its Final Order on October 18, 2010 finding
and holding, inter alia, that Plaintiffs and Defendants are partners in the Raceway Store with
each one of the five partners holding a 20% interest in the partnership, and that the parties
had an agreement that once overhead was met the Raceway Store would repay Plaintiffs their
capital contribution. Defendants appeal to this Court. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed;
Case Remanded
D. M ICHAEL S WINEY, J., delivered the opinion of the Court, in which H ERSCHEL P. F RANKS,
P.J., and J OHN W. M CC LARTY, J., joined.
Gary D. Copas, Nashville, Tennessee, for the appellants, Solomon Haile Birhane and
Frehiwot Tesfagzi.
Lynda F. Jones and Maria Pardue, Nashville, Tennessee, for the appellees, Mulugeta Abebe,
Eshetu Yalemwossen, and Girma Ejegu.
1
Within the record on appeal Mr. Abebe’s last name is spelled as ‘Abebe’ in some places and as
‘Agebe’ at others. We utilize in this Opinion the spelling that appears on the Complaint.
2
Within the record on appeal Mr. Birhane’s first name is spelled as ‘Solomon’ in some places and
as ‘Soloman’ at others. We utilize in this Opinion the spelling that appears on the Answer to the Complaint.
MEMORANDUM OPINION 3
Background
Plaintiffs and Defendants are partners in the Raceway Store, which they
purchased in 2006. Shortly after the purchase of the Raceway Store, disagreements arose
between Plaintiffs and Defendants. Plaintiffs filed this suit seeking, in part, a determination
with regard to the parties’ rights in the Raceway Store.
The case proceeded to trial and after trial, the Trial Court entered its Final
Order on October 18, 2010 finding and holding, inter alia, that Plaintiffs had carried their
burden to show by clear and convincing evidence that Plaintiffs and Defendants are partners
in the Raceway Store with each one of the five partners holding a 20% interest in the
partnership. The Final Order further found and held, inter alia:
The partners agreed that Mr. Birhane will have his salary as manager of the
Store of $1800 [sic] per month. The partners also agreed that after overhead
is met, the Store would repay the Plaintiffs, Mulugeta Abebe, Eshetu
Yalemwossen and Girma Ejegu, their capital contribution of $205,356.00. At
this time, the balance owed from the Store is approximately $30,000.00. After
these two obligations are paid, the partnership will pay the five partners each
20% of the profits. The term profit as used by the Court, is defined as revenue
generated by the Raceway #961 after all expenses are paid. Mr. Abebe shall
account to the other two capital contributors (the other two Plaintiffs), for their
share of the capital contribution which has been repaid. All partners shall have
access to the books of Raceway Store #961.
Defendants filed a motion to alter or amend, which the Trial Court denied. Defendants
appeal to this Court.
3
Rule 10 of the Rules of the Court of Appeals provides: “This Court, with the concurrence of all
judges participating in the case, may affirm, reverse or modify the actions of the trial court by memorandum
opinion when a formal opinion would have no precedential value. When a case is decided by memorandum
opinion it shall be designated ‘MEMORANDUM OPINION,’ shall not be published, and shall not be cited
or relied on for any reason in any unrelated case.”
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Discussion
Although not stated exactly as such, Defendants raise one issue on appeal:
whether the Trial Court erred in returning capital contributions to Plaintiffs. Plaintiffs raise
an issue regarding whether this appeal is frivolous.
Our review is de novo upon the record, accompanied by a presumption of
correctness of the findings of fact of the trial court, unless the preponderance of the evidence
is otherwise. Tenn. R. App. P. 13(d); Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001).
A trial court's conclusions of law are subject to a de novo review with no presumption of
correctness. S. Constructors, Inc. v. Loudon County Bd. of Educ., 58 S.W.3d 706, 710 (Tenn.
2001).
Defendants argue in their brief on appeal that the Revised Uniform Partnership
Act, Tenn. Code Ann. § 61-1-101 et seq., prohibits the return of capital contributions absent
a dissolution. Defendants cite to two sections of the Revised Uniform Partnership Act in
support of their argument, Tenn. Code Ann. § 61-1-807 and Tenn. Code Ann. § 61-1-401.
Neither of these statutory sections supports Defendants’ assertion.
Tennessee Code Ann. § 61-1-807 deals with the settlement of accounts
between partners “upon winding up the partnership business.” Tenn. Code Ann. § 61-1-
807(b) (2002). In the case now before us on appeal, the partnership business, i.e., the
Raceway Store, is not being wound up. Thus, Tenn. Code Ann. § 61-1-807 is not applicable
to the case now before us at this time.
Tennessee Code Ann. § 61-1-401 deals with a partner’s rights and duties and,
among other things, speaks to the fact that each partner is deemed to have a partnership
account. The fact that Tenn. Code Ann. § 61-1-401 states that each partner is deemed to
have an account “[c]redited with an amount equal to the money plus the value of any other
property, … the partner contributes to the partnership …” does not expressly prohibit the
return of capital contributions.
Defendants also cite to In re: Tennol Energy Co., 127 B.R. 820 (Bankr. E.
Tenn. 1991), a federal bankruptcy court memorandum opinion approving a compromise of
an adversary proceeding. This opinion from the federal bankruptcy court is neither binding
nor persuasive upon this Court. Furthermore, the case now before us does not involve a
bankruptcy and is easily distinguishable from the federal bankruptcy case. Additionally, we
note that in In re: Tennol Energy Co., the bankruptcy court when discussing the allegedly
wrongful return of capital investments relied upon sections of Tenn. Code Ann. which were
repealed effective in 1989, long before the formation of the partnership involved in the case
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now before us on appeal. The In re: Tennol Energy Co. case simply provides no support for
Defendants’ argument.
Defendants have cited to no law, nor has our research revealed any, which
would prohibit the Trial Court and this Court from upholding the parties’ agreement. The
Trial Court found that the parties had agreed “that after overhead is met, the Store would
repay the Plaintiffs, Mulugeta Abebe, Eshetu Yalemwossen and Girma Ejegu, their capital
contribution of $205,356.00.” The evidence in the record on appeal does not preponderate
against this finding. We, therefore, affirm the Trial Court’s October 18, 2010 Final Order.
We turn now to Plaintiffs’ issue regarding whether this appeal is frivolous. “‘A
frivolous appeal is one that is ‘devoid of merit,’ or one in which there is little prospect that
[an appeal] can ever succeed.’” Morton v. Morton, 182 S.W.3d 821, 838 (Tenn. Ct. App.
2005) (quoting Industrial Dev. Bd. of the City of Tullahoma v. Hancock, 901 S.W.2d 382,
385 (Tenn. Ct. App. 1995)). In the exercise of our discretion we decline to hold this appeal
frivolous.
Conclusion
The judgment of the Trial Court is affirmed, and this cause is remanded to the
Trial Court for collection of the costs below. The costs on appeal are assessed against the
appellants, Solomon Haile Birhane and Frehiwot Tesfagzi, and their surety.
_________________________________
D. MICHAEL SWINEY, JUDGE
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