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Choose one of the following cases, then analyze the cases in the Questions and Problems.
Group 1: Chapter 37 (4 and 5) in Dynamic Business Law
Group 2: Chapter 37 (6 and 7) in Dynamic Business Law
For each assigned case, write an analysis of the issue based on the following criteria:
Identify the parties involved in the case dispute (who is the plaintiff and who is the defendant).
Identify the facts associated with the case and fact patterns.
Develop the appropriate legal issue(s) in question (i.e., the specific legal issue between the two parties). Provide a judgment on who should win the case – be clear.
Support your decision with an appropriate rule of law.
Questions & Problems
1. What stages must occur for the termination of a
partnership to be complete?
2. Why is the partnership’s debt particularly impor-
tant in the winding-up stage?
3. What are the advantages of being a limited partner
rather than a general partner?
4. In June 2001, Greenfeld, Stitely, and Karstetter
negotiated to merge their practices into a partner-
ship that would provide accounting, tax, and infor-
mation technology services. The partnership was
profitable every year from its inception. However,
Stitely felt that Greenfeld’s information technol-
ogy services were not generating as much revenue
as his one-third share in the partnership should. So
Stitely indicated to the partners that he wanted to
withdraw from the partnership. Soon after, Stitely
and Karstetter agreed to instead continue as part-
ners together after Greenfeld was out of the picture.
Greenfeld did not violate his partnership agreement,
but the two partners forced Greenfeld out of the part-
nership without compensating him for his interest.
They accomplished this by unlawful means, such as
purporting to withdraw from the partnership while
in reality seizing control of its assets. Furthermore,
they transferred the assets of the partnership to their
new company, preventing Greenfeld from having
computer access to the business files, software, and
client records. Was the partnership terminated prop-
erly? If the dissolution was wrongful, what poten-
tial consequences could Stitely and Karstetter face?
[Wayne I. Greenfeld v. Frank L. Stitely, et al., 2007
Va. Cir. LEXIS 7 (2007).]
5. Jones and Hardy entered into an oral partnership
agreement. They planned to develop and lease
certain areas of land. Together, they formed the
Bloomington Knolls Association. Jones and Hardy
began to experience financial problems, and they
brought in a third partner, Jackson, to arrange addi-
tional financing for the project. Jones subsequently
dissolved the partnership and requested that he be
given a portion of the land as his share of the part-
nership assets. Jackson and Hardy did not honor
his request, and Jones never received any assets of
the partnership. Jones moved for an accounting and
winding up of partnership affairs and brought the
828
Part 7 Business Organizations
case to court. The district court entered judgment
against Hardy and Jackson, jointly and severally,
for an amount representative of Jones’s interest
in the partnership. Jackson and Hardy appealed
the district court’s decision. How do you think the
court decided? [MacKay v. Hardy, 896 P.2d 626
(1995).]
6. Stephen Wainger is a former partner of the law
firm Glasser & Glasser. According to the partner-
ship agreement, a withdrawing partner is entitled
to compensation for “any undivided profits of the
firm with respect to uncollected fees which were
fully earned by the firm prior to the effective date
of his withdrawal. but which fees are received by
line. Construction on the property had not yet
begun. Stiltner disagreed that a sewer line was nec-
essary; he thought there would be no increase in
sewage from the property because Disotell had not
yet commenced construction. He denied Disotell
the building access needed to assess the mechani-
cal, electrical, and other systems. He also refused
to remove his personal property from the building.
A complete breakdown in the relationship between
Stiltner and Disotell then occurred. Subsequently,
the partnership never produced a profit. Should the
court, as a matter of law, dissolve the partnership
and judicially supervise the winding up of the part-
nership affairs? Why or why not? [Carl Disotell v.case to court. The district court entered judgment
against Hardy and Jackson, jointly and severally,
for an amount representative of Jones’s interest
in the partnership. Jackson and Hardy appealed
the district court’s decision. How do you think the
court decided? [MacKay v. Hardy, 896 P.2d 626
(1995).]
6. Stephen Wainger is a former partner of the law
firm Glasser & Glasser. According to the partner-
ship agreement, a withdrawing partner is entitled
to compensation for “any undivided profits of the
firm with respect to uncollected fees which were
fully earned by the firm prior to the effective date
of his withdrawal, but which fees are received by
the firm subsequent to such date.” Before leaving
the firm, Wainger worked on several asbestos com-
pensation cases. After he left the partnership, the
cases were settled and the firm received significant
profits. Wainger argued that he should be compen-
sated for his work despite the fact that he left the
firm before the settlement of the cases. Do you
agree? The trial court found that Wainger was enti-
tled only to fees that had been fully earned at the
time of his withdrawal. How do you think the court
decided the case on appeal? [Wainger v. Glasser &
Glasser, 462 S.E.2d 62 (1995).]
7. Astroline Company, a limited partnership, is in the
investment business. Astroline heard of an opportu-
nity to purchase the license to a television station,
and the company developed a second limited part-
nership, Astroline Communications Company, to
purchase the station. Astroline provided the fund-
ing for Astroline Communications but remained a
limited partner of the company. Astroline Commu-
nications began to experience financial problems
and filed for bankruptcy. Do you think the court
found Astroline Company, as a limited partner,
liable for Astroline Communications Company’s
debts? Why or why not? [In re Astroline Commu-
nications Company Limited Partnership, 188 BR
98 (1995).]
8. Carl Disotell and Earl Stiltner met in 1997. They
discussed Stiltner’s property and agreed to form an
equal partnership to develop, construct, and oper-
ate a hotel on the property. They never entered into
a written partnership agreement. They intended
to convert the two-story commercial building on
the property into a hotel. In May 1998, Disotell
advised Stiltner that the property required a sewer
line. Construction on the property had not yet
begun. Stiltner disagreed that a sewer line was nec-
essary; he thought there would be no increase in
sewage from the property because Disotell had not
yet commenced construction. He denied Disotell
the building access needed to assess the mechani-
cal, electrical, and other systems. He also refused
to remove his personal property from the building.
A complete breakdown in the relationship between
Stiltner and Disotell then occurred. Subsequently,
the partnership never produced a profit. Should the
court, as a matter of law, dissolve the partnership
and judicially supervise the winding up of the part-
nership affairs? Why or why not? [Carl Disotell v.
Earl Stiltner, 100 P.3d 890 (2004).]
9. Mige Associates, a limited partnership, owned an
apartment building. The building could have been
developed into a housing cooperative. The projected
profits for such a conversion were significant. The
conversion required the signed agreement of one of
Mige’s general partners, Jon Meadow. Meadow’s
decision to sign the agreement was contingent on
the promise that he receive more money from the
deal than the other partners. After his request was
denied, Meadow refused to sign the agreement.
Two of the limited partners, Drucker and Schaffer,
filed suit against Meadow. They claimed that he had
breached his fiduciary responsibility to the general
and limited partners of Mige Associates. The trial
court found in favor of Meadow. How do you think
the case was decided on appeal? Did the economic
benefits of the conversion create a fiduciary obliga-
tion for Meadow to sign the agreement? [Drucker v.
Mige Associates, 639 N.Y.S.2d 365 (1996).]
10. After the dissolution of a partnership formed to
develop the Four Seasons Resort, TSA Interna-
tional Limited brought an action against Shimizu
Corporation, alleging breach of fiduciary duty. TSA
had approached Shimizu in 1986 with plans for
developing the hotel. The two companies formed
a partnership, and they began to make plans for
several golf and hotel developments. The loans
TSA and Shimizu had taken out soon became
delinquent. The partners met to negotiate the pay-
ment of the hotel and golf course loans. At the
request of Shimizu, the agreements were drafted
in Japanese. TSA subsequently filed a complaint
asserting, among other things, breach of fiduciary
duty. When reaching the agreements, Shimizu hadChapter 37 Partnerships: Termination and Limited Partnerships
829
discouraged TSA from hiring its own accountants
or legal counsel because of “the long-term rela-
tionship of trust between Shimizu and TSA.” TSA
also alleged that Shimizu arranged the agree-
ment so that Shimizu would obtain substantial tax
advantages. The circuit court found in favor of
Shimizu. How do you think the case was decided
on appeal? Did Shimizu breach its fiduciary duty?
[TSA Intern. Ltd. v. Shimizu Corp., 990 P.2d 713
(1999).]
Looking for more review material?
The Online Learning Center at www.mhhe.com/kubasek2e contains this chapter’s “Assignment on the
Internet” and also a list of URLs for more information, entitled “On the Internet.” Find both of them in
the Student Center portion of the OLC, along with quizzes and other helpful materials.
