Cadwalader, Wickersham & Taft v. Beasley

728 So. 2d 253, 1998 Fla. App. LEXIS 16407, 1998 WL 904065
CourtDistrict Court of Appeal of Florida
DecidedDecember 30, 1998
Docket96-2805, 96-3818, 97-0146 and 97-380
StatusPublished
Cited by5 cases

This text of 728 So. 2d 253 (Cadwalader, Wickersham & Taft v. Beasley) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cadwalader, Wickersham & Taft v. Beasley, 728 So. 2d 253, 1998 Fla. App. LEXIS 16407, 1998 WL 904065 (Fla. Ct. App. 1998).

Opinion

728 So.2d 253 (1998)

CADWALADER, WICKERSHAM & TAFT, Appellant,
v.
James W. BEASLEY, Jr., Appellee.

Nos. 96-2805, 96-3818, 97-0146 and 97-380.

District Court of Appeal of Florida, Fourth District.

December 30, 1998.
Rehearing Denied December 30, 1998.

*254 Sidney A. Stubbs, Jr. of Jones, Foster, Johnston & Stubbs, P.A., and Jane Kreusler-Walsh of Jane Kreusler-Walsh, P.A., West Palm Beach, for appellant.

Montgomery & Larmoyeux and Beasley, Leacock & Hauser, P.A., West Palm Beach, and Joel D. Eaton of Podhurst, Orseck, Josefsberg, Eaton, Meadow, Olin & Perwin, P.A., Miami, for appellee.

ON REHEARING

POLEN, Judge.

We grant CW & T's motion for rehearing in part as it pertains to the trial court's award of punitive damages, and substitute the following in lieu of our original opinion:

In case numbers 96-2805 and 97-380, Cadwalader, Wickersham & Taft (CW & T), a New York law firm, appeals from a final judgment awarding return of capital, interest, profits, and punitive damages to its former partner, James Beasley (Beasley), for wrongful expulsion. CW & T appeals all aspects of the award except for the return of *255 the paid-in capital with interest. Beasley cross-appeals the court's refusal to award him any interest in the firm's goodwill. In case numbers 96-3818 and 97-146, CW & T appeals from an award of attorney's fees and costs to Beasley. On our own motion, we consolidate all four cases at this time. We reverse as to the award of profits, attorney's fees and costs, but affirm as to all other points raised by both parties.

Beasley laterally transferred to become a partner at CW & T in its Palm Beach office in 1989. After his arrival, the Palm Beach office suffered from internal discord and, by 1994, the office was operating at a loss. In response to this situation, the firm's management committee began discussions regarding the termination of up to 30 partners nationwide, including the Palm Beach partners. During this time, and allegedly unbeknownst to CW & T, Beasley was planning to leave the firm. He met secretly with associates in CW & T's Palm Beach office about leaving with him.

The management committee eventually held a day-long meeting on August 7, 1994. Prior to the meeting, the committee members were asked to submit lists of less productive partners to be considered for possible termination. All of the Palm Beach partners were identified on the lists actually submitted. A tentative vote was reached at that meeting and, later that month, the committee formally decided to close its Palm Beach office by year-end 1994. It informed its partners, including Beasley, of its decision on August 30, 1994.

After the announcement, Beasley retained Professor Robert Hillman, who opined that CW & T, pursuant to the partnership agreement, lacked the legal authority to expel him from the partnership. In response to this opinion, CW & T sent a memorandum to Beasley informing him that he was still a partner in the firm. It then offered Beasley either relocation within the firm but in the New York or Washington, D.C. offices, or, a compensation/severance package which included his return of capital, departure bonus, and full shares through December 31, 1994. He was presented with a written withdrawal agreement confirming the same. Beasley, a member of both the Florida and New York bars, rejected the same as impractical.

Settlement negotiations between CW & T and Beasley then continued. On November 9, he sued the firm for fraud and breach of fiduciary duty, among other counts. On November 10, 1994, CW & T sent a letter to Beasley informing him to vacate the premises by 5:00 p.m. the next day. The letter specifically prohibited him from continuing to represent himself as associated with the firm.

After a nine-day bench trial, Judge Cook authored a meticulous and, we believe, exceptionally well-reasoned final judgment. He found that CW & T was authorized to close the Palm Beach office pursuant to the partnership agreement, and that Beasley would have voluntarily left CW & T by year-end 1994 in any event. Nevertheless, since the partnership agreement lacked provisions for the expulsion of a partner except in one limited situation,[1] he found that CW & T had anticipatorily breached the partnership agreement when it announced its plans to close the Palm Beach office in August, and then actually breached the agreement when it sent him the November 10, 1994 letter. The final judgment awarded Beasley his paid-in capital plus interest (which CW & T does not dispute), his percentage interest in the firm's accounts receivables and assets and interest thereon, and punitive damages, all totaling $2.5 + million. The later judgment awarded Beasley's attorneys fees and costs. These amounts are broken down as follows:

- Beasley's paid-in capital of $194,193, plus
  interest at the rate as defined in the
  partnership agreement to the date of
  judgment [$42,199]............................$  236,392.00
- his percentage interest in the firm's accounts
  receivable, work-in-progress, office
  building and other assets.....................$  867,110.00
- his profits attributable to the use of his
  right in the property of the dissolved
  partnership...................................$  935,261.52
- punitive damages..............................$  500,000.00
- attorney's fees and costs.....................$1,108,247.92

*256 The court, however, rejected Beasley's claims for future lost income and retirement benefits. The appeals and cross-appeal, as set forth above, ensued.

I. WHETHER BEASLEY WAS EXPELLED OR VOLUNTARILY WITHDREW

Under New York Partnership Law's adoption of the Uniform Partnership Act (UPA), partners have no common law or statutory right to expel or dismiss another partner from the partnership; they may, however, provide in their partnership agreement for expulsion under prescribed conditions which must be strictly applied. Gelder Med. Group v. Webber, 41 N.Y.2d 680, 394 N.Y.S.2d 867, 363 N.E.2d 573 (1977); N.Y. Partnership Law § 62(1)(d)(McKinney 1993). Absent such a provision, as here, the removal of a partner may be accomplished only through dissolution of the firm. Dawson v. White & Case, 88 N.Y.2d 666, 649 N.Y.S.2d 364, 672 N.E.2d 589 (1996).

The evidence supports Judge Cook's finding that CW & T intended to remove Beasley as a partner in the firm when it announced it was closing its Palm Beach office by year-end 1994. This finding, in turn, supports the conclusion that CW & T anticipatorily expelled Beasley from the firm. See New York Life Ins. Co. v. Viglas, 297 U.S. 672, 681, 56 S.Ct. 615, 80 L.Ed. 971 (1936)(defining an anticipatory breach as one committed before the time has come, when there is a present duty of performance); American List Corp. v. U.S. News and World Report, Inc., 75 N.Y.2d 38, 550 N.Y.S.2d 590, 549 N.E.2d 1161, 1164-65 (1989).

In reaching this conclusion, we necessarily reject CW & T's argument that Beasley voluntary withdrew from the firm rather than having been expelled. Beasley had been practicing exclusively in South Florida for 22 years, where he built a substantial client base.

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Bluebook (online)
728 So. 2d 253, 1998 Fla. App. LEXIS 16407, 1998 WL 904065, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cadwalader-wickersham-taft-v-beasley-fladistctapp-1998.