IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
DAVID HANDLER, ) ) Plaintiff, ) ) v. ) C.A. No. 2022-0672-SG ) CENTERVIEW PARTNERS ) HOLDINGS L.P., ) ) Defendant.
Date Submitted: November 7, 2023 Date Decided: April 24, 2024
C. Barr Flinn, Elisabeth S. Bradley, Kevin P. Rickert, Zeliang Liu, Hana Brajuskovic, and Elena C. Norman, YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware, Attorneys for Plaintiff David Handler.
Michael A. Barlow and Hayden Driscoll, QUINN EMANUEL URQUHART & SULLIVAN, LLP, Wilmington, Delaware, Attorneys for Defendant Centerview Partners Holdings, L.P.
GLASSCOCK, Vice Chancellor The narrow, and rather unusual, subject of this Memorandum Opinion is
whether Plaintiff, David Handler, was an employee of a Delaware L.P., or was in
fact a partner in the entity that managed that L.P. The L.P. itself is an investment
firm, a fact perhaps surprising in light of the informality with which the individuals
involved here conducted themselves and their business, internally. The case arose
as a request for books and records, standing for which was denied by the L.P. on the
ground that Handler was not a partner.1
Handler was initially an employee of the L.P., and was given the title
This was an honorific; such partners were no
more equity holders than Colonel Harland Sanders was a field officer, although they
did in some cases have rights upon liquidation for deferred compensation. For
several years thereafter, Handler discussed the terms of a partnership in
the entity managing the Partnership, with the firm s founders. The dispute here is
whether Handler was offered and accepted a partnership in Topco, subject only to
agreement on non-essential terms, or whether, as Defendant asserts, there was never
a meeting of the minds with respect to a partnership in Topco. The matter comes
down to one meeting of Handler with the founders, and whether a partnership
1 A companion substantive case, dependent in part upon the outcome rights after leaving the company. Centerview P rs Hldgs. LP v. Handler, C.A. No. 2022-0767- SG.
1 agreement was reached at that meeting. Handler alleges that an oral partnership in
Topco was agreed to at that November 8, 2012 meeting.
The issue
books and records) was tried. In this post-trial Memorandum Opinion, I find that
Handler has failed to show, by a preponderance of the evidence, that the parties
reached an agreement under which Handler (and his fellow employee, non-party
David St. Jean) became partners in Topco. The recollections of the crucial
meeting are in conflict; the post-meeting correspondence between the founders and
Handler and St. Jean, and between St. Jean and Handler themselves, supports a
conclusion that no agreement was reached, and the abundant documentary evidence
after the meeting is inconclusive. Handler has failed to demonstrate that he is a
partner in Topco.
I. FACTUAL BACKGROUND2
A. The Parties
joined a subsidiary of Centerview Partner
or, with its subsidiaries, ) in 2008 as an
P
See Updated Final Joint Trial Exhibit List, Dkt. No. 187. Citations to the - Pretrial Stipulation and [Proposed] Order, Dkt. No. 145. Tr. of 7-25-2023 Evidentiary Hr g Volume I, Dkt. No. 198; Tr. of 7-26- 2023 Evidentiary Hr g Volume II, Dkt. No. 199.
2 technology practice group.3 Handler joined the Company together with his friend,
non-party David St. Jean.4 Handler resigned from the Company on August 1, 2022.5
6 Centerview maintains offices in New York, London, San Francisco, Menlo
Park, and Paris.7
Centerview has a multilayered entity structure, with Topco being the highest 8 entity in Topco is the sole manager of
investment banking
operating company.9
Topco was formed as a Delaware limited liability company on December 7, 10 A later-filed Certificate of Amendment was filed
with the Secretary of State of the State of Delaware on June 6, 2006, which changed
converted into a Delaware limited partnership on November 19, 2013, with the
3 PTO ¶ 18. 4 Id. 5 Id. 6 Id. ¶ 19. 7 Id. 8 Id. ¶ 20. 9 Id. 10 Id. ¶ 21.
3 , 11 to which I will refer, in its
-dealer subsidiary,
Centerview conducts its U.S. advisory business.12
Non-
and are limited partners in Topco .13
Centerview Partners Holdings LP , Pruzan Holding LLC, Centerview Partners Holding LLC
Centerview Partners Advisory Holdings LLC
99%
Centerview Partners LLC (operating company)
11 Id. 12 Id. ¶ 22. 13 Id. ¶ 23.
4 B. The 2008 Letter
On June 16, 2008, Handler and
two non-parties, David St. Jean and an undisclosed third party, joined Centerview as
employees of CP LLC , creating a Tech Team practice
in the Company.14 Although the 2008 Letter referenced Handler and St. Jean as
it did not reflect an actual partnership agreement at Centerview, but
reflected an at-will employee status.15 The 2008 Letter, however, guaranteed that
Handler and St. Jean would earn 35% of revenues they generated up to $25 million,
40% of all revenues between $25 to $40 million, and 50% above the $40 million
threshold.16
In addition, the 2008 Letter enabled Handler and St. Jean to participate in a
fixed share of the Centerview Partners Profit Pool after 2010.17 The 2008 Letter also
interest in the terminal value of Centerview upon a liquidity event (sale, IPO etc) . .
. .18 The 2008 Letter explicitly stated that TVIs did not entitle Handler and
St. Jean to a share of profits of the firm, ownership, or governance rights.19 Further,
14 JX2; PTO ¶ 18. 15 JX2 at 2; Dep. of David Handler 35:20 36:3 First Handler Dep . Centerview purportedly
their own client relationships. -Trial Opening Br. 2, Dkt. No. 201 16 JX2 at 1. 17 Id. 18 Id. 19 Id.
5 the 2008 Letter provided that if either Handler or St. Jean left Centerview before a
liquidity event occurred, at its tax
value at the date of grant plus interest at 2.5%.20
C. Partnership Proposals & Negotiations Prior to the Purported Oral Partnership Agreement
After 2008, there were several failed attempts between the Founders and
Handler to renegotiate the relationship created by 2008 Letter Agreement into a
partnership agreement.21 In 2011, St. Jean expressed a disdain for only receiving a
Centerview and failure to reach a partnership agreement.22 In
response, Effron expressed a commitment to working with St. Jean to achieve the
latter result.23 Soon after, Handler began to voice his concerns to the Founders about
not being a Topco partner, threatened to leave the Company, and told a third party
about his frustrations.24 Eventually, on September 20, 2012, the Founders presented
Handler and St. Jean a 60-
expressing the Founders intent to add Handler and St. Jean as partners in Topco.25
20 Id. upon a liquidity event . . . and will not entitle any of you to a share of profits of the firm or have Id. 21 JX23; JX7; JX11; JX15-17; First Handler Dep. 50:3 53:4, 90:4 91:25, 105:6 11. 22 JX12. 23 Id. 24 JX24; JX26; Tr. 14:22 16:2 (Handler). 25 JX30.
6 Handler, for numerous reasons, rejected the proposed LPA without offering a
counterproposal and continued to express his intent to leave the Company.26 On
October 24, 2012, in an email to Pruzan, Effron recounted an offsite meeting, stating
that Handler and St. Jean wanted further negotiations to concern terms to 27 In other
words, in an offsite meeting Handler and St. Jean conveyed to Effron that they were
focused on changing their employment terms under the 2008 Letter, instead of
negotiating the proposed Topco partnership agreement.28
Three days later, Handler and St. Jean
the 2008 Letter that served as their employment contract; the addendum addressed
their annual compensation and suggested the establishment of a new technology
focused private equity fund.29 In response, the Founders began preparing a draft
term sheet, which, contrary to the addendum, described a classic partnership with
shared participation, risk, and reward.30
26 Tr. 29:14 15, 30:15 31:1 (Handler). Handler rejected the LPA because it gave the Founders the right to effectively cancel the deal or change it in a material way, among other reasons. Id. 27 JX35. 28 Id. 29 JX39 at 3; Tr. 215:6 11 (Handler). In regard to compensation, the addendum provided that the Tech Team would be paid 60% of revenue it generated, by Centerview Partners, LLC. 30 JX43; JX44; JX47.
7 D. The Purported Oral Agreement
31 The term sheet included a compensation
change for Handler and St. Jean and identified issues the parties would need to
negotiate if they ultimately were to reach a written partnership agreement. 32 In
particular, the proposed term sheet described traditional partnership concepts, such
as sharing in profits and losses in the Company.33
31 JX52; Tr. 36:4 40:1 (Handler). 32 JX52. 33 Id.; Tr. 41:3 22 (Handler). 34 JX52 at 4. 35 Tr. 55:22 56:3, 145:7 11, 149:1 7, 153:9 10 (Handler); Tr. 45:19 46:7 (Handler).
8 36
36 See generally, JX52; see also Tr. 51:10, 174:1 175:6 (Handler); see also Tr. 38:4 45:15, 54:15 55:1 (Handler); JX474 ¶ 18; JX413 at No.16. 37 JX52; First Handler Dep. 123:1 6. 38 Tr. 160:13 18 (Handler). 39 See Tr. 361:5 19 (Pruzan); see, e.g., Tr. 139:19 142:15, 387:5 20, 388:1 4 (Centerview).
9 E. Aftermath of the Purported Oral Agreement
1. First Communications
The day after the purported oral agreement, Handler and Effron exchanged
40 Handler responded , We need to absorb
41 A month later on
December 16, 2012, St. Jean sent an email to Pruzan and copied Handler stating:
the lines we have been discussing . . . we are not done working through the details 42 The email further stated, 43 . . we will stand with you [] to invest capital . . .
Afterwards, Handler sent the proposed term sheet to his attorney, stating, to 44 In
addition, St. Jean and Handler exchanged drafts of the proposed term sheet with
revisions.45 On December 14, 2012, St. Jean sent Handler an updated term sheet.46
40 JX54. 41 Id. at 2. 42 JX138. 43 Id. 44 JX55. 45 Id. 46 JX62.
10 The revised draft included new governance rights and, under receipt of profit points,
, with another note stating that 47
2. The Parties Exchange Numerous Draft LPAs
On January 8, 2013, Handler wrote the Founders via email stating he wanted
in the similar spirit that [the 48 Founders] laid . . . In that same email, Handler requested to
Handler prepared an agenda for a January 25, 2013 meeting in which the
Founders and Handler were to discuss a written partnership agreement.50 The topics
for the agenda included David St. Jean] response to [the 51 Handler also
prepared a chart to facilitate this meeting.52 The chart listed terms that were agreed
upon between the parties, while also listing terms that were still under discussion.53
For example, [the Founders]
47 Id. at 6. 48 JX74 (emphasis added). 49 JX74; see also JX79; Tr. 111:8 114:23 (Handler). 50 JX79. 51 Id. 52 JX81. 53 Id. at 4.
11 54
For several more months, the parties carried on business as usual without
executing a partnership agreement. For instance, the parties met again to discuss a
partnership agreement in March 2013, but , the 2008
Letter, i.e. the employment agreement, remained operative, as evidenced in a
memorandum detailing the meeting.55 A month later, in an email to a third-party
organization, where Handler chairs the board of directors, Handler expressed that he
still had not signed partnership agreements with Centerview.56 Again two months
later, Handler, in an email to his accountant, expressed that the partnership
agreement had not been executed.57 In response to receiving a revised written
partnership agreement from St. Jean, Handler responded: 58
Following the Founders proposing the concept of admitting Handler and St.
Jean to the partnership, arising as of 2012, the parties never signed a written
agreement. They continued to exchange drafts of the partnership agreement
throughout the end of 2013.59 On October 18, 2013, Handler sent a partnership
54 Id. 55 JX88 at 4. 56 Tr. 94:4 10 (Handler); JX93. 57 JX97. 58 JX103. 59 JX103; JX125.
12 agreement with revisions to the Founders and St. Jean.60 The email, to which the
agreement was attached, mentioned the November 8th Meeting, among others, and 61 The
today. From 62 a day-to-
p agreement
and themselves executed the Topco ,
converting Centerview Partners Holdings LLC into Topco on November 19, 2013.63
The Topco LPA did not include Handler and St. Jean as limited partners of Topco.64
Nevertheless, the Founders continued to seek to add Handler and St. Jean to the
Topco partnership by sending Handler a revised draft limited partnership agreement
to sign on May 18, 2014.65
limited partnership
agreement
this Agreement in connection with the admission of additional limited partners and
60 JX125. 61 Id. 62 Id. 63 JX126; JX135. 64 JX126; JX135. 65 JX169; JX170; JX171.
13 limited partnership agreement.66 In response, Handler 67
3.
After the November 8th Meeting
increased,68 but his compensation continued to be recorded through W-2 forms.69
remained subject to year-end negotiations with the Founders.70 The Founders had
discretion to implement compensation principles flexibly, purportedly in a manner
that benefited the firm and addressed issues for specific employees.71
For example, at a certain time, 72 As a result, the
to perform according to expectations in 2015,73 causing Centerview to absorb the 74 Handler also received Priority Capital Amounts as
66 JX170 at 006. 67 JX171. 68 Tr. 361:5 19 (Pruzan); see, e.g., Tr. 139:19 142:15, 387:5 20, 388:1 4 (Centerview). 69 See JX163; Tr.154:13 155:11 (Handler). 70 Tr. 348:2 4, 406:4 9 (Pruzan); JX300 (anticipating year end compensation discussion by detailing methodology for compensation). 71 JX250 at 3. . . . firm minus . . . adjusted for the profit points allocated to all other teams vs their annual contribution. Id. at 2. 72 JX352 at Tab 2013 Cell E:20, Tab 2014 Cell E:21, Tab 2015 Cell E:21; JX 250 at 492; JX 260. 73 JX250 at 492; JX260. 74 JX250 at 492.
14 part of his compensation from 2012 2015.75 But, Handler did not receive Priority
Capital Amounts after 2015.76
In the next year, Pruzan provided Handler with a compensation proposal that
did not include priority amounts, but gave Handler a maximization of cash payouts.77
In response, Handler submitted a compensation proposal, which set forth two
principal terms for deliberation but did not demand a deferral of the Priority Capital
Amounts.78 Eventually, in a 2018 compensation proposal to Handler, Pruzan
informed Handler that Centerview would no longer give profit gross ups to the Tech
Team.79
for three years, and did not express that his lack of participation violated an oral
partnership agreement.80
4. Handler Elects to Receive TVIs in CPAH
During negotiations in 2013, Handler elected to receive TVIs in CPAH the
Topco subsidiary via a 83(b) form pursuant to the 2008 Letter.81 The 83(b) form,
75 JX319 at 2. 76 JX249; see, e.g. compensation tracker did not reflect priority amounts after 2015). 77 JX 250 at 493; Pruzan Dep. 179:2 19. 78 JX262. 79 JX301 at 490. 80 JX318. 81 JX23; First Handler Dep. 102:9 22; JX 129. As mentioned previously, the TVIs in CP LLC did not reflect ownership interest in the firm, profits or losses, or governance rights.
15 to which Handler was a signatory, provided that [u]pon termination of service, the
Interest is subject to repurchase by the Company. 82 A memorandum attached to the
83(b) form also specified that
interests for the original fair market value as of the grant date, plus 2.5% per annum 83 thereon, upon a termination of [Ha This language
coincided with the specifications concerning the TVIs that was originally referenced
in the 2008 Letter, under which Handler was an employee, not a partner.84
After his election, Handler began to receive Schedule K-1s, which recorded
his TVIs in CPAH, but not in Topco.85 To third parties, Handler represented and
disclosed that his TVIs were in CPAH, by providing them with those Schedule K-
1s.86 In 2018, Handler sought information concerning his interests in Centerview.87
Terminal Interests (B 88 Handler did
not express an opposition upon receipt of this information.89
82 JX129 at 066. 83 Id. at 067. 84 Id. 85 Tr. 155:12 20 (Handler). 86 JX186 at 2 (Handler sent Schedule K-1 to accountant); JX345 at 2 (Handler sent CPAH 83(b) form to regulators); Tr. 153:10 154:2 (Handler) (admitting that he did not disclose he held Topco interests to gaming regulators). 87 JX304. 88 JX302 at 2. 89 JX304; Tr. 152:3 10 (Handler).
16 5. Events Leading to the Books and Records Demand Letter
From the November 8th Meeting up until 2022, Handler did not express an
intent to leave the Company.90 In fact, Handler relocated his family to Silicon Valley
to open a Centerview office, which prevented the firm from hiring a lateral partner
to do so.91 However, on January 2, 2022, Handler voiced concerns to the Founders
about his compensation via email.92 Handler asserted that his compensation was
. . . and . . . the 2008 93 [employee] [ The email did not mention the purported oral
partnership agreement in Topco.
Handler served a books and records demand on Topco, CPAH, and CP LLC
on May 23, 2022.94 Centerview
a partner of Topco, and therefore was not entitled to books and records on May 31,
2022.95 Thereafter, the parties engaged in numerous communications in
disagreement from June 3, 2022, to July 15, 2022.96 Handler resigned from the
Company on August 1, 2022.97
90 PL PT OB 29 (citing JX74); see also JX79; Tr. 111:8 114:23 (Handler). 91 Tr. 77:18 79:18, 120:10 121:16 (Handler). 92 JX377. 93 Id. at 2. 94 PTO ¶ 24. 95 Id. ¶ 25. 96 Id. ¶¶ 26 30. 97 Id. ¶ 18.
17 F. Procedural Background
On August 1, 2022, Handler filed a complaint pursuant to 6 Del. C. § 17-305
to enforce the books and records demand served upon Topco on May 23, 2022, along
with a motion to expedite .98 Defendant filed its
answer on August 30, 2022.99 Defendant had previously filed a complaint in this
Court in a separate action seeking a declaratory judgment that Handler was not a 100 partner of Topco (the Handler filed his answer and
counterclaims on October 4, 2022.101 Soon after, Topco filed a motion for judgment
on the pleadings in the Books and Records Action.102 On November 3, 2022, I held
a scheduling conference and stayed the Plenary Action and bifurcated the Books and
Records Action to first determine the validity of Handler is a
partner of Topco .103
Topco filed a renewed motion for judgment on the pleadings on November 8,
2022.104 On January 9, 2023, Handler filed a motion to compel production of
98 Verified Compl. Pursuant to 6 Del. C. Section 17-305 to Compel Inspection of Books and Records, Dkt. No. 1. 99 Def. ., Dkt. No. 9. 100 Centerview P rs Hldgs. LP v. Handler, C.A. No. 2022-0767-SG, Dkt. No. 1. Handler filed his Answer and Counterclaims on October 5, 2022. Dkt. No. 18. 101 Centerview P rs Hldgs. LP v. Handler, C.A. No. 2022-0767-SG, Answer and Countercl., Dkt. No. 17. 102 Def.s Mot. for J. on the Pleadings, Dkt. No. 12. 103 Tel. Scheduling Conf., Dkt. No. 32. 104 Def. . for J. on the Pleadings, Dkt. No. 36.
18 documents and information from Defendant.105 Magistrate judge Bonnie W. David
recommended that the motion be granted in part and denied in part in a Final Report
and Recommendation on February 13, 2013.106 Handler filed a letter to Magistrate
David to seek relief in connection with the February 13, 2023 Order,107 which Topco
opposed.108 Magistrate David held argument on the issues and delivered a Final
Report and Recommendation in a bench ruling on February 28, 2023.109
On March 3, 2023, Topco filed a motion for a protective order110 and notice
of e February 28, 2023 Final Report,111 with Handler
filing his oppositions on March 8, 2023.112 The Court heard oral argument on the
motion and exceptions on March 9, 2023, and issued a bench ruling granting in part
and denying in part the motion but adopting the Magistrate Final Report with
modification.113
105 Pl.'s Mot. to Compel Prod. of Docs. and Info. from Def., Dkt. No. 61. 106 Adopting Order, Dkt. No. 92. 107 Letter to The Hon. Bonnie W. David from Elisabeth S. Bradley Regarding Order Granting Mot. to Compel, Dkt. No. 91. 108 Letter to The Hon. Bonnie W. David from Michael A. Barlow on behalf of Def. Centerview P rs Hldg. . 24, 2023 letter, Dkt. No. 93. 109 Teleconference Status before Master Bonnie David on 2.28.2023 re: The Master delivered a final report under Rule 144 on discovery issues. Dkt. No. 94. 110 Centerview P rs Hldgs. LP's Mot. for a Protective Order, Dkt. No. 98. 111 Centerview P rs Hldgs. LP's Notice of Exceptions to the Master's Feb. 28, 2023 Final Report, Dkt. No. 99. 112 Pl. David Handler's Opp n to Centerview P rs Hldgs. LP's Mot. for a Protective Order, Dkt. No. 107; Pl. David Handler's Opp n to Centerview P rs Hldgs. LP's Exception to the Master's Report, Dkt. No. 109. 113 Hr g on Exceptions to Master's Ruling and Mot. for Protective Order on 3.9.2023 before Vice Chancellor Laster- Mot. granted in part and denied in part, Dkt. No. 114.
19 Centerview filed a motion for continued confidential treatment on June 30,
2023,114 which was opposed by Handler.115 Thereafter, on July 12, 2023, Handler
filed his motion for sanctions against Defendant,116 with Defendant opposing the
motion.117 I held an evidentiary hearing in this action on July 25, 2023 and July 26,
2023.118 I heard post-trial oral arguments on the Standing Issue, motion for
sanctions, and motion for continued confidential treatment on November 7, 2023.119
I took the matter under advisement that day.120
This Memorandum Opinion solely addresses the Standing Issue, and other
non-related motions will be addressed in a separate letter opinion, to the extent
necessary. To the extent that those motions seek sanctions in the form of certain
inferences in favor of Handler, I have not identified a circumstance where such an
inference, supported by equity, would change my decision here.
II. ANALYSIS
Before me is
status within Centerview, as either a partner or employee. In dispute is a purported
oral partnership agreement as alleged by Handler, that establishes his status as a
114 Centerview P rs Hldgs. . for Continued Confidential Treatment, Dkt No. 157. 115 Pl.'s Opp n to Def s Mot. for Continued Confidential Treatment, Dkt. 161. 116 Pl.'s Mot. for Sanctions, Dkt. No. 164. 117 Centerview P rs Hldgs. . for Sanctions, Dkt. No. 184; Pl.'s Reply in Further Supp. of His Mot. for Sanctions, Dkt. No. 186. 118 Trial before Vice Chancellor Sam Glasscock dated 7.25.23 through 7.26.23, Dkt. No. 189. 119 Closing Arg. Post Trial before Vice Chancellor Sam Glasscock dated 11.7.23, Dkt. No. 219. 120 Id.
20 partner in Topco. Plaintiff has the burden of proving each element of the oral
partnership agreement by a preponderance of the evidence.121 This standard of proof
requires that the evidence shows that the fact at issue is more likely than not.122 I
find that Handler has not met this burden and that the record demonstrates that
Handler was an employee when he left his employment with Centerview on August
1, 2022.
A. Plaintiff Fails to Overcome his Burden to Establish there was an Oral Partnership Agreement Creating his Partnership in Topco
Handler asserts that the November 8th Meeting resulted in an oral agreement
to create a limited partnership in Topco.123 Handler further asserts that the parties
operated and performed in accordance with the purported oral partnership
agreement.124 Defendant, in turn, contends that the November 8th Meeting did not
result in an oral partnership agreement.125 Defendant also contends that Handler did
121 Grunstein v. Silva, 2014 WL 4473651, at *16 (Del. Ch. Sept. 5, 2014), aff'd, 113 A.3d 1080 (Del. 2015), and aff'd sub nom. Dwyer v. Silva, 113 A.3d 1080 (Del. 2015). Although the issue here is simply whether Handler is a partner of Topco for purposes of the books-and-records statute, the matter is akin to a specific performance of the supposed oral partnership agreement, which would require clear and convincing evidence from Handler. Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1158 (Del. 2010) (holding that [a] party must prove by clear and convincing evidence that he or she is entitled to specific performance . . . . The parties in briefing have asserted that the standard of evidence is preponderance, however, and for purposes of this Memorandum Opinion, I accept and apply that standard. 122 Id. 123 Pl. -Trial Br. on the Standing Issue OB 24 27, Dkt, No. 202 PL PT OB . 124 Id. at 27 32. 125 Def. -Trial Opening Br. 12 15, Dkt. No. 201 DF PT OB .
21 not assert that the oral partnership agreement existed until this present litigation
ensued.126
Pursuant to traditional partnership principles, a partnership is created by the
association of [two] or more persons (i) to carry on as co-owners a business for profit
form a partnership, whether or not the persons intend to form a partnership, and (ii)
to carry on any purpose or activity not for profit, forms a partnership when the
persons intend to form a partnership. 127 Under Delaware law, a limited partnership
128 affairs of a limited partnership and the conduct of its
entered into or otherwise existing either before, after or at the time of the filing of a 129 is a question
of intent. 130 A partnership exists if the 131 Traditional contract principles apply to partnership
agreements, as such a partnership agreement is only enforceable if it contains all
material terms.132
126 Id. at 33. 127 6 Del. C. § 15-202(a). 128 6 Del. C. § 17-101(14). 129 See 6 Del. C. § 17-201(d). 130 Grunstein v. Silva, 2011 WL 378782, at *9 (Del. Ch. Jan. 31, 2011) (quoting Hynansky v. Vietri, 2003 WL 21976031, at *5 (Del. Ch. Aug. 7, 2003)). 131 Id. at 9 (quoting Ramone v. Lang, 2006 WL 905347, at *12 (Del. Ch. Apr. 3, 2006)). 132 Id.
22 Under Delaware law, an enforceable contract exists when (1) the parties have
made a bargain with sufficiently definite terms; and (2) the parties have manifested
mutual assent to be bound by that bargain. 133 M
objectively based upon the[ ] [parties'] expressed words and deeds as manifested at 134 the time rather than by their after-the-
Therefore, the Court must determine hether a reasonable negotiator in the position
of one asserting the existence of a contract would have concluded, in that setting,
that the agreement reached constituted agreement on all of the terms that the parties
themselves regarded as essential and thus that agreement concluded the negotiations
. . . . 135 A contract is not required to be in writing in order to be enforceable
the objective, contemporaneous evidence indicates that the parties have reached an
agreement, they are bound by it, regardless of its form or the manner in which it was 136
Here, the objective contemporaneous evidence demonstrates that Handler and
Centerview did not reach an agreement on the essential terms to create a partnership
in Topco at the November 8th Meeting. It is clear that the Founders of Topco wished
to bring in Handler and St. Jean as partners. Prior to the November 8th Meeting,
133 Sarissa Cap. Domestic Fund LP v. Innoviva, Inc., 2017 WL 6209597, at *21 (Del. Ch. Dec. 8, 2017) (quoting Osborn ex rel. Osborn, 991 A.2d at 1158). 134 Id. (quoting Debbs v. Berman, 1986 WL 1243, at *7 (Del. Ch. Jan. 29, 1986)). 135 Id. (quoting Leeds v. First Allied Conn. Corp., 521 A.2d 1095, 1097 (Del. Ch. 1986)). 136 Id. (quoting Debbs, 1986 WL 1243, at *7).
23 Handler was considered an employee pursuant to the 2008 Letter. The Founders
proposed terms for establishing a partnership with Handler before the November 8th
Meeting, which were not acceptable to Handler.137 Handler and St. Jean proposed 138 At the November 8th
M 139
Handler asserts that this meeting created a partnership in Topco. 140 The
evidence offered into the record, however, belies this. To the extent the term sheet
was an offer by the Founders to create a partnership with Handler, Handler did not
accept. After the meeting, Handler sent the Founders an email stating,
This, I find, is
strong evidence that an agreement was not reached at the November 8 th Meeting.141
At trial, Handler characterized what took place at the November 8th Meeting as an 142
Other email exchanges in the weeks after the November 8th Meeting, among
the Founders, Handler, and St. Jean strongly indicate that neither Handler nor St.
137 Tr. 29:14 15, 30:15 31:1 (Handler). 138 Tr. 246:24 247:4, 253:10 19 (Handler). 139 Tr. 361:5 19 (Pruzan). 140 PL PT OB 24 27. 141 JX54 at 2. 142 Tr. 168:16 23, 246:21 4, 253:7 13 (Handler).
24 Jean considered that they had entered an oral partnership agreement. For example,
on November 15, 2012, Handler sent the proposed term sheet to his attorney, stating, 143 In
addition, on December 16, 2012, St. Jean wrote to Pruzan and with Handler copied
stated
along the lines we have been discussing . . . we are not done working through the 144 Importantly, when Handler first expressed his
displeasure with his pay in 2022, he sent an email to Pruzan and Effron stating his
. . . and 145 ... He did not reference the purported
oral partnership agreement in Topco.146
Notably, several material terms were still up for discussion throughout the
years-long exchange of draft LPAs following the November 8th Meeting.147
The parties also did not perform in accordance with the terms identified in the
purported oral partnership agreement.148
143 JX55. 144 JX 138. 145 JX377. 146 Id. at 2. 147 See JX62; JX79; JX125. 148 Compare JX318 (stating that Handler had not participated in the Priority Capital Amounts for three years); JX250 (evidencing compensation were subject to the Founders and compensation proposals) , with JX52; Tr. 51:10, 174:1 175:6 (Handler); Tr. 38:4 45:15, 54:15 55:1 (Handler); JX474 ¶18; JX413 at No.16 (showing purported terms from the purported oral partnership agreement).
25 remained at the discretion of the Founders, and not the terms set forth in the
purported oral partnership agreement.149 In fact, when his compensation did not
coincide with the purported oral partnership agreement, Handler did not assert or
express his rights under the purported oral partnership agreement.150 For instance,
once Handler made an 83(b) election he began to receive Schedule K-1s, which
reflected interests in CPAH, not Topco; he did not dispute the classification.151
In addition, during , before making his 83(b)
compensation was reflected through W-2s, demonstrating that
Handler was in fact an employee, and not a traditional partner.152 Notably, Handler
never signed the LPA agreement, which, that document provides, is a requirement
to form the partnership.153 In a similar vein, Handler represented to third parties that
an agreement regarding the partnership had not been reached, evidencing that the
parties were still in discussions regarding a partnership agreement and nothing
149 JX250. 150 For example, in a response to a compensation proposal, Handler expressed an interest in a term that Handler claims the parties agreed to in the purported oral partnership agreement, Handler acknowledged that he had not participated in it for three years and did not express that such violated an oral partnership agreement. JX318. 151 Handler argues that a lack of receiving Schedule K-1s is not indicative of a lack of an oral partnership agreement. PL PT AB 48 51 (citing Robinson v. Darbeau, 2021 WL 776226, at *9 (Del. Ch. Mar. 1, 2021); Cianci v. JEM Enter., Inc., 2000 WL 1234647, at *2 (Del. Ch. Aug. 22, 2000)). I find that the record demonstrates that an oral partnership agreement was not reached between the parties; the lack of a Schedule K-1 is not determinative and is only a part of the evidence that I find predominates. 152 See JX163; Tr. 154:13 155:11 (Handler). 153
listed on the signature pages hereto . . . (responding to St. Jean in an email ).
26 pertaining to the agreement had been fully executed. 154 Handler asserts that these
communications merely evidence that either there was no written agreement to
provide or that Topco had not been formed at that time.155
not persuasive. I find that under a reasonable interpretation the third-party
communications evidence that the partnership agreement was still under discussion,
and not consummated. These include email to a third-party organization,
of which Handler chairs the board of directors, expressing that he still had not
entered partnership agreements with Centerview,156
accountant, stating that the partnership agreement had not been reached.157
Handler offers numerous arguments to support the creation and execution of
the purported oral partnership agreement, none of which, in my view, are persuasive
or sufficient to satisfy his burden.158 First,
154 Tr. 94:4 10 (Handler); JX93 (expressing to a company, where he chaired the board of directors, that he still had not signed partnership agreements with Centerview); JX97 (emailing his accountant and expressing that the partnership agreement had not been executed). 155 Id. 156 Tr. 94:4 10 (Handler); JX93. 157 JX97. 158 Handler makes further arguments based on the Topco LPA, which is a written agreement that he did not enter.
PL PT OB 37. opinion, supports his argument that he is a partner of Topco, because the LPA provided for this
to the Partnership:
27 demonstrate that the oral partnership agreement existed.159 Handler argues that
operational proceeds, which in his view, was consistent with the terms that the
parties agreed to at the November 8th Meeting.160 Similarly, Handler contends that
the Topco 2012 Ledgers also Capital
,
accounts that were otherwise only held by Effron and Pruzan, the founding
partners.161 The record evidences that the spreadsheets are not, and were never, 162 Rather, the spreadsheets that
Handler reference track economic interests across the full Centerview organization,
admission to the Partnership, such Partner shall be deemed to have made Capital Contributions to the Partnership with respect to such contributed, exchanged, or Id.; JX135 § 1.5(a).
I find that the evidence does not support his assertion, as the record indicates that the other two individuals mentioned are themselves not partners, but employees, of Topco, who do not enjoy governance or control rights at Topco. Tr. 368:11 15; 403:11 17 (Pruzan) (stating Hartman and
JX271 (2016); JX307 (2017); JX329 (2018); JX343 (2019); JX393 (2020); JX421 (2022)). 160 Id. at 34. 161 Id. 35. 162 Vicari Aff. ¶ 3.
28 and thus are
partner.163 They are evidence in support of a partnership, but not strong evidence.
Handler further contends that
recorded Handler
well as Topco Class B Units.164
is a Topco partner. I find that the record evidences that
Jeanne Vicari,
negotiations, to demonstrate what schedules to the LPA
might have looked like if the parties had come to a partnership agreement.165 But,
because Handler and St. Jean never executed a written partnership agreement, that
finalized.166
Handler and St. Jean had no
interests as of 2013, since the spreadsheet contains --
. 167
163 See Vicari Aff. ¶¶ 4, 9; Centerview Tr. 252:9 10 (Pruzan testifying that Vicari keeps these id. at 263:17 19 (Pruzan testifying: This is a page that represents the 164 PL PT OB 39. 165 Vicari Aff. ¶ 5; JX72. 166 Id. 167 JX161.
29 Handler also points to 2014 22 ledger records, which reflected that
he . Handler further argues those
ledgers also recorded that he
three additional fiscal years after the November 8th Meeting, and continued to hold
, which accrued interest
until he left in 2022.168
partnership.169 According to Handler, receipt of Topco Priority Capital Amounts
and Priority Capital Accounts
not a partner of Topco.170
Amounts and TVIs. First, simply receiving economic interests does not provide that
a partnership exists.171 As I have previously found, Handler did not share in losses
168 JX217; . 169 Pl. -Trial Br. on the Standing Issue 16, Dkt. No. 211 (citing . Corp., 906 A.2d 218, 230 (Del. Ch. June 29, 2006); Bamford v. Penfold, L.P., 2020 WL 967942, at *17 (Del. Ch. Feb. 28, 2020); 6 Del. C. § 17-101(15)). 170 PL PT OB 42. 171 See Grunstein, 2014 WL 4473641, at *23 (holding that a partnership did not exist where plaintiff did not have control and ownership in the purported partnership); see also Silva, 2011 WL 378782, at *9 (A partnership exists if parties have a common obligation to share losses as well as
30 with Centerview and did not have governance rights, indicating that a partnership
did not exist. Priority Capital
Amounts were a part of his annual compensation discussions, which were subject to
and not provided by the purported oral partnership
agreement.172
Again, the documentary evidence pointed to by Handler is some evidence of
an oral partnership, but not strong evidence. To the extent that this documentary
evidence supports Handler contention that an oral partnership agreement was
reached at the November 8 Meeting,173 I find that it is insufficient to rebut the record
that supports a finding that the parties did not come to an agreement for all of the
reasons previously listed.174
Handler, relying on Grunstein,175 also argues that the exchange of various
draft LPAs is not conclusive that the parties did not come to an oral partnership
profits.); see generally 6 Del. C. § 15-202 (c)(3)(ii) (providing that an employee sharing profits does not create a presumption of partnership)). 172 See JX250 at 3; JX249; JX352 at 2016 Tab Cell E:35, 2017 Tab Cell E:35 (showing that capital amounts after 2015). 173 Centerview asserts that these entries were placeholders, and, as I found above, this characterization is credible. Vicari Aff. ¶ 5; JX72. 174 See Pogue v. Hybrid Energy, Inc., 2016 WL 4154253, at *1 (Del. Ch. Aug. 5, 2016) (finding inclusion on the stock ledger states a prima facie, but rebuttable, case that a plaintiff is a statutory stockholder of record; and that, here, the undisputed record rebuts that presumption, precluding Pogue from the relief he seeks. 175 Id. at *10 (holding on summary judgment agreements does not indicate as a matter of law that the parties never reached a different
31 agreement at the November 8th Meeting.176 Handler is correct, but his reliance on
Grunstein is unpersuasive. The exchange of draft LPAs is not conclusive but
supportive of my finding that the parties did not agree to the essential terms of an
oral partnership agreement, as evidenced by continued negotiations and unsuccessful
attempts to alter the original proposal over a period of time.177
In addition, Handler points out that he had expressed his displeasure at his
compensation and lack of ownership and argues that his remaining at Centerview
after voicing his discontent demonstrates that the parties must have reached an oral
partnership agreement at the November 8th Meeting.178 Before the November 8th
Meeting, however, Handler and St. Jean sent the Founders an addendum to the 2008
Letter, which addressed their compensation.
was consistent with the addendum to the 2008 Letter. After the November 8th
Meeting, when Handler addressed his compensation issues with the Founders, he
asserted compensation rights provided by the 2008 Letter, instead of the purported
oral partnership agreement.179 As such, I find that the record demonstrates that the
compensation, post the November 8th Meeting, merely indicate
176 PL PT OB 5; Grunstein, 2011 WL 378782, at *9. mutual assent are also unpersuasive since they concern actions where an oral partnership agreement was not in dispute or involve evidence of executed written agreements. See PL PT OB 4 6. 177 Grunstein, 2014 WL 4473641, at *19. 178 PL PT OB 18 20, 29 30. 179 JX377 at 2 (asserting standard . . . and . . . ).
32 Handler accomplished his purpose at the meeting, to increase his compensation at
Centerview, which explains his continuing presence at the firm.
Overall, however, I find that the evidence falls short of demonstrating an oral
partnership agreement, and Plaintiff has not met his burden. Therefore, I conclude
that when Handler left his employment in 2022, he was an employee with certain
vested rights in Centerview (to be determined in the Plenary Action) but was not a
Topco partner entitled to invoke 6 Del. C. § 17-305.
III. CONCLUSION
For the foregoing reasons, I find that Plaintiff is not a partner of Topco and
therefore not entitled to books and records under 6 Del. C. § 17-305. The parallel
litigation, the Plenary Action, should proceed. To the extent motions in this books-
and-records action need resolution, the parties should so inform me. The parties
should submit a form of order consistent with this Memorandum Opinion.