Kelly v. Smith

611 N.E.2d 118, 1993 Ind. LEXIS 41, 1993 WL 84949
CourtIndiana Supreme Court
DecidedMarch 26, 1993
Docket37S04-9303-CV-388
StatusPublished
Cited by30 cases

This text of 611 N.E.2d 118 (Kelly v. Smith) is published on Counsel Stack Legal Research, covering Indiana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kelly v. Smith, 611 N.E.2d 118, 1993 Ind. LEXIS 41, 1993 WL 84949 (Ind. 1993).

Opinions

ON PETITION TO TRANSFER

KRAHULIK, Justice.

This case concerns the division of legal fees earned after the dissolution of a law partnership. Timothy F. Kelly (Plaintiff and Counter-Defendant below) seeks transfer from the Court of Appeals opinion which affirmed the grant of partial summary judgment in favor of J.B. Smith, Robert F. Parker, Randall J. Nye, Andrew J. Fetsch and Daniel W. Glavin (Defendants and Counterclaimants below) (the "Firm"). Kelly v. Smith (1992), Ind. App., 588 N.E.2d 1306.

Proceedings Below

The parties to this action, Kelly and the Firm, practiced law together in the partnership of Beckman, Kelly & Smith. Their relationship was governed by a written partnership agreement which incorporated the Uniform Partnership Act ("UPA"), Ind. Code § 28-4-1-1 through § 28-4-1-48, to govern matters not addressed by or in conflict with the partnership agreement.

On March 21, 1989, Kelly notified his partners that as of March 81, 1989, he would withdraw from the partnership. Following Kelly's withdrawal, the remaining partners continued to practice together under the name of Beckman, Kelly & [120]*120Smith, but some of the Firm's clients rected that their files be transferred Kelly's new firm so that Kelly could continue legal representation. Additionally, some of the Firm's employees left the Firm to work for Kelly.

Shortly after his withdrawal, Kelly and Elizabeth D. Kelly, his mother, filed a Verified Complaint for Preliminary Injunction with the Lake Superior Court requesting the court to restrain the Firm from using the "Kelly" name in the title of the law firm. The Firm filed a counterclaim. In Count I of its counterclaim, the Firm asserted that the matters removed by Kelly from the Firm were assets of the Firm and, consequently, Kelly was liable to the Firm for all legal fees generated by these matters, although the Firm conceded that Kelly was entitled to retain his partnership interest in these fees.

The Firm filed a summary judgment motion on Count I of its counterclaim and the trial court granted a partial summary judgment in favor of the Firm. The partial summary judgment held that the Firm was entitled to its share of fees earned by Kelly after his withdrawal on matters removed from the Firm. However, the trial court found that a genuine issue of material fact existed as to Kelly's partnership interest, the matters which were partnership assets, and the amount of fees which were earned on these matters. The trial court also held that the granting of the partial summary judgment was a final and appealable order.

After his motion to correct errors was denied by the trial court, Kelly appealed to the Court of Appeals and raised several issues. Among the claimed errors was the trial court's construction of the partnership agreement. The Court of Appeals affirmed the trial court. In his petition to transfer, Kelly challenges the division of subsequently-earned legal fees. We grant transfer in order to resolve this issue.1

Issues Presented

Kelly asserts that (1) the Court of Appeals improperly divided the legal fees earned after dissolution because the partnership agreement required that all matters of the partnership be valued as of the date of dissolution; (2) it was improper to require the departing partner to return fees to the Firm when the Firm did not have a reciprocal duty to pay fees to Kelly; and (8) the agreement violates the Rules of Professional Conduct because it restricts his ability to practice law after withdrawing from the partnership.

The Firm asserts that, because the partnership agreement is silent regarding payments to be made by the withdrawing partner to the Firm after his withdrawal, the UPA is used to complete the partnership agreement and, pursuant to the UPA, Kelly owes the Firm its share of fees earned after dissolution on matters removed by Kelly. In conjunction with this argument, the Firm asserts that because the UPA, and not the partnership agreement, requires Kelly to remit the fees to the firm, the Rules of Professional Conduct are not violated. The Firm also argues that it does not owe Kelly any fees earned after dissolution for matters which remained with the Firm, because the partnership agreement provided the sole method of calculating the amount of money which is owed to the withdrawing partner.

Discussion

The partnership agreement, more particularly Paragraph 6, titled Termination and Buy-Out, established the value of the withdrawing partner's interest in the partnership as of the last day of the month of withdrawal. In calculating the withdrawing partner's interest, the Firm valued the partner's net capital account, vested interest in receivables, and vested interest in contingent fee cages. The agreement then stated the formula used to determine each of these values. The agreement, however, did not address the withdrawing partner's obligation to the Firm after his withdrawal for matters which followed him, nor did it address whether the Firm has any obligation beyond Paragraph 6 to the withdrawing partner.

[121]*121When a court is asked to interpret an agreement, it is necessary for the court to examine the parties' intent when they wrote the agreement. First Federal Sav. Bank v. Key Markets (1990), Ind., 559 N.E.2d 600, 603; DeHaan v. DeHaan (1991), Ind.App., 572 N.E.2d 1315, 1320; Hollars v. Randall (1990), Ind.App., 554 N.E.2d 1177, 1179. The court, in interpret, ing the agreement, is under an obligation to read the agreement in a manner which harmonizes its provisions as a whole and to give effect to the parties' expressed intent. First Federal, 559 N.E.2d at 608; DeHaan, 572 N.E.2d at 1320; McCae Management v. Merchants National Bank & Trust (1990), Ind.App., 553 N.E.2d 884, 887.

As stated previously, the partnership agreement incorporated the UPA as governing "except as otherwise provided," and stated that, if there were a conflict between the UPA and the partnership agreement, the partnership agreement controlled. Here, the partnership agreement addressed the withdrawal of a partner by providing a buy-out provision. As a result, the partners agreed on what would occur upon a partner's withdrawal from the Firm. It is clear that the parties intended that the UPA be preempted by the agreement and that the affairs between them be wound up at the moment of the withdrawal of a partner. Therefore, the Firm's contention is correct that Kelly should receive no subsequent payment from the Firm except that which is provided in Paragraph 6. Likewise, however, the Firm is not entitled to receive payments for legal services provided by Kelly in matters which followed Kelly. This decision gives effect to the parties' intent which was to wind up partnership affairs at the moment of dissolution.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Nilles v. Webb
N.D. Indiana, 2023
Cohen & Malad, LLP v. Daly
17 N.E.3d 940 (Indiana Court of Appeals, 2014)
Stewart v. TT COMMERCIAL ONE, LLC
911 N.E.2d 51 (Indiana Court of Appeals, 2009)
Trustees of Indiana University v. Cohen
910 N.E.2d 251 (Indiana Court of Appeals, 2009)
Thomas Hinc v. Lime-O-Sol Company
382 F.3d 716 (Seventh Circuit, 2004)
Attorney Grievance Commission v. Potter
844 A.2d 367 (Court of Appeals of Maryland, 2004)
Wenzel v. Hopper & Galliher, P.C.
779 N.E.2d 30 (Indiana Court of Appeals, 2002)
Bowling v. Poole
756 N.E.2d 983 (Indiana Court of Appeals, 2001)
Ecorp, Inc. v. Rooksby
746 N.E.2d 128 (Indiana Court of Appeals, 2001)
Galanis v. Lyons & Truitt
715 N.E.2d 858 (Indiana Supreme Court, 1999)
Galanis v. Lyons & Truitt
698 N.E.2d 368 (Indiana Court of Appeals, 1998)

Cite This Page — Counsel Stack

Bluebook (online)
611 N.E.2d 118, 1993 Ind. LEXIS 41, 1993 WL 84949, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kelly-v-smith-ind-1993.