Smith & Condeni, L.L.P. v. Condeni

2023 Ohio 1480
Ohio Court of Appeals·Decided May 4, 2023·No. 111903·Published

Opinion

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

SMITH AND CONDENI, LLP, ET AL, :

Plaintiffs-Appellants, :

No. 111903

v. :

JOSEPH A. CONDENI, ET AL., :

Defendants-Appellees. :

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED AND REMANDED RELEASED AND JOURNALIZED: May 4, 2023

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-17-889339

Appearances:

Cavitch, Familio & Durkin Co., LPA, Max E. Dehn, and Madelyn M. Maruna, for appellants.

Dunson Law, LLC, and Joseph P. Dunson, for appellees.

SEAN C. GALLAGHER, J.:

N. Lindsey Smith, and Smith and Condeni, LLP (“S&C”), appeal the trial court’s interlocutory decision declaring Smith to have been dissociated from S&C as late as December 29, 2014, before their claims for relief against Joseph

Condeni are alleged to have arisen. For the following reasons, the decision of the trial court is affirmed.

In light of the interlocutory nature of this appeal, the recitation of the facts is limited to those necessary to resolving the limited issue presented for review. Although the amended complaint and counterclaim contain several allegations pertaining to damages caused by the other’s alleged misconduct, the trial court bifurcated the trial proceeding. The first part involved a hearing on the dissociation claims advanced by Smith and Condeni that would determine which of the two was authorized to act on behalf of S&C, potentially impacting Smith’s ability to include S&C as a co-plaintiff. That is to be followed by the resolution of the claims stemming from the various tort and contract claims advanced by Smith and Condeni, some of which were claims on behalf of S&C. Neither of the parties challenge the trial court’s decision to bifurcate the proceeding in this manner.

Smith and Condeni each owned a 50 percent share of S&C until a dispute arose in 2014 regarding Smith’s desire to withdraw from the partnership and move his part of the practice to another law firm. During the harmonious years of S&C’s operations, Smith focused his practice of law on estate planning, while Condeni focused on personal injury litigation. S&C employed several associates and support staff and leased the building within which it operated from a separate entity owned and managed, in pertinent part, by Smith and Condeni. As part of Smith’s estate planning practice, S&C registered a trade name, Trustee Administration

Services (“TAS”), with the Ohio Secretary of State. TAS was established by S&C to handle insurance trust matters for Smith’s estate-planning clients.

In 2014 the partners started discussing Smith’s desired departure from S&C. On December 29, 2014, Smith provided Condeni a memorandum detailing the proposed move and, shortly thereafter, began transitioning clients and some of S&C’s staff to Cavitch, Familo & Durkin Co., L.P.A. (“Cavitch”). Unbeknownst to Condeni, Smith had already shared S&C’s privileged and confidential information with Cavitch as early as October 29, 2014, providing Cavitch with personal information of S&C employees, including salary information for S&C employees Cavitch anticipated hiring and projected and past revenues for the entire S&C estate planning practice. Smith provided that information from a personal email account not associated with S&C and in purported violation of Article 18 of the S&C Partnership Agreement. Under Section 18.2(iii), a duty of loyalty to S&C is created requiring the partners to “refrain from competing with the Partnership in the conduct of Partnership business before the dissolution of the Partnership” and under Section 18.8, all partners must maintain “all business information” in confidence, which survives any partner’s dissociation. (Emphasis added.) At the time Smith began providing confidential and privileged information to S&C’s competitor, Cavitch, there were no attempts to dissolve S&C to permit the disclosure.

In early 2015, Smith departed S&C, taking its various partnership assets and some of its staff with him. This included Smith’s unilaterally transferring the TAS trade name from S&C to himself in August 2016, well over a year after Smith moved his practice from S&C to Cavitch. Smith used S&C employees to facilitate the migration while those employees worked for and were paid by S&C.

After Smith transitioned to Cavitch, S&C remained liable for the rent and office expense obligations based on the inability to sell the building or relet the office space. Both partners used the office space in some capacity following Smith’s departure with Cavitch paying for half the space for a 12-month period. After several years, the dispute between the former partners boiled over and Smith and S&C initiated the underlying action claiming that Condeni secretly retained S&C fees to fund Condeni’s new law firm after Smith left S&C. According to Smith, this formed the basis for him to seek to expel Condeni from S&C, a claim that was included in the amended complaint along with a request for an accounting from S&C.

Condeni answered, asserting claims that Smith withdrew from S&C according to the provision of the S&C Partnership Agreement and Ohio law no later than March 2015 when Smith joined Cavitch, meaning Smith lacked standing to prosecute claims on behalf of S&C.

A large part of their dispute arises from a fundamental misunderstanding of partnership law that infected the partners’ divorce.

In forming their partnership, Smith and Condeni availed themselves of the benefits of operating under a limited liability partnership, thereby creating S&C through execution of the S&C Partnership Agreement. As a result, that agreement and the Revised Uniform Partnership Act (“RUPA”), the statutory section controlling the formation, management, and dissolution of partnerships, provides the framework to effectuate a partner’s decision to leave the partnership. Thus, in taking advantage of the limited liability partnership protections, Smith and Condeni ceded their ability to unilaterally act outside of the terms of the partnership agreement and Ohio law. If either desired to leave the partnership, more was necessary than simply taking each partner’s clients and divvying up the partnership’s property or assets. Despite the limitations placed on limited liability partnerships, Smith left S&C in 2015, taking business and unilaterally taking assets from the partnership without any attempt to formally dissolve the separate entity, which is a prerequisite to what Smith desired to accomplish — a divorce from S&C and a winding up of its affairs.

Along those lines, the trial court aptly observed that although the law with respect to RUPA is not well developed in Ohio, especially in terms of lawyers forming partnerships in the practice of law, the current case stands as the “cautionary tale of what not to do” when the partners’ relationship has run its course.

Important to this discussion is the fact that the Uniform Partnership Act (“UPA”) was replaced and dramatically altered in 2008.1 By adopting RUPA, the legislature changed the law governing partnership breakups and dissolution. “An entirely new concept, ‘dissociation,’ is used in lieu of the [UPA] term ‘dissolution’ to denote the change in the relationship caused by a partner’s ceasing

1 Although the S&C Partnership Agreement was executed in May 2007, R.C.

Chapter 1776 applies to all partnerships after January 1, 2010. R.C. 1776.95(B).

to be associated in the carrying on of the business.” Official Commentary R.C. 1776.51. Although the term “dissolution” was retained, it took on a different meaning, which was that of acts necessary to the termination of the separate entity consisting of the partnership. Id.

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

Smith & Condeni, L.L.P. v. Condeni, 2023 Ohio 1480 (Ohio Ct. App. 2023).

2023 Ohio 1480 (Smith & Condeni, L.L.P. v. Condeni) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Smith & Condeni, L.L.P. v. Cavitch Familo & Durkin Co., L.P.A.
2026 Ohio 1047 (Ohio Court of Appeals, 2026)