Willacy v. Marotta

683 F. App'x 468
CourtCourt of Appeals for the Sixth Circuit
DecidedMarch 24, 2017
DocketNo. 16-3351
StatusPublished
Cited by5 cases

This text of 683 F. App'x 468 (Willacy v. Marotta) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Willacy v. Marotta, 683 F. App'x 468 (6th Cir. 2017).

Opinions

SUTTON, Circuit Judge.

Aubrey Willacy and Salvatore LoPresti practiced law together for decades. When Willacy retired and moved to Florida, he wanted more money for his share in the partnership than LoPresti and the new partners were willing to pay. LoPresti, Marcovy, and Marotta dissolved the firm and initiated arbitration, as the partnership agreement allowed. The district court rightly allowed the arbitrator to resolve the partners’ claims, and we remand the case only to assess whether Willacy deserves prejudgment or post-judgment interest.

I.

In 1979, Willacy and LoPresti, both practicing lawyers, formed a partnership under Ohio law. Realizing how little in this world lasts, they agreed that “[t]he partnership shall be dissolved upon the demand of either of its partners, in which event the partners shall proceed with reasonable promptness to liquidate and terminate the partnership business.” R. 28-2 at 7. The partnership agreement did not spell out how to distribute the dissolved partnership’s assets. But it did say that, “[i]f the partners are unable to agree upon the method and de[]tails of liquidating the partnership business, the controversy shall be settled by arbitration in accordance with the rules of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction thereof.” Id. at 7-8.

Timothy Marcovy joined the partnership in 1984, prompting the firm to change its name to Willacy, LoPresti & Marcovy. R. 11 at 3. A 2007 amendment to the partnership agreement resolved the partners’ dispute about how much capital Marcovy needed to contribute to pay for his stake in the partnership. That amendment set the firm’s valuation at $1,250,000, stated that Willacy was to receive his 52% share in equal annual payments over ten years, and provided that the capital-return payments would stop if the firm dissolved. Id. at 4; R. 28-3 at 6. The amendment also admitted Thomas Marotta to the partnership and explained how the firm would compensate partners in transitional and full retirement. Id. at 1-5. Willacy entered transitional retirement on January 1, 2008, eventually moving to Florida. R. 11 at 2, 5.

A 2009 amendment to the partnership agreement tried to quell a conflict over Willacy’s retirement compensation and Marcovy and Marotta’s partnership buy-in payments. See R. 1-3. This amendment reduced the firm’s valuation by introducing an annual valuation based on gross collections. Instead of getting better, things got worse, prompting another amendment to [471]*471the agreement in 2010. See R. 1-4. The 2010 amendment specified that “[a] retiring partner shall receive an amount equal to one-half of the draw received by the non-retiring partners, to be paid at the same time and in the same manner as such draws are paid to the non-retiring partners.” Id. at 1. The partners stipulated “that, as of the date of [the 2010] amendment, the amount of draw payments being made to non-retiring partners is One Thousand Five Hundred dollars ($1,500) per week,” but they also agreed that a majority of the partners could change the frequency and size of the non-retiring partners’ draws at any time. Id. at 2.

That did not fix things either. Willacy sought over half a million dollars from his partners—what he felt he was owed based on his remaining interest in the firm at the $1,250,000 valuation. R. 11 at 10. But Lo-Presti, Marcovy, and Marotta were willing to buy him out for only $25,000. Id. at 11. Unable to bridge the gap and daunted by the recession’s impact on the firm’s finances, LoPresti, Marcovy, and Marotta dissolved the firm on July 1, 2014. See R. 1-5. LoPresti, Marcovy, and Marotta estimated that the dissolution entitled Willacy to “about $33,500.00, if the disputed half draws are included.” R. 1-6 at 2. On July 17, the three partners offered to pay Willa-cy either (1) “$20,000 within 30 days ... and $1,000/month for 30 months thereafter, for a total of $50,000”; or (2) “$60,000, paid at $1,000/month, over 60 months.” Id. Willacy rejected each offer. The other three partners initiated arbitration over “[a] dispute [that] has arisen as to the dissolution and winding up of the law partnership of Willacy, LoPresti & Marcovy, pursuant to the Partnership Agreement and ORC Ch. 1776, including the amount of distribution to the partners following the winding up.” R. 3-1 at 2.

In response, Willacy filed a lawsuit against the old firm, his former partners, and their .new firm in federal court. See R. 1. The court stayed the case pending arbitration. R. 20 at 10-11.

The arbitrator found that the old law firm had $69,274.41 in net assets, and she divided those assets among the four partners. R. 28-46 at 27. Willacy received $16,150 for his half draws, $20,800 for his original capital contribution, and $4,331.05 for his 33% share of the remaining assets. Id. In response, Willacy filed motions to lift the stay, to file a second amended complaint, and to vacate, modify, or correct the arbitration award. The district court confirmed the award, denied Willa-cy’s motions, and entered judgment in favor of the defendants. Willacy appealed.

II.

Arbitrability. Willacy first challenges the district court’s arbitrability decision—its decision to honor the arbitration clause and to stay the lawsuit until the arbitration concluded.- “An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.” United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). Arbitrators may determine the arbitrability of claims so long as they are “arguably covered by the agreement.” Turi v. Main Street Adoption Servs., LLP, 633 F.3d 496, 511 (6th Cir. 2011). Whenever “the contract contains an arbitration clause,” whether broad or narrow, “there is a presumption of arbitrability.” AT & T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986).

[472]*472“The gravamen of plaintiffs claims,” as the district court correctly framed the issue, “is a dispute about what compensation plaintiff is entitled to for his interest in” the partnership. R. 20 at 11. The dispute about the half-draw payments no doubt began before the three partners announced the dissolution of the firm. We would be surprised if most issues related to the dissolution of a decades-old firm arose overnight. But all of these issues, no matter the first inkling of the problem, bear on “the method and de[ jtails of liquidating the partnership business,” R. 28-2 at 7, because the partners had a zero-sum pot of partnership assets to distribute. Wil-lacy’s purported right to the half-draw payments entitled him to a larger share of the partnership’s assets and impacted his share in the firm’s ownership. See R. 28-46 at 23-25.

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683 F. App'x 468, Counsel Stack Legal Research, https://law.counselstack.com/opinion/willacy-v-marotta-ca6-2017.