Opinion
Index No. 653609/2014
07-06-2016
ACACIA WIND, LLC, Plaintiff, v. SIGNAL CAPITAL MANAGEMENT, LLC, FXBO 1, LP, and SHANE RODGERS, Defendants.
DECISION and ORDER
Mot. Seq. 001
Plaintiff Acacia Wind, LLC ("Acacia" or "plaintiff") brings this action against defendants, Signal Capital Management, LLC ("Signal"), its managing member, Shane Rodgers ("Rodgers"), and FXBO 1, LP ("FXBO" and collectively, "defendants"). Plaintiff seeks a judgment ordering the dissolution of the partnership FXBO, an accounting of the affairs of the partnership, the selling of the partnership's assets, the division of the partnership's assets, and the appointment of a receiver to direct the dissolution of the partnership, sale of its assets, collection of all monies and division of the proceeds. Plaintiff further seeks damages, costs, disbursements and attorney's fees.
The following factual allegations are set forth in the verified complaint. Plaintiff Acacia and defendant Signal entered into an agreement, in writing, stating that they were partners in the investment partnership known as FXBO (the "Partnership"). Plaintiff contributed $49,000 to the Partnership. Signal's managing member, Rodgers, managed and had control over the FXBO. Defendants Signal and Rodgers failed to send regular statements to plaintiff, though FXBO was purportedly making investments. Plaintiff has been denied access to the books and records of FXBO and has never been provided with a proper accounting. Beginning in March 2013, investments claimed to have been made by FXBO did not follow the original investment guidelines previously agreed upon. Plaintiff has never received any proof that any investments were actually made. Rodgers promised plaintiff that Acacia would recover its losses.
On July 15, 2014, Victor J. Caputo, Esq., sent a letter to Signal requesting, inter alia, access to the books and records of FXBO on behalf of the plaintiff. Rodgers denied plaintiff access to the books and records of the Partnership.
The verified complaint asserts claims for breach of the partnership agreement, dissolution of the partnership, refusal to provide an accounting, breach of fiduciary duty, negligence, and fraud.
Plaintiff now moves for an Order, pursuant to CPLR § 3215, directing the entry of a default judgment in favor of plaintiff. In support, plaintiff submits the attorney affirmation of Victor J. Caputo, Esq., dated December 23, 2015; a copy of the summons and verified complaint; copies of the affidavits of service attesting to service upon defendants FXBO, Signal, and Shane Rodgers; and proof of additional service upon defendants via first-class mail pursuant to CPLR § 3215(g).
No opposition is submitted.
Under New York law, a "partnership is an association of two or more persons to carry on as co-owners of a business for profit." Partnership Law § 10. Every partner is an agent for the purpose of the partnership's business, and in general the act of every partner done for the carrying on of the business of the partnership will bind the partnership. Partnership Law § 20(1).
A partnership dissolves when there is a change in the relationship between the partners caused by one partner who no longer associates with the purposes of the partnership. Partnership Law § 60; see Gardiner Intern., Inc. v J W. Townsend & Assocs. Inc., 13 A.D.3d 246 (1st Dept. 2004). The express will of any partner, when there is no definite term in the agreement, will cause a dissolution. Partnership Law § 62; see Vann v Kreindler, Relkin & Goldberg, 78 A.D.2d 255 (1st Dept. 1980) (a partnership dissolves at the time a partner leaves or withdraws from it); Mashihi v 166-25 Hillside Partners, 51 A.D.3d 738, 738-739 (2d Dept. 2008) (where partners stopped managing the real property which was the purpose of their at-will partnership, stopped making financial contributions toward its maintenance, and then ceased communicating with other partners, by operation of law the partnership was dissolved no later than the point at which communications ceased).
Pursuant to Partnership Law § 63, a court shall decree a dissolution on application by or for a partner whenever "[a] partner wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him," or "[o]ther circumstances render a dissolution equitable[.]" Partnership Law § 63(1)(d), (f). The dissolution of a partnership does not terminate the partnership, and the partnership continues until its affairs have been completely wound up. Partnership Law § 61.
Partnership Law § 41 provides that "[t]he partnership books shall be kept, subject to any agreement between the partners, at the principal place of business of the partnership, and every partner shall at all times have access to and may inspect and copy any of them" (emphasis added). A formal accounting is permitted under Partnership Law § 44 when a partner "is wrongfully excluded from the partnership business or possession of its property by his copartners[.]" Partnership Law § 44.
A temporary receiver should only be appointed where there is a clear evidentiary showing of the necessity for the conservation of the property at issue and the need to protect a party's interests in that property. See CPLR § 6401; Vardaris Tech, Inc. v. Paleros Inc., 49 A.D.3d 631, 632, 853 N.Y.S.2d 601 (2d Dept. 2008); In re Armienti, 309 A.D.2d 659, 661, 767 N.Y.S.2d 2, 4 (1st Dept. 2003) ("The drastic remedy of the appointment of a receiver is to be invoked only where necessary for the protection of the parties. . . . There must be danger of irreparable loss, and courts of equity will exercise extreme caution in the appointment of receivers, which should never be made until a proper case has been clearly established."); Trepper v. Goldbetter, 205 A.D.2d 363, 364 (1st Dept. 1994) (a detailed evidentiary showing is required for the appointment of a receiver).
Wherefore, it is hereby
ORDERED that the branch of plaintiff's motion seeking a declaration that the Partnership, FXBO 1, LP, is dissolved as a matter of law is granted without opposition; and it is further
ORDERED that defendants Signal Capital Management, LLC, Shane Rodgers, and FXBO 1, LP, are directed to provide an accounting of the partnership affairs to the Court within 60 days after service of a copy of this order with notice of entry; and it is further
ORDERED that the branch of plaintiff's motion seeking the appointment of a temporary receiver is denied as premature pending this Court's receipt of an accounting of the affairs of the partnership and the declaration of its assets.
This constitutes the Decision and Order of the Court. All other requested relief is denied. DATED: JULY 6, 2016
/s/_________
EILEEN A. RAKOWER, J.S.C.