Opinion
No. 3D99-340.
Opinion filed April 5, 2000.
An appeal from the Circuit Court for Dade County, Thomas M. Carney, Judge. LOWER TRIBUNAL NO. 95-27680
G. Richard Strafer, for appellant.
Robert A. Butterworth, Attorney General, and Paulette R. Taylor, Assistant Attorney General, for appellee.
Before LEVY and GERSTEN, JJ., and NESBITT, Senior Judge.
After a jury trial, attorney Roberto Rigal, Jr., was convicted of organized scheme to defraud, grand theft third degree, grand theft second degree, and offense against intellectual property. The charges were based on the claim that Rigal had deposited into his personal account several checks which were the property of his law firm and that he had altered the firm's computer records to conceal this activity. Rigal did not deny the allegations but rather maintained that as a partner in the firm, he was a joint owner of the firms assets and thus, he could not be convicted of their theft.
At sentencing the court granted Rigal's motion to vacate his conviction for organized scheme to defraud as being encompassed in his conviction for grand theft third degree.
The established firm procedure was for all monies collected from settlements in the firm's cases to be deposited into the firm's trust account and then paid to the respective clients. According to partner David Levine, only named partners of the firm were authorized to make withdrawals from this account.
Rigal worked for the firm of Levine, Bush, Schnepper and Stein (LBSS), which specializes in worker's compensation cases. LBSS hired Rigal as an associate in 1989. As time went on, Rigal and another associate became dissatisfied with their compensation. Rigal testified that as his reputation as a worker's compensation attorney grew, other firms had attempted to recruit him. To prevent his departure, the founding partners in LBSS made Rigal a partner. According to Rigal, partner Barry Stein told him, "you are now one of us" and introduced him to other clients and lawyers as the "new partner in the firm." Various advertisements, as well as the firm's letterhead, reflected Rigal's partnership status. Rigal was given equal billing with the partners in the firm's listing in Martindale-Hubble. LBSS associates were listed separately on the letterhead and not mentioned at all in the Martindale-Hubbell listing. Each of the firm's original partners had made an initial investment in the firm. Rigal made no such investment but, according to his testimony, did forego other business opportunities to become an LBSS partner. While no written partnership agreement was signed, after his change in status Rigal attended partnership meetings. Notwithstanding the partner designation, for the year 1994 the partners distributed millions in firm profits but gave none to Rigal. When Rigal complained, the firm gave him $20,000.
In November, 1991, the case of Jamie Burgos had been referred to LBSS. Partner Levine conducted the initial interview and signed Burgos as a client. Under the agreement, Burgos was liable to the firm for fees and costs should the firm recover on his behalf. In 1995, when Rigal won a large verdict for client Burgos, shortly after a confrontation with his partners, he put some $50,000 of the fees due the firm into his own personal account.
Additionally, thereafter, from records seized from Rigal's home, the case of Norrianne Pierre was discovered. An insurance company had settled Pierre's case for $25,000 plus $7,500 fees and $740.16 costs. Bank records demonstrated Rigal had deposited the checks from the case into his personal account after being named a partner in LBSS. The files of another client reflected a similar pattern of activity.
In September of 1995, Detective Francisco Perez arrested Rigal at the firm. Perez testified that Rigal admitted taking the checks. Rigal had told Perez that as a firm partner he was justified in taking the checks because he deserved the money and the checks had been made payable to him. Rigal also admitted falsifying the firm's computer records.
Reviewing the dates of the crimes alleged, we agree with Rigal that the place for him to account for his actions was in civil court, not in a criminal prosecution. Accordingly, we reverse the criminal convictions at issue.
Rigal's defense that he was a joint owner of the property at issue is not a new or novel defense, but rather, until recently, has been the general rule as to such claims. See Hinkle v. State, 355 So.2d 465, 467 (Fla.3d DCA 1978) (concluding that "co-owner is in lawful possession of the joint property and cannot be guilty of (1)taking the property (2)of another, two essential elements of larceny"). See also Escudero v. Hasbun, 689 So.2d 1144, 1147 (Fla.3d DCA 1997);Brennan v. State, 651 So.2d 244, 246 (Fla.3d DCA 1995) ("[i]t is axiomatic that [a defendant] cannot be charged and/or convicted of the theft of his own property"). Courts throughout the country have similarly adopted this analysis. See People v. Zinke, 555 N.E.2d 263, 264-67 (1990); see also People v. Clayton, 728 P.2d 723, 725-26 (Colo. 1986); Patterson v. Bogan, 261 S.C. 87, 198 S.E.2d 586, 589 (1973); Jane M. Draper, B.C.L., Annotation , Embezzlement, Larceny, False Pretenses, or Allied Criminal Fraud by a Partner, 82 A.L.R.3d 822, 825 (1978).
See People v. Llamas, 60 Cal.Rptr.2d 357, 361-62 (Cal. Ct. App. 1997) (concluding that a spouse can be convicted of theft for taking community property); Commonwealth v. Mescall, 592 A.2d 687, 690-91 (Pa. Super. Ct. 1991) (same); People v. Kahanic, 241 Cal.Rptr. 722, 723 (Cal. Ct. App. 1987) (holding that a spouse can be convicted of vandalism for destroying community property);State v. Webb, 824 P.2d 1257, 1262-63 (Wash. Ct. App. 1992) (same). See also State v. Kuntz, 875 P.2d 1034, 1036 (Mont. 1994) (a partner can commit theft of partnership assets if he uses the assets for non-partnership purposes without the consent of the other partners); State v. Sylvester, 516 N.W.2d 845, 849 (Iowa 1994) (a partner can be convicted of embezzling partnership assets); State v. Larsen, 834 P.2d 586, 590-91 (Utah App. 1992) (same).
As stated in 50 Am.Jur.2d Larceny section 100 (1995):
Generally, in the absence of penal statutes to the contrary, courts have taken the position that a partner cannot be guilty of embezzlement or larceny of partnership property, or of obtaining partnership property under false pretenses. The common-law rule was apparently based on the belief that since partners have a community of property and interest in the partnership effects, and in law are treated, in a qualified sense, as joint tenants of the partnership property, the use or appropriation of the funds or property of the partnership by a partner to his or her private use would not constitute a criminal act.
Looking at the charges against Rigal, section 812.014, Florida Statutes (1993) provides:
(1) A person commits theft if he or she knowingly obtains or uses, or endeavors to obtain or to use, the property of another with intent to, either temporarily or permanently:
(a) Deprive the other person of a right to the property or a benefit from the property.
(b) Appropriate the property to his or her own use or to the use of any person not entitled to the use of the property. (Emphasis added.)
In section 620.585 (1), Florida Statutes (1993), the term "partnership" is defined simply as "an association of two or more persons to carry on a business for profit as coowners." As to the rules for determining the existence of a partnership, section 620.59, Florida Statutes (1993), provides that the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business. That statute also provides that no such inference shall be drawn if the profits were received in payment as wages. Here, however, Rigal had received $20,000 in addition to his regular wages when he complained that the partners had not been forthcoming with his share of the firm's profits. Likewise, section 620.595, Florida Statutes (1993) provides:
(1) All property brought into the partnership or subsequently acquired by purchase or otherwise on account of the partnership is partnership property.
Confirming our analysis are the statutory changes enacted by the Florida legislature which modify the rule that a partner cannot be charged with the theft of partnership assets. In contrast to the statutes in effect at the time of the actions at issue, section 620.8501 Florida Statutes (1995), applicable to actions occurring after January 1, 1996, clearly provides:
Partnership property is owned by the partnership as an entity, not by the partners as coowners. A partner has no interest that can be transferred, either voluntarily or involuntarily, in specific partnership property. (Emphasis added.)
Furthermore the most recent comment to that section provides in pertinent part:
Section 501 provides that a partner is not a co-owner of partnership property and has no interest in partnership property that can be transferred, either voluntarily or involuntarily. Thus, the section abolishes the UPA Section 25(1) concept of tenants in partnership and reflects the adoption of the entity theory. Partnership property is owned by the entity and not by the individual partners. See also Section 203, which provides that property transferred to or otherwise acquired by the partnership is property of the partnership and not of the partners individually.
RUPA also deletes the references in UPA Sections 24 and 25 to a partner's "right in specific partnership property," although those rights are largely defined away by the detailed rules of UPA Section 25 itself. Thus, it is clear that a partner who misappropriates partnership property is guilty of embezzlement the same as a shareholder who misappropriates corporate property. (Emphasis added.)
Uniform Comment to section 620.8501, Florida Statutes, reprinted in 18 Fla. Stat. Ann. 334 (2000).
Therefore, the Florida legislature, faced with this "opportunity for theft with immunity from criminal prosecution," Annot. 82 A.L.R.3d at 825, has aligned itself with those states which have concluded the partnership is a separate entity from the individual partners and there is no impediment to the prosecution of such claims based on the partnership relation.
As to the case at hand, reviewing the record, it is clear that the firm had announced to the world that Rigal was a partner, the firm had given him partnership assets, and Rigal had foregone other business opportunities for this new status. For the purpose of the instant criminal prosecution, Rigal should be considered a partner. In Hudson v. State, 408 So.2d 224 (Fla.4th DCA 1981), the court concluded that conflicting evidence required a jury's determination of whether certain property was jointly owned, thus warranting an instruction on the effect of joint ownership of partnership property on crime. Here, the evidence presented neither required nor permitted the question of Rigal's partnership status to go to the jury. Reading the applicable statutory definitions for partnerships and partnership assets, it is clear that the instant criminal conviction cannot be upheld.
As the court noted in Hinkle v. State, 355 So.2d at 467, we are expressing no opinion as to the civil consequences of defendant's actions. The firm is free to pursue an argument that a legally binding partnership was not formed. Moreover, if a partnership is found, section 620.66, Florida Statutes (1993), clearly provides:
(1) Every partner must account to the partnership for any benefit, and hold as trustee for it any profits, derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him or its property.
Nonetheless, the directed verdict Rigal sought in this criminal prosecution should have been granted. A case could not be made for Rigal's pre-partner activities, which he characterized as no more than several clerical errors. As to his activities after he was named a partner, the theft of the property of another was not proven. Accordingly, the order under review is reversed.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DISPOSED OF.