North Carolina Lawyers Weekly
Grub, Inc. v. Sammy’s Seafood House & Oyster Bar, LLC (Lawyers Weekly No. 15-16-0380, 31 pp.) (Linda Stephens, J.) Appealed from Carteret County Superior Court (John Nobles Jr., J.) N.C. App. Unpub.
Holding: Despite defendant Boyd’s testimony that he agreed to pay plaintiff VanHorn’s past-due bills plus $25,000 for his restaurant, plaintiffs presented evidence that Boyd and VanHorn agreed to a 50-50 partnership with Boyd paying VanHorn’s past-due bills during the first year and then five percent of the restaurant’s gross sales thereafter. Whether their partnership later took the form of a new LLC or whether VanHorn was to give Boyd a share of plaintiff Grub, Inc. at some point appears to have been a detail VanHorn and Boyd were willing to determine later; thus, it was not a material term of the partnership agreement.
We affirm in part the trial court’s judgment in favor of plaintiffs in the amount of $415,018.55. We vacate in part and remand for additional findings of fact and recalculation of damages.
Although numerous cases say the sharing of profits is an indispensable part of any partnership, the trial court did not rely on the sharing of gross sales alone in determining that a partnership existed between Boyd and VanHorn. Additional evidence in the form of witness testimony, documentary evidence, and the actions and representations of Boyd and VanHorn all supported the trial court’s findings regarding both the existence of a partnership as well as the specific terms included in the oral partnership agreement.
While we agree with defendants that the partnership agreement was at will, we conclude that the trial court correctly concluded that defendants breached the agreement prior to the termination of the parties’ partnership.
Plaintiffs’ complaint alleges that the agreement was to continue “for so long as the two remained in business together.”
In a partnership at will, dissolution occurs automatically by operation of law upon any partner’s unequivocal expression of an intent and desire to dissolve the partnership.
Although, by the summer of 2011, Boyd had become evasive when VanHorn tried to discuss problems with their partnership, it was not until a meeting in January or February 2012 that Boyd clearly communicated his intent or desire to dissolve the partnership.
Defendants’ acts and omissions prior to that date – including the creation of defendant Sammy’s Seafood House & Oyster Bar, LLC (SSH) without providing VanHorn a 50 percent interest therein and the failure to give plaintiffs five percent of the restaurant’s gross sales – were breaches of the agreement. Accordingly, the trial court did not err in finding and concluding that defendants breached the agreement.
Defendants argue that the trial court erred in concluding that SSH was liable for breach of the agreement because it did not yet exist when Boyd and VanHorn entered into the agreement. We reject this circular argument.
While SSH did not exist at the time the agreement was made, its existence was clearly contemplated by and provided for in the agreement. Indeed, the creation of SSH, to the exclusion of VanHorn, was one of the primary actions which constitutes breach of the partnership agreement here. Boyd cannot shield his assets from liability for his breach of the agreement by arguing that SSH – the entity whose very creation was itself the breach – did not exist at the time the agreement was entered into.
However, since the partnership terminated in January or February 2012, the trial court erred in awarding plaintiffs five percent of gross sales through the end of 2013. We remand to the trial court for additional findings of fact regarding the date of the termination and recalculation of damages based thereon.
Where this conflict was solely an internal matter between Boyd and VanHorn over the terms of their contractual relationship, the conduct at the root of this matter did not affect commerce. Accordingly, the trial court did not err in dismissing plaintiffs’ unfair trade practices claim.
Affirmed in part; vacated and remanded in part.
