Case Law Summaries

Barr v. Trien, Rosenberg, Rosenberg, Weinberg, Ciullo & Fazzari

• Opinion Date: March 14, 2002
• Business Law
• E-Mail

PARTNERSHIPS— Where a partnership has no agreement dealing with dissolution value, statutory terms apply, and those terms recognize goodwill value as a partnership asset.

Two partners resigned from an accounting partnership and sought compensation, including a share of their former partnership’s goodwill. The partnership agreement provided for dissolution of their firm only in the event of “death, incompetence, or bankruptcy of a Partner.” There were “no provisions for distribution in the event a partner withdrew from the firm, and there were no covenants not to compete in place at any time.” At trial, the resigning partners produced an expert as to valuation. The expert’s testimony was ultimately rejected by the lower court, which held that the expert “played with numbers as no one has ever done. It’s unbelievable what he’s done with his numbers. Never has there been such a lengthy report that I’ve seen which meant so little.” The lower court’s opinion included seven pages of specific examples to support that finding. The opinion included language reading that the expert “juggled the figures as nobody as [sic] ever juggled figures ... [by taking] actual figures when he wanted to ... [and] ignor[ing] them when he wanted to,” “when he [] reconstructed the balance sheet he jockeyed it to whatever he wanted to do.” The lower court concluded that “there’s no basis whatsoever for the comparables which [the expert] used in his determination of market value” and “this was the most unreliable, illogical witness with outrageous, unreasonable opinions— much more than a dozen— unsupported by competent, credible evidence and even contrary to some of his prior statements.” The Appellate Division found no error in the lower court’s “painstaking analysis of the evidence… .” According to the Court, “[e]ven putting on the rosiest-colored glasses, a judge is not required to accept an expert’s conclusory statements which are a net opinion or one totally unsupported by the evidence presented at trial just because an expert says it.” “Since the partners had no express agreement dealing with dissolution valuation after a voluntary withdrawal of some of the partners, the burden [was] on the [withdrawing partners], using the criteria set forth in [the Uniform Partnership Act].” In determining value pursuant to the Act, it is appropriate to recognize goodwill “as an intangible asset of a partnership which may have value upon its dissolution… .” Here, the withdrawing partners failed to put competent evidence of that value before the Court, and according to the Appellate Division, the lower court correctly decided to reject the expert’s valuation of goodwill.

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