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Trombetta v. Trombetta

A-3311-06T1 (N.J. Super. App. Div. 2008) (Unpublished)

PARTNERSHIPS — To determine whether a partnership exists, a court can consider the intention of the parties, how the business is conducted, how profits and losses are shared, and the conduct of the parties toward third parties.

A married couple sued the husband’s brother, alleging a breach of an oral partnership agreement in which they were one-third owners. The alleged partnership operated a machine entertainment business. The brother denied the existence of any partnership. He claimed that he had only been paying the couple commissions over the prior thirty years in return for the couple managing the store in which the business was located. Witnesses testified as to their belief that the brother usually paid commissions as compensation to people who managed similar businesses owned by the brother. The couple never presented any evidence as to the partnership’s existence, such as tax returns. As a consequence, the lower court ruled that the business relationship between the two parties was contractual in nature and not a partnership.

On appeal, the Appellate Division found no abuse of discretion by the lower court. It held that the lower court’s findings were consistent with the New Jersey Uniform Partnership Law (UPL). Under that law, a partnership is defined as an association of at least two or more persons to carry on as co-owners of a business. The Court noted that under the UPL, to determine whether a partnership exists, a court can consider the intention of the parties, how the business is conducted, how profits and losses are shared, and the conduct of the parties towards third parties. The Court noted that the lower court accepted the brother’s testimony that he intended to form a partnership and that major business decisions had not been made by the parties on a collaborative or consensus basis, but rather by the brother alone. It stated that without proving elements of a partnership, the couple had not shown that their receipt of one-third of the profits was anything more than compensation for their management services. Furthermore, the business continued without interruption despite any disputes between the parties, and the couple failed to provide any evidence as to the value of the business. Accordingly, it found that the lower court’s factual determinations were supported by substantial credible evidence and its legal conclusions were appropriately derived.


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