Title: Smith, Keller & Associates v. Dorr & Associates

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Smith, Keller & Associates v. Dorr & Associates1994 WY 64875 P.2d 1258Case Number: 93-130, 93-157Decided: 06/09/1994Supreme Court of Wyoming
SMITH, 
KELLER & ASSOCIATES, a Wyoming general partnership,

Appellants 
(Plaintiffs),

v.

DORR 
& ASSOCIATES, a partnership; Dorr, Bentley & Pecha, a partnership; Dorr, 
Bentley & Pecha, Certified Public Accountants, a Limited Liability Company; 
Bill Dorr; Dorr Investments; First Interstate Bank of Commerce; Steven K. 
Bentley; Steven K. Bentley, P.C.; Mark Dorr; Dorr, Bentley & Pecha, P.C.; 
Dorr, Bentley & Pecha, a CPA Network; Barbara Elizabeth Dorr; and Stephen H. 
Pecha, Appellees (Defendants).

 

DORR, 
BENTLEY & PECHA, P.C.; Steven K. Bentley, P.C.; Mark Dorr; Barbara Elizabeth 
Dorr; and Stephen H. Pecha,

Appellants 
(Defendants),

v.

SMITH, 
KELLER & ASSOCIATES, a Wyoming general partnership,

Appellee 
(Plaintiff).

 

Don 
W. Riske of Riske & Arnold, P.C., Cheyenne, Wyoming; Patrick Vellone of 
Vinton, Waller, Slivka & Panasci, Denver, CO, for appellant in Case No. 
93-130 and appellee in Case No. 93-157.

Greg 
L. Goddard of Goddard, Perry & Vogel, Buffalo, James Edwards of Stephens, 
Edwards & Hallock, Gillette, for appellees in Case No. 
93-130.

Ernest 
W. Halle, Cheyenne, for Dorr & Associates.

Greg 
L. Goddard of Goddard, Perry & Vogel, Buffalo, for appellants in Case No. 
93-157.

 

Before 
THOMAS, CARDINE and GOLDEN, JJ., BROWN and ROONEY, JJ. 
(Retired).

BROWN, 
Justice (Retired).

[¶1]      The parties to 
this appeal, partners in two existing accounting firms, formed a third 
partnership styled Dorr, Keller, Bentley & Pecha (DKBP). The DKBP 
partnership dissolved in May, 1989, and since then the parties have been engaged 
in continuous litigation. In this instance, the district court granted a partial 
summary judgment in favor of the individuals who formed former partner Dorr and 
Associates (D & A). The district court determined that D & A had not 
breached any fiduciary duties owed to former partner Smith, Keller and 
Associates (SK & A) and denied a second post-dissolution accounting of the 
partnership assets. In another ruling, the district court granted partial 
summary judgment in favor of SK & A. The district court ruled that some 
assets of the DKBP partnership had been fraudulently conveyed to business 
entities associated with the individuals who formed D & A (collectively the 
Dorr faction). After the district court certified that there was no just cause 
for delay, all parties filed separate appeals.

[¶2]      We reverse and 
remand.

I. 
ISSUES

[¶3]      The two appeals 
were consolidated for oral argument and disposition. In case No. 93-130, 
appellants, SK & A, specify the issues to be:

1. 
Did the district court have jurisdiction to interpret the meaning of a confirmed 
arbitration award in order to deny the Appellants the right to an accounting 
during the winding up period of a partnership?

2. 
Did the district court commit reversible error by determining that a partner, 
who fraudulently conveyed the partnership assets it held in trust during the 
winding up period of a partnership, has not breached the fiduciary duties it 
owes to its copartners and the partnership?

3. 
Did the district court commit reversible error in determining that in winding up 
a partnership, the relief and procedures set forth in the Wyoming Uniform 
Fraudulent Conveyances Act are identical to the relief and procedure set forth 
in the Wyoming Uniform Partnership Act?

4. 
Where a partnership is a partner in a second partnership, are the individual 
partners of the first partnership responsible for the duties and obligations 
owed by the first partnership to the second partnership?

[¶4]      In case No. 
93-157, appellants, the Dorr faction, designate the issues 
as:

1. 
Did the trial court correctly rule that assets of Dorr, Keller, Bentley & 
Pecha were fraudulently conveyed?

2. 
Was the July 30, 1990, stipulated arbitration order - set aside by Judge 
Kalokathis - correctly confirmed by the trial court?

3. 
Is goodwill or client base an asset that can be fraudulently 
conveyed?

4. 
Is goodwill subject to creditor's claims?

II. 
FACTS

[¶5]      The parties were 
in partnership for sixteen months, January 1, 1988 to May 4, 1989, and have been 
in litigation for fifty-seven months. The DKBP accounting partnership was 
established by the joinder of two existing accounting partnerships, D & A 
and SK & A. According to the DKBP partnership agreement, D & A 
contributed $750 in capital to the DKBP partnership, and SK & A contributed 
$250 in capital. Each partner was then entitled to a corresponding share of the 
profits. D & A also brought an established client base from its Gillette, 
Wyoming office into the partnership. SK & A brought a client base from its 
Cheyenne, Wyoming office into the partnership.

[¶6]      The DKBP 
partnership agreement provided a specific procedure in the event of dissolution 
"within 24 months of the formation of this partnership[.]" Under the DKBP 
partnership agreement, D & A or SK & A could dissolve the partnership 
without the consent of the other by providing notice thirty days in advance of 
dissolution. If dissolution occurred by this procedure, the DKBP partnership 
agreement provided: "In this case only, each party shall take back those assets 
and/or liabilities it brought to the partnership." SK & A dissolved the DKBP 
partnership by notice effective May 4, 1989. In accord with the terms of the 
partnership agreement, the disputes that followed were first submitted to 
arbitration.

[¶7]      This is the 
second time the parties have visited this court. Dorr, Keller, Bentley & 
Pecha, et. al. v. Dorr, Bentley & Pecha, 841 P.2d 811 (Wyo. 1992) 
(Dorr I). In Dorr I, we held inter alia that full effect 
had not been given to the arbitration awards dated August 24, 1989, and October 
1, 1989 (nunc pro tunc order) (collectively first arbitration award). 
Following the publication of the decision in Dorr I, the district court 
confirmed another arbitration award dated July 30, 1990 (second arbitration 
award). No party chose to challenge by appeal the confirmation of these 
arbitration awards.

[¶8]      In February, 
1990, before the confirmation by the district court of the first arbitration 
award, D & A filed for a Chapter 11 bankruptcy which was later converted to 
a Chapter 7 bankruptcy. The estate of D & A has been placed in the hands of 
a Chapter 7 trustee. Dorr I, 841 P.2d  at 815. Since the dissolution of 
DKBP partnership on May 4, 1989, and until the present, SK & A has attempted 
to regain DKBP assets alleged to have been fraudulently conveyed by the Dorr 
faction. SK & A has also attempted to obtain DKBP business records and other 
assets so that the affairs of DKBP may be wound up and that partnership 
terminated. It is not entirely clear what happened to DKBP property after 
dissolution.1 

[¶9]      In the first 
arbitration award, the panel found that SK & A contributed the following 
assets to DKBP as of January 1, 1988:

Cheyenne 
client base, certain equipment, Cheyenne office space and Cheyenne telephone 
numbers. Prior to entering into the Partnership Agreement, the parties had the 
understanding that Mr. Keller desired to reduce the amount of time he spent on 
"mainstream" accounting activities such as tax work, preparation of financial 
statements and bookkeeping, and to devote more time to "special projects" within 
the accounting practice, such as litigation support, arranging of financing and 
buying and selling of businesses, and also to devote more time to his outside 
business activities which included a stock brokerage firm. Consistent with that 
understanding, Mr. Keller made efforts to introduce his clients to Dorr partners 
and arranged to have his clients' work done by them.

The 
first arbitration award resulted from an accounting of DKBP at the time of 
dissolution. However, following dissolution, some of the tangible property SK 
& A contributed to the partnership may have been foreclosed upon. Some may 
have been appropriated by the Dorr faction or their subsequent business 
entities, the LLC and PC.

[¶10]   SK & A is most concerned about 
the intangible property of DKBP, especially the client base of the Cheyenne and 
Gillette offices of the DKBP partnership. In the first arbitration order dated 
August 24, 1989, the majority of the arbitration panel concluded that, as a 
matter of law, D & A should have returned "the client base of the Cheyenne 
office" to SK & A. As a result of this breach of the DKBP partnership 
agreement by D & A and the failure to pay earned compensation, damages of 
$105,163.78 were awarded by the first arbitration panel to SK & 
A.

[¶11]   It was not clear to those involved 
in the proceedings after the first arbitration award whether termination had 
been accomplished and what, if anything, further should have been done. After 
some jousting in the district court, SK & A went back to the arbitration 
panel for further enlightenment.2 In this proceeding, the second 
arbitration panel determined, in pertinent part:

2. 
The issues presented must be resolved by reference to the Wyoming Uniform 
Partnership Act (W.S. 17-13-101 et seq) and Wyoming case 
law.

3. 
Under such authority, a partnership cannot be terminated unless and until its 
affairs have been settled and fully wound up. The Dorr, Keller, Bentley & 
Pecha partnership has not completed a settlement of its affairs and is, 
therefore, not terminated.

4. 
Pursuant to W.S. 17-13-609, Smith, Keller & Associates has the right to wind 
up the affairs of the Dorr, Keller, Bentley & Pecha 
partnership.

[¶12]   The arbitration panel answered 
specific issues presented to it as follows:

a. 
Whether the Dorr Keller Bentley & Pecha partnership was terminated as of May 
4, 1989.

RESPONSE: 
No.

b. 
Whether the Dorr Keller Bentley & Pecha partnership was terminated as of 
August 24, 1989, the date that the Arbitration Panel issued its Findings of 
Fact, Conclusions of Law and Award.

RESPONSE: 
No.

C. 
Whether the Dorr Keller Bentley & Pecha partnership can be terminated prior 
to the winding-up of its affairs including the marshalling of all assets of the 
partnership, the payments of debts and distribution of remaining assets pursuant 
to W.S. 17-13-612.

RESPONSE: 
No.

d. 
Whether the filing of a bankruptcy petition by Dorr & Associates on February 
1, 1990, imposes a duty upon Smith, Keller & Associates as the non-bankrupt 
partner of Dorr, Keller, Bentley & Pecha, to proceed as the liquidating 
partner of such partnership, to marshall the assets of the partnership, 
liquidate such assets if required to discharge all debt, pay all debts of the 
partnership and distribute the net proceeds thereof pursuant to W.S. 
17-13-612.

RESPONSE: 
Yes.

e. 
If such partnership has not been terminated, what assets belong in such 
partnership?

RESPONSE: 
All assets originally contributed by both partners, assets acquired between 
January 1, 1988 and May 4, 1989, and all profits derived from such assets until 
the date of final settlement and termination. Such assets specifically include 
the client bases of the Gillette and Cheyenne offices, all accounts receivable, 
work in process, furniture, fixtures and equipment, leaseholds, business 
telephone numbers, logos and trademarks and marketing 
programs.

f. 
Whether the August 24, 1989, Award of this panel included consideration of 
matters arising after May 4, 1989.

RESPONSE: 
No.

[¶13]   After this court's remand in 
Dorr I, the parties engaged in extensive litigation in the district court 
to presumably enforce the arbitration awards. The SK & A complaint has been 
amended several times. The answer from the Dorr faction lists eight affirmative 
defenses, including discharge in bankruptcy.3

[¶14]   In an effort to bring some finality 
to these proceedings, the district court granted two partial summary judgments. 
The first partial summary judgment was granted in favor of the Dorr faction. The 
district court determined that D & A had not breached any fiduciary duties 
owed to SK & A and determined that there was no need for a second 
post-dissolution accounting of the DKBP partnership. (Case No. 93-130). SK & 
A had filed a cross motion for summary judgment on this same issue. SK & A 
argued that D & A had breached a fiduciary duty following dissolution and 
that SK & A was entitled to an accounting of the profits earned from 
services performed for DKBP clients. The district court denied the motion for 
partial summary judgment filed by SK & A.

[¶15]   The second partial summary 
judgment, however, was granted in favor of SK & A. The district court 
determined that assets of the DKBP partnership which were in the hands of D 
& A had been fraudulently conveyed by the Dorr faction to successor business 
entities, the LLC and PC. (Case No. 93-157). The district court certified there 
was no just cause for delay and immediate appeals of both partial summary 
judgments were filed.

[¶16]   In effect, the district court 
declined to allow SK & A to wind up the affairs of DKBP under the Wyoming 
Uniform Partnership Act. Under the Uniform Fraudulent Conveyances Act, the 
district court then determined that the partial summary judgment relief granted 
in favor of SK & A was sufficient to permit SK & A to marshall the DKBP 
partnership assets.

III. 
DISCUSSION

[¶17]   "In evaluating the propriety of a 
summary judgment, we determine whether there is no genuine issue of material 
fact and whether the prevailing party is entitled to judgment as a matter of 
law." Prudential Preferred Properties v. J And J Ventures, Inc., 859 P.2d 1267, 1271 (Wyo. 1993); WYO. R.CIV.P. 56(c). A grant of summary judgment is 
reviewed from the viewpoint favorable to the party opposing the judgment. 
Smith v. Nugget Exploration, Inc., 857 P.2d 320, 322 (Wyo. 1993). We 
accord no deference to the district court's decisions on issues of law. 
Prudential Preferred Properties, 859 P.2d  at 1271.

[¶18]   Without the lacquer that has been 
liberally applied to obscure the issues and the fundamental role of the courts, 
we are left with two confirmed arbitration awards and two questions. The first 
question is prompted by the arbitration awards and the district court's first 
partial summary judgment, case No. 93-130. Is SK & A entitled to a second 
post-dissolution accounting to determine the distribution of profits of the DKBP 
partnership from continuing business during the winding-up stage of the 
partnership, in particular the profits earned by D & A or the profits earned 
by former partners of D & A in the Dorr faction from services performed on 
behalf of former clients of SK & A? The second question is prompted by the 
arbitration awards and the district court's second partial summary judgment, 
case No. 93-157. Is SK & A entitled to recover the assets of the DKBP 
partnership alleged to have been fraudulently conveyed by D & A to the Dorr 
faction and other business entities, the LLC and PC?

A. 
CASE NO. 93-130

[¶19]   The DKBP partnership agreement 
provided a simple means to accomplish a division of the DKBP assets following 
dissolution:

Section 
11.1 Terms of Dissolution

Should 
either Dorr or Keller, within 24 months of the formation of this partnership, 
wish to dissolve the partnership, either party may do so without the consent of 
the other. Notice of such intent to dissolve must be made with 30 days advance 
notice. In this case only, each party shall take back those assets and/or 
liabilities it brought to the partnership. Furthermore, Dorr shall be entitled 
to the accounts receivable, work in process, accounts payable, and etc. 
attributable to the Gillette office. Keller shall do the same for the Cheyenne 
office. Such dissolution shall cancel all other provision of this 
document.

(Emphasis 
added.) The unambiguous language of the DKBP partnership agreement directs that 
each partner, upon dissolution, "shall take back those assets and/or liabilities 
it brought to the partnership." The mandatory language of this procedure should 
have effected a settling of the DKBP partnership affairs.

[¶20]   Upon the dissolution of a 
partnership, a partner is entitled to either the value of the partner's share of 
partnership property together with interest or, at the partner's election in 
lieu of interest, the partner's proportional share of profits from the use of 
partnership assets from the date of dissolution during the winding-up stage 
until termination. Svihl v. Gress, 216 N.W.2d 110, 115-117 (N.D. 1974); 
Martin v. Martin, 77 Or. App. 226, 712 P.2d 820, 825 (1986). By 
permitting D & A and SK & A as the partners in DKBP to "take back" the 
assets and liabilities each brought to the partnership, the DKBP partnership 
agreement effectively returned the value of each partner's share of partnership 
property to the partner. The DKBP partnership agreement also allocated the 
work in process, accounts receivable, accounts payable and miscellaneous 
assets to the partners based upon the separate offices each contributed to the 
partnership effectively allocating the profits of the partnership until 
termination.4 Therefore, the DKBP partnership 
agreement created a means to quickly wind up and terminate the partnership 
affairs.

[¶21]   Unfortunately, this process was not 
faithfully executed. The first arbitration award determined that D & A had 
wrongfully maintained possession of the Cheyenne client base that should 
have been returned to SK & A upon dissolution.5 The Cheyenne client base, 
according to the arbitration panel, was "the major asset which [SK & A] 
brought to the partnership." As a result, the arbitration panel awarded SK & 
A damages.

[¶22]   The first arbitration award 
includes damages to be paid by D & A to SK & A. This damage award 
includes $5,840.87 for unpaid compensation due SK & A from 1988 and 
$7,926.64 for unpaid compensation due SK & A in 1989. Of greater importance 
is the damage award of $91,396.27 in favor of SK & A. The first arbitration 
panel noted these were "[d]amages for violation of dissolution 
provisions."

[¶23]   In its findings of facts, the first 
arbitration panel found that SK & A had offered to sell D & A its 
interest in the DKBP partnership for $120,000 before dissolution, but D & A 
valued the Cheyenne client base at $100,000. The first arbitration panel 
determined that D & A had successfully kept the SK & A clients which 
constituted the "backbone" of the Cheyenne client base. According to the 
findings, "[SK & A] suffered damage in the amount of $90,000 by virtue of [D 
& A's] actions in contravention of its obligation to return the Cheyenne 
client base to [SK & A]."

[¶24]   As a result of the first 
arbitration award, the damages suffered by SK & A for the loss of the value 
of the "major asset" SK & A contributed to the DKBP partnership, the 
Cheyenne client base, have been awarded. SK & A contributed the 
Cheyenne client base to the partnership and, on dissolution, was entitled 
to take back the assets it contributed. When D & A acted wrongfully to 
exclude SK & A from DKBP partnership assets, the first arbitration panel 
awarded damages to SK & A equal to the value of that portion of the asset 
which the panel found had been lost. Therefore, the damages awarded by the first 
arbitration panel are compensatory and constitute the amount of actual loss 
suffered by SK & A when D & A retained the Cheyenne client base. 
See UNC Teton Exploration Drilling, Inc. v. Peyton, 774 P.2d 584, 592 
(Wyo. 1989). However, these damages do not account for all the damages suffered 
by SK & A.

[¶25]   The Dorr faction advocates the 
position that the first arbitration award, dated August 24, 1989, effectively 
settled the affairs of the partnership and, thus, it was terminated.6 This stance may present a tactical 
advantage in light of the subsequent bankruptcy proceedings involving D & A; 
however, we do not think the arbitrators intended to repeal WYO. STAT. § 
17-13-602 (1989), which provides: "On dissolution the partnership is not 
terminated, but continues until the winding up of the partnership affairs is 
completed."

[¶26]   The DKBP partners shared profits in 
proportion to the relative strength of their respective practices in Cheyenne 
and Gillette. If the dissolution provision of the partnership agreement had been 
followed, each partner should have received the proportional share of the 
profits for work in process each was entitled to until termination. 
However, this provision was not followed. Moreover, the first arbitration award 
does not allocate damages to SK & A for the lost profits from continuing 
business of the DKBP partnership. See JBC of Wyoming Corp. v. City of 
Cheyenne, 843 P.2d 1190, 1195 (Wyo. 1992) (noting that damages for breach of 
contract include compensatory and consequential damages). Therefore, the first 
arbitration award did not terminate the partnership.

[¶27]   In Weisbrod v. Ely, 767 P.2d 171, 174 (Wyo. 1989), we noted that dissolution is the first of three stages in 
ending a partnership. Following dissolution, the next two stages are winding up 
and termination. Id. "Generally, winding up encompasses the liquidation 
of partnership assets, collection and payment of debts, and distribution of the 
surplus to the partners." Id. The second arbitration panel specifically 
concluded that, as a matter of law, the affairs of the DKBP partnership had not 
been wound up. We agree.

[¶28]   SK & A contends that following 
dissolution, during the winding-up stage, D & A owed a continuing fiduciary 
duty to SK & A as partners in DKBP to not run the business for their own 
benefit, and account as a trustee to SK & A for unfinished business. 
Specifically, SK & A seeks an accounting of all profits derived from clients 
of DKBP from the date of dissolution to the as yet undetermined date of final 
settlement and termination. This accounting would result in the termination of 
the DKBP partnership. The Dorr faction contends that SK & A is not entitled 
to any profits from the services performed following dissolution by D & A or 
the Dorr faction in behalf of clients of DKBP.

[¶29]   The efforts of D & A to prevent 
SK & A from sharing the profits of DKBP's continuing business during the 
winding-up stage of the partnership represent a breach of fiduciary duties. WYO. 
STAT. § 17-13-404(a) (1989) provides:

(a) 
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 of its 
property.

The 
official comment to this section of the Uniform Partnership Act provides an 
instructive illustration of legislative intent:

For 
instance: A, B and C are partners; A, as a result of a transaction connected 
with the conduct of the partnership, has in his hands, so that it may be traced, 
a specific sum of money or other property. A is insolvent. Is the claim of the 
partnership against A a claim against him as an ordinary creditor, or is it a 
claim to the specific property or money in his hands? The words, "and hold as 
trustee for the partnership any profits," indicate clearly that the partnership 
can claim as their own any property or money that can be 
traced.

UNIF.PARTNERSHIP 
ACT § 21, Official Cmt., 6 U.L.A. 258 (1969).

[¶30]   D & A and SK & A 
established a partnership to perform accounting services. When disputes arose, 
the partnership dissolved. SK & A considered the profit from continuing 
services performed for the clients of DKBP in Cheyenne and Gillette to be an 
asset of the DKBP partnership. Apparently, the Dorr faction did not. Therefore, 
D & A breached its fiduciary duty to SK & A.

[¶31]   During the winding-up stage, D 
& A filed for bankruptcy protection and the individual partners of D & A 
set up new business entities and apparently continued performing services for 
some DKBP clients without sharing the profits. The Dorr faction, Mark Dorr, 
Barbara Elizabeth Dorr, Steven K. Bentley and Stephen H. Pecha, were the general 
partners of D & A. The D & A partnership was liable for the profits 
earned from continuing business of the DKBP partnership. WYO. STAT. § 
17-13-404(a). The individual partners of D & A, the Dorr faction, were also 
jointly and severally liable for the profits D & A was charged with holding 
as a trustee for the DKBP partnership. WYO. STAT. § 
17-13-307(a).

[¶32]   The appropriation of DKBP 
partnership profits by D & A and the Dorr faction constituted a breach of 
fiduciary duty. WYO. STAT. § 17-13-404(a) (1989). There is a substantial 
limitation, however, on the scope of the fiduciary duty owed by D & A and 
the Dorr faction to SK & A. SK & A wrongly contends that it is entitled 
to a recovery of all profits realized by D & A or the Dorr faction from 
services performed for clients of DKBP following dissolution. This is not an 
accurate statement of the law.

[¶33]   Dissolution of a partnership 
generally terminates all authority of any partner to act for the partnership, 
with the exception of activities necessary to wind up partnership affairs "or to 
complete transactions begun" but not finished at the time of dissolution. WYO. 
STAT. § 17-13-605(a) (1988). As applied to partners in a professional firm, this 
work in process rule creates a specific obligation and a specific 
limitation.

[¶34]   The obligation the work in 
process rule creates is that during the winding-up stage, the individual 
partners have a fiduciary duty to collect and allocate fees for work of the 
partnership that continued after dissolution. Resnick v. Kaplan, 49 Md. 
App. 499, 434 A.2d 582, 586-88 (1981); Seale v. Sledge, 430 So. 2d 1028, 
1032 (La. App. 1983). "A contractual agreement for the performance of services 
in existence at the dissolution of a partnership is unfinished business of the 
dissolved partnership, and the partners owe a fiduciary duty to wind up that 
business, if possible, and to refrain from taking action for purely personal 
gain." Bader v. Cox, 701 S.W.2d 677, 682 (Tex. App. 1985). The court in 
Resnick, 434 A.2d  at 586-88, correctly applied the work in process 
rule to professional fees earned by members of a legal partnership. Following 
dissolution, fees earned by the partners for services to partnership clients had 
to be collected and divided according to the partnership agreement until work 
was completed on those client files. Id. at 587-88.

[¶35]   The limitation of the work in 
process rule is that fees for new business, even those services performed for 
clients of the dissolved partnership, are not collected and divided as an asset 
of the dissolved partnership. See, e.g., Jewel v. Boxer, 156 Cal. App. 3d 171, 203 Cal. Rptr. 13, 18 (1984) (distinguishing between unfinished business of 
dissolved partnership and new business). A reasonable balance is struck in 
unfinished business litigation between a partner's right to pursue his own 
business after dissolution of a partnership and the duty owed to former 
partners. See, e.g., Turner v. Kaplan, 602 S.W.2d 460, 464 (Mo. App. 
1980) (holding new business transactions of partners undertaken after 
dissolution of partnership were not partnership transactions). "`The partner may 
take for his own account new business even when emanating from clients of the 
dissolved partnership and the partner is entitled to the reasonable value of the 
services in completing the partnership business, but he may not seize for his 
own account the business which was in existence during the term of the 
partnership.'" Fraser v. Bogucki, 203 Cal. App. 3d 604, 250 Cal. Rptr. 41, 
45 (1988) (quoting Rosenfeld, Mayer & Susman v. Cohen, 146 Cal. App. 3d 200, 194 Cal. Rptr. 180, 192 (1983), disapproved on other grounds, Equipment 
Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 28 Cal. Rptr. 2d 475, 869 P.2d 454, 464 n. 10 (1994)).

[¶36]   Public policy directs that the work 
in process rule must be limited as applied to dissolved professional 
partnerships. We agree that individual partners have a fiduciary duty to collect 
and allocate fees for continuing partnership work after dissolution of a 
partnership. Resnick, 434 A.2d  at 586-88. The completion of unfinished 
business and liquidation of partnership assets are among the purposes of the 
winding-up stage of a partnership. WYO. STAT. § 17-13-605(a). However, clients 
of a professional partnership form personal relationships with the individuals 
who provide services on their behalf. Frequently, these personal relationships 
are the basis for selecting which firm or business entity is utilized. The fact 
that a client continues working with the same individual on new business does 
not extend the fiduciary duty to share the profits with the dissolved 
partnership indefinitely. Rosenfeld, 194 Cal. Rptr.  at 192.

[¶37]   D & A and the Dorr faction 
breached a fiduciary duty owed to SK & A to hold as a trustee any profits 
earned from continuing business of DKBP. Therefore, SK & A is entitled to a 
second post-dissolution accounting under WYO. STAT. § 17-13-405 (1989), which 
provides:

(a) 
Any partner shall have the right to a formal account as to partnership 
affairs:

(i) 
If he is wrongfully excluded from the partnership business or possession of 
its property by his copartners;

(ii) 
If the right exists under the terms of any agreement;

(iii) 
As provided by W.S. 17-13-404;

(iv) 
Whenever other circumstances render it just and 
reasonable.

(Emphasis 
added).

[¶38]   The scope of the accounting is 
determined by the parties' duties to each other and to the DKBP partnership. 
According to the second arbitration award, SK & A has a duty to marshall the 
remaining assets of DKBP for the payment of DKBP debts and distribution to the 
partners of any net proceeds. Larsen v. Sjogren, 67 Wyo. 447, 462, 226 P.2d 177, 181 (1951). Therefore, the accounting should establish the present 
market value of any tangible or intangible assets of DKBP, including the value 
of the client base that we have identified as goodwill. These 
assets, which were not previously distributed by the first arbitration award, 
may be held by SK & A, D & A or the Dorr faction. Additionally, D & 
A and the Dorr faction must account to SK & A for any post-dissolution 
profits earned from continuing business of the DKBP partnership under the 
work in process rule. Similarly, SK & A must account to D & A for 
any post-dissolution profits earned from continuing business of the DKBP 
partnership. Debts of the DKBP partnership must be paid and any profits must be 
distributed in accord with the provisions of the DKBP partnership agreement. 
Resnick, 434 A.2d  at 587-88. Under the terms of the DKBP partnership 
agreement, D & A received seventy-five percent of the profits and SK & A 
received twenty-five percent of the profits. Therefore, the bankruptcy estate of 
D & A held by the Chapter 7 trustee will be entitled to seventy-five percent 
of the value of any DKBP assets that may be accounted for and seventy-five 
percent of the profits from any continuing business of the DKBP partnership 
since dissolution on May 4, 1989. Presumably, this money will be available for 
the payment of D & A creditors, including SK & A. SK & A will be 
entitled to twenty-five percent of the value of any DKBP assets that may be 
accounted for and twenty-five percent of the profits earned for continuing 
business of the DKBP partnership during this same time 
period.

[¶39]   We reverse the summary judgment 
granted in favor of the Dorr faction by the district court. We remand case No. 
93-130 with directions that the district court order a partial summary judgment 
in favor of SK & A permitting a post-dissolution accounting for the purposes 
outlined in this opinion.

B. 
CASE NO. 93-157

[¶40]   To this point, our decision has 
considered the interests of SK & A and D & A in the profits of 
continuing business of the DKBP partnership from the date of dissolution of the 
partnership during the winding-up stage until termination. Next, we turn to the 
claimed interest of SK & A in the assets of the DKBP partnership held by D 
& A and the Dorr faction.

[¶41]   SK & A maintains that the DKBP 
partnership assets were fraudulently conveyed by D & A to the Dorr faction 
or subsequent business entities. Before the confirmation of the first 
arbitration award by the district court, D & A sought bankruptcy protection. 
Barbara Elizabeth Dorr and Stephen H. Pecha, two of the members of the Dorr 
faction, who were general partners in D & A, also sought bankruptcy 
protection in March of 1990. However, SK & A contends that before the filing 
of these bankruptcy petitions, the Dorr faction fraudulently conveyed the DKBP 
assets held by D & A to a limited liability company they had formed, the 
LLC. See Footnote 1, supra. After the D & A bankruptcy 
petition was filed, SK & A again contends that the Dorr faction fraudulently 
conveyed the DKBP assets from the LLC to a professional corporation they had 
formed, the PC. As a result of these allegedly fraudulent conveyances, SK & 
A contends D & A was rendered insolvent.

[¶42]   The Dorr faction asserts that no 
assets were fraudulently conveyed. Instead, they argue that D & A had 
obvious financial difficulties and attempted to restructure its debt with a 
Chapter 11 bankruptcy. When attempts to restructure proved impossible, the 
Chapter 7 bankruptcy was filed. As a result of the bankruptcy petitions, the 
Dorr faction declares that the assets of D & A were delivered to a secured 
creditor. The Dorr faction argues that the continued operation of an accounting 
practice by the former general partners of D & A did not constitute a 
fraudulent conveyance.

[¶43]   The district court granted a 
partial summary judgment in favor of SK & A ruling that the Dorr faction 
fraudulently conveyed the assets of the DKBP partnership which were held by the 
D & A partnership to other business entities or themselves. The district 
court granted SK & A a lien on all assets or proceeds from the assets of the 
DKBP partnership identified in the second arbitration 
award.

[¶44]   As enacted in Wyoming, the Uniform 
Fraudulent Conveyance Act (hereinafter UFCA) prohibits fraudulent transfers of 
partnership property:

(a) 
Every conveyance of partnership property and every partnership obligation 
incurred when the partnership is or will be thereby rendered insolvent, is 
fraudulent as to partnership creditors, if the conveyance is made or obligation 
is incurred:

(i) 
To a partner, whether with or without a promise by him to pay partnership debts; 
or

(ii) 
To a person not a partner without fair consideration to the partnership as 
distinguished from consideration to the individual 
partners.

WYO. 
STAT. § 34-14-109(a) (1990). The remedy provided by the UFCA reaches a broad 
range of transactions. "`Conveyance' includes every payment of money, 
assignment, release, transfer, lease, mortgage or pledge of tangible or 
intangible property, and also the creation of any lien or incumbrance[.]" WYO. 
STAT. § 34-14-102(a)(ii) (1990).

[¶45]   Fair consideration is said to be 
given when one of the conditions in WYO. STAT. 34-14-104(a) is 
satisfied:

(a) 
Fair consideration is given for property, or obligation:

(i) 
When in exchange for such property, or obligation, as a fair equivalent 
therefor, and in good faith, property is conveyed or an antecedent debt is 
satisfied; or

(ii) 
When such property, or obligation is received in good faith to secure a present 
advance or antecedent debt in amount not disproportionately small as compared 
with the value of the property, or obligation obtained.

"The 
only way of determining actual intent to hinder or delay creditors is by a 
consideration of the circumstances surrounding the transaction." Matter of 
Estate of Reed, 566 P.2d 587, 591 (Wyo. 1977).

[¶46]   The creditor's remedies provided by 
the UFCA depend upon whether the claim has matured and 
include

setting 
the conveyance aside to the extent necessary to satisfy the claim or 
disregarding the conveyance and attaching or levying upon the property conveyed 
(where claim has matured); restraining defendant from disposing of the property; 
appointing a receiver to take charge of the property; setting the conveyance 
aside; or making any order which the circumstances of the case may 
require.

Headen 
v. Miller, 
141 Cal. App. 3d 169, 190 Cal. Rptr. 198, 200 (1983). See also WYO. STAT. §§ 
34-14-110(a) and 34-14-111(a) (1990).

[¶47]   The purpose of the UFCA is to 
prevent an insolvent debtor from placing property outside the reach of creditors 
while still enjoying the benefits of the property. United States v. 
Mazzara, 530 F. Supp. 1380, 1383 (D.N.J. 1982) (applying New Jersey law). 
The UFCA, therefore, is a creditor's remedy that may be analogized to a state 
bankruptcy law. Hopfan v. Knauth, 156 Misc. 545, 282 N.Y.S. 219, 225 (N Y 
1935). It provides: a means to void preferential payments by a debtor to one 
creditor, WYO. STAT. § 34-14-105 (1990); a means to void conveyances made 
without fair consideration, WYO. STAT. § 34-14-107 (1990); or a means to void 
conveyances which are intended to hinder, delay or defraud present or future 
creditors, WYO. STAT. § 34-14-108 (1990).

[¶48]   SK & A overreaches in arguing 
that it has a right to void any conveyance of DKBP assets and retain or resell 
the property under WYO. STAT. § 34-14-109(a) (1990). Normally, specific 
partnership property is held as a tenancy in partnership in which each partner 
is a co-owner of the property. WYO. STAT. § 17-13-502(a) (1989). Therefore, an 
assignment by one partner of specific partnership property, without the consent 
of the other partners, is void. Columbia Mortgage Co. v. Hsieh, 42 Wn. App. 114, 708 P.2d 1226, 1229 (1985) (collecting cases). However, the language 
of the DKBP partnership agreement altered this rule upon dissolution. Except for 
the DKBP assets specifically required by the first arbitration award to be 
returned to SK & A, D & A was entitled to retain the remaining DKBP 
assets and pay damages to SK & A for the loss of those 
assets.

[¶49]   Following the confirmation of the 
first arbitration award, SK & A became a judgment creditor of the D & A 
partnership entitled to $105,163.78. WYO. STAT. § 1-36-116 (1988). While these 
damages represent the value of the SK & A share of the DKBP assets, the 
damage award does not entitle SK & A to recover the specific assets of DKBP 
from D & A or the Dorr faction under the UFCA as a matter of law. The damage 
award did not make SK & A a creditor of the DKBP partnership. SK & A is 
rather a creditor of D & A as explained above. We must, therefore, consider 
if the district court's grant of partial summary judgment may be sustained on 
any other legal ground supported by the record. Miller v. Campbell 
County, 854 P.2d 71, 75 (Wyo. 1993).

[¶50]   As a creditor of D & A, SK 
& A may be entitled to apply WYO. STAT. § 34-14-109(a) in an attempt to 
establish a fraudulent conveyance of D & A partnership property. In order to 
do so, SK & A would have to prove: (1) a conveyance, (2) of D & A 
partnership property, (3) was made to a partner or to a person not a partner 
without fair consideration, (4) which rendered the partnership insolvent. WYO. 
STAT. § 34-14-109(a). The proof contained in the record on appeal, however, 
fails to conclusively establish a fraudulent conveyance. Strom v. Felton, 
76 Wyo. 370, 387-88, 302 P.2d 917, 923-24 (1956). See Jurkovich v. Estate of 
Tomlinson, 843 P.2d 1166, 1172-74 (Wyo. 1992) and McDonald v. 
Anderson, 261 Mont. 268, 862 P.2d 402, 405-06 (1993).

[¶51]   SK & A broadly argues that the 
actions of the Dorr faction in creating two additional business entities, the 
LLC and the PC, resulted in fraudulent conveyances. However, proof of any 
conveyance is totally absent. We have no specific evidence that any "payment of 
money, assignment, release, transfer, lease, mortgage or pledge of tangible or 
intangible property, and also the creation of any lien or incumbrance" occurred 
between D & A and the Dorr faction or the new business entities. WYO. STAT. 
§ 34-14-102(a)(ii). Also, if there was a conveyance, SK & A never 
established what specific D & A partnership property was transferred to the 
new business entities. The record contains only the conclusive allegation that 
the these new business entities were created by the Dorr faction. This is 
insufficient.

[¶52]   Furthermore, the UFCA mandates a 
specific test to determine if a partnership is rendered insolvent by an 
allegedly fraudulent conveyance:

(b) 
In determining whether a partnership is insolvent there shall be added to the 
partnership property the present fair salable value of the separate assets of 
each general partner in excess of the amount probably sufficient to meet the 
claims of his separate creditors, and also the amount of any unpaid subscription 
to the partnership of each limited partner, provided the present fair salable 
value of the assets of such limited partner is probably sufficient to pay his 
debts, including such unpaid subscription.

WYO. 
STAT. § 34-14-103(b) (1990). The record is devoid of any information that 
indicates the assets of each general partner in D & A were considered in 
making the bare allegation that D & A was rendered insolvent by any 
allegedly fraudulent conveyances. The record does indicate that D & A was a 
highly leveraged operation with numerous debts. This alone may account for its 
bankruptcy.

[¶53]   As the party moving for a partial 
summary judgment, SK & A has failed to meet its burden of making a prima 
facie showing that no genuine issue of material fact exists. Moore v. 
Labnau, 855 P.2d 1245, 1248 (Wyo. 1993). Therefore, the summary judgment 
granted in favor of SK & A is reversed. We note again, that in a case such 
as this involving issues of fraud and intent, summary judgment is "notoriously 
inappropriate." Cordova v. Gosar, 719 P.2d 625, 635 (Wyo. 1986) (citation 
omitted).

C. 
ATTORNEY FEES

[¶54]   Finally, SK & A raises the 
issue: "Whether Appellee, Smith, Keller & Associates, is entitled to 
attorney's fees and damages as provided for in Rule 10.05, Wyoming Rules of 
Appellate Procedure."7 We decline to impose sanctions. 
Were there an appropriate rule, we would assess costs and damages on both 
parties (perhaps not equally) because of the burden they have put on the courts, 
both state and federal. Judge O'Brien exercised restraint in his mild 
chastisement of the parties when he said:

Stripping 
this of all the legal complexity which has been heaped on it from both sides, 
and I think principally from starting with Dorrs' side, Dorr seeks to take 
bankruptcy and be discharged of all obligations and yet keep all the assets. And 
that's just wrong.

[¶55]   We agree with Judge O'Brien. 
Settling the affairs among the combatants here should have been a relatively 
simple matter. Upon dissolution on May 4, 1989, the assets of DKBP should have 
been marshalled, an accounting accomplished, partnership debts paid and 
remaining assets, if any, divided according to the partnership agreement. That, 
however, is too simple for people who have a predilection to do 
battle.

IV. 
CONCLUSION

[¶56]   The myriad of legal theories 
presented by the parties to this litigation reveal opposing conclusions. Parties 
supposedly attempting to settle honest disputes are the same parties seeking to 
obstreperously obfuscate issues, delay confronting their obligations to one 
another and generally avoiding justice. Parties searching for fairness are 
abusing the system and presenting the appearance of seeking a greedy form of 
vengeance. The remarkable enigma in these opposing conclusions is they result 
from partnership.

[¶57]   In case No. 93-130, we inquired, 
whether SK & A is entitled to a second post-dissolution accounting to 
determine the distribution of profits of the DKBP partnership from continuing 
business during the winding-up stage of the partnership, in particular the 
profits earned by D & A or the profits earned by former partners of D & 
A in the Dorr faction from services performed on behalf of former clients of SK 
& A. We have determined the answer is yes. Therefore, case No. 93-130 is 
reversed and remanded for entry of a partial summary judgment which 
conforms to this opinion.

[¶58]   In case No. 93-157, we asked, 
whether SK & A is entitled to recover the assets of the DKBP partnership 
alleged to have been fraudulently conveyed by D & A to the Dorr faction and 
other business entities, the LLC and PC. The answer is no. Therefore, case No. 
93-157 is reversed and remanded.

Footnotes

1 SK & A contend that on August 16, 1989, D & A and individual 
partners fraudulently conveyed all the DKBP assets to Dorr, Bentley & Pecha, 
Certified Public Accountants, a Limited Liability Company (LLC) and that on or 
about March 24, 1990, Dorr, et al., again fraudulently conveyed DKBP 
assets from the LLC to Dorr, Bentley & Pecha, a Professional Corporation 
(PC).

2 This revisit to the arbitration panel was without notice to the Dorr 
faction. D & A was represented in this second visit to the arbitration panel 
by Thomas Hogan, who was the trustee in bankruptcy for D & 
A.

The Dorr people continue to object to the way this second arbitration was 
accomplished. The district court was not too happy about it either. We are not 
entirely delighted, but do not have a practical suggestion as to what should 
have been done. We determined in Dorr I, consistent with FED.R.BANKR.P. 
2002(a)(3) and 9019 that a debtor (Dorr) was not entitled to notice of 
arbitration. Dorr I, 841 P.2d  at 816. We see no reason to depart from our 
determination in Dorr I. It would be presumptuous and improper for this 
court to add the requirement of notice to a debtor in 
bankruptcy.

3 The record presently consists of nine volumes of frequently redundant 
material. Noticeably absent from the designated record on appeal are the first 
and second amended complaints filed by SK & A and the answers filed by the 
Dorr faction. The answer to the third amended complaint contained in the 
designated record on appeal is obviously a copy from the attorney's files. This 
copy, however, does not contain any indication that the document has been filed 
with the Clerk of the District Court. For purposes of this proceeding, we have 
assumed that the document was filed in a timely 
fashion.

4 The DKBP partnership agreement does not define work in process. 
This court, therefore, can apply an ordinary meaning to this term. Arizona v. 
City of Sheridan, 408 P.2d 704, 706 (Wyo. 1965). In the context of the DKBP 
partnership agreement, we define work in process as: the unfinished 
business of the dissolved partnership, including those contractual agreements 
for the performance of services which were in existence before the dissolution 
of the partnership. See Bader v. Cox, 701 S.W.2d 677, 682 (Tex. Ct. App. 
1985); WYO. STAT. § 17-13-605(a) (1988).

5 The arbitration panel adopted the term client base to describe the value 
of the practices contributed as assets by D & A and SK & A to DKBP. 
However, a more accurate term for the asset being valued is goodwill. 
Goodwill represents an intangible asset that refers to the ability of a 
professional firm to attract clients as a result of the firm's name, reputation, 
location, managerial skill, and technological resources. BLACK'S LAW DICTIONARY 
694-95 (6th ed. 1990). The accepted rule has recognized that professional 
partnerships do not have a goodwill asset. Lyon v. Lyon, 246 Cal. App. 2d 519, 54 Cal. Rptr. 829, 832 (1966); Craver v. Nakagama, 94 
N.C. App. 158, 379 S.E.2d 658, 660 (1989). This rule is consistent with the 
position that a client's files belong to the client, and the professional 
partnership may not withhold the files to restrict the client's access to other 
providers. See Hoover v. Crippen, 151 Ill. App.3d 864, 105 Ill.Dec. 8, 
12, 503 N.E.2d 848, 852 (1987) (requiring surrender of accounting partnership's 
files on written request of client). However, goodwill may be valued as 
an intangible asset in an accounting partnership when the facts and 
circumstances show an exception to the general rule is intended by the 
parties. Stefanski v. Gonnella, 15 Mass. App. Ct. 500, 446 N.E.2d 734, 
736-37 (1983); Jackson v. Caldwell, 18 Utah 2d 81, 415 P.2d 667, 670 (1966). 
Compare Fraser v. Bogucki, 203 Cal. App. 3d 604, 250 Cal. Rptr. 41, 44-45 
(1988) (holding legal partnership did not have a goodwill asset which 
could be sold) with Howard v. Babcock, 6 Cal. 4th 409, 25 Cal. Rptr. 2d 80, 
863 P.2d 150 (1993) (acknowledging that change in California Rules of 
Professional Conduct may permit sale of law firm goodwill in certain 
circumstances). The finding of the first arbitration panel that the DKBP 
partnership valued goodwill in the form of a client base, therefore, is 
binding on this court.

6 It was not illogical to initially argue that the first arbitration 
award, awarded SK & A a sum sufficient to buy out its interest in DKBP. The 
second arbitration award, however, clarified any ambiguity and provided, among 
other things, that DKBP was not terminated by the first award, that the 
client base of the Cheyenne and Gillette offices of DKBP was an asset of 
the partnership, and an accounting was required. The two arbitration awards were 
confirmed by the district court, the orders of confirmation were not appealed 
and, thus, they became the law of the case. Neither a trial court nor an 
appellate court may properly ignore arbitration awards. We are bound to give 
effect to both arbitration awards.

7 WYO.R.APP.P. 10.05 provides:

If the judgment or appealable order is affirmed in a civil case, appellee 
shall recover the cost for publication of the brief with the cost to be computed 
at the rate allowed by law for making the transcript of the evidence. If the 
court certifies there was no reasonable cause for the appeal, a reasonable fee 
to be fixed by the appellate court shall also be taxed as part of the costs in 
the case. The fee shall not be less than one hundred dollars ($100.00) nor more 
than five thousand dollars ($5,000.00) to the counsel of appellee; and damages 
to appellee, in such sum as may be reasonable, shall not exceed two thousand 
dollars ($2,000.00) unless the judgment, or appealable order directs the payment 
of money and execution was stayed, when in lieu of such penalty, it shall bear 
additional interest at a rate not to exceed five percent (5%) per annum for the 
time for which it was stayed, to be ascertained and awarded by the appellate 
court.