Opinion ID: 812798
Heading Depth: 3
Heading Rank: 1

Heading: Existence of Partnership

Text: Leoff’s initial complaint includes a claim to enforce the mechanic’s lien he filed against the White House property for improvements resulting from his efforts. The district court awarded partial summary judgment to S&J on this claim. It determined that Leoff was a partner of S&J and then applied the rule of Damrell v. Creagar, 599 P.2d 262, 263–64 (Colo. App. 1979), that a partner cannot file a mechanic’s lien against partnership property. In determining that Leoff and S&J had formed a partnership, the district court followed settled Colorado law. Colorado’s version of the Uniform Partnership Act defines a partnership as “the association of two or more persons to carry on as co-owners a business for profit . . . whether or not the persons intend to form a partnership.” Colo. Rev. Stat. § 7-64-202(1) (2012). Interpreting nearly identical language in an earlier partnership statute, see id. § 7-60-106 (2012) (“A partnership is an association of two or more persons to carry on, as co-owners, a business for profit . . . .”), the Colorado Supreme Court explained that “a partnership is a contract, express or implied, between two or -11- more competent persons to place their money, effects, labor or skill, or some or all of them, into a business, and to divide the profits and bear the losses in certain proportions.” Grau v. Mitchell, 397 P.2d 488, 489 (Colo. 1964). As the final clause of the statutory definition indicates, parties can form a partnership by their conduct alone, regardless of their actual intentions. See Stratman v. Dietrich, 765 P.2d 603, 605 (Colo. App. 1988); Yoder v. Hooper, 695 P.2d 1182, 1187 (Colo. App. 1984), aff’d, 737 P.2d 852 (Colo. 1987) (en banc). The district court concluded that Leoff and S&J were partners because the 2006 Management Agreement provided for the sharing of profits and losses. The Agreement states that “Leoff is entitled to 30% of all profits or losses of S&J” and that “[i]f S&J suffered a loss rather than a profit, than [sic] Leoff’s pro-rata share must be accounted for.” R., Vol. IX Ex. A-2 at 1. Leoff concedes that a partner cannot file a mechanic’s lien against partnership property under Colorado law, but he disputes that he actually formed a partnership with S&J. In reviewing the district court’s decision to the contrary, we must apply the same standard that the court should have applied in granting summary judgment. See Camuglia v. City of Albuquerque, 448 F.3d 1214, 1218 (10th Cir. 2006). That is, we must view the record in the light most favorable to Leoff and ask whether it discloses any genuine issue of material fact with respect to the existence of a partnership. See id.; Fed. R. Civ. P. 56(c). -12- Leoff argues that several facts undermine the district court’s ruling. He points out that the parties never expressly designated each other as partners: the Agreement was titled “Management Agreement” rather than “Partnership Agreement,” and it referred to Leoff not as a partner or owner, but as a “Manager.” And he emphasizes the absence of any correspondence referring to the relationship as a partnership. But he ignores that a partnership can be created without any formalities and regardless of the parties’ intentions. See Colo. Rev. Stat. § 7-64-202(1) (partnership may exist “whether or not the persons intend to form a partnership”); Grau, 397 P.2d at 489 (partnership is a contract that may be “express or implied”); Yoder, 695 P.2d at 1187 (“[N]o express agreement is necessary; rather, a partnership may be formed by the conduct of the parties.”). Similarly, Leoff’s observation that the “Development Agreement and Operating Agreement of S & J Land Company, LLC,” R., Vol. IX at 1694, makes no mention of Leoff is irrelevant. The issue is whether Leoff and S&J became partners with each other, not whether Leoff was made a partner in S&J. Leoff also calls attention to a Colorado statutory provision providing exceptions to the presumption that one who shares in a business’s profits is a partner of that business. It states: “A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment . . . [f]or services as an independent contractor or of wages or other compensation to an employee . . . .” Colo. Rev. Stat. § 7-64-202(3)(c). -13- Leoff argues that his sharing in S&J’s profits constituted wages for his contracting services and that the statute therefore rules out any presumption of a partnership. But Leoff was sharing in losses as well as profits. He has presented no authority that one sharing in both profits and losses can be merely an employee or independent contractor. Finally, Leoff advances three arguments on appeal that were not presented to the district court in the summary-judgment pleadings. First, he claims that Colo. Rev. Stat. § 7-60-107 (2012) defeats any presumption of a partnership because it contains language similar to that found in § 7-64-202. See id. § 7-60-107(1)(d) (“The receipt by a person of a share of the profits of a business is prima facie evidence that the person is a partner in the business, but no such inference shall be drawn if such profits were received in payment . . . [a]s wages of an employee . . . .”). Second, he contends that he was not a partner in the White House Project because the Management Agreement gave him a share of S&J’s profits or losses, not a share of the White House Project’s profits or losses. And third, noting that S&J, not the White House partnership, held title to the White House property, he argues that he was not placing a lien on partnership property. We question the merits of these arguments. In particular, § 7-60-107 is no more helpful to Leoff than was § 7-64-202; and the White House property could be owned by the partnership even if titled in the name of a partner, see id. § 7-64-302(1)(c) (2012). But we reject the arguments without resolving their -14- merits because Leoff forfeited them by failing to make them in opposing summary judgment. See Cummings v. Norton, 393 F.3d 1186, 1190–91 (10th Cir. 2005). Thus, we deny Leoff’s challenges to the ruling of the district court that Leoff and S&J formed a partnership under Colorado law. The district court committed no error in awarding partial summary judgment to S&J.