Opinion ID: 1059244
Heading Depth: 2
Heading Rank: 2

Heading: Basis for PGI's Cause of Action

Text: The trial court held that PGI's claims are solely based on a breach of contract theory[;] therefore, an action in tort is not appropriate. The trial court's ruling misapprehends the nature of the relationship created between PGI and Rathe and the law that applies. In Legum Furniture Corp. v. Levine, 217 Va. 782, 787, 232 S.E.2d 782, 786 (1977), we cited 46 Am.Jur.2d Joint Ventures §§ 36, 37 with approval as follows: The rights, duties, and obligations of joint venturers and of members of syndicates, as between themselves, depend primarily upon the terms of the contract by which they assumed that relationship. They are also affected, however, by certain general principles which operate in the absence of specific provisions in the contract, or sometimes in conjunction with such provisions. These principles . . . are much the same as, or at least are clearly analogous to, those which govern the relations of partners. In Roark, 234 Va. at 475, 362 S.E.2d at 714, we restated the principle at stake with greater emphasis: the rules of law governing the rights, duties, and liabilities of joint venturers are substantially the same as those which govern partnerships. There is no express contract between PGI and Rathe which establishes this joint venture. As previously stated, the evidence more than amply establishes an implied contract for a joint venture. To the extent that this implied agreement does not address an issue, the law of partnership is applied. The Virginia Uniform Partnership Act (the Act), Code §§ 50-73.79 to -73.149, governs relations among the partners and between the partners and the partnership except as provided in a partnership agreement and to the extent that the agreement does not violate certain specific statutory requirements. Code § 50-73.81. If the issue in question is not addressed by the partnership agreement or the Act, the principles of law and equity apply. Code § 50-73.82. [3] At common law, ordinarily one partner was not permitted to sue another partner before settlement of all partnership business occurred. See, e.g., Dulles Corner Props. II Ltd. P'ship v. Smith, 246 Va. 153, 155, 431 S.E.2d 309, 311 (1993). But even at common law, an exception to the general rule was made for circumstances such as those presented in this case. In Pugh v. Newbern, 193 N.C. 258, 136 S.E. 707, 708-09 (1927) (citations omitted), the Supreme Court of North Carolina stated such an exception: The general rule is that one partner cannot sue another partner at law until there has been a complete settlement of the partnership affairs and a balance struck. .... There are, however, well established exceptions to the general rule. A partner may maintain an action at law against his copartner upon claims growing out of the following state of facts: .... 6. Where the partnership is for a single venture or special purpose which has been accomplished, and nothing remains to be done except to pay over the claimant's share. See also Johnson v. Jackson, 82 F.Supp. 915, 917 (E.D.Pa. 1949); L.H. Heiselt, Inc. v. Brown, 108 Colo. 562, 120 P.2d 644, 646 (1941); Ruschoff v. Wachsmuth, 185 Minn. 579, 242 N.W. 296, 297 (1932); Warren v. Warren, 784 S.W.2d 247, 252 (Mo.Ct.App. 1989); Davis v. Johnson, 689 S.W.2d 297, 300 (Tex.Ct.App.1985); 59A Am.Jur.2d Partnership § 552 (2002). Nothing in the Act abridges this common law exception. Rather, the Act expands the exception by providing the following: § 50-73.103 Actions by partnership and partners. .... B. A partner may maintain an action against the partnership or another partner for legal or equitable relief, with or without an accounting as to partnership business, to: 1. Enforce that partner's rights under the partnership agreement; 2. Enforce that partner's rights under this chapter, ... [; or] 3. Enforce the rights and otherwise protect the interests of that partner,.... A cause of action for conversion lies independent of an action in contract and may provide a separate basis, distinct from the contract, upon which one partner may sue another. The trial court erred in holding to the contrary.