Opinion ID: 1811152
Heading Depth: 1
Heading Rank: 13

Heading: Timeliness of Keith's Election to Purchase Steven's Interest

Text: Keith contends that he timely exercised his option to purchase Steven's partnership interest under the buyout provision. He argues that he complied with the timeframe because he gave notice of his intention to buy out Steven's partnership interest within 90 days of July 28, 2003, the date of the summary judgment order in Steven's prior lawsuit. We have not previously addressed the issue of when a lawsuit for dissolution of a partnership triggers a buy-sell provision. But other courts have held that the filing of a lawsuit to dissolve a partnership or service of the complaint gives notice of a partner's intent to withdraw or dissolve a partnership. In Logan v. Logan, [4] the plaintiffs brought an action for dissolution of a partnership. In response, the defendant tendered an election to purchase the plaintiffs' interest under the buy-sell provision in their partnership agreement. After the plaintiffs refused to sell, the defendant counterclaimed for specific performance. The Washington Court of Appeals held that by filing suit, the plaintiffs had provided notice of their intention to withdraw. The court stated, The filing of the groundless lawsuit was an act inconsistent with the continuation of the partnership. [5] The defendant was therefore entitled to specific performance of the buyout provision. Similarly, in Maus v. Galic, [6] the Minnesota Court of Appeals addressed whether a lawsuit triggered dissolution of a partnership. The court stated, `[N]othing could send a clearer message of intent to terminate and provide more reasonable notice of such termination than service of a complaint seeking as relief dissolution of the partnership.' [7] We conclude that service of the complaint on Keith, rather than either the summary judgment order or the filing of the lawsuit, provided notice of Steven's intent to withdraw and dispose of his interest. Although the record does not show the date of service, it does show that Keith moved for summary judgment on May 20, 2003, which indicates he had at least received notice by that date. Keith's first letter of intent to purchase Steven's interest in the partnership, dated August 25, 2003, was outside the 90-day limitation period. We affirm the district court's order denying specific performance.