Opinion ID: 2311050
Heading Depth: 2
Heading Rank: 4

Heading: Expanding the Judgment to Include the Unnamed Park City Partners in Their Individual Capacities

Text: Although the propriety of entering a judgment against the unnamed Park City partners was considered by the trial justice before the judgment in fact entered, [13] we consider the denial of Levitt and Park City's prejudgment request to exclude the unnamed Park City partners from the judgment to be the procedural equivalent of a denial of a postjudgment motion to vacate pursuant to Super.R.Civ.P. 60(b)(4). [14] We exercise a de novo standard of review because such a motion which contends that a judgment is void is one which is not addressed to the court's discretion. A judgment is either valid or it is not and discretion plays no part in resolving the issue. Shannon v. Norman Block, Inc., 106 R.I. 124, 130, 256 A.2d 214, 218 (1969). If the judgment is void, the movant has an unqualified right to relief. Id. at 132, 256 A.2d at 219. The form of judgment here is ambiguous in that it refers to defendants merely as Arthur Sadowski et als rather than name each defendant that is included in the judgment and specify the capacity for which each has been found liable. However, at the March 25, 1994 hearing Levitt and Park City objected to the form of the Nisenzons' proposed judgment and asked the court to exclude the unnamed Park City partners from the judgment because of a lack of personal jurisdiction over them. This proposed judgment provided it would enter as against Defendant JAMES D. LEVITT, both in his individual capacity and as a general partner in Defendant PARK CITY CAPITAL, and as against Defendant PARK CITY CAPITAL and its general partners, to wit James D. Levitt, Leo J. Gannon, John G. Ridlon, and Fred S. Hashway, Jr., and Stephen A. Gordon. All said Defendants are jointly and severally liable for said judgment. Because the trial justice overruled Levitt and Park City's objection and refused to accept their lack-of-personal jurisdiction argument, we read the et als in the judgment that entered as including the unnamed Park City partners. [15] As noted above, the unserved and unnamed Park City partners argue that the judgment entered against them is void because they were neither named as defendants nor served with process and that thus the Superior Court had no personal jurisdiction over them. They argue further that the entry of judgment against them in an individual capacity violates Rhode Island partnership law. The Nisenzons argue in opposition that notice to a partner is notice to the partnership, G.L.1956 § 7-12-23, that a partnership is liable for the wrongful acts of its partners, § 7-12-24, and that all partners are jointly and severally liable for everything chargeable to the partnership, § 7-12-26. Accordingly the Nisenzons argue that service of process upon Levitt in his capacity as a general partner of Park City constituted notice to the partnership and that Levitt was found guilty of wrongful acts attributable to the partnership; therefore, the entry of judgment against each partner individually was proper. Lacking in their calculus, however, is any reference to the due-process rights of the unnamed Park City partners. To the extent the judgment purports to bind the unnamed Park City partners in their individual capacities without their having been afforded notice and an opportunity to be heard, it is void as violative of their due process rights. See U.S. Const. Amend. XIV, sec. 1 ([n]o state shall    deprive any person of    property, without due process of law); R.I. Const. art. 1, sec. 2 ([n]o person shall be deprived of    property without due process of law); Fricke v. Fricke, 491 A.2d 990, 997 (R.I.1985) ([i]t is fundamental that the Fourteenth Amendment requires notice and an opportunity to be heard before one is deprived of his property or liberty). Moreover, to the extent the Uniform Partnership Act of 1914 as enacted in Rhode Island (§§ 7-12-12 to 7-12-55) even addresses the issue, [16] the Nisenzons' argument fails as a matter of partnership law as well. Pursuant to the rules relating to service of process, [17] [a] party to a judgment is one who is named as such in the record and is properly served with process or enters an appearance. State v. Manco, 425 A.2d 519, 521 (R.I.1981). An appearance is [a] coming into court as party to a suit, either in person or by attorney, whether as plaintiff or defendant. Black's Law Dictionary 97 (6th ed. 1990). (Emphasis added.) Two critical components of a valid judgment are that the court have jurisdiction of the subject matter and of the parties whose rights are to be adjudicated. A valid judgment cannot be entered against an individual who has not received any notice which would have afforded an opportunity for the concerned individual to show cause against its entry. Lamarche v. Lamarche, 115 R.I. 472, 474, 348 A.2d 22, 23 (1975). Moreover, rules relating to service of process are to be followed and construed strictly since [absent waiver] jurisdiction of the court over the person of a defendant is dependent upon proper service having been made. Shannon, 106 R.I. at 130, 256 A.2d at 218. In addition, the mere fact that a defendant has knowledge of a suit pending against him is insufficient to give a court jurisdiction, absent service of process or a voluntary appearance   . 62B Am. Jur.2d Process § 5 (1990). Because the unnamed Park City partners were not named as parties, were not served with process, and did not waive service of the summons and complaint, they cannot be parties to the judgment, and any judgment entered against them in an individual capacity is void. Thus, after reviewing Rhode Island's enactment of the Uniform Partnership Act of 1914 and the cases decided under it, we reject the Nisenzons' argument that Rhode Island's partnership law authorizes the entry of a personal judgment against an unnamed and unserved partner in an action against a partnership. Rule 17(b) of the Superior Court Rules of Civil Procedure provides that [t]he capacity of    a partnership    [to] be sued shall be determined by the law of this state. Rhode Island law has long held that, without joining at least one partner to the action, [a] partnership has no capacity to    be sued as such. Actions must be maintained by and against the partners. 1 Kent, R.I. Civ. Prac. § 17.5 at 168 (1969). [18] However, when, as here, the liability of the partners for the wrongful acts of a partner acting within the ordinary course of partnership business is alleged to be joint and several, see § 7-12-26(a) ([a]ll partners are liable    [j]ointly and severally for everything chargeable to the partnership), there is no requirement that all partners be sued to bring the claim against the partnership before the court. [19] Rather, because partnership liability is joint and several, the Nisenzons had the option of selecting which partners they wished to serve to bring Park City within the jurisdiction of the court, as long as they served at least one partner in his or her capacity as partner. See §§ 7-12-23, 7-12-24; see also Louis Benito Advertising, Inc. v. Brown, 517 So.2d 775, 776 (Fla.Dist.Ct. App.1988) ([s]ervice of process on one partner gives a court jurisdiction over the partnership and authorizes it to render a judgment binding on the partner served and the partnership property). Although this court's reasoning in Nathanson v. Spitz, 19 R.I. 70, 31 A. 690 (1895), suggests that a judgment could not properly enter against an unserved partner, the question of whether service on one partner is sufficient to subject the unserved partners' personal property to the court's jurisdiction has not yet been squarely addressed in Rhode Island. However, other jurisdictions, when faced with this question, have ruled that a partner cannot be held personally liable unless he or she has been duly served with process. [20] We agree. In a suit involving served and unserved partners, the trial justice has carefully to distinguish between liabilities of a partnership and the obligation of an unserved general partner to respond personally for such liabilities. Detrio v. United States, 264 F.2d 658, 661 (5th Cir.1959). Here, the trial justice stated that this is a partnership and    [the] Handbook of the Law[s] of Corporations and Other Business Enterprises by Harry G. Henn    set[s] forth that the general partners are jointly and severally liable for the damages caused by any tort or breach of trust committed by a partner within the scope of partnership business. Accordingly, the trial justice appears to have imposed personal liability upon the unnamed Park City partners. We believe that he erred in doing so because notwithstanding that every partner may be potentially liable for the torts of their partners, in order to impose personal liability on a vicariously liable partner, that partner must be individually named and served in the action   . The mere fact that personal liability may exist is only half of the equation. Personal jurisdiction must be obtained over each of the potentially liable partners for their potential liability to be realized. Somer & Wand, P.C. v. Rotondi, 219 A.D.2d 340, 642 N.Y.S.2d 937, 939 (N.Y.App.Div.1996). See generally Uniform Partnership Act (1994) § 307(c), 6 U.L.A. 47 (1995) (not adopted in Rhode Island) (A judgment against a partnership is not by itself a judgment against a partner. A judgment against a partnership may not be satisfied from a partner's assets unless there is also a judgment against the partner.). Thus we vacate whatever portion of the judgment below that included the unnamed Park City partners in their individual capacities. IV