Court Opinion

ID: 160788
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:53:09+00
Date Added: 2024-06-11T17:15:38.164620
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                   UNITED STATES COURT OF APPEALS
                                                                         FEB 26 2001
                               TENTH CIRCUIT
                                                                      PATRICK FISHER
                                                                               Clerk

 ROBERT J. LEVY and JOHN M.
 LEVY,
             Plaintiffs - Appellees,                    No. 98-1360
 v.                                                (D.C. No. 91-B-1460)
 EDWARD M. LEVITT,                                       (D. Colo.)
             Defendant - Appellant.

                          ORDER AND JUDGMENT *

Before SEYMOUR, McKAY, and LUCERO, Circuit Judges.

                                 I. Background

      In this diversity action under Colorado law, Plaintiffs sue Defendant for

contribution pursuant to their partnership and joint venture agreements. In 1983,

the parties formed Tri L Partners (Tri L), an equally-owned partnership, and

Tejon-Kiowa Associates (Tejon-Kiowa), a joint venture owned by Tri L and the

parties individually. Tejon-Kiowa was formed to acquire and develop certain real

      *
       This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
estate—the Giddings Building—in Colorado Springs, Colorado. In order to fund

the purchase of the building, Plaintiffs and Defendant obtained two separate loans

for which they were liable individually, as joint venturers of Tejon-Kiowa, and as

general partners of Tri L.

      The partnership and joint venture soon began losing money. In July 1987,

Defendant stopped making payments to fund the ongoing deficiencies of the joint

venture and partnership. However, Plaintiffs continued to make payments on

Defendant’s behalf, as allowed under the partnership and joint venture

agreements. These payments were initially classified as capital payments made by

Defendant with offsetting loans from Plaintiffs to Defendant; later they were

reclassified as loans from Plaintiffs to Defendant.

      Despite his nonpayment, Defendant continued to serve for several months

as managing partner of the partnership. In addition, Defendant made payments on

a junior debt against the Giddings Building, received monthly reports on the

partnership and joint venture, and claimed partnership deductions on his federal

income tax returns for 1987-89. Defendant states that he told Plaintiffs “It’s

over” on June 9, 1988; nevertheless, he continued to indicate a willingness to pay

the sums he owed and even stated an interest in purchasing Plaintiffs’ shares in

the partnership.

      On January 4, 1990, Tejon-Kiowa sold the Giddings Building and gave the

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proceeds to Tejon-Kiowa’s creditors. Plaintiffs then personally paid the balance

of Tejon-Kiowa’s debts, including Defendant’s share of the loss. Defendant

endorsed a Consent and Ratification approving the Giddings Building Deed and

was released from liability to the banks on the two notes. Defendant specifically

referred to himself in the Consent as a partner of Tri L and joint venturer of

Tejon-Kiowa. Plaintiffs and Defendant also discussed signing a mutual release of

all parties from the obligations incurred under payment of the bank notes in

exchange for Defendant’s endorsement of the Consent and Ratification; however,

Defendant found Plaintiffs’ release draft unsatisfactory and refused to sign it.

      Plaintiffs, by letter of October 24, 1990, demanded that Defendant pay the

money he owed or they would dissolve the partnership and joint venture. When

they received no substantive response, Plaintiffs dissolved Tejon-Kiowa and

terminated Tri L on December 31, 1990, pursuant to the provisions of their

respective agreements. On August 22, 1991, Plaintiffs filed suit against

Defendant for amounts owed under the partnership and joint venture agreements.

      Nearly a decade of litigation followed, during which the parties filed nine

separate motions for summary judgment and Defendant asserted more than twenty

different defenses to liability. The district court repeatedly attempted to resolve

or simplify the issues presented. On November 5, 1993, the court struck the

parties’ previous briefs and required both parties to submit simultaneous briefs in

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support of their existing summary judgment motions. Important to this appeal,

Defendant moved for summary judgment as to the date in which the partnership

and joint venture were dissolved and his release from liability to Plaintiffs.

Plaintiffs moved for summary judgment on their claims for breach of contract and

capital contribution and against all of Defendant’s defenses, including the

dissolution date and release. On January 19, 1995, the court granted Plaintiffs’

motion for summary judgment with respect to their breach of contract and capital

contribution claims and denied summary judgment for Defendant on his numerous

defenses. On August 12, 1998, the court entered judgment against Defendant for

Plaintiffs’ attorney fees and costs.

      On appeal, Defendant asserts that the district court erred in granting

summary judgment on Plaintiffs’ breach of contract, dissolution date, and

contribution claims. In addition, Defendant alleges violations of due process and

requests that we set aside Plaintiffs’ award of attorney fees.

      We review the district court’s grant of summary judgment de novo,

applying the same legal standard used by the district court. Summary judgment is

appropriate “if the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” F   ED .   R. C IV . P. 56(c). When applying this

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standard, we view the evidence and draw inferences therefrom in the light most

favorable to the nonmoving party.     See id.

                      II. Partnership Accounting, Dissolution

       Defendant first claims that the district court erred in entering summary

judgment in favor of Plaintiffs on their breach of contract claim. Defendant

contends that Plaintiffs’ action must be dismissed because Plaintiffs failed to

include a specific claim for a partnership accounting, as required by      Boner v. L.C.

Fulenwider, Inc. , 513 P.2d 730, 732 (Colo. Ct. App. 1973). The         Boner court

declared the general rule that individual members of a partnership “cannot

maintain an action for damages against another member unless there has been an

accounting.”   Id. However, Colorado courts have enumerated several exceptions

to the Boner rule. The Colorado Supreme Court has held that “where a

partnership has been dissolved, or where its business has been concluded, or

where a partnership exists for a single venture or special purpose . . . the rule

does not apply.”   Morris v. Redak , 234 P.2d 908, 914 (Colo. 1951).

       In the instant case, although the parties dispute the exact date of

dissolution, both concur that the partnership was dissolved before Plaintiffs

brought suit. In addition, prior to this litigation all partnership business had

concluded with the dissolution and sale of the partnership’s property. Finally, the

partnership and joint venture existed for only one purpose: to manage the

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investment in a single piece of real property. Thus, by any of these three

exceptions, Plaintiffs were not required to make a specific claim for accounting

under Colorado law.   1

       Defendant next claims that a genuine issue of material fact existed as to the

exact date of dissolution of the Tri L partnership. He asserts that his declaration

to the Plaintiffs that “It’s over” acted to dissolve the partnership on June 9, 1988,

as opposed to December 31, 1990, the date in which Plaintiffs formally acted to

dissolve both the joint venture and the partnership. The earlier dissolution date

was essential to Defendant’s statute of limitations defense.   2

       The district court found that Defendant claimed partnership losses on his

1988, 1989, and 1990 tax returns.    3
                                         In addition, on February 9, 1990, Defendant

       1
         We further note that some years after this suit was instigated, Colorado
adopted § 405 of the Uniform Partnership Act, which allows a partner to maintain
actions against other partners without an accounting to enforce the partner’s
rights under the partnership agreement.  See C OLO . R EV . S TAT . § 7-64-405 (2000).

       2
         The Colorado Court of Appeals has recently ruled that a two-year
catch-all statute of limitations applied to a withdrawing partner’s action for
partnership accounting because the amount due from accounting was not capable
of ascertainment by reference to partnership agreement or by simple computation
derived from agreement. See Tafoya v. Perkins , 932 P.2d 836, 838 (Colo. Ct.
App. 1996). The district court had held that the applicable time frame for
Plaintiffs to bring suit in this action under Colorado law was six years. See Order
of May 27, 1993 (App. at 51-57).

       As Defendant points out, the court erred in making this finding. It should
       3

have determined that such losses were claimed in 1987, 1988, and 1989. Since
                                                                          (continued...)

                                             -6-
signed a “Consent and Ratification” regarding the sale of the Giddings Building

in which he declared four separate times that he was a partner of Tri L and a joint

venturer of Tejon-Kiowa. The district court cited     In re S & D Foods, Inc. , 144

B.R. 121, 159 (Bankr. D. Colo. 1992), for the proposition that a party is estopped

from denying the existence of a partnership where he has held himself out as a

partner by executing documents in behalf of the partnership. The court further

noted that under Colorado law, a party holds himself out as a partner if he claims

partnership losses on his tax returns.    See Roberts v. Roberts , 155 P.2d 155, 157

(Colo. 1945). Thus, the court held, Defendant was estopped from arguing that

dissolution occurred on June 9, 1988.

       On appeal, Defendant contends that      Roberts is inapposite because, in

contrast to the defendant in   Roberts , he does not deny the existence of a

partnership, only that his status as a partner was changed through dissolution.

However, Defendant asserts a distinction without a meaningful difference. While

Roberts dealt specifically with an individual denying the existence of a

partnership, its principle is equally applicable to individuals denying their status

in an existing partnership. The essential rule of   Roberts is that an individual

cannot acquire the benefits of partnership without simultaneously assuming its

       3
           (...continued)
Defendant endorsed the Consent and Ratification as a partner in 1990, the error
was harmless.

                                            -7-
corresponding liabilities. Colorado courts have affirmed this rule since at least

1892: “It is well settled that where a person, with his knowledge and consent, has

been held out to the person having a claim or to third parties as a partner, liability

as a partner is fastened upon him.”   Butler v. Hinckley , 30 P. 250, 252 (Colo.

1892). Defendant cannot deny his status as a partner of Tri L for a period in

which he induced the Internal Revenue Service and two banks to believe that he

had the right, as a partner, to receive tax refunds and manage partnership

property. This inducement of third parties to change position detrimentally in

reasonable reliance on the inducing party’s actions is the very purpose for

estoppel. Cont’l W. Ins. Co. v. Jim's Hardwood Floor Co., Inc.    , 12 P.3d 824, 829

(Colo. Ct. App. 2000).

       Since Defendant was estopped from denying his status as a partner after

June 9, 1988, and presented no other evidence refuting Plaintiffs’ claim that

dissolution occurred on December 31, 1990, the court held that December 31,

1990, was the proper dissolution date. We agree.

                           III. Release and Contribution

       Defendant next claims that the court erred in granting summary judgment

against him on his release from liability defense. Defendant maintains that in

exchange for ratification of the Giddings Building deed, he was released from

liability on the two bank notes as to both the banks and Plaintiffs. Plaintiffs point

                                          -8-
out that Defendant did not also sign the mutual release on the indebtedness that

they proffered to him. Nevertheless, Defendant argues that his negotiations with

Plaintiffs over a mutual release in return for the Giddings ratification constituted

an implied release of his obligations on the notes to both the banks and to

Plaintiffs. However, Defendant fails to substantiate his inventive argument.

Defendant had full opportunity to sign Plaintiffs’ proposed release and refused to

do so. In addition, as the district court held, a release of his indebtedness to the

banks did not relieve him of liability to his partners under the partnership and

joint venture agreements. Viewing the evidence in the light most favorable to

Defendant, there is no triable issue concerning Defendant’s release claim.

      Defendant next contests the district court’s grant of summary judgment on

Plaintiffs’ contribution claim. The court found that Defendant admitted failing to

make capital contribution payments in breach of the partnership and joint venture

agreements. In addition, Defendant did not dispute that, pursuant to the terms of

the joint venture agreement, Plaintiffs made capital contributions on his behalf

until dissolution and termination of the partnership and joint venture.

Nevertheless, Defendant argues that Plaintiffs did not follow the contribution

procedures described in the partnership and joint venture agreements, which allow

Plaintiffs to pay Defendant’s capital contributions and then buy out his interest.

Defendant claims that he should have been bought out under these procedures

                                          -9-
instead of held liable for his breach. However, as the district court noted, the

joint venture agreement also states that “nothing in the agreement is intended to

limit the rights ‘at law or by statute or otherwise’ of any party aggrieved by the

agreement’s breach.” App. at 243. The court also observed that under Colorado

law, a partner “shall contribute toward the losses whether of capital or otherwise

sustained by the partnership according to his share in the profits.” C   OLO .   R EV .

S TAT . § 7-60-118(1)(a). The court then held that section 118(1)(a) conferred

upon Plaintiffs the right to collect the capital contributions that Defendant failed

to provide. Defendant presented no genuine issue of material fact for the court to

decide. In addition, Defendant identifies no error in the court’s reasoning under

Colorado law, nor does he present evidence indicating a mandated hierarchy of

Plaintiffs’ remedies for his breach. Thus, the court did not err in granting

Plaintiffs’ motion for summary judgment on their contribution claim.

                                    IV. Due Process

       Defendant next claims that the district court denied him due process when

it ordered the parties to submit simultaneous briefs consolidating all outstanding

motions for summary judgment. Defendant contends that the simultaneous

briefing procedure prevented him from presenting rebuttal evidence in accordance

with Fed. R. Civ. P. 56, since he had no opportunity to respond to Plaintiff’s brief

after its submission. However, Defendant misconstrues the purpose and use of

                                            -10-
the simultaneous briefs. The parties had submitted nine separate briefs detailing

various motions for summary judgment, which were followed by the opposing

parties’ respective responses. This was an unwieldy load. The district court

struck the nine summary judgment briefs and ordered each of the parties to submit

a single consolidated brief that organized and condensed the arguments that each

had already made. The court did not deny Defendant the right to respond to

Plaintiffs’ arguments; Defendant had already done so, followed by which both

parties were required to consolidate their previous briefs. The court’s act was a

common and appropriate attempt to manage its caseload in accordance with local

rules. 4 Defendant was not prejudiced by this unremarkable consolidated briefing

procedure.

      Defendant also alleges that he was denied due process because the initial

district court judge in charge of this action “had a personal bias or prejudice

against both parties within the meaning of 28 U.S.C. § 455(b)(1) such that he

should have disqualified himself years ago.” (Br. Aplt. at 43). Defendant

“constructively infer[s]” this bias by pointing out the number of times that trial

dates were rescheduled, the court’s order for simultaneous briefing, its rejection

      4
        D.C. C OLO . L. R. 7.1(H) states: “[B]riefs and Motions shall be concise. A
verbose, redundant, ungrammatical, or unintelligible brief or motion may be
stricken or returned for revision, and its filing may be grounds for imposing
sanctions. Limitations may be imposed on the length of any brief or motion.”

                                        -11-
of Defendant’s arguments, and even the judge’s retirement before this case had

concluded.

       However, the Supreme Court, in discussing § 455(b)(1), has stated that

“judicial rulings alone almost never constitute a valid basis for a bias or partiality

motion.” Liteky v. United States , 510 U.S. 540, 555 (1994). In addition,

       opinions formed by the judge on the basis of facts introduced or
       events occurring in the course of the current proceedings, or of prior
       proceedings, do not constitute a basis for a bias or partiality motion
       unless they display a deep-seated favoritism or antagonism that
       would make fair judgment impossible. . . . Not establishing bias or
       partiality . . . are expressions of impatience, dissatisfaction,
       annoyance, and even anger, that are within the bounds of what
       imperfect men and women, even after having been confirmed as
       federal judges, sometimes display.

Id. at 555-56; see also United States v. Young , 45 F.3d 1405, 1415 (10th Cir.),

cert. denied , 515 U.S. 1169 (1995).

       At most, Defendant has shown that the district judge was impatient with the

parties’ numerous briefs and unheeding to Defendant’s pleas for exoneration.

This did not rise to the level of judicial bias or prejudice under § 455(b). Even if

it did, the remedy for judicial prejudice is a motion for recusal that “must be

timely filed,” and a party must act promptly in filing its motion once it knows of

the facts on which it relies.   Willner v. Univ. of Kan. , 848 F.2d 1023, 1028-29

(10th Cir. 1988), cert. denied , 488 U.S. 1031 (1989). Defendant’s belated claim

of judicial bias stemming from over nine years of judicial administration is

                                           -12-
certainly not timely.

                                  V. Attorney Fees

       Lastly, Defendant argues that the award of attorney fees to Plaintiffs should

be set aside. Defendant’s one-sentence justification directs this court to peruse

three of his previous filings and alleges that Plaintiffs did not prove their

entitlement to attorney fees. However, Defendant fails to provide this court with

the documents he references. “It is not this court’s burden to hunt down the

pertinent materials. Rather, it is [Defendant’s] responsibility as the appellant to

provide us with a proper record on appeal.”      Rios v. Bigler , 67 F.3d 1543, 1553

(10th Cir. 1995). We thus decline to review Defendant’s challenge to the district

court’s award of attorney fees.   See Knowlton v. Teltrust Phones, Inc.   , 189 F.3d

1177, 1182 (10th Cir. 1999) (failure to provide adequate record requires court to

disregard challenges to district court’s ruling on sanctions).

       For the foregoing reasons, the judgment of the district court is

AFFIRMED .

                                         Entered for the Court:

                                         Monroe G. McKay
                                         Circuit Judge

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