ÿWPC´ 0# °UN» %  0(w@74w‹ 0@š 0lÚ 0DF 0JŠ 0TÔ 0^( 0h† 0rî 0|` 0†Ü 0b 1uò 0dg U>Ë B) B2 D3O DC‚ AMÅ U* < (B jv~x AQöÆG 0D  0DQ D/• BÄvÓá˜HP LaserJet 4SiHPPCL5MS,ü,,,,,ü0nL(Î(ÈhH  Z ‹6Times New Roman RegularX($¡¡ ‚Uƒ„£…† ‡ ˆ ‰ ŠÓ€–B\J#3|x–("ÿÿ$££Ò  ÒÒ  Ò((3üÝ$¤¤Ý ƒ!ÝÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô  ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(&Times New Roman% Line 7 d d 'ÿÿdxd7Border 1dd*"Cþÿ << Gÿÿ< Œ 9p`(Arial üÝ ƒ!ÝÔ€ÔÝ  ÝÝ ƒ+"ÝÝ  ÝÔ€$ÔÔ€$ÔÓ  ÓÔ YYY ÔFILEDÔ€$XÔÌÌò òOctober€16,€1997ÌÌCecil€Crowson,€Jr.ÌÔ€$ôÔAppellate€Court€Clerkó ó Ý ƒ!ÝÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝWalsh,€individually,€also€asserted€a€claim€for€breach€of€employment€contract€against€theÏFitzpatricksðð€new€company,€BA,€Inc.,€and€the€trial€court€denied€Walshððs€motion€for€summaryÏjudgment€as€to€that€claim.€€In€granting€the€Plaintiffsðð€motion€for€summary€judgment€against€theÏFitzpatricks,€the€trial€court€directed€that€a€final€judgment€be€entered€as€to€the€breach€of€fiduciaryÏduty€claim.€€òòò òSeeó óóó€T.R.C.P.€54.02.Ì Ý ƒ!ÝÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝBy€its€terms,€section€61„1„120(a)€requires€only€that€the€Fitzpatricks€have€benefited€fromÏthe€transaction.€€òòò òSeeó óóó€T.C.A.€ðð61„1„120(a)€(1989).€€In€applying€this€statute,€however,€ourÏsupreme€court€has€indicated€that€a€partner€suing€for€breach€of€fiduciary€duty€also€must€show€thatÏthe€partnership€was€harmed€by€the€transaction.€€ò òòòCudev.€Couchóóó ó,€588€S.W.2d€554,€555„56Ï(Tenn.€1979).ÌPtPtHHÚ(ÿáÿâùFG(üHHØ(d'`*+,-Cþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5(3¯$¢¢Ý ƒ!ÝÝ  Ý($$””ò òÚ  Ú1Ú  Úó ó..'÷ÿ dxdüÿP PdStyl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  ion-F Geneva ÒÒ  ion-F Geneva ÒÝ ƒ!ÝÔ . ÔÔ€ÔÝ  Ýò òÑ\R AØ'\ÑÓ` Ü` p”XÓÑ\R AØ'\ÑÞ ÞÌà@ àIN€THE€COURT€OF€APPEALS€OF€TENNESSEE,€WESTERN€SECTIONÌà@ àAT€JACKSONó óÌÌà@ à_______________________________________________________ÌÌà à)Ìò òWALTER€L.€WALSH,€JR.€andó óà à)à àShelby€County€Chancery€CourtÌò òPREMIER€PROPERTIES€ó óà à)à àNo.€104730„2€R.D.Ìò òPARTNERSHIP,€a€Tennessee€Generaló óà à)Ìò òPartnershipó ó,à à)Ìà à)Ì€€€€€Plaintiffs/Appellees.à à)Ìà à)ÌVS.à à)à àC.A.€No.€02A01„9703„CH„00051ÌÙ€*ÙßR€#%"A1-j|¸ù,` Å `€€@ÿRßà à)Ìò òBA,€INC.€f/k/a€MEDICAL€DEVICESó ó,à à)Ìò òINC.,€a€Tennessee€Corporation,€ALANó óà à)Ìò òC.€FITZPATRICK€and€BEVERLY€R.ó óà à)Ìò òFITZPATRICKó ó,à à)Ìà à)Ì€€€€€Defendants/Appellants.à à)Ìà à)Ì______________________________________________________________________________ÌÌFrom€the€Chancery€Court€of€Shelby€County€at€Memphis.Ìò òHonorable€Floyd€Peete,€Jr.,€Chancellor€ó óÌÌÌÌò òTimothy€A.€Ryan,€IIIó ó,€Memphis,€TennesseeÌAttorney€for€Defendants/Appellants.ÌÌÌò òRobert€E.€Oriansó ó,€MARTIN,€TATE,€MORROW€&€MARSTON,€P.C.,€Memphis,€TennesseeÌAttorney€for€Plaintiffs/Appellees.ÌÌÌÌOPINION€FILED:ÌÌò òREVERSED€AND€REMANDEDó óÌÌÌà àò òFARMER,€J.ó óÌÌò òCRAWFORD,€P.J.,€W.S.ó ó:€(Concurs)Ìò òLILLARD,€J.ó ó:€(Concurs)ÌÌÌÌÌÌÌÌÌÌÌÌÌÌÓÓÓ  ÓÓ` Ü` ˜XÓà àDefendants€AlanC.€Fitzpatrick€and€BeverlyR.€Fitzpatrick€appeal€the€trial€courtððsÏorder€which€granted€the€motion€for€summary€judgment€filed€by€Plaintiffs/Appellees€WalterL.ÏWalsh,€Jr.,€and€Premier€Properties€Partnership€and€which€awarded€the€Partnership€a€judgment€ofÏ$38,500€on€its€claim€for€breach€of€fiduciary€duty€against€the€Fitzpatricks.€€We€reverse€the€trialÏcourtððs€judgment€based€on€our€conclusion€that€a€genuine€issue€of€material€fact€exists€as€to€whetherÏthe€Fitzpatricks€breached€their€fiduciary€duty€to€the€Partnership€when€they€amended€a€PartnershipÏlease€without€the€consent€of€all€the€partners.ÌÌà àWalsh€and€the€Fitzpatricks€formerly€owned€Medical€Devices,€Inc.,€a€medical€supplyÏbusiness.€€Walsh€and€the€Fitzpatricks€also€were€partners,€along€with€CalvinV.€Howell,€in€PremierÏProperties€Partnership.€€The€Partnership€owned€the€building€in€which€Medical€Devicesðð€businessÏwas€located.€€Pursuant€to€a€lease€agreement€entered€into€between€the€Partnership€and€MedicalÏDevices€in€January€1992,€Medical€Devices€agreed€to€pay€a€monthly€rental€of€$5250€for€a€period€ofÏfour€years;€however,€the€agreement€permitted€Medical€Devices€to€cancel€the€lease€at€any€time€byÏproviding€sixty(60)€days€written€notice€of€cancellation.€€Walsh,€as€the€managing€partner,€executedÏthe€lease€on€behalf€of€the€Partnership.ÌÌà àIn€1993,€Walsh€transferred€his€ownership€interest€in€Medical€Devices€to€theÏFitzpatricks.€€Thereafter,€Walsh€became€an€employee€of€Medical€Devices€pursuant€to€a€writtenÏemployment€contract.ÌÌà àIn€March€1994,€the€Fitzpatricks€sold€Medical€Devices€to€ServiceMaster€LimitedÏPartnership€for€a€consideration€of€$1.96€million.€€In€connection€with€this€transaction,€theÏFitzpatricks,€without€Walshððs€or€Howellððs€consent,€renegotiated€the€lease€between€Medical€DevicesÍand€Premier€Properties€Partnership.€€On€behalf€of€both€the€Partnership€and€Medical€Devices,€AlanÏFitzpatrick€executed€an€amendment€to€the€lease€which€reduced€the€monthly€rental€to€$3,500€andÏextended€the€term€of€the€lease€to€February28,€1999.€€As€amended,€the€lease€permitted€MedicalÏDevices,€now€owned€by€ServiceMaster,€to€cancel€the€lease€upon€six(6)€months€written€notice.ÌÌà àIn€October€1994,€Walsh,€on€behalf€of€the€Partnership,€filed€a€complaint€for€breachÏof€fiduciary€duty€against€the€Fitzpatricks.€€The€Plaintiffs€contended€that€the€Fitzpatricks,€byÏrenegotiating€the€Medical€Devices€lease€without€the€consent€of€the€other€partners,€violatedÏTennessee€Code€Annotated€section€61„1„120(a),€which€provides€that:ÌÌà8 àà àEvery€partner€must€account€to€the€partnership€for€anyÏbenefit,€and€hold€as€trustee€for€it€any€profits€derived€by€him€withoutÏthe€consent€of€the€other€partners€from€any€transaction€connectedÏwith€the€formation,€conduct,€or€liquidation€of€the€partnership€orÏfrom€any€use€by€him€of€its€property.ÌÌÌT.C.A.€ðð61„1„120(a)€(1989).ÌÌà àShortly€after€the€Plaintiffs€filed€this€lawsuit,€the€Fitzpatricks€and€Howell€removedÏWalsh€as€managing€partner€and€voted€to€make€Howell€the€new€managing€partner.€€Howell€thenÏsigned€a€consent€form€in€which€he€agreed€to€the€renegotiation€of€the€Medical€Devices€lease.€€ÌÌà àThe€Plaintiffs€subsequently€moved€for€summary€judgment€on€their€claim€for€breachÏof€fiduciary€duty€against€the€Fitzpatricks.€€The€trial€court€granted€the€Plaintiffsðð€motion€and€enteredÍa€judgment€of€$38,500€in€favor€of€the€Partnership.€€This€appeal€followed.× ƒ& ××  ×ÌÌà àWe€agree€with€the€Fitzpatricksðð€contention€on€appeal€that€summary€judgment€wasÏimproperly€granted€in€this€case€because€a€material€issue€of€fact€exists€as€to€whether€the€FitzpatricksÏbreached€their€fiduciary€duty€to€the€Partnership.€€A€summary€judgment€is€appropriate€only€whenÏ(1)the€record€before€the€trial€court€contains€no€genuine€issue€as€to€any€material€fact,€and€(2)theÏmoving€party€has€demonstrated€that€it€is€entitled€to€a€judgment€as€a€matter€of€law.€€ò òòòByrdv.€Halló óóó,Ï847€S.W.2d€208,€214€(Tenn.€1993).€€After€carefully€reviewing€the€record€that€was€before€the€trialÏcourt,€we€conclude€that€a€genuine€issue€of€material€fact€exists€as€to€whether,€in€renegotiating€theÏMedical€Devices€lease€on€behalf€of€the€Partnership,€the€Fitzpatricks€benefited€from€the€transactionÏto€the€detriment€of€the€Partnership.× ƒ' ××  ×ÌÌà àIn€moving€for€summary€judgment,€the€Plaintiffs€pointed€to€the€following€evidenceÏthat€the€Fitzpatricks€personally€benefited€from€the€transaction€to€the€Partnershipððs€detriment.€ÏServiceMasterððs€letter€of€intent€to€purchase€Medical€Devices€specified€that€its€valuation€of€MedicalÏDevices€ð ðwas€partly€based€on€the€representation€by€[Medical€Devices]€that€a€lease€for€the€currentÏfacilities€can€be€negotiated€with€[the€Partnership]€for€at€least€five€years€for€a€monthly€rental€ofÏapproximately€$3,500,€cancelable€by€[ServiceMaster]€with€six(6)€months€notice.ðð€€Similarly,€theÏsubsequent€sale€agreement€executed€between€Medical€Devices€and€ServiceMaster€indicated€thatÏServiceMasterððs€obligations€under€the€agreement,€at€ServiceMasterððs€option,€were€subject€to€andÍconditioned€upon€Medical€Devices€entering€into€a€new€lease€with€the€Partnership€containing€theÏrenegotiated€terms.€€Finally,€the€lease€amendment€itself€provided€that€consummation€of€theÏtransactions€contemplated€by€the€sale€agreement€was€subject€to€the€Partnershipððs€execution€of€theÏlease€amendment.ÌÌà àDespite€this€evidence,€the€Fitzpatricks€testified€by€deposition€that€the€$1.96€millionÏsale€price€for€Medical€Devices€was€not€contingent€upon€a€renegotiation€of€the€lease.€€Specifically,ÏAlan€Fitzpatrick€testified€that€ServiceMaster€still€would€have€consummated€the€sale€of€MedicalÏDevices€and€merely€would€have€rented€space€elsewhere.€€He€also€testified€that€the€original€monthlyÏrental€of€$5250€was€inflated€and€that€$3500€more€closely€matched€the€rental€amounts€that€otherÏtenants€in€the€building€were€paying.€€Beverly€Fitzpatrick€corroborated€this€testimony,€stating€thatÏthe€reduced€rent€was€more€in€line€with€the€rent€of€the€other€tenants€and€that,€absent€renegotiation€ofÏthe€lease,€ServiceMaster€would€have€moved€the€business€elsewhere.€€She€also€testified€that€theÏPartnershipððs€original€lease€with€Medical€Devices€was€structured€so€that€Medical€Devices€wasÏpaying€the€Partnershipððs€note€on€the€building.€€In€light€of€the€inflated€rental€Medical€Devices€wasÏpaying,€she€believed€that€the€renegotiation€of€the€lease€was€in€the€Partnershipððs€best€interestÏbecause€it€ensured€Medical€Devicesðð€continued€tenancy€in€the€building.€€In€any€event,€MedicalÏDevices€could€have€canceled€the€original€lease€at€any€time€merely€by€providing€sixty(60)€daysÏwritten€notice€of€the€cancellation.ÌÌà àWe€conclude€that€the€foregoing€evidence€creates€a€genuine€issue€of€material€fact€asÏto€(1)whether€(and€to€what€extent)€the€Fitzpatricks€benefited€from€the€renegotiation€of€the€leaseÏwithout€Walshððs€consent,€and€(2)whether€(and€to€what€extent)€the€Partnership€was€harmed€by€theÏtransaction.€€Although€the€documentary€evidence€contained€in€the€record€strongly€supports€theÏPlaintiffsðð€contention€that€the€purchase€price€for€Medical€Devices€was€based€on€renegotiation€of€theÏlease€and,€thus,€that€the€Fitzpatricks€personally€benefited€from€the€transaction,€the€Fitzpatricks€haveÏoffered€sworn€testimony€which€directly€contradicts€the€Plaintiffsðð€theory€of€recovery.€€Thus,€weÍconclude€that€this€testimony€precluded€the€entry€of€summary€judgment€in€favor€of€the€Partnership.ÌÌà àIn€reversing€the€trial€courtððs€order€granting€summary€judgment,€we€reject€theÏFitzpatricksðð€argument€that€the€Plaintiffs€cannot€maintain€a€claim€for€breach€of€fiduciary€duty€underÏsection€61„1„120(a)€because€a€majority€of€the€partners€consented€to€the€transaction€whereby€theÏMedical€Devices€lease€was€renegotiated.€€Under€the€Uniform€Partnership€Act,€any€partner€has€theÏright€to€a€formal€account€as€to€partnership€affairs€as€provided€by€section€61„1„120.€€T.C.A.Ïðð61„1„121(3)€(1989).€€By€its€terms,€section€61„1„120(a)€requires€the€consent€of€ð ðthe€otherÏpartnersðð€and€not€merely€a€majority€of€the€partners.€€ò òòòSeeó óóó€T.C.A.€ðð61„1„120(a)€(1989).€ÏAccordingly,€despite€the€fact€that€the€partnership€agreement€required€only€a€majority€vote€of€theÏpartners€for€most€Partnership€actions,€we€conclude€that€the€consent€of€three€of€the€four€partners€didÏnot€preclude€the€Plaintiffs€from€maintaining€this€action€against€the€Fitzpatricks.€€Our€conclusion€isÏsupported€by€a€decision€of€the€Florida€District€Court€of€Appeal,€which,€in€construing€the€sameÏprovision€of€the€Uniform€Partnership€Act,€has€held€that€a€transaction€in€which€a€partner€benefitsÏrequires€the€consent€of€all€the€partners.€€ò òòòSeeó óóó€ò òòòGrossmanv.€Greenbergó óóó,€619€So.€2d€406,€408Ï(Fla.€Dist.€Ct.€App.)€(and€cases€cited€therein),€ò òòòreview€deniedó óóó,€629€So.€2d€133€(Fla.€1993);€ò òòòseeÏalsoó óóó€ò òòòAliziov.€Perpignanoó óóó,€576€N.Y.S.2d€213,€215„16€(N.Y.€App.€Div.€1991)€(concludingÏthat€transaction€constituted€self„dealing€and,€thus,€required€consent€of€remaining€partners).ÌÌà àThe€trial€courtððs€judgment€is€reversed€and€this€cause€remanded€for€furtherÏproceedings€consistent€with€this€opinion.€€Costs€of€this€appeal€are€taxed€to€the€Appellees,€forÏwhich€execution€may€issue€if€necessary.ÌÌÓÓà àà àà àà àà àà àà àà àà àà àà àà àà àà àà àà àà à____________________________________Ìà àà àà àà àà àà àFARMER,€J.ÌÌÌÌ______________________________ÌCRAWFORD,€P.J.,€W.S.€(Concurs)ÌÌÌÌ______________________________ÌLILLARD,€J.€(Concurs)Ì