Business Associations, Pages 286โ€“290

Saint Alphonsus Diversified Care, Inc. v. MRI Associates, LLP

Supreme Court of Idaho, 2009

Facts:

St. Alphonsus and HCA formed a general partnership named MRIA to operate medical equipment, starting with an MRI scanner. St. Alphonsus withdrew from the partnership after a number of years to provide competing MRI services. It filed suit to determine the amount it was entitled to receive for its interest, and MRIA counterclaimed on multiple counts, notably wrongful dissociation.

Procedural History:

District court held that St. Alphonsus wrongfully dissociated and granted MRIA partial summary judgment on the issue.

Issue:

Did St. Alphonsus wrongfully dissociate from MRIA?

Rule:

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RUPA ยง 602

"A partner who wrongfully dissociates is liable to the partnership and to the other partners for damages caused by the dissociation." A partner's dissociation is wrongful if "[i]t is in breach of an express provision of the partnership agreement."

Reasoning:

The partnership agreement provided that a partner could withdraw "at any time if" one of four conditions was met. The district court reasoned that these would conditions that had to occur for a partner to withdraw, but the sentence could also just state a partner could withdraw in the event that one of the events occurred. Listing four events does not prohibit withdrawal from the partnership unless one occurred. Even implying such a meaning, it still would not be an express provision limiting withdrawal, which is required for a breach to make the dissociation wrongful.

Holding:

No, St. Alphonsus did not wrongfully dissociate from the partnership. Judgment vacated and remanded.