This is a motion for summary judgment made by the defendants to dismiss the complaint of a former law partner against the partnership for a claimed value of his partnership interest.
Plaintiff Simon Levin ("Levin") was a partner of the defendant law firm of Robinson, Wayne & La Sala ("RW & L"),
formerly Robinson, Wayne, Levin, Riccio & La Sala. He resigned from the firm on April 28, 1988 to practice law with another Newark law firm. He sues his former law firm and six individual defendants, all of whom are present or former partners in RW & L.*fn1
Levin claims that, although there was no partnership agreement, he is owed a balance attributable to his partnership interest based upon various theories.
The issue is whether plaintiff, having asserted in his matrimonial action that he had received all funds to which he was entitled pursuant to the Partnership Agreement, can assert a contrary position in a subsequent law suit against the partnership.
The court concludes that plaintiff's causes of action are barred by the doctrine of judicial estoppel because the claims are based on positions which are entirely inconsistent with positions which he previously took in his matrimonial action.
A. Plaintiff's Divorce Action
Levin was sued for divorce by his former wife in December 1986, wherein she sought, inter alia, equitable distribution of Levin's assets including his partnership interest in RW & L. The divorce decree, granted in November 1989, incorporated the parties' settlement agreement, which permitted Levin to retain his interests in his law practice except for certain pension and profit sharing benefits from RW & L. The lawyer for Levin's
ex-wife told Judge Cass that Mrs. Levin waived "any and all claims to any law firm practice that Mr. Levin might have specifically, whether from his old practice or from his new."
B. Plaintiff's Claims in This Action
Although Levin resigned from RW & L in April 1988, he received his full withdrawal distribution from the firm in August 1988. However, it was not until May 1990 that he instituted this action. He also filed an amended complaint two days later. He states that on September 1, 1973, he became a partner in the predecessor firm to RW & L and remained a partner until April 28, 1988. He further states that upon his departure from the partnership he made a demand to be paid what he was owed for his interest in the partnership, and on August 1, 1988, he was paid $24,958.63 for this interest.
Levin claims that he is owed "his partnership interest estimated to be three hundred thousand dollars ($300,000.00), and . . . his pro rata share of the net distributable profits" of the partnership.
Levin also alleges that a RW & L client gave defendants Robinson and Riccio personal family gifts, which should have been treated as partnership income and property, at least for the purpose of determining the value of Levin's partnership interest.
Levin further alleges that there was an oral partnership agreement which entitled him, as a withdrawing partner, "to receive: (1) his net capital account, (2) an amount equal to his pro rata share of the net distributable profits of the firm for that portion of its then current year, and (3) an amount equal to thirty rounds as 'rounds' was defined in their partnership agreement."
Although Levin alleges that there was "no written partnership agreement in existence", he then alleges that "in the event the court finds such an agreement to exist, he demands judgment, alternatively, under the terms of the agreement".
Levin also alleges that in late 1987 and early 1988, defendants conspired to "force" him to resign from the RW & L firm by reducing the partners' draw ("rounds"), based upon the financial condition of the firm. This reduction, Levin claims, put undue pressure on him to resign from the firm due to the pendency of his divorce action.
C. Levin's Certifications And Positions In His Divorce Action
Prior to his departure from RW & L, Levin was embroiled in a bitterly contested matrimonial action. After Levin resigned from RW & L in April 1988, an equitable distribution issue arose between Levin and his wife over whether there was any value in his former partnership interest of RW & L. Levin's first sworn Case Information Statement ("CIS"), filed with the matrimonial court in December 1986, listed his interest in RW & L as $55,841. However, in a later CIS, sworn to on September 16, 1988, he did not even list his partnership interest in RW & L as having any value under Item No. 7 ("Businesses, Partnerships, Professional Practices") of "Part E -- Balance Sheet". Levin's representations to the matrimonial court on these issues continued up to the conclusion of the matter in November 1989.
In his divorce action in April 1988, five months after Levin left RW & L, and after he had received the check from RW & L for $24,958.63 "completing all payments and obligations owed to [plaintiff] as a result of [plaintiff's] withdrawal from the Firm" Levin's wife produced an appraisal report prepared by Joseph G. Aronson dated October 3, 1988, purporting to establish a "value" of $254,062. for Levin's former partnership interest in RW & L for equitable distribution purposes.
On November 30, 1988, Levin filed a motion, certification and brief seeking "to bar plaintiff's expert report concerning the valuation of [Levin's] partnership interest in his former law firm" on the grounds that there was a written Partnership
Agreement, which he attached to his certification, and that Levin had already received everything he was entitled to receive for his partnership interest. Levin and his attorney filed certifications and made representations to the matrimonial court in late 1988 and 1989 which, defendants contend, estop and bar him from asserting and pursuing his claims in this action. As part of that motion, Levin certified:
2. The enclosed Agreement of Partnership fully governed my compensation during my employment with the firm . . . and dictated the terms of my final payment upon departure from the firm.
3. I am aware that the payments made to other members of the firm upon their departure therefrom were made in complete accordance with said Agreement of Partnership.
8. My understanding of the Agreement of Partnership is that I have received substantially all monies relating to my partnership interest (except for minor discrepancies). . . .
9. I received $24,958.63 from Robinson, Wayne, Riccio and La Sala (now Robinson, Wayne & La Sala) for my partnership interest.
The Partnership Agreement attached to Levin's certification set forth all his rights upon withdrawal from the partnership, which he certified that he had received. Although the Partnership Agreement was unsigned, he nevertheless swore in his certification that it was, in fact, the Agreement of Partnership. Therefore, Levin's contention that he did not represent in his matrimonial action that there was a "written" Partnership Agreement is frivolous. Moreover, there was an earlier Partnership Agreement dated October 1, 1977, which was executed by the partners, which contained substantially identical withdrawal provisions.
Thus, in order to avoid his wife's claim for equitable distribution of the purported "value" of his partnership interest in RW & L (asserted to be worth $254,062 by his wife's expert), Levin swore in the divorce action that there was a written Partnership Agreement; swore that it fixed all his rights upon withdrawal; and swore that the $24,958.63 which he had received for his partnership interest in August 1988 was his complete entitlement
under the Partnership Agreement. These certifications were made after Levin had spent three days with his wife's expert reviewing "all records relating to [his] former partnership".*fn2
Levin's attorney in the divorce action made similar representations to the court in her brief when she stated:
The only equitable means of valuing defendant's interest in his prior law firm is what the firm has in fact paid him, which is consistent with the partnership agreement. . . .
The firm of R, W, L, R & L fashioned a partnership agreement, a copy of which is attached to this letter brief as Exhibit B, through which the value of defendant's interest in the firm is readily ascertainable. Paragraph 18(b) of the partnership agreement states that 'upon the effective date, the withdrawing proprietary partner's right, title and interest in the Firm shall be extinguished in consideration of the payments to or for him by the continuing Firm.' . . . .
Defendant Mr. Levin withdrew from the firm to practice law with another firm with its principal office located in the City of Newark. This very Court has already held that defendant terminated his association with R, W, L, R & L in good faith when plaintiff sought to enforce the pendente lite support order. Accordingly, pursuant to the payout provisions of the partnership agreement, defendant is not entitled to receive any other monies from his partnership interest at R, W, L, R & L.
Plaintiff's expert has failed to consider the agreement alleging, albeit unsupported, that he 'has been advised that the agreement is not consistently followed and that withdrawing partners generally negotiate the terms of their own withdrawal.' Neither plaintiff nor plaintiff's expert have produced any facts to support this allegation. The evidence is clearly to the contrary. At R, W, L, R & L all of the partners agreed to Exhibit B and have conformed their dealings pursuant to the agreement. See Certification of defendant attached hereto as Exhibit E. The agreement had been followed as is evidenced in the case of others who have left the firm.
Upon his withdrawal from R, W, L, R & L, defendant received $24,958.63 representing defendant's capital account. Pursuant to the agreement, as evidenced by Exhibit C, defendant is not entitled to any additional monies for his partnership interest. The defendant understands Exhibit C, the letter received from the managing partner, to mean that he has been paid in full by his former firm. The defendant is unaware of any cause of action that he
might pursue against his former firm in order to obtain a greater amount of money. . . .
In conclusion, the value of defendant's interest in R, W, L, R & L was established when he terminated his association with the firm. As had been in the past practice, he received all monies to which he was entitled by his partnership interest. Defendant does not know of any additional money to which he is entitled for his partnership interest. . . (emphasis added).
Even as late as August 28, 1989, Levin's attorney in the divorce action filed another brief in further support of Levin's motion to bar his wife's valuation of his former partnership interest. In that brief (filed seventeen months after Levin left RW & L) Levin's attorney again asserted:
The first flaw in Mr. Aronson's report is that it is based upon an incorrect premise '. . . that withdrawing partners generally negotiate the terms of their own withdrawal. . . .' To the contrary, all of the former partners abided by the terms of the Agreement; there was no negotiation. See Certification of Simon Levin, attached to defendant's November 30, 1988 letter brief as Exhibit E.
The second flaw of Mr. Aronson's report is that he ignores the fact that defendant has received all funds to which he is entitled pursuant to the partnership agreement. . . See defendant's letter brief of November 30, 1988, at page 2, and cases cited therein.
Plaintiff refuses to accept the fact that defendant has received all funds to which he is entitled to by the partnership agreement and is trying to create an issue where none exists. Defendant has received $24,958.63 upon his withdrawal from RW & L. This was in accordance with the partnership agreement and did not involve any negotiation as alleged by the plaintiff. If defendant had been able to negotiate his pay-out, or not abide by the partnership agreement, he would have negotiated a pay-out for more than $24,958.63. . . .
As a result of the foregoing flaws, the expert report of Joe Aronson is not itself sufficiently reliable, and is not based on facts, and must be barred . . . Moreover, it would be truly inequitable for the court to value defendant's interest in RW & L for a greater amount than defendant has been paid and force defendant to split a hypothetical figure that is over ten times his actual payment. . . .
Plaintiff is certainly entitled to a portion of defendant's law partnership; however, the valuation of that asset has been clearly and unequivocally determined. Since the value of defendant's interest in RW & L has been clearly determined, plaintiff's expert report will ...