Which Partnership Law Applies?

Which Partnership Law Applies?

      In a recent decision from the Kentucky Court of Appeals, it reversed a grant of summary judgment made with respect to a claim of partnership by estoppel. It is not clear to me, however, that the correct partnership law was applied. Coppage Construction Company, Inc. v. Sanitation District No. One, No. 2018-CA-000419-MR, 2019 WL 6795706 (Ky. App. Dec. 13, 2019).

      DCI Properties - DKY, LLC (“DCI”) is a private Ohio development firm. In 2005 it entered into an agreement with the City of Dayton (Ky) to develop certain land along the Ohio River. Thereafter, DCI approached Sanitation District No. One (“SD1”), a public sanitation utility operating in Boone, Campbell and Kenton counties, with respect to relocating a pipeline in its stormwater network. This decision recites that these efforts began “In the later portion of 2006.” Once DCI and SD1 had agreed to terms, DCI contracted with Coppage Construction Company, Inc. to perform the necessary work. There arose disagreements regarding performance under that agreement. Coppage gave notice of default to DCI and offered it the opportunity to cure. However, DCI chose to simply terminate the agreement and filed suit against Coppage. Coppage filed a counterclaim alleging a variety of issues including partnership by estoppel between DCI and SD1.  Those allegations were dismissed on summary judgment, leading to this appeal. 

      On appeal the Court of Appeals reversed the grant of summary judgment as to the claim for partnership by estoppel between DCI and SD1. In discussing and allowing there to proceed a claim on that theory, the court quoted KRS § 362.225; it is there that my question arises. Again, the earliest that the alleged partnership could have come into existence was the “latter portion of 2006.” In the summer of 2006 the Kentucky UPA, which contains KRS § 362.225 and as well KRS § 362.180(1), was supplanted by the Kentucky Revised Uniform Partnership Act (2006) for all partnerships formed on or after its effective date, that being July 12, 2006.

      While the elements of partnership by estoppel are not materially different between the two laws, I am uncertain how Coopage could “prevail as a matter of law under the language of KRS 362.225.” when, at least by my reading, that statute would never be applicable.