Which Partnership Law?

Which Partnership Law?

      In a recent and otherwise not very interesting (at least from my perspective) decision out of the Kentucky Court of Appeals, it seems there was confusion as to which partnership law controls. Carlotta v. Reed, No. 2013-CA-001567-MR (Ky. App. July 15, 2016).

       This dispute involved the winding up and termination of a limited liability partnership, Mark & Barry Foods, LLP, which had as its constituent partners Mark G. Carlotta and Barry G. Reed. Most of the opinion deals with the effect in the litigation of failures by Carlotta to produce documents in discovery, failures which were strongly held against him in the trial on the merits.

 

       That aside, the court seemed to be confused as to which statute would apply. For example, on the first page of the slip opinion, it recited that KRS § 362.345 was being applied in the “partnership dissolution and allocating the parties respective partnership interests.” That statutory reference is to the Kentucky Uniform Partnership Act, originally adopted in 1954. However, later in the opinion (page 10 of the slip opinion), both KRS §§ 362.1-806 and 362.1-807 are cited in connection with Carlotta’s challenge to “the sufficiency of the evidence supporting the trial court set’s final judgment as concerns the division of partnership assets and contends that his filings did not comply with KRS 362.1-806 and KRS 362.1-807, which govern the settlement of liabilities and accounts upon the dissolution of the partnership.” Of course, both KRS §§ 362.1-806 and 362.1-807 are from the Kentucky Revised Uniform Partnership Act (2006).

      Ultimately, it may not matter which statute applied as they will largely yield the same results. However, both cannot apply to the same partnership.