The opinion of the court was delivered by: KATZ
This case illustrates what happens when ordinary contract and professional malpractice claims are dressed in the costume of RICO. A simple claim that a wealthy investor in real estate tax shelters and his difficult wife were frozen out of future deals by a parvenu becomes an exaggerated struggle between good and evil. A marginal claim that an overly busy lawyer out to get business neglected a matter becomes a vast conspiracy between a lawyer and his client to retire on the money of a rich investor. What is portrayed as the grand opera of racketeering turns into a dreary Chestnut Hill soap opera with thin jury questions.
After a three week trial, the jury bought none of it. There was ample evidence to support the jury's verdict for defendants. Now I am left to decide whether to dissolve some of the partnerships in which the parties were involved. I will not.
In Counts VIII and Count IX of their Second Amended Complaint, plaintiffs ask this Court to dissolve the Epictetus Associates and Highland Partners partnerships. Plaintiffs allege that Tarantino breached fiduciary duties he owed the plaintiffs and breached provisions of the partnership agreements in question. Plaintiffs contend that Tarantino's conduct constitutes circumstances requiring a judicial decree of dissolution of the two partnerships pursuant to 59 Pa. Cons. Stat. Ann. § 354(a)(4) and § 354(a)(6) (Purdon 1985).
Plaintiffs also ask this Court to rescind an amendment to the Epictetus Associates General Partnership Agreement, to dissolve Epictetus Associates and Highland Partners, order an accounting of these partnerships and appoint a receiver for the purposes of winding up the affairs of these partnerships.
In their Proposed Findings of Fact and Conclusions of Law, plaintiffs, for the first time, ask this Court to dissolve the Epictetus I and Blair Hall partnerships, order an accounting of these partnerships and appoint a receiver for the purposes of winding up partnership affairs. Plaintiffs base their demand for dissolution on alleged breaches of fiduciary duty, fraud, and violations of Pennsylvania partnership law.
Defendant Tarantino, in his Proposed Findings of Fact and Conclusions of Law, for the first time, asks this Court to dissolve Epictetus Associates. Tarantino contends that Mr. Stainton wrongfully dissolved the partnership by his express will to end his business relationship with Tarantino. See 59 Pa. Cons. Stat. Ann. § 353(2). Tarantino requests that he be allowed to buy out Mr. Stainton's interest in Epictetus Associates and continue to run the partnership, pursuant to 59 Pa. Cons. Stat. Ann. § 360(b)(2).
For the reasons set forth below, judgment will be entered against plaintiffs and for defendants on Counts VIII and Count IX of plaintiffs' Second Amended Complaint. All other relief is denied.
The following are my Findings of Fact and Conclusions of Law with respect to Count VIII and Count IX of plaintiffs' Second Amended Complaint.
1. Plaintiff Edward Stainton (hereafter "Mr. Stainton") is a very wealthy investor of an inherited fortune and chairman of the Creative Arts Department at a private school in Philadelphia. N.T. 5-19 to 5-20; 5-153 to 5-154; 5-159 to 5-167; 6-27 to 6-34.
2. Plaintiff Christine Stainton (hereafter "Mrs. Stainton"), Mr. Stainton's wife, is active in volunteer groups. N.T. 5-56.
4. Defendant Morgan Jones (hereafter "Jones") is a partner in a large Philadelphia law firm. N.T. 6-105; 6-148; 14-81 to 14-83.
5. The original Complaint in this matter was filed on November 15, 1984 and demands a jury trial. The First Amended Complaint was filed on April 12, 1985 and demands a jury trial. The Second Amended Complaint was filed on October 1, 1985 and demands a jury trial.
6. The Second Amended Complaint includes in Counts VIII and IX a demand for dissolution of two of the partnerships in which the parties were involved, Epictetus Associates and Highland Partners. Plaintiffs also demand that the Court rescind an Amendment to the Epictetus Associates General Partnership Agreement on the grounds that it was obtained by fraud. Dissolution is demanded pursuant to 59 Pa. Cons. Stat. Ann. § 354(a)(4) and § 354(a)(6)(Purdon 1985).
7. Plaintiffs' demands for dissolution of Epictetus Associates and Highland Partners are premised on allegations that Tarantino breached fiduciary duties to plaintiffs and that such breaches constituted violations of the partnership agreements as well as violations of Pennsylvania law. Plaintiffs also contend that defendants violated various provisions of the Racketeer Influenced and Corrupt Organizations Act (hereafter "RICO") (18 U.S.C.A. § 1961 et seq.) (West 1984) and committed professional malpractice.
8. In their Proposed Findings of Fact and Conclusions of Law, plaintiffs ask this Court to dissolve the Epictetus I and Blair Hall, Ltd. partnerships. Plaintiffs allege that Tarantino misappropriated partnership funds and fraudulently reduced Mr. Stainton's interest in the Blair Hall partnership.
9. Plaintiff also allege that Tarantino has failed to provide the Staintons with any financial information regarding the partnerships since October, 1984.
10. In addition plaintiffs request a judicial decree of dissolution on the grounds that Tarantino's conduct has prejudicially affected the carrying on of the partnership business and because the differences between the parties are unreconciliable. 59 Pa. Cons. Stat. Ann. § 354(a)(3).
11. Plaintiffs did not request dissolution of the Blair Hall or Epictetus I partnerships in their Second Amended Complaint.
12. None of the partnerships involved are named as parties to this lawsuit.
13. Defendant Tarantino first met the Staintons in 1978 while he was employed as a certified public accountant by a large accounting firm in Philadelphia. N.T. 3-13; 5-18.
14. While employed by the accounting firm, Tarantino prepared the plaintiffs' tax returns (N.T. 1-99 to 1-101; 3-11); Mrs. Stainton's will (N.T. 1-96); codicils for Mr. Stainton's will (N.T. 1-96); trust agreements for their daughter (N.T. 1-96; 1-127, 5-158 to 5-159); and the partnership agreements for Epictetus Associates and Highland Partners (N.T. 1-104; 1-121; 2-66; 5-167). Tarantino also reviewed an offering memorandum on Mr. Stainton's behalf. N.T. 1-109 to 1-111; 5-159 to 5-160.
15. Tarantino denied that he was the Staintons' attorney. See e.g., N.T. 1-92; 1-109; 2-12; 2-16. Tarantino claimed he acted as the Staintons' business partner in the real estate transactions at issue and that he performed legal and accounting services for the partnerships in question as part of his duties as general and managing partner. N.T. 1-94; 1-100; 1-109; 2-12; 2-16; 2-19; 2-26; 2-51 to 2-52.
16. Tarantino also discussed investment and other financial matters with Mr. Stainton (N.T. 1-89 to 1-90; 1-98 to 1-99) in addition to other financial services he performed for the Staintons. N.T. 3-9 to 3-12; 5-158 to 5-167.
18. Tarantino created a two-tiered partnership structure to purchase Highland Court. N.T. 2-26 to 2-32.
19. Tarantino and Mrs. Stainton formed a general partnership called Epictetus Associates. Epictetus Associates then became one of the limited partners in an existing limited partnership, Highland Partners, which owned Highland Court at the time of purchase. N.T. 2-62 to 2-68.
20. One of the limited partners in Highland Partners continued in the partnership after the sale of the building in order to keep the partnership from dissolving and thus avoid the imposition of realty transfer taxes. N.T. 2-62 to 2-63.
21. This "carryover" limited partner is not named as a party to this suit.
22. Plaintiffs contended at trial that the two-tiered partnership structure was a device Tarantino used to exclude Mr. and Mrs. Stainton from participating in the partnership business and to gain control of Highland Court while misrepresenting to the Staintons that they would be owners of Highland Court. See N.T. 2-27 to 2-28; 2-36.
23. However, I credit Tarantino's testimony in this matter. Tarantino testified that the two-tier partnership structure was designed to protect the Staintons' assets from potential liability and to give Tarantino, as general partner of Epictetus Associates and Highland Partners, the authority to conduct the partnership business. Mr. Stainton had advised Tarantino that he wanted to minimize his tax liability and also protect the Staintons' assets from potential liability. The Staintons also wanted their interest in the partnerships kept from public knowledge. N.T. 2-28 to 2-30; 2-43; 2-64; 5-70; 5-96; 5-99 to 5-100; 6-64 to 6-65.
24. The lack of any sinister motive on Tarantino's part for devising the two-tier partnership structure is also demonstrated by the fact that Tarantino gave Mr. Stainton a general power of attorney to act in the former's stead as the general partner of both Highland Partners and Epictetus Associates. N.T. 2-29 to 2-30; 2-64 to 2-65; 2-68; 5-175.
25. Tarantino gave Mr. Stainton the power of attorney in order to give Mr. Stainton ultimate control of the enterprise in case something happened to Tarantino. N.T. 2-68; 2-84; 5-175.
26. Tarantino also explained why Mrs. Stainton was a general partner in Epictetus Associates instead of Mr. Stainton, who was putting up the money. Mr. Stainton wanted to get Mrs. Stainton interested and involved in business matters so that in the event of his death, she would be sufficiently knowledgeable to handle the Staintons' financial affairs. N.T. 2-42 to 2-43; 5-41 to 5-42; 5-174.
27. Mrs. Stainton's presence as general partner in Epictetus Associates was also an estate planning device. N.T. 2-43; 5-174.
28. Epictetus Associates is a Pennsylvania general partnership. Stipulation of Facts, paragraph 1 (Ex. J-83).
29. Under the terms of the general partnership agreement for Epictetus Associates (dated June 3, 1980), Tarantino is to make management decisions, subject to Mrs. Stainton's approval (P-306, at section 3.1) and has a fiduciary duty to Mrs. Stainton to act in good faith in the performance of all partnership duties. Id. at section 3.2.
30. Mrs. Stainton has a 99% share of all profits and losses; Tarantino's share is 1%. Id. at section 4.1. The agreement is silent with respect to the distribution of management fees.
31. The partners may amend the agreement at any time. Id. at section 7.2. The agreement is to be governed by Pennsylvania law. Id. at section 7.1.
32. Mrs. Staintons' initial capital contribution to Epictetus Associates was $9,900.00; Tarantino contributed $100.00. Id. at section 2.1.
34. The limited partners in Highland Partners are Epictetus Associates and the "carryover" limited partner. Id. at Schedule A. Neither limited partner is a party to this lawsuit. Neither Mr. Stainton nor Mrs. Stainton is a partner in Highland Partners.
35. Epictetus Associates has a 98% share of profits and losses; Tarantino has a 1% share, as does the carryover limited partner. Id. at section 9.1, Schedule A. Epictetus Associates holds an option to buy out the interest of the carryover limited partner for $100. N.T. 2-66; 2-82.
36. The limited partners are protected from liability for partnership debts. Id. at section 11.2.
37. The purpose of Highland Partners is to "invest in, acquire, hold, maintain, operate, improve, develop, sell, exchange, lease and otherwise use real property . . . for profit . . . ." Id. at section 3.1.
38. The partnership agreement contains no provisions for removing a limited partner. No limited partner may "withdraw from the partnership without the prior written consent of the General Partner." Id. at section 12.1.
39. The Highland Partners partnership agreement is silent with respect to the distribution of management fees.
40. Tarantino prepared the partnership agreements and other legal documents in connection with the purchase of Highland Court. N.T. 1-104; 1-121; 2-66; 5-167. Tarantino never advised the Staintons to obtain independent legal counsel or accounting advice in connection with the transaction. N.T. 2-60 to 2-61; 5-170 to 5-171.
41. To finance the purchase of Highland Court, Mr. Stainton borrowed $300,000.00, secured upon a pledge of some of his stock. Eventually, the Staintons' investment in Highland Court totalled $360,000.00. N.T. 2-5; 2-64; 6-57 to 6-60.
42. The tax savings from deducting the interest on the borrowed money, along with Mrs. Stainton's share of the partnership's net losses, equalled the interest Mr. Stainton was obliged to pay on the loan. The result was that the after-tax cost to the Staintons of borrowing the money was zero. N.T. 5-25 to 5-26; 13-29 to 13-30.
43. The Staintons asked that Tarantino hold himself out as the owner of Highland Court because they did not want others to know of their ownership interest in the apartment complex. N.T. 2-183 to 2-184; 5-96 to 5-99; 6-59 to 6-60.
44. Because the pledged stock belonging to Mr. Stainton was at risk as long as the loan in question was outstanding, Tarantino and Mr. Stainton orally agreed at the time of the purchase of Highland Court that Tarantino would attempt to refinance Highland Court as soon as feasible so Mr. Stainton would receive the return of this capital investment as soon as possible. N.T. 2-110 to 2-111; 3-160 to 3-162.
45. At the same time, Tarantino and Mr. Stainton orally agreed that once Mr. Stainton received back the proceeds of the loan from the projected refinancing, Tarantino and the Staintons would share equally in the allocation of profits, losses and distributions from Epictetus Associates. N.T. 3-179; 4-9; 4-13 to 4-15; 4-121 to 4-124; 12-130 to 12-132.
46. The parties planned to refinance and to reallocate the partnership interests after the Staintons had received certain tax benefits from the transaction. N.T. 2-24 to 2-25; 5-45.
48. I find that the transaction was not unfair to the Staintons either on its face or in substance.
49. The parties did not intend that Mrs. Stainton, the named general partner in Epictetus Associates, be a straw party to the transaction involving the purchase of Highland Court, but she soon became one. She showed little interest in partnership business. N.T. 2-54 to 2-56; 2-68 to 2-69; 2-76 to 2-79; 2-110 to 2-114; 2-119 to 2-120; 3-167 to 3-168; 5-87 to 5-90; 5-112 to 5-115.
50. Plaintiffs contend that Tarantino misappropriated partnership funds by moving into a rent-free apartment and renovating and furnishing that apartment with partnership funds. See N.T. 2-162 to 2-164. Plaintiffs also contend that Tarantino repaired his personal automobile with partnership funds and purchased a piano. See N.T. 2-157 to 2-158.
51. I find that Tarantino disclosed all these alleged misappropriations to the Staintons and that they consented to them. N.T. 2-157 to 2-160; 2-162 to 2-164; 5-176 to 5-177. The rent-free apartment was part of his compensation for managing the partnerships. N.T. 4-166 to 4-167; 5-62; 5-80; 5-167; 5-176 to 5-177; 12-114 to 12-115. Such compensation was reasonable under the circumstances. N.T. 13-178 to 13-179; 14-6 to 14-7.
52. In or about 1982, Tarantino and Mr. Stainton acquired another apartment building in Philadelphia, Colonial Manor. N.T. 1-90 to 1-91.
53. Colonial Manor was Tarantino's first real estate syndication. N.T. 3-25. Mr. Stainton advanced the deposit of $32,325.00 for the purchase of Colonial Manor. This sum was returned to him as other investors in the transaction made their capital contributions. N.T. 2-9 to 2-10; 2-167 to 2-168. Mr. Stainton also guaranteed that he would purchase any unsold limited partnership units; however, all these interests were sold. N.T. 2-167 to 2-168; 5-180.
54. In acquiring Colonial Manor, Tarantino once again used a two-tier partnership structure. Tarantino and Mr. Stainton formed a limited partnership called Epictetus I. Tarantino is the general partner of this partnership, and Mr. Stainton is the sole limited partner. All income, gains and losses are to be allocated in equal amounts to Tarantino and Mr. Stainton. Epictetus I Limited Partnership Agreement, section 6.01 (P-314). The agreement is silent with respect to the disposition of management fees. See N.T. 3-17 to 3-18; 4-15 to 4-16.
55. Tarantino then formed another limited partnership, Star Enterprises Ltd., which holds the title to Colonial Manor. Epictetus I is the sole general partner of Star Enterprises. Tarantino, as general partner of Epictetus I, managed both partnerships and managed the apartment building. N.T. 2-9; 2-165 to 2-167; 2-178 to 2-182.
56. Tarantino drafted the partnership agreement for Epictetus I. N.T. 2-19; 2-179.
57. But he retained Jones' law firm to do other legal work in connection with the purchase of Colonial Manor. N.T. 2-19; 3-25 to 3-26; 3-29; 7-43 to 7-44.
58. Tarantino never advised Mr. Stainton to obtain independent legal counsel or accounting advice in connection with the purchase of Colonial Manor. N.T. 2-13 to 2-14; 2-179; 3-27 to 3-28. Tarantino denied that he provided legal or accounting services to Mr. Stainton with respect to this transaction. Rather, Tarantino claimed he was Mr. Stainton's partner in the transaction. N.T. 2-19 to 2-20; 2-22 to 2-23; 2-176.
60. Tarantino took virtually all of the management fees generated by the operation of Colonial Manor. N.T. 2-180 to 2-182; 2-190 to 2-191; 3-17 to 3-18. I find that Tarantino and Mr. Stainton orally agreed that Tarantino would receive fees for managing the apartment building and for syndicating this real estate transaction. N.T. 2-191; 3-17 to 3-18; 4-15 to 4-16; 12-41 to 12-44; 12-115 to 12-116. The fees he received were ordinary and reasonable under the circumstances. N.T. 13-174 to 13-176; 14-13.
61. In late 1983, Tarantino syndicated the purchase of another apartment building in Philadelphia, now called Chestnut Hill Apartment. N.T. 1-91; 3-53; 5-17.
62. Mr. Stainton advanced the deposit under the agreement of sale and was reimbursed for this advance. N.T. 3-54; 3-58; 5-17; 6-3.
63. Tarantino used a two-tier partnership structure to purchase Chestnut Hill Apartments. Tarantino formed a limited partnership, Blair Hall, Ltd. Under the terms of the Blair Hall Limited Partnership agreement Tarantino is the general partner, and Mr. Stainton is one of several limited partners. N.T. 3-47 to 3-49. Ex. P-315, Section 6.02. Mr. Stainton is entitled to receive 12.5% of partnership income and losses. Ex. P-315, Section 6.02.
64. Tarantino then formed another limited partnership, Star Enterprises II, which holds the title to Chestnut Hill Apartments. Blair Hall is the general partner of Star Enterprises II. N.T. 3-47 to 3-48; 3-64.
65. Tarantino retained Jones' law firm to do the legal work for the acquisition of Chestnut Hill Apartments. N.T. 3-65; 4-4 to 4-5; 6-7 to 6-8; 7-77 to 7-79.
66. Tarantino did not advise the Staintons to get independent legal counsel or accounting advice in connection with the acquisition of Chestnut Hill Apartments. N.T. 3-62 to 3-63; 3-71. Jones did not advise Tarantino or Mr. Stainton that the latter should obtain independent legal counsel for this transaction. N.T. 7-80.
67. A draft of the Blair Hall partnership agreement shows that Mr. Stainton is the sole limited partner and is to receive 50% of the income of that partnership. N.T. 2-49 to 2-50; 3-64 to 3-65. Exs. P-259; P-272.
68. Mr. Stainton was aware that other parties were to be limited partners in Blair Hall. N.T. 3-68 to 3-70; 3-76; 6-4.
69. Tarantino and Mr. Stainton wanted to make a charitable contribution to the Chestnut Hill community. In order to provide for this bequest, Tarantino agreed to give up $100,000.00 worth of management fees, and Mr. Stainton agreed to the reduction of his interest in Blair Hall. N.T. 3-65 to 3-70; 3-72 to 3-76; 12-97 to 12-99; 12-119; 12-146 to 12-147; 13-26 to 13-28.
70. I find that Tarantino did not misappropriate any partnership funds. The bonuses Tarantino distributed in connection with refinancing Colonial Manor and Chestnut Hill Apartments were reasonable under the circumstances. N.T. 5-10 to 5-18; 5-45 to 5-48; 12-123 to 12-126. Any management or promotional fees Tarantino received from syndicating and managing Colonial Manor and Chestnut Hill Apartments were ordinary and reasonable under the circumstances. N.T. 13-174 to 13-176. Mr. Stainton was aware that Tarantino was to receive such fees for these services. N.T. 12-41 to 12-45.
71. In the first half of 1984, three events occurred: Mrs. Stainton assigned her interest in Epictetus Associates to Mr. Stainton, Tarantino arranged for the refinancing of Highland Court, and Mr. Stainton and Tarantino executed an amendment to the general partnership agreement for Epictetus Associates. These three events are related.
73. I credit Tarantino's version of these events.
74. By early 1984, the relationship between Tarantino and Mrs. Stainton had deteriorated. N.T. 3-166 to 3-169. Tarantino discussed this matter with Mr. Stainton. N.T. 3-167 to 3-171; 6-9. Tarantino then asked Mr. Stainton to have Mrs. Stainton assign her interest in Epictetus Associates to her husband. Mrs. Stainton had shown little interest in the conduct of partnership business. N.T. 3-167 to 3-172; 3-176; 5-89 to 5-90; 6-9.
75. With the personal animosity between Tarantino and Mrs. Stainton, Tarantino and Mr. Stainton believed the assignment was necessary to enable the partnership to conduct its business. N.T. 3-171.
76. Tarantino had another concern as well. He and Mr. Stainton had orally agreed to amend the Epictetus Associates General Partnership Agreement once Mr. Stainton received a distribution from the refinancing of Highland Court. The proceeds of the new mortgage loan would reimburse Mr. Stainton for the loan that he had previously taken out to finance the purchase of Highland Court. N.T. 3-91 to 3-92; 3-171 to 3-172; 3-176; 4-57 to 4-58.
77. The contemplated amendment to the partnership agreement would provide for an equal split of profits and losses. Tarantino testified that he was not going to have time to prepare the amendment prior to the refinancing. While he trusted Mr. Stainton to execute the amendment after the latter had received the distribution from the refinancing, he did not trust Mrs. Stainton to do so. For this reason, Tarantino wanted Mr. Stainton to have Mrs. Stainton assign her interest in Epictetus Associates to her husband. Without the assignment, Tarantino did not feel comfortable distributing the proceeds of the new mortgage loan to Mr. Stainton. N.T. 3-171 to 3-172; 4-57 to 4-58.
78. The refinancing yielded $315,000.00 in cash. Tarantino distributed $290,000.00 of that amount to Mr. Stainton, and some of the balance was used for improvements on an apartment occupied at below-market rent by Mr. Stainton's sister-in-law. N.T. 2-109; 4-113 to 4-118; 6-68 to 6-69.
79. As part of the refinancing of Highland Court, Tarantino assumed personal liability for the new mortgage debt of $515,000.00. Mr. Stainton did not want to be personally liable on this new mortgage. Tarantino also waived approximately $35,000.00 in distributions and fees to which he was entitled. N.T. 3-90 to 3-91; 4-57 to 4-58; 4-113 to 4-120; 12-127.
80. Some time after the refinancing, Tarantino drafted an amendment to the Epictetus Associates General Partnership Agreement. That amendment reflected the oral understanding between Mr. Stainton and Tarantino that these parties would share equally in partnership profits, losses and distributions once Mr. Stainton had received enough money, from the refinancing, to pay off the $300,000.00 loan. N.T. 3-90 to 3-92; 4-26 to 4-27; 4-57 to 4-59.
81. Tarantino brought a handwritten draft of this amendment to Jones, and asked Jones to review it. N.T. 4-35 to 4-36; 7-28.
82. After reviewing the proposed amendment and the original agreement, Jones suggested the addition of some recitals at the beginning of the document to clarify the history of the amendment. N.T. 4-27 to 4-37; 4-47 to 4-51; 4-56; 7-23 to 7-24; 7-120 to 7-121; 7-125; 7-127 to 7-128. Jones made no substantive changes to the proposed amendment. N.T. 4-56; 12-158; 14-125.
84. In addition, Jones suggested a recital of the reason for the amendment. N.T. 4-47; 4-51 to 4-52; 7-94; 7-128 to 7-129. That clause of the amended agreement reads as follows:
WHEREAS, THT [Tarantino] and ECS [Mr. Stainton] were in agreement that were the mortgage debt on Highland Court refinanced with the result that a substantial cash distribution could be made by HIGHLAND PARTNERS to its limited partner, EPICTETUS, and by EPICTETUS to its general partners, the allocation of profits, losses and cash flow of EPICTETUS would be revised to provide equality of allocation between the general partners. . . .
This recital comports with Tarantino's version of the events surrounding the amendment. See N.T. 3-179; 4-9; 4-13 to 4-15; 4-121 to 4-124; 12-130 to 12-132.
85. With Jones' recommendations in mind, Tarantino retyped the amendment and gave it to Mr. Stainton, who took it home with him. N.T. 4-57 to 4-58.
86. Mr. Stainton testified that he never read the amendment and that Tarantino never explained the impact of the amendment to him. N.T. 6-12 to 6-13; 6-22 to 6-23; 12-48. Tarantino never advised Mr. Stainton to obtain independent legal counsel to review the amendment. N.T. 4-19 to 4-20; 4-121 to 4-122. Jones never advised Mr. Stainton or Tarantino that Mr. Stainton should obtain independent legal counsel to review the amendment. N.T. 7-95 to 7-96.
87. I credit Tarantino on this matter. He testified that he and Mr. Stainton had discussed the nature and effect of the proposed amendment on previous occasions. N.T. 4-46; 4-52 to 4-53; 4-123 to 4-124. When he offered to review the document with Mr. Stainton, Mr. Stainton did not allow him to do so; Mr. Stainton said he needed no explanation because he trusted Tarantino. N.T. 4-57 to 4-62; 6-12 to 6-13; 12-48.
88. Mr. Stainton returned the amended agreement a few days later signed, witnessed and acknowledged. N.T. 4-66 to 4-67; 6-14 to 6-15.
89. Tarantino testified that Mr. Stainton, by signing the amendment, proved he was an honorable man. He noted that the refinancing distribution of cash to Mr. Stainton preceded the amendment to the Epictetus Associates partnership agreement by some months time. If Mr. Stainton had refused to sign the amendment, Tarantino would have had no way to prove the existence of their prior oral agreement concerning the re-allocation of partnership interests. N.T. 3-91 to 3-92; 4-18 to 4-19.
90. The present partners in Epictetus Associates are Thomas Tarantino and Edward Stainton. Stipulation of Facts, paragraph 2.
91. The recitals of Amendment No. 1 to General Partnership Agreement of Epictetus Associates state that Mrs. Stainton and Tarantino formed the partnership to make indirect investments in real estate and that Epictetus Associates became a limited partner in Highland Partners, the owner of Highland Court. Ex. P-307.
92. The assignment of Mrs. Stainton's interest in Epictetus Associates to Mr. Stainton is also noted in the recitals. Id.
93. The purpose of the amendment is laid out in the recitals as well. The amendment notes an agreement between Tarantino and Mr. Stainton to re-allocate the distribution of profits, losses and cash flow of Epictetus Associates if the mortgage debt on Highland Court was refinanced and Highland Partners made a substantial cash distribution to Epictetus Associates and then to the general partners of Epictetus Associates. The amendment states that the allocation of income would be revised to provide "equality of allocation between the general partners." Id.
95. The amendment reflects the intention of the parties "to formalize the above-described equal allocation agreement. . . ." Id. The amendment is effective as of January 1, 1984. Id.
96. The partnership term is to expire no later than December 31, 2020, unless dissolution is mutually agreed upon. Id. at section 1.3.
97. Tarantino is to manage the partnership activities and has a fiduciary duty to Mr. Stainton to act in good faith in the performance of all partnership duties. Id. at sections 3.1 and 3.2.
98. The purpose and business of the partnership is to make indirect investments in real estate. Id. at section 1.4.
99. All net losses and profits are to be divided equally between Tarantino and Mr. Stainton. Id. at section 4.1.
100. The amendment contains no provision for the removal of a partner. The amendment does state that "no partner may voluntarily withdraw from the partnership without the prior consent of the other partner, which consent shall not be unreasonably withheld." Id. at section 6.1.
101. The amendment states that Tarantino consented to the assignment of Mrs. Stainton's interest in the partnership to ...