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[U] Martz & Gailey, LLP v. Martz

Superior Court of Pennsylvania

August 14, 2013

MARTZ & GAILEY, LLP, Appellant
v.
HOLLY MARTZ, EXECUTRIX OF THE ESTATE OF GARY D. MARTZ MARTZ & GAILEY, LLP
v.
HOLLY MARTZ, EXECUTRIX OF THE ESTATE OF GARY D. MARTZ, Appellant

NON-PRECEDENTIAL DECISION

Appeal from the Order Entered July 24, 2012, in the Court of Common Pleas of York County Civil Division at No. 2011-SU-001051-44

Appeal from the Order Entered July 24, 2012, in the Court of Common Pleas of York County Civil Division at No. 2011-SU-001051-44

BEFORE: FORD ELLIOTT, P.J.E., WECHT AND COLVILLE, [*] JJ.

MEMORANDUM

FORD ELLIOTT, P.J.E.

This is a cross-appeal from the order of July 24, 2012, granting Martz & Gailey, LLP's motion for judgment on the remaining pleadings. We affirm.

On March 8, 1999, Gary D. Martz and Herman A. Gailey, III, entered into a partnership agreement ("the Agreement") for the purpose of practicing law. A limited liability partnership was created, Martz & Gailey, LLP. Each partner owned a 50% interest in the partnership. Gary Martz's wife, Holly Martz, was the bookkeeper and office administrator of the firm.

Gary Martz died on May 19, 2008, and Holly Martz is the executrix of his estate. Holly Martz remained employed by the firm until March 2011. At issue is whether Gary Martz's death constitutes a "retirement event" or a "liquidating event" under the terms of the Agreement. According to Martz & Gailey, Gary Martz's death was a retirement event under Section 12.1 of the Agreement; and therefore, his estate is owed the "redemption price" as set forth in Section 12.2.

By contrast, Holly Martz contends that Gary Martz's death was a liquidating event under Section 13 of the Agreement because Martz & Gailey only had two partners. Holly Martz argues that the estate's interest in the partnership should not be valued under the redemption price calculation provided in Section 12.2. Rather, pursuant to Section 13 of the Agreement, the firm must dissolve and wind-up its affairs if only one partner remains. Any balance that remains after the firm liquidates its assets and satisfies the claims of creditors is to be distributed to the partners. According to Holly Martz, this would include all pending contingency fee cases.

Martz & Gailey filed a complaint in the nature of a declaratory judgment action on March 15, 2011, to determine the rights of the parties under the Agreement. Holly Martz filed an answer and new matter contending that Section 13 of the Agreement controlled, and demanding that the firm be liquidated. Holly Martz also set forth allegations of breach of contract and breach of a fiduciary duty against Attorney Gailey. On January 5, 2012, the trial court granted Holly Martz's motion for partial judgment on the pleadings, finding that the death of Gary Martz constituted a "liquidating event" under Section 13 of the Agreement. The trial court determined that Section 12 would only apply in situations where there are three or more partners and the partnership could continue after there is a "retirement event, " such as the death or normal retirement of one of the partners. The trial court denied Martz & Gailey's cross-motion for partial judgment on the pleadings.

Subsequently, on July 24, 2012, the trial court granted Martz & Gailey's motion for judgment on the remaining pleadings, and entered judgment in favor of Martz & Gailey with regard to Holly Martz's remaining allegations and claims for relief. The trial court stated that,

We agree with [the firm] in that, although [Holly Martz] may not have styled her allegations and claims for relief as "counterclaims, " such allegations remained unresolved as evidenced by [Holly Martz]'s continuing demand for answers to interrogatories after entry of our previous Order granting [Holly Martz]'s Motion for Partial Judgment on the Pleadings.

Order, 7/24/12 at 1.

Martz & Gailey filed a notice of appeal on August 9, 2012. Holly Martz filed a cross-appeal on August 22, 2012. Both parties complied with Pa.R.A.P., Rule 1925(b), 42 Pa.C.S.A., and the trial court has filed an opinion.

Martz & Gailey has raised the following issue for this court's review on appeal:

1. Did the trial court err when it denied Martz & Gailey's Motion for Partial Judgment on the Pleadings, granted Mrs. Martz's Motion for Partial Judgment on the Pleadings, and concluded that Section 13 of the Partnership Agreement concerning dissolution governed over the specific provisions of Section 12, where Section 12 establishes a comprehensive and detailed means for arriving at a final binding ...

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