Opinion
No. 107,701.
2012-10-5
YAN ZHOU and Qi Zhang, Appellees, v. Walter BICKLEY, dba Lawrence Motorcyle Shop, Appellant.
Appeal from Douglas District Court; Paula B. Martin, Judge. Darryl Graves, of Darryl Graves, A Professional Law Corporation, of Lawrence, for appellant. Napoleon S. Crews, of Crews Law Firm, of Lawrence, for appellees.
Appeal from Douglas District Court; Paula B. Martin, Judge.
Darryl Graves, of Darryl Graves, A Professional Law Corporation, of Lawrence, for appellant. Napoleon S. Crews, of Crews Law Firm, of Lawrence, for appellees.
Before BRUNS, P.J., PIERRON and MARQUARDT, JJ.
MEMORANDUM OPINION
PER CURIAM.
Yan Zhou and Qi Zhang contributed funds to Walter Bickley to open a motorcycle repair shop in Lawrence. Unfortunately, the parties did not enter into a written agreement. Moreover, the record reflects that Zhou, Zhang, and Bickley had difficulty communicating with one another. Shortly after the shop opened, the relationship between the parties soured and litigation was commenced. Following a bench trial, the district court found that the parties had failed to form a partnership. Based on our review of the record, we find sufficient evidence to support the district court's decision. Furthermore, we do not find that the district court arbitrarily disregarded evidence or that it based its decision on bias, passion, or prejudice. Thus, we affirm.
Fact And Procedural History
Bickley worked as the service and parts manager at Lawrence Yamaha. Frequently, he would eat lunch at a Chinese restaurant where Zhou and Zhang were employed as servers. Zhou and Zhang were both in their early 20's and had come to the United States from China. Although Zhou and Zhang spoke a limited amount of English, they required the assistance of an interpreter when they testified at the trial in this case.
At some point in 2009, Bickley informed Zhou and Zhang that Lawrence Yamaha was going out of business and that he would be losing his job. Later, Bickley suggested that Zhou and Zhang assist him in opening a motorcycle repair shop to replace Lawrence Yamaha. Evidently, Bickley proposed that he would provide the tools and expertise required to operate the shop, and he asked Zhou and Zhang to contribute money to the operation.
On September 28, 2009, Zhou, Zhang, and Bickley signed a 2–year lease for the building in which the motorcycle repair shop would be located. Zhou and Zhang paid the security deposit and the first month's rent. In addition, they provided funds for Bickley to purchase inventory for the shop. Moreover, before the business opened, Zhou, Zhang, and Bickley cleaned up the shop and set up the inventory.
Shortly after the business opened, Bickley refused requests by Zhou and Zhang for keys to the building and the code to the alarm system. Zhou and Zhang also asked Bickley to let them see financial information from the business—including invoices and receipts—but he refused to provide them with access to the records. Zhou and Zhang also asked Bickley to permit them to work in the shop, either by assisting with motorcycle repairs, cleaning, or customer service; but he said he did not need them and refused to let them help. Bickley also refused to enter into a written agreement with Zhou and Zhang.
On October 15, 2009, Zhou, Zhang, and Bickley met for the last time. It appears that the parties got into a heated argument after Bickley requested payment of his salary. At the end of the meeting, Zhou and Zhang agreed to give Bickley additional money, but they told him that no more funds would be provided until the parties entered into a written contract. Although Bickley never presented a contract to Zhou and Zhang, he continued to ask them for money.
Bickley continued to operate the motorcycle repair shop and pay rent in the amount of $1,700 a month under the terms of the lease signed by the parties. He was, however, able to sublet an upstairs apartment for $850 a month. Also, by the time this action went to trial, the term of the lease had expired.
In mid-November 2009, Bickley received a demand letter from Zhou and Zhang's attorney. About a year later, Zhou and Zhang filed this action against Bickley, seeking the return of the funds they had previously provided to him to open the motorcycle repair shop. In response, Bickley filed a counterclaim for breach of contract.
A bench trial was held in this case on September 7, 2011, Zhou, Zhang, and Bickley each testified under oath at trial. In addition, one other witness testified and 12 exhibits were admitted into evidence. Even though they were assisted by an interpreter, a review of the trial transcript reflects that Zhou and Zhang had difficulty understanding and answering some of the questions asked of them by counsel.
On November 28, 2011, the district court issued a memorandum decision in which it rejected Bickley's contention that the parties had entered into a partnership. Rather, the district court found that “[i]t is clear from the divergent testimony of the witnesses, that there was no agreement between the parties on any terms other than a vague agreement to open a motorcycle repair shop.” Accordingly, the district court concluded that there was “insufficient [evidence] to form a binding contract.”
Additionally, the district court found that Bickley had “essentially operated as a sole proprietor with [Zhou and Zhang] acting as his lender.” Ultimately, the district court awarded Zhou and Zhang a judgment against Bickley in the amount of $9,594. Likewise, the district court denied Zhou and Zhang's request for attorney fees and allowed Bickley to retain the security deposit paid on the building lease.
Analysis
The burden of proof is on the party asserting the existence of a partnership. See Yeager v. Graham, 150 Kan. 411, 416, 94 P.2d 317 (1939); Argianas v. Chestler, 259 Ill.App.3d 926, 942, 631 N.E.2d 1359 (1994). Furthermore, whether a partnership exists is a question of fact. See Beverly v. McCullick, 211 Kan. 87, 96–97, 505 P.2d 624 (1973). Here, the district court made the negative finding that Bickley had failed to prove the existence of a partnership. Thus, to prevail on appeal, Bickley “must prove an arbitrary disregard of undisputed evidence or must prove some extrinsic consideration such as bias, passion, or prejudice.” Hall v. Dillon Companies, Inc., 286 Kan. 777, 781, 189 P.3d 508 (2008).
In reviewing a district court's decision following a bench trial, “[f]indings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.” K.S.A. 60–252. In other words, we do not “weigh conflicting evidence” nor do we “redetermine questions of fact.” See Hodges v. Johnson, 288 Kan. 56, 65, 199 P.3d 1251 (2009). Hence, we afford significant deference to the credibility determinations made by the district court after hearing and observing the testimony of the witnesses.
In the present case, the district court was undoubtedly in the best position to determine the credibility of the witnesses, whose testimony was offered under oath and subjected to cross-examination. See State v. Scaife, 286 Kan. 614, 624, 186 P.3d 755 (2008). In particular, the district court was in the best position to determine the ability of Zhou and Zhang to understand the discussions regarding the opening of the motorcycle repair shop. Based on our review of the record, we find the district court appropriately weighed the conflicting evidence in reaching the decision that a binding contract had not been formed by the parties.
Generally, a partnership is “the association of two or more persons to carry on as co-owners a business for profit.” K.S.A. 56a–202(a). ‘ “The mere fact that the parties called themselves partners and referred to their business relation as a partnership will not necessarily make them partners, nor their business a partnership.’ “ Potts v. Lux, 161 Kan. 217, 220–21, 166 P.2d 694 (1946). Furthermore, an attempt to form a partnership can fail for numerous reasons. See Beverly, 211 Kan. at 96.
Although Zhou, Zhang, and Bickley contributed money to the start-up expenses of the motorcycle repair shop and they signed a lease together, a reasonable person could conclude based on the evidence presented that no binding contract was ever formed—much less a binding contract to form a partnership. In fact, a reasonable person could conclude that Zhou and Zhang did not have sufficient understanding due to language barriers and/or their inexperience in business to enter into a binding contract with Bickley. Similarly, a reasonable person could conclude from the evidence—in particular their repeated requests for a written contract—that Zhou and Zhang simply intended to enter into a partnership agreement at some date in the future.
It was also reasonable for the district court to conclude that the parties had failed to form a partnership based on Bickley's actions in operating the business. As the evidence in the record reflects, Bickley denied Zhou and Zhang access to the building, denied them access to financial records, and refused to let them participate in the operations of the business in any way. Certainly, such actions are not consistent with the fiduciary duties that partners owe to one another under the Kansas Uniform Partnership Act. See K.S.A. 56a–101 et seq. Moreover, Bickley's own testimony was inconsistent on the type of partnership—general or limited—which he believed was formed.
“The existence of a partnership is not a question of the ... terminology [the parties] use to describe their relationship.... It is the intent to do the things which constitute a partnership that determines whether individuals are partners, regardless if it is their purpose to create or avoid the relationship.” In re Taylor & Associates, L.P., 249 B.R. 474, 478–79 (E.D.Tenn.1998). In the present case, there was sufficient evidence presented at trial upon which the district court could reasonably conclude that the parties did not intend to do those things which constitute a partnership under K.S.A. 56a–202(a). Furthermore, Bickley has failed to establish that the district court arbitrarily disregarded evidence or based its decision on “bias, passion, or prejudice.” Hall, 286 Kan. at 781. Therefore, we will not substitute our judgment for that of the district court.
Affirmed.