JOHN PECK, individually and as former general partner of P&B ASSOCIATES v. LILY BENTAS, individually and as former general partner of P&B ASSOCIATES

By petition brought under G. L. c. 241, Plaintiff has asked the court to appoint a commissioner to partition approximately 8.75 acres of land with frontage on Route 6 in Halifax (Locus). Locus is held of record in the name of P&B Associates, a Massachusetts General Partnership (P&B). In the alternative, Plaintiff requests that if the court determines that it does not have jurisdiction to partition Locus, that the court appoint a receiver to take possession of and sell Locus in order to complete the winding up of P&B’s affairs in accordance with a certain settlement agreement executed by the parties, as partners of P&B, on April 9, 1998 (Settlement Agreement). Plaintiff also asks the court for equitable adjustment of the net proceeds resulting from a sale of Locus by the commissioner or, in the alternative, by a receiver.

P&B was formed by Plaintiff and Defendant 1983, in order to own and operate investment property. Through their Settlement Agreement, the partners agreed it was their express intent to dissolve P&B effective immediately and wind up the affairs of the partnership in a commercially reasonable manner as soon as possible. As of the date of the Settlement Agreement, P&B owned only Locus, having disposed of all other partnership properties. In the ten years since the execution of the Settlement Agreement, Locus has remained in P&B’s name and has not been sold. Plaintiff argues that the Settlement Agreement terminated the partnership’s business, and even though the record title remains in the name of P&B, the parties hold Locus effectively as tenants-in-common. Therefore, Plaintiff asserts the court has jurisdiction to partition the land pursuant to G. L. c. 241, § 1. Defendant has moved to dismiss the partition action, arguing that Locus is not owned by a tenancy-in-common and, therefore, partition does not lie.

On September 2, 2008, Defendant filed a motion to dismiss this action for lack of subject matter jurisdiction, which was opposed by Plaintiff through a written opposition filed September 16, 2008. Defendant argues that P&B continues to hold title to Locus. According to Defendant, P&B continues to incur real estate taxes and partnership expenses which necessitate the filing of partnership tax returns. She argues that this action involves the rights and obligations of partners in a partnership, and consequently, is governed by the Massachusetts Uniform Partnership Act, G. L. c. 108A (Partnership Act), which does not fall within the subject matter jurisdiction of this court under G. L. c. 185, § 1.

Plaintiff’s opposition to Defendant’s motion to dismiss is two-fold. First, Plaintiff argues that this is not a partnership dispute because P&B’s business has terminated and the partnership has no creditors or assets other than Locus, from which it derives no income. Rather, Plaintiff asserts that Locus is effectively held by a tenancy-in-common because the partnership has been dissolved and no longer conducts business. Second, Plaintiff argues in the alternative that the court has equitable power to specifically enforce the Settlement Agreement through the appointment of a receiver. Plaintiff bases his second argument on the fact that under G. L. c. 185, § 1(k), the court has jurisdiction “of all matters cognizable under general principles of equity jurisprudence where any right, title or interest in land is involved, including actions for specific performance of contracts.”

On September 17, 2008, this court held a hearing on the Defendant’s motion to dismiss and granted Defendant’s motion as to Plaintiff’s request for appointment of a receiver and Count II for equitable adjustment. As a result, this order relates only to the remaining count which is Plaintiff’s partition action (Count I).

As the moving party seeking to dismiss the action, Defendant bears the burden of proving that this is a dispute over which the court does not have subject matter jurisdiction. Accordingly, the pleadings must establish that Locus is not currently subject to partition under G. L. c. 241, and the partners’ dispute relating to Locus is subject to resolution under the Partnership Act. “A motion to dismiss will be granted only where it appears with certainty that the non-moving party is not entitled to relief under any combination of facts that he could prove in support of his claims.” Sullivan v. Chief Justice for Administration and Management of the Trial Court, 448 Mass. 15 , 21 (2006) (citing Spinner v. Nutt, 417 Mass. 549 , 550 (1994); Flattery v. Gregory, 397 Mass. 143 , 145-46 (1986)). The court must “take the allegations in the complaint and inferences drawn therefrom in a plaintiff’s favor as true.” Morais v. City of Lowell, 50 Mass. App. Ct. 540 , 541 (2000). In that context, this court concludes that Defendant is entitled to dismissal of the action.

Both parties cite to Webber v. Rosenberg, 318 Mass. 768 , 769 (1945), to support their respective positions. Plaintiff cites Webber for the proposition that an agreement to cease doing business as a partnership and to distribute the partnership property effectively terminates the partnership, making them tenants-in-common of real property formerly owned by the partnership, which can then be partitioned. See 318 Mass. at 770. Defendant argues that this is a partnership dispute because despite the parties’ Settlement Agreement to dissolve P&B, the partnership is not yet terminated and as a result Locus remains held by a tenancy in partnership. Defendant argues that Webber is distinguishable because there the court found that the partnership had been terminated. In contrast here, the partners have not yet wound up their affairs and the partnership has not yet been terminated. The language of the Settlement Agreement makes that clear. This court agrees with Defendant that applying Webber, based on the facts presented, Locus continues to be held by a tenancy in partnership.

General Laws chapter 241, § 1 provides: “Any person, except a tenancy by the entirety, owning a present undivided legal estate in land, not subject to redemption, shall be entitled to have partition in the manner [set forth in the statute].” A present undivided legal estate consists of property held in common, in joint tenancy, or by the entirety. Because the partition statute specifically excepts from partition actions properties held by tenancies by the entirety, only joint tenancies and tenancies in common may be partitioned. The Partnership Act created tenancies in partnership, but did not subject such tenancies to partition under G. L. c. 241, § 1. Webber, 318 Mass. at 769. As a result, tenancies in partnership are not subject to partition. Id. The Partnership Act states “[o]n dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is completed.” G. L. c. 108A, § 30. The Supreme Judicial Court cited this statutory language in Webber in determining that the parties in that case entered into an agreement that constituted a termination of their partnership and, in effect, a distribution of the partnership’s remaining assets to the partners. Webber, 318 Mass. at 770.

In contrast, the Settlement Agreement between Plaintiff and Defendant here did not terminate their partnership because they expressly agreed to “wind up the affairs of the partnership in a commercially reasonable manner as soon as possible.” As of the date of the execution of the Settlement Agreement, the only partnership asset was Locus. The parties have not disposed of Locus and have not agreed on a disposition plan for Locus in order to complete the wind up process of P&B. Defendant’s counsel stated at the hearing that in Defendant’s opinion, now is not a “commercially reasonable” time to dispose of Locus. P&B continues to exist and to hold Locus as a tenancy in partnership, which this court cannot order divided or sold under G. L. c. 241. Plaintiff’s argument in opposition that the partnership has been effectively terminated fails because the sole evidence of that fact is the Settlement Agreement, which this court reads otherwise. For that reason, Defendant’s motion to dismiss this case must be granted.

For the foregoing reasons, it is hereby

ORDERED that Count I of the petition is dismissed without prejudice to this court’s consideration of a future petition for partition should the parties become tenants-in-common of Locus and one of them seeks relief under G. L. c. 241.

So Ordered.

By the Court. (Scheier, C.J.)