Southex Exhibitions, Inc. v. Rhode Island Builders Association, Inc. RI 2002
Facts: The Rhode Island Builder’s Association (RIBA) and Sherman Exposition Management, Inc. (SEM), entered into an agreement in 1974 for future productions of the RIBA home shows at the Providence Civic Center. Plaintiff Southex acquired SEM following a series of assignments and contract renewals agreed to by RIBA. Southex believed that in order to maintain its financial stake in RIBA home shows, the 1974 Agreement between RIBA and Southex needed to be renegotiated or allowed to expire according to its terms. RIBA in turn expressed dissatisfaction with Southex’s performance, and eventually entered into a management contract with another producer. Southex commenced suit against RIBA alleging that the 1974 Agreement established a partnership between RIBA and Southex’s predecessor SEM, and/or that by its silence RIBA had enabled the formation of a partnership by estoppel, and RIBA breached its fiduciary duties to its co-partner, Southex, by its wrongful dissolution of their partnership.
Issue: Did the 1974 Agreement between RIBA and SEM (i.e. Southex’s predecssor) establish a partnership between RIBA and SEM based on the totality of the circumstance?
Holding: No partnership between RIBA and SEM.
The term “partner” frequently is defined with a view to its context. More importantly, the label the parties assign to their intended legal relationship, while probative of partnership formation, are not necessarily dispositive as a matter of law, particularly in the presence of countervailing evidence, such as are present here.
Argument for Partnership:
-Agreement refers to “partners”
-Profit sharing - 55% (SEM); 45% (RIBA)
-Parties determine show dates and admission prices
-This is not like the Fenwick (hair salon) case, where Fenwick has all of the control over the business operations.
Argument against Partnership:
-Agreement is an “agreement” not a “partnership”
-SEM advances all funds, indemnifies RIBA for losses (i.e. RIBA has no liability)
-SEM conducted business with third parties in its own name
-No federal/state partnership