United States District Court, D. Massachusetts
DENNIS R. DEVONA, Plaintiff,
STEVEN M. ZEITELS Defendant. STEVEN M. ZEITELS, M.D. and ENDOCRAFT LLC, Counterclaim Plaintiffs,
DENNIS R. DEVONA Counterclaim Defendant.
MEMORANDUM & ORDER
Talwani United States District Judge
Introduction and Background
Dennis R. DeVona (“DeVona”) claims that Defendant
Steven M. Zeitels (“Zeitels”) wrongfully
dissolved a partnership with DeVona with respect to
co-ownership and management of Endocraft, LLC
(“Endocraft”), a surgical instrument design,
development, and sales business. Complaint [#1],
Count II (Rhode Island Uniform Partnership Act), Count III
(breach of fiduciary duty) and Count IV (breach of contract).
Before the court is the Motion by Defendant Steven M.
Zeitels, M.D. for Summary Judgment as to Partnership
Issues [#171]. Zeitels contends that he is entitled to
summary judgment on these three counts on the ground that
there are no facts sufficient to support DeVona’s claim
that a partnership ever existed.Additionally before the court
is Zeitels’ Motion to Strike [#184] certain
evidence DeVona attaches to his opposition. As set forth
below, the court finds that the challenged evidence should
not be stricken and that there is a genuine dispute of
material fact as to whether DeVona and Zeitels formed a
partnership. Accordingly, the motion for summary judgment and
the motion to strike are DENIED.
Summary Judgment Standard
movant is entitled to summary judgment if “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A genuine dispute of fact exists if an issue can be
resolved in favor of either party. Calero-Cerezo v. U.S.
Dep’t of Justice, 355 F.3d 6, 19 (1st Cir. 2004).
A fact is material if it has the potential to affect the
outcome of the case. Id. In reviewing a motion for
summary judgment, the court takes all properly supported
evidence in the light most favorable to the nonmovant and
draws all reasonable inferences in his favor. Griggs-Ryan
v. Smith, 904 F.2d 112, 115 (1st Cir. 1990). The moving
party bears the burden of showing an “absence of
evidence to support the nonmoving party’s case.”
Celotex Corp. v. Cattret, 477 U.S. 317, 325 (1986).
Where that burden is met, the nonmoving party “must
adduce specific facts showing that a trier of fact reasonably
could find in his favor.” Murray v. Warrren Pumps,
LLC, 821 F.3d 77, 83 (1st Cir. 2016) (citing
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
Rhode Island Partnership Law
Rhode Island law, “[a] partnership is an association of
two (2) or more persons to carry on as co-owners [of] a
business for profit.” R.I. Gen. Laws § 7-12-17.
“Partnership, ” however, “is a notoriously
imprecise term, whose definition is especially elusive in
practice.” Southex Exhibitions, Inc. v. R.I.
Builders Ass’n, 279 F.3d 94, 100 (1st Cir. 2002)
(applying Rhode Island law). A written document is not
required to form a legal partnership. Loft v.
Lapidus, 936 F.3d 633, 636 (1st Cir. 1991) (citation
omitted). Instead, “a partnership contract may be
implied based on acts and words evidencing intent.”
Id. at 637.
partnership is sought to be proven through a particular
partnership agreement, the question of whether a partnership
exists is a question of law. Filippi v. Filippi, 818
A.2d 608, 618 (R.I. 2003) (citing Boston & Colo.
Smelting Co. v. Smith, 13 R.I. 27, 34 (R.I. 1880))
(finding question of partnership matter of law where
partnership was sought to be proven without evidence outside
of the contract). However, where there is no express
partnership contract, a party claiming the
partnership’s existence may rely on extrinsic evidence
to show that the parties intended their business relationship
to be a partnership, and the inquiry becomes a question of
fact. Southex Exhibitions, Inc., 279 F.3d at 98;
T.G. Plastics Trading Co. v. Toray Plastics (America),
Inc., 958 F.Supp.2d 315, 327 (D.R.I. 2013). Moreover,
“the intent of the parties to a partnership agreement
is the critical factor in determining when a partnership
commences, and the parties’ intent should be
ascertained as a question of fact.” 59A Am. Jur. 2d
Partnership § 78 at 276. The court assesses the
“totality of the circumstances” to determine
whether the parties had such an intent. See Southex,
279 F.3d at 101. For example, courts have considered,
inter alia, whether the parties shared in the
profits of the business relationship, the parties’
respective contributions to the business relationship, the
parties’ “rights in management, ” whether
third parties understood the parties to be partners, and
whether the parties filed a state or federal partnership tax
return. See id. at 99-103; Acinapura v.
Natalizia, No. PC 1999-2007, 2003 WL 22048717, at *5
(R.I. Super Ct. 2003). No one indicium of partnership is
conclusive. Southex, 279 F.3d at 101.
contends that he and Zeitels went into business together
around 1997, and that that partnership continued even after
Endocraft was created. Pl.’s Resp. Def.’s
Statement Undisputed Fact ¶¶ 6, 10 [#178]
(“Pl.’s Stmt.”). Zeitels claims that DeVona
was not his partner, and instead, beginning in 1999, was a
contractor of Endocraft.
sets forth several arguments as to why he and DeVona cannot
be found to have formed a partnership. First, Zeitels argues
that he and DeVona did not share in the profits of the
is prima facie evidence of a partnership. R.I. Gen. Laws
§ 7-12-18; see also T.G. Plastics, 958
F.Supp.2d at 328 (the party claiming partnership must
actually share in the profits, not merely in a percentage of
the sales). However, while profit-sharing is a
“particularly probative indicium of partnership
formation . . . it does not necessarily follow that evidence
of profit sharing compels a finding of partnership
formation.” Id. at 101. For example, evidence
that one party received profits in the form of employee wages
can rebut “the evidentiary presumption created by
profit sharing.” Id.; R.I. Gen. Laws §
7-12-18(4)(ii) (“The receipt by a person of a share of
the profits of a business is prima facie evidence that he or
she is a partner in business, but no such inference is drawn
if profits were received in payment . . . As wages of an
employee. . .”).
support of his motion, Zeitels points to the Independent
Sales Representative Agreement between DeVona and Endocraft.
Def.’s Statement Undisputed Fact ¶ 3 [#174]
(“Def.’s Smt.”). Zeitels contends that,
under this agreement, DeVona shared in no profits with
Zeitels and that the payments DeVona received from Endocraft
were for DeVona’s services as an independent
contractor. Aff. Steven M. Zeitels ¶¶ 9-10, 20
[#173]; Ex. C (Independent Sales ...