Citation. 8182 Maryland Assocs. v. Sheehan, 14 S.W.3d 576, 2000)
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Brief Fact Summary.
8182 Maryland Associates, Limited Partnership, (Appellant), brought suit for past due rent and other expenses and named as defendants all past and present general partners of the law firm, Popkin, Stern, Heifitz, Lurie, Sheehan, Reby & Chervitz. with whom it had a lease agreement. Several general partners successfully moved for summary judgment and partial summary judgment. Appellant appeals.
Synopsis of Rule of Law.
Any change in membership dissolves the partnership and creates a new partnership. A party becomes liable on a contractual agreement the moment it is executed regardless of whether it has a future date of commencement. Dissolution of a partnership does not relieve the partners from their liability for performance contracts theretofore made. A party is liable for rent under the creation of a tenancy by privity of estate while the tenant is in possession.
On April 5 1982, the general partnership of Popkin, Stern, Heifitz, Lurie, Sheehan, Reby & Chervitz, a law firm, entered into a lease agreement with Appellant. Richard J. Sheehan, a general partner, signed the lease along with the other thirteen partners. The lease was to begin when the space was “ready for occupancy.” Prior to that date, Sheehan withdrew from the partnership. He assigned his interest in the partnership to the remaining partners. Then the partnership formally adopted the name of Popkin & Stern. The lease was not expressly assigned in writing to the new partnership nor did the new partnership assume the obligations of the lease in writing. Popkin & Stern began occupancy of the leased premises sometime before April 27, 1986.
Timothy Noelker, Douglas Burdette, Barbara Lageson, and Jeffrey Klar became partners of Popkin & Stern at varying points during 1985. All four withdrew from the partnership before December 1, 1989. Popkin & Stern defaulted on their lease in September of 1991 and filed for bankruptcy in 1992. Appellant brought suit for past due rent and other expenses and named as defendants all past and present general partners of the firm since April 4, 1984. Noelker, Klar, Sheehan, Burdette, and Harris successfully moved for summary judgment and partial summary judgment. 8182 Maryland appeals.
Whether Sheehan’s withdrawal from the partnership terminated his personal liability because his withdrawal became effective before the lease agreement “commenced.”
Whether Sheehan’s liability terminated at withdrawal because he withdrew before any breach of the lease occurred.
Whether Noelker, Burdette, Lageson, and Klar assumed the obligations under the lease merely by occupying the premises.
Whether Noelker, Burdette, Lageson, and Klar are personally liable for rent arising subsequent to the time they were members of a partnership in occupation of the premises when the lease breach occurred subsequent to their withdrawal.
No. Once Sheehan signed the lease agreement, he became jointly and severally liable for all existing and future obligations under that lease.
No. Withdrawing partners retain personal liability after withdrawal.
Yes. The members of the new partnership were liability for rent not because of when the obligation of a lease arose, but because they were in occupation of the premises.
No. The new partners are not personally liable for rent arising subsequent to the time they were members of the partnership in occupation when the lease breach occurred subsequent to their withdrawal.
Sheehan became personally liable for the lease when the lease was executed. Commencement under the terms of the lease was merely the starting point for the collection of rent and occupancy. Once Sheehan signed the lease agreement he became jointly and severally liable for all existing and future obligations under that lease.
Sheehan’s withdrawal from the partnership did not sever his liability on the lease. Dissolution of the original partnership and the subsequent reformation of Popkin & Stern did not discharge the existing liability of any partner.
The new partners were liable for rent because they were in occupation of the premises. A party can be liable for rent under the creation of a tenancy by privity of estate. This liability arises and binds continually throughout the period of occupation.
Privity of estate creates liability only for payment of rent and other covenants running with the land only while the tenant is in possession. Thus each succeeding Popkin & Stern partnership and each of the varying partners became jointly and severally liable for rent payments only during the period their partnerships were in privity of estate with 8182 Maryland. When each Defendant withdrew from the partnership, that partnership ceased to exist and ceased to occupy the land. Its privity of estate ended and thus the withdrawing partner’s personal liability for rent ended as well.