Wittingham, LLC v. TNE Limited Partnership
Wittingham, LLC v. TNE Limited Partnership, 2020 UT 49 (Durrant, C.J.)
Partnerships and Contracts
A partnership dissolved, and years later the former partner in the partnership obtained a loan from TNE. The partner secured that loan with a trust deed on buildings owned by the partnership. TNE released the funds to the partner. The partner’s family discovered the partner’s actions, sued the partner, and transferred title of the buildings to a new entity. TNE, then, sued the family, claiming that the trust deed on the building was valid and sought damages in the amount of its loan. The district court determined that the trust deed was void. The district court dismissed TNE’s claims against the partner because it did not serve the partner. The Utah Supreme Court reversed, holding:
- The district court erred in concluding that the trust deed was void, not voidable. The trust deed was presumed voidable, and that presumption can only be rebutted through a showing free from doubt that the contract is against public policy. Here, the General and Limited Liability Partnerships Act does not have a clear public policy that voids such contracts; rather, it has several provisions that suggest the existence of a general public policy in favor of protecting third parties (such as TNE) who enter into a transaction with a dissolved partnership.
- The district court erred in dismissing TNE’s claim against the partner because it believed it lacked personal jurisdiction. Although TNE failed to properly serve the partner, the partner participated in litigation and failed to assert the affirmative defense of improper service of process before or during trial. Therefore, the partner waived any objection that the district court lacked personal jurisdiction.
- The district court did not err in finding that the partner was competent at the time he signed the trust deed. The court heard expert testimony and testimony from four lay witnesses that the partner was competent, and it was not clearly erroneous to find that the partner was competent.
- The district court did not err in concluding that the partner intended to bind the partnership.