Ingram v. Deere

Ingram v. Deere, 288 S.W.3d 886 (Tex. 2009) interpreted the Texas Revised Partnership Act (TRPA), which governs partnerships formed between January 1, 1994 and December 31, 2005--the same period during which Patel asserts a partnership with Malone and Choo was formed. The TRPA provides that "an association of two or more persons to carry on a business for profit as owners creates a partnership," Tex. Rev. Civ. Stat. art 6132b-2.02(a), and articulates five factors that indicate the creation of a partnership: (1) receipt or right to receive a share of profits of the business; (2) expression of an intent to be partners in the business; (3) participation or right to participate in control of the business; (4) sharing or agreeing to share: (A) losses of the business; or (B) liability for claims by third parties against the business; and (5) contributing or agreeing to contribute money or property to the business (Tex. Rev. Civ. Stat. art 6132b-2.03(a).) It further provides that one "of the following circumstances, by itself, does not indicate that a person is a partner in the business": (1) the receipt or right to receive a share of profits: (A) as repayment of a debt, by installments or otherwise; (B) as payment of wages or other compensation to an employee or independent contractor; (C) as payment of rent; (D) as payment to a former partner, surviving spouse or representative of a deceased or disabled partner, or transferee of a partnership interest; (E) as payment of interest or other charge on a loan, regardless of whether the amount of payment varies with the profits of the business, and including a direct or indirect present or future ownership interest in collateral or rights to income, proceeds, or increase in value derived from collateral; or (F) as payment of consideration for the sale of a business or other property by installments or otherwise; (2) co-ownership of property, whether in the form of joint tenancy, tenancy in common, tenancy by the entireties, joint property, community property, or part ownership, whether combined with sharing of profits from the property;(3) sharing or having a right to share gross returns or revenues, regardless of whether the persons sharing the gross returns or revenues have a common or joint interest in the property from which the returns or revenues are derived; or (4) ownership of mineral property under a joint operating agreement. Tex. Rev. Civ. Stat. art 6132b-2.03(b). In Ingram v. Deere, the plaintiff alleged that he had an oral partnership agreement with the defendant providing him a one-third ownership in a medical clinic. 288 S.W.3d at 891. The jury found that the plaintiff and defendant entered into a partnership agreement, and that the defendant breached both that agreement and his fiduciary duty to the plaintiff. Id. at 892. The relevant jury question in Ingram asked whether the plaintiff and defendant "formed a joint venture without giving it a name for the purpose of a interdisciplinary pain clinic that included the following terms: . . . that plaintiff and defendant would each own 50% of the unnamed joint venture . . . . ." Id. at 904 (Johnson, J., concurring). The jury was further instructed to consider the five TRPA factors quoted above in deciding whether the joint venture was created. Id. Resolving an issue of first impression, the supreme court held that--unlike under the common law scheme that the TRPA replaced--evidence in support of all five TRPA factors is not required to support a jury's finding that a partnership exists. Id. at 897. Rather, the court adopted a totality-of-the-circumstances approach, "considering all of the evidence bearing on the TRPA partnership factors," id. at 896, on a continuum: "Evidence of none of the factors under the Texas Revised Partnership Act will preclude the recognition of partnership, and even conclusive evidence of only one factor will also normally be insufficient to establish the existence of a partnership under TRPA. However, conclusive evidence of all five factors establishes a partnership as a matter of law." Id. at 904. Because the court concluded that the plaintiff had "not provided legally sufficient evidence of any of the five TRPA factors" to prove the existence of a partnership, it rendered judgment that the plaintiff take nothing. Id. The supreme court in Ingram identified several differences between the TRPA and the prior common-law model, noting that the "TRPA contemplates a less formalistic and more practical approach to recognizing the formation of a partnership." Id. at 895.