United States Court of Appeals
For the First Circuit
No. 01-1132
SOUTHEX EXHIBITIONS, INC.,
Plaintiff, Appellant,
v.
RHODE ISLAND BUILDERS ASSOCIATION, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ernest C. Torres, U.S. District Judge]
Before
Boudin, Chief Judge,
Cyr, Senior Circuit Judge,
and Lynch, Circuit Judge.
Leland P. Schermer, with whom Gregg D. Orsag and Metz,
Schermer & Lewis, L.L.C. were on brief for appellant.
Barry J. Kusinitz for appellee.
February 8, 2002
CYR, Senior Circuit Judge. Appellant Southex
Exhibitions, Inc. ("Southex") challenges a district court bench
ruling that no partnership existed between Southex and the Rhode
Island Builder's Association, Inc. ("RIBA"), even though
Southex's predecessors in interest had produced home shows for
RIBA in Rhode Island ever since 1974. We affirm the district
court judgment.
I
BACKGROUND
In 1974, with the construction of the new Providence
Civic Center ("Civic Center") and the expansion in RIBA home
shows, RIBA's executive director, Ross Dagata, decided to enter
into an agreement with Sherman Exposition Management, Inc.
("SEM"), a Massachusetts-based professional show owner and
producer, for future productions of the RIBA home shows at the
Civic Center ("the 1974 Agreement"). The preamble in the 1974
Agreement announced that "RIBA wishes to participate in such
[s]hows as sponsors and partners . . . ." (Emphasis added.)
The term of the 1974 Agreement was fixed at five years,
renewable by mutual agreement.
RIBA further agreed (i) to sponsor and endorse only
shows produced by SEM, (ii) to persuade RIBA members to exhibit
at those shows, and (iii) to permit SEM to use RIBA's name for
3
promotional purposes. In turn, SEM undertook, inter alia, to
(i) obtain all necessary leases, licenses, permits and
insurance, (ii) indemnify RIBA for show-related losses "of
whatever sort," (iii) accord RIBA the right to accept or reject
any exhibitor, (iv) audit show income, and (v) advance all the
capital required to finance the shows. Net show profits were to
be shared: 55% to SEM; 45% to RIBA.
The 1974 Agreement further provided that all show dates
and admission prices, as well as the Rhode Island banking
institution at which show-related business would be transacted,
were to be mutually determined by the parties. In the event the
Civic Center were to become unavailable for reasons beyond SEM's
control, SEM was to be excused from its production duties,
provided that SEM promoted no other home show in Rhode Island
during the interim; and RIBA retained the right to conduct a
home show at another venue, upon appropriate notification to
SEM.
In contemporaneous conversations relating to the
meaning of the term "partners," Manual Sherman, SEM's president,
informed RIBA's Ross Dagata that he "wanted no ownership of the
show," because he was uncertain about the financial prospects
for home shows in the Rhode Island market. Manual Sherman
advised Dagata: "[A]fter the first year, if I'm not happy, we
4
can't produce the show properly or make any money, we'll give
you back the show." Although SEM owned other home shows which
it produced outside Rhode Island, Manual Sherman consistently
described himself simply as the "producer" of the RIBA shows.
In 1994, following a series of assignments and contract
renewals agreed to by RIBA, Southex acquired SEM'S interest
under the 1974 Agreement.1 By 1998, Southex determined that in
order to maintain its financial stake in the RIBA home shows,
the 1974 Agreement either needed to be renegotiated or allowed
to expire according to its terms in 1999. RIBA in turn
expressed dissatisfaction with Southex's performance, and
eventually entered into a management contract with another
producer, Yoffee Exposition Services, Inc.
Southex commenced suit against RIBA in federal district
court, to enjoin the RIBA 2000 home show, alleging that the 1974
Agreement established a partnership between RIBA and Southex's
predecessor-in-interest (i.e., SEM), and/or that by its silence
RIBA had enabled the formation of a partnership-by-estoppel, and
1
With regard to the acquisition by Southex, RIBA's Dagata
inartfully advised the Providence Journal that Reed Exhibitions,
SEM's successor-in-interest, had "sold its home shows to
Southex." One month later, an article appeared in an RIBA trade
publication entitled: "Southex Exhibitions acquires Home Show."
(Emphasis added.) In each instance, however, RIBA mitigated any
inference of co-ownership by referring to Southex as the
"producer" of its shows.
5
that RIBA breached its fiduciary duties to its co-partner,
Southex, by its wrongful dissolution of their partnership and
its subsequent appointment of another producer. Following an
evidentiary hearing, the district court denied the preliminary
injunction requested by Southex, finding no likelihood of
ultimate success on the merits. We affirmed in an unpublished
opinion. See Southex Exhibitions, Inc. v. R.I. Builders Ass'n,
No. 00-1247, slip op. at 2 (1st Cir. Mar. 2, 2000) (per curiam).
At the bench trial following our remand, the district
court entertained further evidence, then entered judgment for
RIBA on the ground that the 1974 Agreement established no
partnership under Rhode Island law, and that Southex had adduced
insufficient evidence to support its partnership-by-estoppel
claim. In due course, Southex brought the instant appeal.
II
DISCUSSION
Under Rhode Island law, a "partnership" is "an
association of two (2) or more persons to carry on as co-owners
a business for profit . . . ." R.I. Gen. Laws. § 7-12-17
(emphasis added). The same statute further provides, inter
alia, that —
[i]n determining whether a partnership
exists, these rules apply:
. . . .
6
(2) Joint tenancy, tenancy in common,
tenancy by the entireties, joint
property, common property, or part
ownership does not of itself establish
a partnership, whether the co-owners do
or do not share any profits made by the
use of the property.
. . . .
(4) 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 the business,
but no such inference is drawn if
profits were received in payment:
(i) As a debt by installments or
otherwise;
(ii) As wages of an employee or
rent to a landlord;
(iii) As an annuity to a widow or
representative of a deceased
partner;
(iv) As interest on a loan, though
the amount of payment vary
with the profits of the
business;
(v) As the consideration for the
sale of a good will of a
business or other property by
installments or otherwise.
Id. § 7-12-18.2
2Although there is a dearth of Rhode Island case law
construing section 7-12-18, the Rhode Island legislature has
counseled the courts to look to the interpretations which other
states have given the Uniform Partnership Act (UPA), upon which
section 7-12-18 is based. See R.I. Gen. Laws § 7-12-15(d). We
heed its counsel. See VanHaaren v. State Farm Mut. Auto. Ins.
Co., 989 F.2d 1, 3 (1st Cir. 1993) ("Absent controlling state
court precedent, a federal court sitting in diversity may
certify a state law issue to the state's highest court, or
undertake its prediction 'when the course [the] state courts
7
While pure legal issues, such as statutory
interpretations, are reviewed de novo, see R.I. v. Narragansett
Indian Tribe, 19 F.3d 685, 691 (1st Cir. 1994), the
determination as to whether a partnership was formed turned
primarily on factual findings,3 which we review only for clear
error.4 A finding of fact constitutes clear error only if, after
reviewing the entire trial record, "we are firmly convinced that
a mistake has been made." See Tokyo Marine & Fire Ins. Co. v.
Perez & CIA, de Puerto Rico, Inc., 142 F.3d 1, 11 (1st Cir.
1998) (emphasis added). As the party asserting that a
partnership was formed, the ultimate burden of persuasion rested
upon Southex.5
would take is relatively clear.'") (citation omitted).
3
See, e.g., In re Hassiepen, 646 N.E.2d 1348, 1353 (Ill.
App. Ct. 1995); Hofer v. St. Clair, 381 S.E.2d 736, 739 (S.C.
1989).
4
See, e.g., Boeckmann v. Mitchell, 909 S.W.2d 308, 312 (Ark.
1995); Widdoss v. Donahue, 331 N.W.2d 831, 833 (S.D. 1983);
accord In re Hassiepen, 646 N.E.2d at 1353 (factfinder's
determination can be vacated only if contrary to "the manifest
weight of the evidence").
5
See Boeckmann, 909 S.W.2d at 312; In re Hassiepen, 646
N.E.2d at 1353; Tralmer Sales & Serv., Inc. v. Erickson, 521
N.W.2d 182, 187 (Wis. Ct. App. 1994). Although some courts
require that partnership formation be established by clear and
convincing evidence, see Cochran v. Bd. of Supervisors of Del
Norte County, 85 Cal. App. 3d 75, 81 (Ct. App. 1978), for
present purposes we assume, arguendo, that the Rhode Island
courts would adhere to the less burdensome preponderance-of-the-
evidence standard.
8
Southex insists that the 1974 Agreement contains ample
indicia that a partnership was formed, including: (1) a 55-45%
sharing of profits; (2) mutual control over designated business
operations, such as show dates, admission prices, choice of
exhibitors, and "partnership" bank accounts; and (3) the
respective contributions of valuable property to the partnership
by the partners. Given the highly deferential standard of
appellate review, however, Southex must do more than point to
supportive record evidence. Since it bears the burden of proof,
it must demonstrate that the district court ruling, viewed in
the light most favorable to RIBA, is not rationally supported by
the record evidence. See Damon v. Sun. Co., 87 F.3d 1467, 1477
(1st Cir. 1996). In our view, the record evidence indicating a
nonpartner relationship cannot be dismissed as insubstantial.
First, the 1974 Agreement is simply entitled
"Agreement," rather than "Partnership Agreement." Second,
rather than an agreement for an indefinite duration, it
prescribed a fixed (albeit renewable) term. Third, rather than
undertake to share operating costs with RIBA, SEM not only
agreed to advance all monies required to produce the shows, but
to indemnify RIBA for all show-related losses as well. State
law normally presumes that partners share equally or at least
proportionately in partnership losses. See R.I. Gen. Laws §§ 7-
9
12-26(a), 7-12-29(1)&(2). Although partners may agree to
override such statutory "default" provisions, there is no
evidence that SEM and RIBA meant to do so notwithstanding an
intent to form a partnership. See 1 Alan R. Bromberg & Larry E.
Ribstein, Bromberg and Ribstein on Property § 2.07(d) (1999)
(identifying "loss sharing" as very important partnership
attribute).
Similarly, although RIBA involved itself in some
management decisions, SEM was responsible for the lion's share.
Cf. R.I. Gen. Laws § 7-12-29(5) (noting default rule that
partners normally share "equal rights in management").
Furthermore, Southex not only entered into contracts but
conducted business with third parties, in its own name, rather
than in the name of the putative partnership. As a matter of
fact, their mutual association was never given a name. It is
noteworthy as well that Southex stipulated at trial that it
never filed either a federal or state partnership tax return.
See Cochran v. Bd. of Supervisors of Del Norte County, 85 Cal.
App. 3d 75, 82 (Ct. App. 1978) (failure to file partnership tax
return probative of nonpartner relationship); Wilder v. Hobson,
398 S.E.2d 625, 627 (N.C. Ct. App. 1990) ("Filing a partnership
tax return is significant evidence of a partnership."); Widdoss
v. Donahue, 331 N.W.2d 831, 833 (S.D. 1983).
10
Similarly, the evidence as to whether either SEM or
RIBA contributed any corporate property, with the intent that it
become jointly-owned partnership property is highly speculative,
particularly since their mutual endeavor simply involved a
periodic event, i.e., an annual home show, which neither
generated, nor necessitated, ownership interests in significant
tangible properties, aside from cash receipts. Unlike tangible
real and personal property, whose ownership is more readily
established (e.g., by documentary evidence and public records),
see, e.g., Harrell Oil Co. of Mt. Airy v. Case, 543 S.E.2d 522,
525 (N.C. Ct. App. 2001) (finding "overwhelming" evidence of
ownership in "building, the property, the inventory, and the
equipment"), the intangible intellectual property involved here,
such as clientele lists, goodwill, and business expertise, did
not so readily lend itself to evidentiary establishment. As a
consequence, in the present circumstances the requisite mutual
intent to convert intangible intellectual properties into
partnership assets may well depend much more importantly upon a
clear contractual expression of mutual intention to form a
partnership.
Finally, even assuming that the 1974 Agreement, as a
whole, is ambiguous, (i) Manuel Sherman testified that he
regarded SEM as simply the producer of the annual RIBA shows;
11
and (ii) Dagata testified that SEM specifically disclaimed any
ownership interest in the home shows in 1974. See Boeckmann v.
Mitchell, 909 S.W.2d 308, 312 (Ark. 1995) (where testimony
relates to partnership formation, appellate court must defer to
trial court as primary arbiter of witness credibility).
Next, Southex asserts that the district court committed
reversible error by not crediting undisputed evidence that RIBA,
in 1974, expressly agreed to share business profits with SEM.
Southex reasons that since the Rhode Island partnership statute
makes such profit sharing prima facie evidence of partnership
formation, and RIBA failed to rebut that evidentiary presumption
by establishing any of the five exceptions specified in
subsection 7-12-18(4), the district court was required to find,
as a matter of law, that a partnership was formed. Its
reasoning is flawed.
"Partnership" is a notoriously imprecise term, whose
definition is especially elusive in practice. See Boeckmann,
909 S.W.2d at 312 ("[T]he term 'partnership' is not easily
elucidated [and] . . . [t]he business association that is known
in the law as partnership is not one that can be defined with
precision. To the contrary, a partnership is a contractual
relationship that may vary, in form and substance, in an almost
infinite variety of ways.") (citation omitted). Since a
12
partnership can be created absent any written formalities
whatsoever, its existence vel non normally must be assessed
under a "totality-of-the-circumstances" test.6
Furthermore, the courts frequently consider indicia of
partnership formation not prescribed in the UPA, such as the
extent to which the putative partners respectively exercised
control over the entity's business operations, see, e.g.,
McAleer v. Smith, 818 F. Supp. 486, 493 (D.R.I. 1993), aff'd, 57
F.3d 109 (1st Cir. 1995), or whether the entity filed
partnership tax returns, see, e.g., Wilder, 398 S.E.2d at 628.
Yet, though these considerations constitute "necessary
guidepoints of inquiry, . . . none is conclusive." Beckman v.
6
See, e.g., Holmes v. Lerner, 74 Cal. App. 4th 442, 443 (Ct.
App. 1999) (considering "terms of their agreement, conduct, and
the surrounding circumstances"); Cochran, 85 Cal. App. 3d at 81
(noting that the "terms of their agreement is, of course, a
crucial factor . . . as are the conduct of the parties and the
surrounding circumstances"); Beckman v. Farmer, 579 A.2d 618,
628 (D.C. 1990) (noting that primary statutory criteria, like
profit sharing, "'take[] on greater or lesser importance as an
independent element of partnership depending on the extent to
which there is other evidence supporting partnership'")
(citation omitted); In re Hassiepen, 646 N.E.2d at 1354 ("The
trial court must review all facts and circumstances surrounding
the formation of the business."); Harrell Oil Co., 543 S.E.2d at
525; Wilder, 398 S.E.2d at 627 ("Existence of a partnership does
not require an express agreement and the parties' intent to
formulate a partnership can be inferred by the conduct of the
parties by examining all the circumstances."); Roberts v.
Lebanon Appliance Serv. Co., 779 S.W.2d 793, 795 (Tenn. 1989)
(noting that partnership determination turns on "consideration
of the totality of all relevant facts").
13
Farmer, 579 A.2d 618, 627 (D.C. 1990); see Holmes v. Lerner, 74
Cal. App. 4th 442, 454 (Ct. App. 1999) ("[T]he presence or
absence of any of the various elements set forth in [the UPA] .
. . is not necessarily dispositive.").
Similarly, even though the UPA explicitly identifies
profit sharing as a particularly probative indicium of
partnership formation, and some courts have even held that the
absence of profit sharing compels a finding that no partnership
existed, see, e.g., Harrell Oil Co., 543 S.E.2d at 525 ("'[C]o-
ownership and sharing of any actual profits are indispensable
requisites for a partnership.'") (citation omitted), it does not
necessarily follow that evidence of profit sharing compels a
finding of partnership formation. See, e.g., Boeckmann, 909
S.W.2d at 312 ("[S]haring of profits alone does not make one a
partner."); Holmes, 74 Cal. App. 4th at 454 & n.14 ("[P]rofit
sharing [is] evidence of a partnership, rather than a required
element of the definition of a partnership," and the UPA simply
establishes an "evidentiary presumption."); Wilder, 398 S.E.2d
at 627 ("[S]haring profits does not of itself establish a
partnership.").
Furthermore, even though the UPA specifies five
instances in which profit sharing does not create a presumption
of partnership formation, see R.I. Gen. Laws § 7-12-18(4)(i)-
14
(v), supra, Southex cites (and we have found) no authority for
the proposition that the evidentiary presumption created by
profit sharing can be overcome only by establishing these five
exceptions, rather than by competent evidence of other pertinent
factors indicating the absence of an intent to form a
partnership (e.g., lack of mutual control over business
operations, failure to file partnership tax returns, failure to
prescribe loss-sharing). Thus, the undisputed evidence of
profit sharing did not compel a determination that Southex and
RIBA formed a partnership. Instead, the validity of the ruling
below depends upon whether the district court correctly assessed
the totality of the circumstances. See supra note 6.
Southex next urges that the 1974 Agreement necessitated
a finding of partnership formation, in that it unambiguously
describes the contracting parties as "partners." Consequently,
Southex insists, the district court erred by considering
extrinsic evidence regarding the meaning of the term "partners,"
viz., by crediting testimony that RIBA and Southex's predecessor
did not intend, in 1974, to employ the term "partners" in its
strict legal sense, but merely in its colloquial sense, as a
"cooperative joint effort." Further, Southex asserts that
because RIBA concededly reviewed the 1974 Agreement with
15
counsel, we must presume that the term "partners" was employed
in its strict legal sense. Once again we must disagree.
First, the term "partner" frequently is defined with
a view to its context. See Commonwealth v. Campbell, 616 N.E.2d
430, 432 (Mass. 1993) ("[T]he word 'partner' has also been known
to describe other kinds of relationships, as diverse as husband
and wife or two people who dance together."). Yet, the present
record contains no conclusive evidence as to whether the 1974
Agreement was drafted by a layman or by an attorney.
More importantly, the labels 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 — e.g., the provision in the 1974 Agreement
indemnifying RIBA for all show-related losses — which would tend
to refute the partnership characterization. See Beckman, 579
A.2d at 627 ("[A]lthough the manner in which the parties
themselves characterize the relationship is probative, the
question ultimately is objective [intent]."); Grimmett v.
Higginbotham, 907 S.W.2d 1, 2 n.3 (Tex. App. 1994) ("There is
significant authority that representations by the parties in
documents or to third parties that a partnership relationship
16
exists constitutes a legal conclusion and is not determinative
of the relationship.").
Although the courts should refrain from resorting to
extrinsic evidence where a contract is utterly unambiguous, see
Fashion House, Inc. v. K Mart Corp., 892 F.2d 1076, 1083 (1st
Cir. 1989), the lone reference to "partners" in the 1974
Agreement's prefatory clause is so inconclusive as to carry
minimal interpretive weight, especially since it arguably
conflicted with other contract provisions. 7 Had the parties
intended otherwise, it would seem entirely reasonable to expect
the 1974 Agreement to have been entitled "Partnership
Agreement," rather than simply "Agreement."
Southex next contends that the district court erred by
relying upon Dagata's testimony, viz., that he may have intended
to form a partnership in the production of the home shows, but
not in relation to the parties' joint use and ownership of the
physical property involved in conducting the business. As
7
The cases cited by Southex represent somewhat more
persuasive authority for finding partnership formation, since
they did not simply involve a single reference to "partners" in
the written agreement. See, e.g., Plainview Milk Prods. Coop.
v. Marron Foods, Inc., 3 F. Supp. 2d 1074, 1077 (D. Minn. 1998)
(finding partnership formation where agreement called
relationship a "partnership" and referred to "partnership
equipment," and where parties concededly made extracontractual
references to their relationship, "from time to time," as a
partnership).
17
Southex sees it, this finding constituted legal error because
(i) the law recognizes no such "production-only" or "non-
ownership" partnership; and (ii) the undisputed evidence
demonstrates that each contracting party contributed "property"
(e.g., clientele, goodwill or expertise) to the partnership.
These contentions are immaterial.
First, it is unnecessary to determine whether Rhode
Island law would recognize a "production-only" or "non-
ownership" partnership, because it is clear that the absence of
any joint-property ownership is an entirely legitimate criterion
for determining that no cognizable partnership was ever formed.
See McAleer, 818 F. Supp. at 493; Harrell Oil Co., 543 S.E.2d at
525 ("'[C]o-ownership . . . [is] [an] indispensable requisite[]
for a partnership.'") (citation omitted). Consequently, the
reference to a "production-only" or "non-ownership" partnership
is immaterial, since Dagata is not competent to opine on Rhode
Island partnership law. Instead, the question is whether the
district court's determination — that the absence of any co-
ownership of property weighed against a finding of partnership
formation — constituted clear error. It did not.
Southex further contends that the district court
finding that Dagata, "a layman with no legal training," drafted
the 1974 Agreement, constituted reversible error because (i)
18
there is no evidence as to the identity of the drafter, and (ii)
in any event, Dagata reviewed the 1974 Agreement with counsel.
Assuming, arguendo, that the district court erred, the error was
harmless. See Moulton v. Rival Co., 116 F.3d 22, 26 (1st Cir.
1997) ("'[T]he standard for reviewing a district court's
nonconstitutional error in a civil suit requires that we find
such error harmless if it is highly probable that the error did
not affect the outcome of the case.'") (citation omitted).
The passing reference to Dagata's role as draftsman was
but one of several alternative grounds upon which the district
court rejected Southex's contention that the reference in the
1974 Agreement to "partners" was dispositive. The district
court noted as well (i) that the term "partners" appeared "only
once and only in the preamble of the agreement," (ii) the 1974
Agreement was "not labelled as a partnership agreement," (iii)
the 1974 Agreement was "devoid of many of the provisions
ordinarily found in [a] partnership agreement," including a
"provision for the distribution of assets upon termination [of
the partnership]," and (iv) the 1974 Agreement contained other
provisions inconsistent with an intent to form a partnership,
such as its limited five-year term, SEM's full indemnification
19
of RIBA, and SEM's commitment to advance all expenditures for
the shows.8
Further, the district court identified extrinsic
evidence that Manual Sherman disclaimed any ownership interest
in the shows, that Southex never asked RIBA in 1994 whether
Southex was acquiring a partnership interest, and that Southex
had entered into related third-party contracts in its name
alone, rather than any partnership name. Given these
alternative holdings, we are unable to conclude that there
existed the requisite "high probability" that any misperception
regarding Dagata's draftsmanship affected the outcome below.
8 Southex contests various evidentiary rulings as well. For
instance, it argues that the district court admitted hearsay
testimony, by Ross Dagata, that Manual Sherman expressly
disclaimed any ownership interest in the shows. RIBA counters
that the Dagata testimony came within an exception to the
hearsay rule, since Dagata testified as to Manual Sherman's
state of mind or intent in signing a contract which contained
the word "partners." See Fed. R. Evid. 803(3). In reply,
rather than explaining why Rule 803(3) is inapposite, Southex
merely contends that RIBA adduced no evidence that Manual
Sherman made this remark at or about the time he executed the
1974 Agreement.
We review rulings under Evidence Rule 803(3) only for abuse
of discretion. See Colasanto v. Life Ins. Co. of N. Am., 100
F.3d 203, 212-13 (1st Cir. 1996). The district court acted well
within its discretion in finding that Manual Sherman, a
sophisticated businessman, likely would have made his statement
to Dagata, regarding his understanding of a contract, before he
executed the contract. Indeed, Dagata testified that Manual
Sherman stated that "[h]e wanted no ownership of the show . . .
. [a]nd . . . we came to an agreement." The other evidentiary
challenges asserted by Southex are unfounded as well.
20
Finally, Southex suggests that the district court erred
in rejecting its partnership-by-estoppel claim. Southex
contended that even if the 1974 Agreement itself established no
cognizable partnership, RIBA had the legal duty to so inform
Southex in 1994, at the time Southex acquired its rights under
the 1974 Agreement, and that RIBA's failure to do so estops it
from denying partnership formation now.
We review equitable estoppel rulings under a bifurcated
standard, assessing legal conclusions de novo and findings of
fact for clear error only. See Ludlow Hosp. Soc'y, Inc. v.
Sec'y of Health and Human Servs., 124 F.3d 22, 25 n.6 (1st Cir.
1997). Southex had the burden to prove: "'[1] an affirmative
representation or equivalent conduct on the part of the person
against whom the estoppel is claimed [viz., RIBA] which is
directed to another [viz., Southex] for the purpose of inducing
the other to act or fail to act in reliance thereon; and . . .
[2] that such representation or conduct in fact did induce the
other to act or fail to act to his injury.'" Providence
Teachers Union v. Providence Sch. Bd., 689 A.2d 388, 391-92
(R.I. 1997) (citation omitted). "Silence [also] . . . can be
the basis for estoppel where there exists a duty not to remain
silent as where the circumstances require one to speak lest such
silence would reasonably mislead another to rely thereon to his
21
detriment." Schiavulli v. Sch. Comm. of Town of N. Providence,
334 A.2d 416, 419 (R.I. 1975).
On the other hand, equitable estoppel is
"extraordinary" relief, which "will not be applied unless the
equities clearly [are] balanced in favor of the part[y] seeking
relief." Greenwich Bay Yacht Basin Assocs. v. Brown, 537 A.2d
988, 991 (R.I. 1988) (emphasis added).9 As the party asserting
9To the extent Southex based its estoppel claim on the Rhode
Island statute, it is more than arguable that the UPA estoppel
provision simply creates rights of action against partners by
third parties (i.e., non-partners), rather than rights inter se
alleged co-partners such as Southex. See, e.g., Vergos v.
Waterman Bldg. P'ship, 613 So.2d 383, 389 (Ala. 1993). The
Rhode Island partnership statute provides, in pertinent part:
When a person, by words spoken or written or
by conduct, represents him or herself, or
consents to another representing him or her
to any one, as a partner in an existing
partnership or with one or more persons not
actual partners, he or she is liable to any
person to whom the representation has been
made, who has, on the faith of the
representation, given credit to the actual
or apparent partnership, and if he or she
has made a representation or consented to
its being made in a public manner he or she
is liable to the person, whether the
representation has or has not been made or
communicated to the person giving credit by
or with the knowledge of the apparent
partner making the representation or
consenting to its being made.
R.I. Gen. Laws § 7-12-27. On the other hand, it is arguable as
well that putative co-partners may still invoke the common-law
doctrine of equitable estoppel. See Vergos, 613 So.2d at 389.
We therefore assume, arguendo, that the Rhode Island courts
22
the equitable estoppel claim, Southex bore the ultimate burden
of proof. See Steinke v. Sungard Fin. Sys., Inc., 121 F.3d 763,
776 (1st Cir. 1997).
A finding of fact is not to be disturbed under the
clear error standard of review unless "we are firmly convinced,"
after reviewing all the evidence, "that a mistake has been
made." Tokyo Marine, 142 F.3d at 11. Southex identifies three
pieces of evidence which purportedly created an affirmative duty
on the part of RIBA to inform Southex, in 1994, that Southex was
not acquiring a partnership interest; viz. (i) the reference to
"partners" in the 1974 Agreement; (ii) the statements Dagata
made to the local press that Reed Exhibitions had " sold its home
shows to Southex," supra note 1; and (iii) an article, in a 1994
RIBA trade publication, entitled: "Southex Exhibitions acquires
Home Show," id.
Based on the trial record, the district court
reasonably could have found the following facts. Since the 1974
Agreement is ambiguous, in that it included no clear
representation by RIBA that it regarded its relationship with
SEM as a partnership, both RIBA and Southex were placed on fair
notice to inquire into the nature of their relationship. Yet,
at no time during the pre-transfer discussions between the
permit such a cause of action.
23
Southex and RIBA representatives did either party raise the
issue regarding whether Southex was to acquire ownership rights
in the RIBA shows. Furthermore, RIBA merely consented to the
1994 agreement between Reed and Southex, whereby Reed
transferred its rights under the 1974 Agreement, which consent
neither necessitated nor implied any viewpoint on the part of
RIBA regarding the nature of the contractual rights thereby
transferred.10 The pertinent transfer occurred between Southex
and Reed. Southex neither established that it did not rely on
Reed's representations, nor that but for RIBA's silence it would
not have acquired the rights to produce either the RIBA shows or
the two other shows it simultaneously purchased from Reed along
with the RIBA contract.
Finally, like the 1974 Agreement itself, the two post-
consent statements RIBA made to the press — allegedly
proclaiming Reed's ownership rights in the RIBA shows — were
internally contradictory as well as ambiguous, and, if anything,
should have placed Southex on "additional inquiry" notice.
10
Southex insists that its request that RIBA consent to the
Reed-Southex transfer, together with the fact that RIBA's
consent mentions the 1974 Agreement, "clearly" establish
Southex's reliance. We cannot agree that such a request,
reasonably asserted by parties attempting to assign a personal-
services-type contract, necessarily implied a further request
for RIBA's opinion regarding the nature of the contractual
rights transferred. Simply put, Southex sought no such opinion.
24
While employing ambiguous terms, such as "sold" and "acquires,"
which reasonably could portend either a transfer of partnership
or nonpartnership rights, RIBA described Southex as the
"producer" of the RIBA shows. Thus, the district court
permissibly determined that Southex did not exercise due
diligence in ascertaining and/or clarifying the terms of the
1974 Agreement which it was about to assume, and, consequently,
that the equities did not clearly weigh in its favor. See
Greenwich Bay Yacht, 537 A.2d at 991.
Accordingly, the district court judgment is affirmed;
costs are assessed against appellant. SO ORDERED.
25