                           State of New York
                    Supreme Court, Appellate Division
                       Third Judicial Department
Decided and Entered: January 7, 2016                    520455
________________________________

VALERIE SUTTON,
                     Respondent,
     v

SCOTT BURDICK, as Executor of
   the Estate of WESLEY BURDICK,             MEMORANDUM AND ORDER
   Deceased, et al.,
                    Respondents,
      and

RAYMOND HARVEY,
                    Appellant.
________________________________


Calendar Date:    November 19, 2015

Before:   Peters, P.J., Lahtinen, Garry, Rose and Clark, JJ.

                              __________


      Napierski, VanDenburgh, Napierski & O'Connor, LLP, Albany
(Thomas J. O'Connor of counsel), for appellant.

      Tabner, Ryan & Keniry, LLP, Albany (Brian M. Quinn of
counsel), for Valerie Sutton, respondent.

      Renee G. Carter, Cambridge, for Scott Burdick and another,
respondents.

                              __________


Garry, J.

      Appeal from an order and judgment of the Supreme Court
(O'Connor, J.), entered October 27, 2014 in Rensselaer County,
which, among other things, granted plaintiff's motion to confirm
a referee's report.
                               -2-                520455

      Defendant Raymond Harvey (hereinafter defendant), plaintiff
and Wesley Burdick were equal partners in Green Valley Associates
(hereinafter the partnership), a partnership formed to buy, sell
and develop real estate under an agreement executed in 1984.1
Defendant's primary role in the partnership was to provide the
funding, while plaintiff and Burdick located and sold properties
and managed other partnership business. Riva Gold Enterprises,
Inc. (hereinafter the corporation), a related corporation, was
formed for similar purposes in 1983. Thereafter, the partners,
acting for the partnership and the corporation (hereinafter
collectively referred to as the entities), purchased, improved,
developed and sold various parcels of real property.2 Financial
disagreements arose and, in 1990, defendant commenced involuntary
bankruptcy proceedings against the entities that were later
discontinued. In 1997, the partners entered into a dissolution
agreement, but the agreement was never fully implemented and the
entities were not dissolved. In 2000, the partners executed a
certificate of authority giving defendant the right to sell or
encumber certain partnership assets; he thereafter negotiated a
commercial loan and mortgage using partnership property, sold
other partnership assets and, after paying back taxes, retained
the proceeds.

      In 2008, plaintiff commenced this action to dissolve the
partnership and a proceeding to dissolve the corporation.3
Defendant joined issue and asserted a counterclaim for specific
performance of the 1997 dissolution agreement. Supreme Court
granted plaintiff's motion to dismiss the counterclaim, finding
that it was time-barred, and this Court affirmed (75 AD3d 884,


    1
        Burdick, who was plaintiff's husband, died in 2008.
    2
        The parties apparently accept the finding, made in the
course of litigation, that they made no distinction in the course
of their transactions between the partnership and the corporation
and treated the entities as interchangeable. Accordingly, assets
titled to either of the entities will be referred to herein as
"partnership" properties.
    3
        The matters were subsequently consolidated.
                               -3-                520455

885 [2010], lv dismissed 15 NY3d 874 [2010]). In 2009, the court
issued an order of dissolution as to the entities and referred
the matter to a referee for, among other things, approval of an
accounting of the entities' affairs. Following a hearing, the
referee issued a report that was later amended upon defendant's
motion. The court rendered a decision and order in August 2014
that, as pertinent here, confirmed the amended report, appointed
a receiver to wind up the business of the entities, and directed
plaintiff to submit an order delineating the receiver's powers.
In October 2014, the court issued an order and judgment that,
among other things, established the receiver's powers and duties.
Defendant appeals.4

      "The determination of a [r]eferee appointed to hear and
report is entitled to great weight, particularly where
conflicting testimony and matters of credibility are at issue,
and it will not be disturbed if supported by the evidence in the
record" (Rich v Rich, 282 AD2d 952, 954 [2001] [internal
quotation marks, brackets, ellipsis and citations omitted]). In
challenging the referee's determinations, defendant first
contends that he was authorized to transfer two properties to
himself in 2009, and that the referee erred in finding that these
transfers were void. However, the record supports the referee's
conclusion that defendant violated Business Corporation Law
§ 1114 by conveying the parcels to himself after service of the
petition that commenced the proceeding to dissolve the
corporation (see Matter of Musano [Sisto Funeral Home, Inc.], 28
AD3d 349, 349 [2006]; Matter of Rappaport, 110 AD2d 639, 641
[1985]). Defendant's argument that the conveyances were
authorized by the 1997 dissolution agreement is unavailing, as
this Court has already determined that defendant's claim for
specific performance of that agreement is time-barred (75 AD3d at
885). Contrary to defendant's argument, the unavailability of a
judicial remedy did not entitle him to obtain relief by engaging
in self-help.



     4
        Contrary to plaintiff's argument, defendant properly took
a timely appeal from the October 2014 final order and judgment
(see CPLR 5501 [a] [1]).
                              -4-                520455

      The referee correctly denied defendant's motion to
reinstate his counterclaim for specific performance. Defendant's
attempt to show that an exception to the statute of limitations
is applicable is precluded by the doctrine of the law of the
case, as he has already had "a full and fair opportunity to
address the issue" of the statute of limitations (Town of Massena
v Healthcare Underwriters Mut. Ins. Co., 40 AD3d 1177, 1179
[2007]; accord Briggs v Chapman, 53 AD3d 900, 901 [2008]).
Further, as the 1997 agreement had no probative value in
resolving issues related to the dissolution of the entities or
the distribution of their assets, the referee did not abuse his
discretion in refusing to admit it into evidence (see Brooks v
Lewin, 48 AD3d 289, 292 [2008], lv dismissed and denied 11 NY3d
826 [2008]).

      Next, we reject defendant's contention that the referee
should have awarded him interest on his capital contributions to
the entities. As the referee found, the agreement by which the
partnership was formed makes no reference to the accrual or
payment of interest on the partners' capital contributions.5
Partnership Law § 40 (4) provides that in the absence of an
agreement pertaining to interest, "[a] partner shall receive
interest on the capital contributed by him [or her] only from the
date when repayment should be made." Here, the agreement
provided that defendant would be repaid for his capital
contributions "as soon as practical" after a sale of property,
but not before expenses were deducted and profits or losses then
assessed to the partners. However, it is undisputed that no such
assessment of expenses, profits and losses from the sale of real
estate was ever performed; instead, the testimony revealed that
funds from the sale of partnership properties were reinvested
into the entities until 2000, when defendant began selling


    5
        No articles of incorporation, bylaws or other records of
the corporation's formation were introduced into evidence,
apparently because they had been lost. Accordingly, and based
upon the previously discussed finding that the partners treated
the two entities as interchangeable, the referee relied upon the
partnership agreement as evidence of their intent with regard to
both entities.
                              -5-                520455

properties pursuant to the certificate of authority. At that
time, he kept the proceeds for himself without notifying the
other partners or engaging in the allocation of expenses, profits
and losses called for by the agreement. Accordingly, there was
no date on which repayment of defendant's capital contributions
should have been made, and interest never became payable pursuant
to Partnership Law § 40 (4).

      The record does not support defendant's contention that
interest is due to him under Partnership Law § 40 (3) from the
date of payment on capital contributions that he made for
purposes other than the purchase of real property. That statute
provides that interest is due to a partner on "any payment or
advance beyond the amount of capital which [the partner] agreed
to contribute" from the date when the payment was made. Here,
the record does not establish that defendant's initial agreement
to make capital contributions to the partnership was limited to
providing funds for the purchase of real property. Although such
purchases were clearly among the purposes for which contributions
from defendant were anticipated, the partnership agreement does
not dictate any specific purpose for capital contributions, nor
impose any financial limit on the amount of such contributions.
Instead, it broadly provides that all of the partners "shall
contribute any capital that they deem necessary to the operation
of the business partnership" and may make additional capital
contributions "if they see fit." Thus, Partnership Law § 40 (3)
is inapplicable.

      The referee did not err in finding that funds provided by
defendant in 1986 for the purchase of a property and in 1988 for
another real estate purchase were loans rather than capital
contributions.6 Both transactions were memorialized in
promissory notes that set out terms by which the entities would
repay the obligations, including interest rates for both notes


    6
        The debts underlying the two notes were never paid, and
the referee found that they were unenforceable, as defendant took
no action to compel repayment until after the statute of
limitations expired. Defendant does not challenge that aspect of
the referee's determination.
                               -6-                520455

and a repayment date for the 1988 obligation. Defendant
testified that the partners considered both transfers to be
capital contributions, not loans, and that they executed the
notes solely to establish that defendant expected interest to be
paid on the underlying obligations.7 However, "a written
agreement that is complete, clear and unambiguous on its face
must be enforced according to the plain meaning of its terms"
(Greenfield v Philles Records, 98 NY2d 562, 569 [2002]; accord
Boice v PCK Dev. Co., LLC, 121 AD3d 1246, 1247 [2014]). The
plain language of the notes unambiguously identifies both
transactions as loans rather than capital contributions. As
such, extrinsic evidence is inadmissible to contradict the terms
of the documents, and the referee's determination that the
transfers were loans is supported by the record (see Matter of
Delmar Pediatrics Asthma & Allergy Care, P.C. [Pasternack-
Looney], 35 AD3d 987, 988 [2006]).

      Next, defendant challenges the referee's allocation of
interest attributable to an unsatisfied judgment to defendant
alone. In 1995, defendant's brother commenced an action against
the entities, plaintiff and Burdick – but not against defendant –
to recover funds that the brother had loaned to the entities.
The action culminated in a default judgment that was never
satisfied, and the brother recorded judgment liens against
various properties owned by the entities. Between 2003 and 2007,
defendant sold a number of these properties and, although the
underlying obligation remained unsatisfied, the brother
facilitated each sale by signing releases to remove the judgment
liens. As previously noted, defendant kept the proceeds of these
sales for himself and neither used the proceeds to satisfy the
judgment nor advised plaintiff and Burdick of the sales.
Defendant further retained certain funds that he netted from
commercial mortgage loans that he placed on partnership property
during this period. The referee rejected defendant's claims that
these transfers were authorized by the 1997 dissolution agreement


     7
        Notably, this argument undermines defendant's argument
that he also expected to be paid interest on his other
contributions to the entities – as to which no notes were
executed.
                              -7-                520455

and the 2000 certificate of authority, finding that nothing in
either document entitled him to retain the funds and that
defendant's conduct constituted self-dealing to the detriment of
his partners in breach of his fiduciary duty (see Partnership Law
§ 43 [1]; Carella v Scholet, 34 AD3d 915, 916-917 [2006]). The
referee treated the principal of the unpaid judgment obligation
as an expense of the entities to be shared among the partners,
but held defendant solely liable for the accrued interest.
Contrary to defendant's argument, the referee's determination did
not improperly penalize defendant for failing to use his personal
funds to satisfy the judgment. Instead, the record supports the
referee's determination that partnership funds consisting of the
proceeds from the property transfers were available to pay the
judgment. Defendant was properly held responsible for the
accrued interest, as the referee found that his failure to use
those funds to satisfy the judgment caused the delay in
satisfying the obligation.

      The referee did not err in determining that certain
expenses claimed by defendant as reimbursement for his services
to the partnership and for miscellaneous expenditures were
operating expenses for which defendant expected to be compensated
from the entities' profits rather than capital contributions to
be reimbursed. With regard to defendant's services, a partner is
not ordinarily entitled to compensation for services performed
for the partnership beyond his or her share of the profits,
unless the partners have agreed otherwise (see Birnbaum v
Birnbaum, 73 NY2d 461, 465-466 [1989]; Levy v Leavitt, 257 NY
461, 467-468 [1931]; Posner v Posner, 280 AD2d 318, 319 [2001]).
Here, it is undisputed that the partnership agreement made no
provision for compensating partners for their services, and
defendant did not seek compensation when he performed the
services in question. The referee found that certain expenses,
including insurance premiums on properties that were titled to
the entities but used solely by defendant, had been incurred for
defendant's own benefit rather than that of the entities. The
referee did not credit defendant's claim that he was owed
reimbursement for certain other expenditures, finding that
defendant's claims were self-serving and that the lack of
accounting, bank and tax records made it impossible to confirm
whether materials and equipment that defendant allegedly
                              -8-                520455

furnished to the entities had actually been supplied. Finally,
to the extent that defendant claimed that he was compelled to
cover certain operating expenses because of financial
difficulties faced by the entities, the record supports the
referee's conclusion that these financial difficulties were
caused, at least in part, by defendant's self-dealing and
wrongful conduct. Given the absence of any evidence that
defendant previously sought repayment or expected to be
reimbursed for these expenditures, we find support in the record
for the referee's conclusions.

      Finally, we agree with defendant that there were errors in
the referee's final reconciliation of the entities' assets and
the sums to be allocated to the parties. Partnership Law § 71
sets out rules for the order in which assets are to be applied to
partnership liabilities in settling partners' accounts, but also
provides that these rules are "subject to any agreement to the
contrary." Here, the partnership agreement expressly provides
that capital contributions are to be repaid "after expenses and
before profits and losses are assessed to the partners." As
such, the referee erred in calculating a "presumptive share" of
the profit to be received by each partner before making
deductions for capital contributions. Further, in determining
the total value of the partnership's assets, the referee included
the appraised value of the two properties that defendant
transferred to himself in 2009. The inclusion of these
properties as partnership assets was appropriate given the
referee's determination that the conveyances to defendant were
void. However, the referee also deducted the value of the
properties from the amounts due to defendant, thus double-
counting them in the final calculations. Notably, defendant
Scott Burdick, the executor of Burdick's estate, acknowledges
that the sums were included twice in the referee's calculations
and advises this Court that, during the pendency of the appeal,
the properties in question were listed with other partnership
assets for sale by the receiver pursuant to Supreme Court's
order. He further provides a proposed recalculation that takes
the errors into account. Upon review, we agree that these errors
occurred. Accordingly, we direct that the order and judgment be
modified such that the formula set forth in the agreement is
applied and the amount of defendant's debt to the entities is
                              -9-                  520455

adjusted to remove the value of the two properties transferred in
2009. We find the sums set forth within Scott Burdick's proposed
recalculation to be correctly determined based upon the record,
and thus adopt this recalculation and direct that the order and
judgment be modified accordingly.

     Peters, P.J., Lahtinen, Rose and Clark, JJ., concur.



      ORDERED that the order and judgment is modified, on the
law, without costs, by deleting the amounts stated therein as the
balance due to plaintiff Valerie Sutton, the estate of Wesley
Burdick and defendant Raymond Harvey; substitute the amount of
$219,114.04 to Sutton, the amount of $219,114.04 to the estate
and the amount of $600,979.79 to Harvey; and, as so modified,
affirmed.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
