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AFBT-II, LLC v. Country Vill. on Mooney Pond, Inc. - 305 A.D.2d 340, 759 N.Y.S.2d 149 (App. Div. 2003)

Rule:

When the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving a practical interpretation to the language employed and the parties' reasonable expectations.

Facts:

Plaintiff limited partner, AFBT-II, LLC (“AFBT”), sued defendant general partner, Country Village on Mooney Pond, Inc. (“Mooney Pond”), alleging, inter alia, that Mooney Pond breached the parties' partnership agreement by improperly dissolving the partnership before making a distribution pursuant to the agreement. The trial court found that the partnership agreement was clear and unambiguous and did not obligate the general partner to make a cash flow distribution unless the parties agreed upon it. The trial court also found that one of the preconditions for a dissolution existed. 

Issue:

Did the partnership agreement obligate general partner Mooney Pond to make a cash flow distribution?

Answer:

No

Conclusion:

The appellate court found that the trial court properly denied AFBT's motion for summary judgment since, inter alia, it failed to show that Mooney Pond was obligated to make a distribution. The partnership agreement unequivocally provided that cash flow distributions would be made only on agreement by the parties and it was undisputed that no such agreement was reached. However, the trial court improperly granted Mooney Pond's cross motion for summary judgment. Every contract included an implied covenant of good faith and fair dealing. Also, Mooney Pond was bound in a fiduciary relationship with AFBT, and was thus obligated to deal fairly with it. AFBT successfully rebutted Mooney Pond’s showing that no triable issue of fact existed as to whether Mooney Pond arbitrarily refused to agree to make a cash flow distribution.

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