CASE LAW UPDATE: A SURVEY OF RECENT TEXAS PARTNERSHIP AND LLC CASES

By

Elizabeth S. Miller Professor of Law Baylor University School of Law Waco, Texas

The University of Texas School of Law

2009 PARTNERSHIPS AND LLCs July 23 & 24, 2009 Austin, Texas

2009 Elizabeth S. Miller, All Rights Reserved

TABLE OF CONTENTS Page

I. II.

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Recent A. B. C. D. E. Texas Cases Involving General Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Existence of Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Partners Personal Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Partners Fiduciary Duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Partnership Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interpretation and Enforcement of Partnership Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Financial Rights.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Arbitration Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Forum Selection Clause.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. W ithdrawal/Expulsion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Statute of Frauds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of Death or W ithdrawal of Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . W inding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Divorce of Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Partnerships or Partners Standing to Sue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personal Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Necessary Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sufficiency of Pleadings and Service of Process on Partners or Partnership. . . . . . . . . . . . . . . . . Recovery of Attorneys Fees in Suit Between Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Collateral Estoppel/Res Judicata. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conflict of Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attorney Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Texas Cases Involving Limited Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General Partners Personal Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Authority of General Partner or Other Agent.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statutory Liability Protection of Limited Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Piercing Partnership Veil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fiduciary Duty of Partners and Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interpretation of Limited Partnership Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Fiduciary Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Financial Rights.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Arbitration Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Transfer Restrictions and Buy-Out Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Removal of General Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Duress. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Partnership Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dissolution of Limited Partnership/Events of W ithdrawal of General Partner. . . . . . . . . . . . . . . Judicial Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of Merger or Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Divorce of Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Creditor Remedies: Charging Order, Turnover Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i . 1 . 1 10 12 16 19 19 21 22 22 23 24 25 26 27 27 28 29 30 30 31 32 32 32 33 34 34 35 36 37 41 49 49 50 51 52 53 54 56 56 58 59 61 63 63 65

F. G. H. I. J. K. L. M. N. O. P. Q. R. III. Recent A. B. C. D. E. F.

G. H. I. J. K. L. M.

N. O. P. Q. R. S. T. U. V. W. X. Y. IV.

Fraudulent Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bankruptcy.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Securities Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subrogation Rights of Limited Partner Guarantors of Partnership Debt. . . . . . . . . . . . . . . Succession to Limited Partnerships Rights as Beneficiary of Letter of Credit. . . . . . . . . . Property Tax Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personal Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sufficiency of Pleadings and Service of Process on Partners or Limited Partnership. . . . . Misnomer.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diversity Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attorney Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.... .... .... .... .... .... .... .... .... .... .... ....

. . . . . . . . . . . .

65 67 70 71 72 73 75 79 83 85 85 86

Texas Cases Involving Limited Liability Companies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 A. Nature of Limited Liability Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 B. Pre-Formation Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 C. Fraudulent Inducement in Formation of LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 D. LLC Property; LLC Membership Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 E. Fiduciary Duties.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 F. Limited Liability of Members; Personal Liability of Members Under Agency or Other Law. . . . 94 G. Authority of Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 H. Admission of Member. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 I. Conflict Between Regulations and Articles of Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 J. Buy-Sell Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 K. Capital Call Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 L. Dissolution/W inding Up. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 M. Veil Piercing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 N. Fraudulent Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 O. Charging Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 P. Turnover Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Q. Franchise Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 R. Property Tax Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 S. W orkers Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 T. Marital Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 U. Recovery of Attorneys Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 V. Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 W. Personal Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 X. Service of Process .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Y. Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Z. Pro Se Representation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 AA. Derivative Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 BB. Diversity Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 CC. Bankruptcy.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 DD. Conflict of Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 EE. Interpretation of Contract Referring to Corporation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 FF. Effect of Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 GG. Attorney-Client Privilege. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 HH. Attorney Disqualification.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Texas Cases Involving Registered Limited Liability Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Limited Liability of Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Effect of Registration; LLP as Successor Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Effect of W ithdrawal of Registration Upon Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Effect of Dissolution and Expiration of Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E. Bankruptcy.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii 129 129 131 133 133 134

V.

F. G. H.

Suits Against Foreign LLPs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 Diversity Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 Pro Se Representation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

iii

Case Law Update: A Survey of Recent Partnership and LLC Cases Elizabeth S. M iller I. Introduction This paper summarizes recent Texas cases involving issues of partnership and limited liability company law. II. Recent Texas Cases Involving General Partnerships A. Existence of Partnership

Ingram v. Deere , __ S.W.3d __, 2009 W L 1900537 (Tex. 2009). In 1997, Ingram, a psychologist, and Deere, a psychiatrist, entered an oral agreement which provided that Deere would serve as the medical director for a pain clinic. Deere asserted that they agreed he would receive one-third of the clinics revenue, Ingram would receive one-third, and the remaining one-third would be used to pay expenses. Deere also claimed that Ingram told him their work was a joint venture, or [they] were partners, or [they] were doing this together. Ingram asserted that they agreed only that Deere would receive one-third of the revenue and that there was no agreement as to the remaining two-thirds. Deere admitted that he never contributed money to the clinic, did not participate in hiring employees, did not know the clinic staffs names, never purchased any of the clinics equipment, was not a signatory on the clinics bank account, and was not named on the lease agreement for the clinic space. Fourteen months after Deere began working at the clinic, Ingram prepared for Deeres signature a Physician Contractual Employment Agreement that stated Ingram was the sole owner of the clinic. Deere refused to sign the agreement, claiming it contradicted their agreement, and ceased working at the clinic. Deere sued Ingram, and the jury found that Deere and Ingram entered into a partnership agreement and that Ingram breached his fiduciary duty to Deere. Ultimately, however, the trial court granted a motion by Ingram for a judgment n.o.v. and rendered a take nothing judgment. The court of appeals reversed and reinstated an earlier judgment of the trial court. Ingram appealed to the Texas Supreme Court, and the court determined that there was no evidence of a partnership between Deere and Ingram and reinstated the trial courts take-nothing judgment. The court reviewed the development of Texas partnership law with respect to determining the existence of a partnership, first discussing the approach that developed under common law and then analyzing the statutory treatment. The court stated that the following five-factor test for partnership formation developed under the common law: (1) intent to form a partnership, (2) a community of interest, (3) an agreement to share profits, (4) an agreement to share losses, and (5) a mutual right of control or management of the enterprise. The court then traced the history of Texas partnership statutes from the passage of the Texas Uniform Partnership Act to the adoption of the Texas Revised Partnership Act (TRPA) and the Texas Business Organizations Code (TBOC), explaining that it was uncontested that TRPA governed the dispute in this case because the partnership in issue was allegedly formed in 1997. (The court noted that the TRPA and TBOC rules for determining partnership formation are substantially the same.) The court quoted Section 2.02(a) of TRPA (an association of two or more persons to carry on a business for profit as owners creates a partnership), and listed the five factors specified in Section 2.03(a) as indicating 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 losses of the business or liability for claims by third parties against the business; and (5) contributing or agreeing to contribute money or property to the business. The court characterized these factors as similar to the common law factors but distinguished the common law test and the T RPA approach on the basis that the common law test required proof of all five factors to establish the existence of a partnership whereas TRPA contemplates a less formalistic and more practical approach to recognizing the formation of a partnership. Unlike the common law, TRPA does not require proof of all the listed factors for a partnership to exist. The court stated that TRPA does not require direct proof of the parties intent to form a partnership but instead lists the expression of intent to form a partnership as a factor to consider. In the past, intent to be partners was a prime, though not controlling, element in the creation of a partnership. The court also distinguished the treatment of profit-sharing at common law and under TRPA by stating that sharing of profits is not required under TRPA whereas it was essential for establishing a partnership under the common law. The court noted that the comments to TRPA recognize that sharing profits and control over the business will likely continue to be the 1

most important factors in the analysis. Finally, the court pointed out that TRPA recognizes that sharing of losses may be indicative of a partnership but that such an arrangement is not necessary to create a partnership. The court next discussed the question of how many of the TRPA factors are required to form a partnership. The court stated that the TRPA factors seem to serve as a proxy for the common law requirements of intent to form a partnership by identifying conduct that logically suggests a collaboration of a businesss purpose and resources to make a profit as partners. The court concluded that the issue of whether a partnership exists should be decided considering all of the evidence bearing on the TRPA partnership factors, i.e., a totality-of-the-circumstances test, an approach the court noted would be difficult to uniformly apply. The court counseled that evidence of none of the factors will preclude recognition of a partnership, and conclusive evidence of all the TRPA factors will establish the existence of a partnership as a matter of law. The challenge, the court acknowledged, will be application of the totality-of-the-circumstances test between these two points on the continuum. The court did offer the additional guidance that conclusive evidence of only one factor normally will be insufficient to establish the existence of a partnership. The Legislature does not indicate that it intended to spring surprise or accidental partnerships on independent business persons, if, for example, an employee is paid out of business profits with no other indicia of a de facto partnership under TRPA. Turning to the application of the TRPA factors to the case at bar, the court found that there was no evidence of any of the TRPA factors. W ith respect to the first factor, the evidence did not show that Deere received a share of the profits because Deere received a percentage of gross revenue rather than profits. There was no evidence that the amount Deere received would have changed if expenses grew or shrank. Also, the checks written to Deere referred to him as medical consultant or contract labor, and Deere cashed the checks without challenging the characterizations. Under T RPA, receipt of profits as compensation as an employee or independent contractor is not evidence of a partnership. W ith respect to the second factor, expression of an intent to be partners, the court stated that courts should only consider evidence not specifically probative of the other factors, i.e., evidence of profit or loss sharing, control, or contribution of money or property should not be considered evidence of an expression of intent to be partners. The court characterized the TRPA factor of expression of an intent to be partners as differing from the common law issue of intent to be partners, which was a primary concern and involved consideration of other factors. The court gave the following examples of possible evidence of an expression of an intent to be partners under TRPA: parties statements that they are partners, one party holding the other party out as a partner on the businesss letterhead or name plate, or a signed partnership agreement. The court cautioned that the terms used by the parties do not control, and merely referring to another person as partner where the recipient of the message would not expect the statement to have legal significance is not enough. The court pointed out that the term partner is regularly used in common vernacular with a variety of meanings; therefore, the courts should look to the context in which the statements were made and consider the identity of the speaker and the listener. Here, Deeres testimony was unclear and gave the alleged arrangement three different characterizations that they were joint venturers, partners, or were doing this together. Deeres testimony revealed that he did not understand the legal definition of a partner, and the evidence did not show content, context, or circumstances that would give any of the alleged expressions of intent legal significance as evidence of a partnership. W ith respect to the third statutory factor, control, the evidence showed at most that Ingram talked with Deere about the business. Deere offered no evidence that he made executive decisions or had the right to make executive decisions. W ith respect to loss sharing, the evidence showed that the parties never discussed losses, only expenses. Deere alleged that the parties agreed that each would receive one-third of the clinics revenue and that the expenses would be paid by the remainder, but there was no evidence of any discussion of how expenses in excess of one-third of the revenue would be divided. Finally, there was no evidence that Deere agreed to contribute or actually contributed any money or property. Deere argued that he contributed his reputation, which the court acknowledged could be property contributed to a partnership, but the evidence did not show that Deeres reputation added value to the clinic, and, even if it did, there was no evidence that distinguished any value contributed from that of an employee. In sum, the court found no evidence of any of the factors specified in TRPA as indicating a partnership. Sm ith v. Deneve , __ S.W.3d __, 2009 W L 1492997 (Tex. App.Dallas 2009, no pet. h.). Smith and Deneve began living together in 1991 but never formally married. In 1998, they moved into a house. Deneve took title to the house in her name. In 2003, they acquired a boat in Deneves name. In 2005, the couple separated, and Smith sued Deneve for divorce. Deneve denied they were married, and Smith added various claims including a claim that he and Deneve formed a partnership or joint venture which owned the property accumulated during their years of cohabitation. The court granted summary judgment against Smith on the partnership claim, and he appealed. The court of appeals recited the five factors indicating a partnership under Section 2.03(a) of the Texas Revised Partnership Act, i.e., (1) receipt or right to receive a share of profits of the business; (2) expression of an intent 2