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Shar’s Cars, L.L.C. v. Elder

Utah Court of Appeals
97 P.3d 724 (2004)

Written by Sean Carroll, JD

Facts

Jeffrey Birschbach opened a car dealership called Shar’s Cars, L.L.C. (collectively, plaintiffs). Deloy Elder and Bruce Rutherford were partners in a used car wholesale partnership. In early 1998, Birschbach and the Elder-Rutherford partnership agreed to share the Shar’s Cars lot to sell cars. In August 1998, Elder terminated the Elder-Rutherford partnership. They did not go through a formal dissolution process but closed the Elder-Rutherford partnership’s bank account. Birschbach and Rutherford agreed to continue a new partnership together. In October 1998, Birschbach closed down Shar’s Cars. One of Shar’s Cars’s creditors brought suit against Shar’s Cars, and Shar’s Cars in turn filed a third-party claim against Elder and Rutherford. The trial court found that Elder was not liable for partnership debts incurred after he left the Elder-Rutherford partnership. At that point, the partnership’s net loss was $45,000. The trial court entered a judgment against Elder for half that amount, $22,500. Elder appealed.

Rule of Law

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Holding and Reasoning (Greenwood, J.)

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