Southex Exhibitions, Inc. v. Rhode Island Builders Associations, Inc.

Sherman Exposition Management, Inc. (SEM), the predecessor in interest to Southex Exhibitions, Inc. (Southex) (plaintiff), executed an agreement with the Rhode Island Builder’s Association, Inc. (RIBA) (defendant) to produce RIBA home shows at a local civic center. The agreement’s term was five years, renewable upon mutual agreement. The agreement’s preamble stated that RIBA wished to participate in the home shows as sponsors and partners. The agreement further provided that: (1) SEM would put up all the necessary capital for the shows and indemnified RIBA for losses from the shows; (2) the net profits would be divided between SEM (55%) and RIBA (45%); and (3) both parties would mutually determine the show dates and admission prices for the shows. During the contract negotiations, SEM’s president, Sherman, told RIBA representative Dagata that if he was not happy after the first year, he would give back the shows to RIBA. Sherman consistently referred to himself as the producer of the shows. Twenty years after the agreement was executed, Southex acquired SEM’s interest under the agreement. Southex continued to enter into third-party contracts under its own name, and never filed partnership tax returns. Four years later, Southex decided that it would likely renegotiate the agreement. RIBA told Southex that it was dissatisfied with Southex’s performance and then signed a contract with a rival producer. Southex sued RIBA alleging that RIBA breached its duty to Southex by wrongfully terminating the agreement and contracting with the competing producer. The district court entered judgment for RIBA, holding that the agreement created no partnership between RIBA and SEM.