Login | January 31, 2025
Appeals court reverses decision in family investment dispute
KEITH ARNOLD
Special to the Legal News
Published: January 31, 2025
A Franklin County Appeals Court panel reversed the dismissal of a Columbus attorney’s claim that he has been unjustly excluded from the activities of a family partnership formed for the purpose of holding property and sharing rental income among members.
The three-judge panel of the Tenth District Court of Appeals found that the Franklin County Common Pleas Court had not considered David Knisley’s complaint in a light most favorable to him when it granted family members’ motion to dismiss.
“In ruling on a Civ.R. 12(B)(6) motion to dismiss, the court must … presume all factual allegations in the complaint are true and make all reasonable inferences in favor of the plaintiff,” Tenth District Judge Kristin Boggs wrote for the panel. “The dismissal of a complaint for failure to state a claim is proper when it appears, beyond doubt, that the plaintiff can prove no set of facts entitling him to relief.”
On July 31, 2023, Knisley filed an amended complaint against the Knisley Family Partnership, case background provided. The original complaint had been filed 20 days earlier.
In the complaint, he alleged that in 2012 he and four family members formed the partnership for the purpose of holding property and sharing rental income.
Knisley stated that the family partnership had no applicable agreement and therefore the partners shared equal profits and management rights, summary detailed.
He alleged that each partner contributed $200,000 to the partnership, which was used to purchase property at 1111 Dublin Road in Columbus.
Summary provided that the partnership receives rental income from tenant Knisley Law, a law firm of which Knisley was a member until 2016, when he was removed by family members without notice.
Knisley noted that, despite being a member of the family partnership, the other members have not requested his consent for management decisions in years nor has he been receiving capital distributions.
Additionally, he alleged that the other members of the partnership have set the rental price of the property below market value without notifying him or giving him the opportunity to vote on the decision.
He asserted the following claims: judicial dissolution, winding up of the business, breach of fiduciary duty, breach of contract, negligence, promissory estoppel, equitable estoppel, unjust enrichment and conversion, according to the summary.
The defendants filed a motion on Aug. 17, 2023, to dismiss Knisley’s complaint under Civ.R. 12(B)(6), arguing that all of the claims in the complaint are barred by the relevant statutes of limitations, as he alleged he was removed from Knisley Law sometime in 2016.
The trial court granted the motion to dismiss on April 11, 2024, on the basis that Knisley failed to state a claim upon which relief can be granted with respect to his equitable estoppel claim.
Additionally, the trial court found the remaining claims were barred by statute of limitations.
Knisley appealed the lower court ruling to the Tenth District Court of Appeals.
“Our examination of the complaint, when viewed in a light most favorable to David, shows that the alleged harms relate to David’s current strained status as a partner in the family partnership, not from his removal from the family law practice in 2016,” Boggs continued. “David’s complaint alleges harms, such as loss of rental income from the property held by the family partnership, settlement of his partnership account and loss of his investment in the family partnership. These are not harms that resulted from his removal from the family law firm, but from his continuing interest in the family partnership and his exclusion from decisions concerning (it).”
Additionally, the panel determined that the trial court was not in a position to dismiss his other claims related to his status in the family partnership.
“If taken as true, these allegations indicate continuing harms that are on-going, as David is being continually excluded from management decisions and denied his share of the family partnership’s profits. We accordingly sustain David’s assignments of error,” Boggs noted.
The panel’s reversal remands the case to the trial court for proceedings consistent with the decision.
Tenth District Presiding Judge Terri Jamison and Judge David Leland concurred with Boggs’ decision.
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