## Facts

- A. Bertolla & Sons (ABS) was a family farming general partnership formed in Baldwin County in the early 1900s and holding significant assets, including approximately 1,800 acres of farmland, about 920 acres of timberland, and a securities portfolio.
- After a series of deaths, disputes, and intra-family buyouts, the remaining partners were Alexander A. “Andy” Bertolla, his aunt Mary Bertolla Bill, and Mary’s son Michael (“Mike”) Bill.
- Ownership interests were approximately: Andy 47%, Mary 47%, and Mike 6%.
- A written partnership agreement granted Andy and Mary management authority and required that no partner enter transactions that would risk ABS’s business without the other partners’ consent.
- For tax purposes, the agreement addressed valuation of a partner’s interest upon “withdrawal,” using ABS’s book value.
- Mary and Mike alleged that Andy repeatedly acted unilaterally, overspent, and caused financial losses, and that his conduct breached fiduciary duties and the partnership agreement.
- In 1996, Mary and Mike sued Andy and ABS seeking dissolution, an accounting, and relief for breach of fiduciary duty and breach of the partnership agreement.
- Andy did not oppose dissolution, but argued that any distribution in the winding up should be based on ABS’s book value (about $1.5 million) rather than the estimated fair market value of ABS’s assets (roughly $23–$25 million).
- After hearing ore tenus evidence, the trial court ordered judicial dissolution, found misconduct by Andy (including breaches of duty and of the agreement), and directed that partnership assets be sold and the proceeds distributed according to the partners’ percentage interests, using fair market value rather than book value.

## Issues

1. Whether the trial court properly ordered judicial dissolution of ABS based on partner misconduct and the breakdown of the relationship among the partners.
2. Whether the partnership agreement’s book-value provision applicable to a partner’s “withdrawal” controlled valuation and distribution of assets in a judicial dissolution and winding up.
3. Whether the trial court acted within its equitable authority in ordering sale of the partnership assets and distribution of proceeds according to the partners’ ownership percentages using fair market value.

## Decision

- The Supreme Court of Alabama affirmed the judgment ordering dissolution and the method of winding up.
- The Court upheld the trial court’s factual findings made after ore tenus proceedings, including findings supporting dissolution and findings that Andy breached duties owed to the partnership and the other partners.
- The Court agreed that the agreement’s book-value provision tied to “withdrawal” did not govern the valuation and distribution of assets in a court-ordered dissolution.
- The Court approved the ordered sale and distribution of assets based on fair market value, divided according to each partner’s percentage ownership interest.

## Legal Principles

- In an equitable action tried ore tenus, an appellate court gives substantial deference to the trial court’s factual findings and will not reverse absent clear error.
- A court may order judicial dissolution of a general partnership when partner conduct and conflict make it impracticable for the partners to continue the business together, including where a managing partner breaches fiduciary duties or the partnership agreement.
- A valuation clause aimed at measuring a partner’s interest upon “withdrawal” does not automatically control valuation in a judicial dissolution; clear contractual language is required to displace the court’s dissolution and winding-up authority.
- In winding up after dissolution, a court may direct liquidation (including sale of partnership assets) and distribution of proceeds according to the partners’ ownership interests, and it may use fair market value as the measure when the partnership is being terminated rather than continued.

## Conclusion

In *Bertolla v. Bill*, the Alabama Supreme Court affirmed judicial dissolution of a family farming partnership after the trial court found serious misconduct and a breakdown in the partners’ ability to operate together. The Court held that a book-value provision aimed at a partner’s “withdrawal” did not restrict valuation in a court-ordered dissolution, and it upheld the liquidation and distribution of partnership assets at fair market value according to the partners’ percentage interests.


Bertolla v. Bill, 774 So. 2d 497 (1999)