## Facts

- Earl Stiltner purchased real property in Eagle River, Alaska, containing an existing building later intended for hotel conversion.
- In 1997, Stiltner and Carl Disotell formed an unwritten, equal partnership to develop, construct, and operate a hotel on the property.
- Stiltner contributed the real property; Disotell (through his construction business) was to act as general contractor on a cost-only basis and to plan the project and obtain permits and licenses.
- Disotell was to acquire a one-half interest in the property for $137,500 (half of Stiltner’s cost), payable only from future hotel profits; after Stiltner recouped his original cost basis and other specified costs, profits would be shared equally.
- The hotel project did not become profitable, and the partnership dissolved in 1998 after the partners reached an impasse.
- At dissolution, Stiltner was in exclusive possession of the property and lived on the premises.
- Disotell sued for dissolution, judicial windup, a receiver, and damages; Stiltner counterclaimed seeking rescission.
- After a bench trial, the superior court ordered dissolution and windup but did not require liquidation; it instead gave Stiltner an option to buy out Disotell’s partnership interest based on a court-calculated amount.
- The superior court treated the unpaid $137,500 amount as a partnership liability in the accounting, reducing the net partnership value used for the buyout calculation.

## Issues

1. Whether the Alaska Uniform Partnership Act required liquidation of partnership assets upon dissolution or permitted a court-approved buyout in winding up.
2. Whether the superior court’s buyout valuation was supported by competent evidence, including objective evidence of the property’s value.
3. Whether the partnership accounting contained reversible errors, including the classification of the $137,500 obligation and certain cost and contribution items.

## Decision

- The Alaska Supreme Court held that the Alaska Uniform Partnership Act allows, but does not require, liquidation in winding up a dissolved partnership.
- The court affirmed the superior court’s decision permitting Stiltner to buy out Disotell’s partnership interest rather than forcing liquidation.
- The court remanded because the buyout valuation lacked evidence of the objective value of property used in the buyout calculation.
- The court also remanded for correction of additional minor accounting and distribution errors.
- Disposition: affirmed in part and remanded for further proceedings consistent with the opinion.

## Legal Principles

- Partnership dissolution statutes provide default winding-up rules and do not necessarily confer an absolute right on a partner to compel liquidation in every case.
- A court may approve a buyout as a method of winding up a dissolved partnership when it fairly protects both partners’ interests.
- A buyout award must be grounded in competent, objective evidence of value; unsupported valuation requires remand for further findings or proof.
- In judicial windup, trial courts must use a coherent partnership accounting that properly allocates contributions, liabilities, and distributions between the partnership and the partners.

## Conclusion

The Alaska Supreme Court upheld a trial court’s authority to wind up a dissolved partnership through a buyout rather than a forced sale, but required remand where the buyout amount was not supported by objective valuation evidence and where the accounting contained correctable errors.


Disotell v. Stiltner, 100 P.3d 890 (Alaska 2004)