## Facts

- Harry S. Korotki owned Savings First Mortgage, LLC.
- Korotki approached two other mortgage businesses—Greentree Mortgage Corporation and MAS Associates, LLC—to combine their operations into a single venture.
- The three businesses reached an agreement in principle on a merger, and counsel prepared a written agreement to formalize the arrangement.
- The drafted agreement was never executed, and the parties did not complete formal entity-formation steps that would have documented the new structure.
- Even without signed documents, the parties began operating as a combined venture by integrating personnel and operations.
- Each company contributed $150,000 to fund the venture.
- After the venture became profitable, the three owners shared profits equally.
- The owners also operated with the understanding that major decisions for the venture required collective agreement.
- The following year, Korotki notified the other owners that he intended to leave the venture due to health reasons.
- The remaining owners refused to negotiate a buyout of Korotki’s interest.
- Korotki sued in the Circuit Court for Baltimore County. After a bench trial, the circuit court determined that the parties had formed a general partnership and awarded Korotki the value of his partnership interest.
- MAS and the other owner(s) appealed to the Maryland Court of Special Appeals.

## Issues

1. Whether the circuit court erred in finding that the parties formed a general partnership based on their conduct, despite the absence of a signed merger agreement.
2. Whether the circuit court properly awarded Korotki a monetary amount representing the value of his partnership interest upon his departure.

## Decision

- The Court of Special Appeals affirmed the judgment.
- The court held that the circuit court had a sufficient evidentiary basis to find that the parties’ actions showed an agreement to carry on, as co-owners, a business for profit.
- The court reasoned that the lack of an executed written merger agreement did not bar a partnership finding where the parties proceeded to combine operations, contribute capital, share profits equally, and jointly control major decisions.
- The court upheld the trial court’s award valuing Korotki’s partnership interest.

## Legal Principles

- A general partnership may be formed by the parties’ association and conduct; a signed written agreement is not required if the evidence shows an agreement to run a business together for profit as co-owners.
- Partnership intent may be inferred from objective facts, including capital contributions, profit sharing, and shared authority over management decisions.
- Profit sharing is strong evidence of a partnership relationship, particularly when paired with shared control and joint funding of the enterprise.
- Following a bench trial, an appellate court generally defers to the trial court’s factual findings unless clearly erroneous and reviews legal conclusions without deference.

## Conclusion

The Court of Special Appeals affirmed the circuit court’s determination that Korotki and the other owners formed a general partnership through their conduct in combining operations, contributing equal capital, sharing profits equally, and jointly controlling major decisions, and it upheld the resulting award for the value of Korotki’s partnership interest despite the parties’ failure to sign a formal merger agreement.


MAS Associates, LLC v. Korotki, 2018 WL 2258972 (2018)