The NJ Appellate Division recently clarified the manner and timing of claims seeking to hold partners personally liable for partnership debts under the revised Uniform Partnership Act (UPA), holding in American Imaging of Jersey City, et al. v. Baldonado, M.D., Docket No. A- 0788-11T2 (decided July 19, 2013), that:

  • Partners are jointly and severally liable for obligations of the partnership.
  • When both the partnership and partners are sued on a partnership obligation, judgment can be entered against the partnership in the amount due and against the partners as to liability only.
  • A court may then amend the judgment against the partners to "a final judgment for a sum certain" if the partnership is ultimately unable to satisfy the judgment.
  • Under N.J.S.A. 42:1A-19(B) of the UPA, a party bringing suit may elect to sue the partners in either the same or separate action as the suit against the partnership inasmuch as a cause of action against the partners on their personal liability for the partnership's obligation accrues, at the earliest, upon entry of judgment against the partnership.
  • The Entire Controversy Doctrine does not require partners to be joined in the same action as that against the partnership since claims against the individual partners do not accrue until the partnership is found liable and unable to satisfy the judgment.
  • Generally, a partner joined as a party defendant in an action against the partnership would be wise to assert a claim for contribution against the other partners in that same action to avoid contention later by the other partners that any successive action should be precluded.
  • If a partner joined as a party defendant in an action against the partnership fails to join the other partners on a claim for contribution in that same action, it generally will not bar him from bringing a successive action against those partners, despite N.J. Rule 4:5-1 (b)(2)'s requirement of certification regarding whether any non-parties should be joined in the action based on their potential liability arising from the same transactional facts, unless such failure was inexcusable and the right of the excluded party to defend the successive action has been substantially prejudiced by not having been included in the prior action.