1. What arguments can you present in defense of Della Ratta’s actions in this case?

2. Maryland is an RUPA state. Explain the use of the terms dissociation, dissolution, and winding up in this case.

Edward Dyas and Joseph Della Ratta were equal owners of two hotels in Ocean City, Maryland. The “old” hotel was completed in 1988 and the “new” hotel was completed in 2006, with both properties owned under the men’s Spa Motel General Partnership (Spa). They were also developers and equal owners of the Maresol Condominium project in Ocean City, which was completed in 2004 and held under Dyas’s and Della Ratta’s Bay View Limited Liability Company (Bay View). Della Ratta owned the construction company that built these projects, “DRI,” and he also owned “CMC,” the company that managed the two hotels. Dyas believed that Della Ratta was attempting to squeeze him out from Spa and Bay View. Under Dyas’s analysis, Della Ratta’s strategy in the general partnership, Spa, was to call for a very substantial capital contribution to pay claims asserted by CMC for alleged advances made by it to pay for operational expenses and to pay claims to DRI for the new hotel’s construction costs. Dyas contended those calls were unauthorized because the underlying claims could not be substantiated and the partnership agreement required that the developers first seek a commercial loan.

With respect to Bay View, Dyas’s theory of Della Ratta’s squeeze-out strategy involved two ploys. First, that Della Ratta sought personally to purchase the loan from Severn Bank and obtain from it an assignment of the security instrument, on which Della Ratta then would foreclose, so that he could buy in at the foreclosure sale. Severn Bank, however, would not assign the loan to Della Ratta. Dyas further alleged that, as an alternate squeeze-out strategy, Della Ratta wrongfully refused to sell condominium units in Maresol. The resulting illiquidity would deprive Bay View of the cash needed to repay Severn Bank, so that Della Ratta could buy Maresol at a foreclosure sale conducted by Severn Bank. After a 10-day trial, the circuit court concluded that Dyas had proven these allegations. The ultimate findings of the trial court were that it was “no longer reasonably practicable to carry on the business” of Spa or of Bay View and that Dyas “had proved to the court’s satisfaction facts sufficient for the court to grant a dissolution” of the entities. The court further ordered dissociation of Della Ratta as a partner in Spa. The court supervised the winding up of the general partnership. Della Ratta appealed.

JUDICIAL OPINION

Rodowsky, Judge.…

DISSOCIATION

Appellants … contend that the trial court erred (1) by dissociating Della Ratta from Spa and (2) by enjoining his capital calls for Spa.…The conduct of Della Ratta, as a partner in Spa, supports the relief. … Within Spa, the management of the two hotels was entrusted to Della Ratta’s wholly owned company, CMC.

Under the 1988 contract between Spa and CMC for the management of Sea Bay, CMC was to “utilize [the] latest revised edition, A UNIFORM SYSTEM OF ACCOUNTS FOR HOTELS[.]” There were to be monthly financial statements and, “[a]s additional support … detailed analysis of expenditures and variances to Budget.” Instead, Della Ratta’s “accounting principle” was “taking money from wherever is necessary.” The trial court was referring to Della Ratta’s practice of disregarding entities and using cash in one of his  ……………………