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Knez Building Materials Co. v. Manikas
Citations: 831 P.2d 80; 113 Or. App. 220; 1992 Ore. App. LEXIS 1033Docket: C900222CV; CA A68423
Court: Court of Appeals of Oregon; May 20, 1992; Oregon; State Appellate Court
Defendants John G. Manikas and Larry T. Afzal, doing business as Spectra Painting and Drywall, appeal a summary judgment favoring plaintiffs Knez Building Materials Co. and Kenneth R. Lokey for breach of contract. The case centers on a credit application and purchase agreement executed by Afzal on August 3, 1989, on behalf of Spectra, which was then a partnership of Afzal and Manikas. After incorporating Spectra in California on September 14, 1989, the defendants continued transactions with Knez, who received payments from the newly formed corporation. Knez later sued to foreclose on a construction lien, claiming Spectra owed $147,722.08. The trial court granted summary judgment, ruling that the defendants, as partners, were personally liable for the partnership's debts. The defendants contend there was a factual dispute regarding whether Knez was aware of the corporate status of Spectra after it was formed. However, the court found that even if Knez were aware, it did not imply an agreement to release the partnership from its obligations. The acceptance of payments from the corporation did not absolve the partnership's liability. The court affirmed the summary judgment, noting that the defendants failed to establish a factual issue regarding any agreement to substitute the corporation for the partnership or to relieve the partnership of its debt obligations. The court also addressed evidentiary concerns regarding hearsay but deemed the evidence admissible since no objection was raised in the trial court. The lien involved an apartment project for which Lokey had contracted Spectra to install drywall, with Knez later releasing its lien after receiving payment from Lokey.