On a case decided November 23, 2011, Collen Conway Cooney of the Ohio Court of Appeals affirmed the trial court's decision to hold eight business partners equally responsible for the debt associated with their business line of credit. The partners were held responsible for one-eighth of the total debt, regardless of their percentage of ownership in the business.

            The plaintiff and appellant in this case, PNC Bank, took on the debt from National City Bank and attempted to collect the balance from "a borrower identified as "Sam J. Strano, dba Washington Square Enterprises." PNC's complaint alleged that Michael A. Farinacci and Claire Gruttadauria, the defendants-appellees, were liable for Washington Square's debt as general partners. After this complaint, PNC attempted to also include the "other six general partners of Washington Square as defendants, but the motion was denied."

The difference between joint liability and joint and several liability is crucial to both the trial court's and the court of appeal's decision. Joint liability, which was applied to this case, means that all partners are equal for their share, and only their share, of the debt. Joint and several liability would have meant that each partner was liable for the full amount of the debt and that the creditor could have asked for it from each partner.

            The trial court decided that both Michael and Claire owed $4,190.33, plus interest, holding that "The eight general partners of Washington Square Enterprises are only jointly liable, not jointly and severally liable, for the contract debt to PNC and separate judgments on the breach of contract claims against Farinacci and Gruttadauria in the amount of one-eighth each of the entire debt are appropriate." PNC then appealed this judgment.

            PNC assigned the following three errors to the trial court's decision; that the trial court incorrectly applied R.C. 1775.14 instead of 1776.36, that the trial court erred in denying summary judgment and that the trial court erred in dividing the debt equally to all partners and should have been proportionate to ownership.

            PNC's first assignment of error and, therefore, the subsequent two assignments, are based on related legislation changes. The Ohio General Assembly passed the Ohio Uniform Partnership Act, effective January 1, 2010, which includes R.C. 1776.36 and which, according to PNC, should have been applied. This clause would have found the partners "liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law." The act, however, does not apply to partnerships formed before January 1, 2009, aside from those that fell into an inapplicable, and specific set of guidelines. If Washington Square had elected to be governed by the Uniform Partnership Act, they would have been jointly and severally liable to a third party. Since the eight partners formed Washington Square in 1978 and did not elect to extend their liability to a third party, PNC's claim was invalid and their first assignment of error was overruled.

            PNC's second assignment of error stated that the partners benefitted from unjust enrichment due to their nonpayment of the debt, however, "there was no evidence that the individual partners benefitted in the same amount." PNC claimed that "R.C. 1776.36 attaches liability to all partners for all obligations of the partnership," so there is no real distinction between unjust enrichment and a breach of contract, or the debt collection. However, since as previously stated, R.C. 1776.36 is not applicable here, PNC's second assignment of error was overruled.

            PNC's third assignment of error stated that the trial court should have assigned liability according to the partner's ownership percentage in the company. As the partners were still governed under R.C. 1775.17 when they defaulted on their line of credit, "the allocation of liability for losses...applies only to the rights and duties of the partners to each other and is not relevant to partnership liability toward third parties." Therefore, the third assignment of error was overruled.