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PRESENT:    Kinser, C.J., Lemons, Goodwyn, Millette, and Mims, JJ.
MARK C. COMTOIS, ET AL.
OPINION BY
v.    Record No.  101128                                             JUSTICE WILLIAM C. MIMS
                                                                     September  16,  2011
L. LAWTON ROGERS, III
FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA
Nolan B. Dawkins, Judge
In this appeal, we consider whether the circuit court
erroneously failed to perform an accounting of a partnership
prior to ordering its judicial dissolution.
I.    BACKGROUND AND MATERIAL PROCEEDINGS BELOW
L. Lawton Rogers, III and Joseph Killeen shared a
successful law practice in the partnership of Rogers & Killeen
until Killeen’s death in  1998.    Rogers thereafter continued the
practice as a sole proprietorship with Mark C. Comtois, D.
Joseph English, and Patrick D. McPherson, who had been hired as
associates between  1996 and  1998.    In December  1999, Rogers
approached the three associates  (collectively,  “the Plaintiffs”)
to form a new partnership that retained the name Rogers &
Killeen  (“the Firm”).    The Plaintiffs agreed and the four
attorneys signed a partnership agreement backdated to April  1,
1999.
Paragraph  3.2 of the partnership agreement required  “[e]ach
Partner  [to] deposit to the account of the Firm an equal share
of the capitalization of the Firm and the financial records of




the Firm shall reflect the Capital Account of each Partner
individually.”    Paragraph  3.1 provided that  “[t]he
capitalization of the Firm may be referred to in accounting
records and balance sheets as  ‘Net Worth’,  ‘Capital Accounts’ or
‘Partner’s Equity’.”  1                                              (Id.) Paragraph  3.3 required each partner
to make his capital contribution within five days of a call for
capital and Paragraph  3.4 provided that any partner who failed
to do so would be in default, thereby losing his right to
participate in the management of the Firm and subjecting himself
to possible expulsion.    Paragraph  3.5, captioned  “Interest On
Capital Contributions,” provided that interest would be paid on
each partner’s equity in the firm.    Specifically, it stated:
To encourage the adequate capitalization of the
Firm and the interest of the Partners in the
financial success of the Firm which will
accompany the investment by each Partner of
capital in the Firm, the Firm shall pay to each
Partner on the last day of each calendar month as
interest a sum equal to one percent  (1%) of such
Partners’s  [sic] Capitol  [sic] Account during
that month.    Interest shall be paid
notwithstanding the fact that the payment thereof
shall reduce the cash available to the Firm and
trigger a new call for capital.
1 In addition to the account into which each partner
deposited his capital contribution, representing his equity in
the Firm, Paragraph  7.4 of the partnership agreement provided
that each partner would have an income account.    That paragraph
also provided that overdrawn capital and income accounts  “shall
be considered by the Firm as accounts receivable”; conversely,
underdrawn accounts  “shall be considered by the Firm as accounts
payable.”
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The partners also agreed to capitalize the Firm by each
contributing  $150,000.    The Plaintiffs borrowed some of their
contributions from Rogers and Rogers’ wife:    English and
McPherson each borrowed the full  $150,000; Comtois borrowed
$100,000.    Each Plaintiff signed a note securing his
indebtedness with his interest in the Firm.    The respective
notes provided that interest on the outstanding balance would
accrue at the rate of  12% per year.    The notes also provided
that the interest payable by the Firm on the respective
partner’s equity under Paragraph  3.5 of the partnership
agreement would be deposited in Rogers’ capital account as
payment toward the debt.
In late  2000, all four partners joined Carter Ledyard &
Milburn LLP.    The partners did not dissolve the Firm because
they were awaiting a large payment from an unresolved contingent
fee case.    In  2002, the partners moved from Carter Ledyard &
Milburn LLP to Duane Morris LLP.    The Firm remained extant but
inactive.    After  2002, the Firm paid no interest on the
partners’ equity.
In December  2008, Rogers and his wife filed an amended
complaint against the Plaintiffs demanding repayment of the
notes.2    In February  2009, the Plaintiffs filed a separate
2 Rogers subsequently non-suited additional claims in his
amended complaint.
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complaint asserting that Rogers had overdrawn his capital
account by  $611,147.00 and that this amount was an account
receivable owed to the Firm under Paragraph  7.4 of the
partnership agreement.    In their complaint, the Plaintiffs
sought a final accounting, judgment against Rogers in favor of
the Firm in the amount of  $611,147.00, the distribution of the
Firm’s assets equally among the partners, and the judicial
dissolution of the Firm.    By agreement of the parties, the
circuit court consolidated the two cases and heard evidence in a
three-day bench trial.
The circuit court thereafter issued a letter opinion in
which it found that the Firm owed all the partners  1% monthly
interest on their equity from the date the Firm ceased paying
such interest.    It then further found that the Plaintiffs had
not paid Rogers and his wife any interest due under their
respective notes since the Firm had ceased paying interest on
their equity, but determined that the Plaintiffs’ failure to pay
Rogers and his wife was offset by the Firm’s failure to pay the
Plaintiffs.
Accordingly, the circuit court ruled that because English
and McPherson’s equity was equal to their debts under their
notes, their obligations to pay interest under their notes was
canceled out by the Firm’s obligation to pay them interest on
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their equity.3    To the extent English and McPherson had repaid
Rogers and his wife any amounts beyond the interest accrued or
due to them from the Firm on their equity, such repayments would
be applied to reduce their outstanding principal balances due
under the notes.
Similarly, the circuit court found that Comtois’ obligation
to pay annual interest on the outstanding balance of his debt
under his note was canceled out by the Firm’s obligation to pay
him interest on his equity.    Moreover, because Comtois had only
borrowed  $100,000 of his  $150,000 equity, he was entitled to be
paid the monthly interest on the  $50,000 he personally
contributed to the account.    The court found each partner liable
for  25% of the unpaid interest due to Comtois if the Firm’s
assets were insufficient to pay it.    The court also found that
Rogers was entitled to be paid monthly interest on his entire
$150,000 contribution and found each partner liable for  25% of
this obligation.
The circuit court directed all the parties to audit the
payments the Plaintiffs had made to Rogers and his wife and to
3 The Firm was obligated by the partnership agreement to pay
English and McPherson interest on their capital contributions.
In their respective notes, English and McPherson had assigned
their right to receive these interest payments to Rogers and his
wife as payment of the interest due under the notes.    The
circuit court reasoned that English’s and McPherson’s failures
to pay Rogers and his wife interest as required by the notes was
subsumed by the Firm’s failure to pay English and McPherson
interest as required by the partnership agreement.
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propose a final order providing for the payment of any
outstanding balance under the notes, plus  12% annual interest
until paid in full.    The court made no finding with respect to
the Plaintiffs’ allegations that Rogers’ capital account was
overdrawn or that he owed the Firm any money as a result.
Finally, the court found that the Plaintiffs had met their
burden of proof that the Firm should be judicially dissolved.
Rogers and his wife and the Plaintiffs were unable to agree
to the amounts of their respective obligations and therefore
proposed competing final orders to the circuit court.    The court
held a hearing on the parties’ proposals, after which it entered
a final order.    The final order found that Comtois had paid
$77,951 in principal under his note and owed an outstanding
balance of  $22,049; that McPherson had paid  $93,951 in principal
under his note and owed an outstanding balance of  $56,049; and
that English had paid  $75,951 in principal and owed an
outstanding balance of  $74,049.    The court entered judgment
against each Plaintiff in favor of Rogers and his wife for the
outstanding balances he owed, plus  12% interest per year on
those balances until paid in full.4
4 No party assigns error to the court’s factual findings as
to the amount of principal each Plaintiff had paid or to the
outstanding balance each Plaintiff owed Rogers and his wife
under their respective notes.
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In its final order, the circuit court also awarded Rogers
$129,500.00 in unpaid  1% monthly interest on his equity in the
Firm, the liability for which was to be divided equally among
the four partners.    The court awarded Comtois  $43,000 in unpaid
1% monthly interest only on  $50,000 in equity he had not
borrowed, the liability for which was also to be divided equally
among the four partners.    It awarded English and McPherson no
unpaid interest on their equity because their entire
contributions had been borrowed.    The court therefore
specifically ordered English and McPherson each to pay Rogers
$32,500.00 and Comtois  $10,750.00 in unpaid interest on equity;
finding that Rogers’ liability to Comtois partially offset
Comtois’ liability to Rogers, it ordered Comtois to pay Rogers
$21,500.00 in unpaid interest on equity.5
Finally, the court ordered the partnership judicially
dissolved.
The Plaintiffs objected to the final order and we awarded
them this appeal.6
5 No party assigns error to the portion of the court’s order
calculating each partner’s share of Rogers’ unpaid interest on
equity as  $32,250, even though four equal shares of  $129,500
amount to  $32,375 each.
6 Rogers and his wife also objected to the final order and
we awarded them an appeal, Record No.  101132, which we dismiss
by separate, unpublished order for the reasons set forth
therein.
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II. ANALYSIS
The Plaintiffs assign error to the circuit court’s judgment
on three grounds.    First, they assert that the circuit court
ordered the judicial dissolution of the Firm without performing
an accounting and settlement of the partners’ accounts.    Second,
they assert that by failing to perform the required accounting,
the circuit court failed to require Rogers to repay his
allegedly overdrawn, negative capital account or award the
Plaintiffs the balances of their underdrawn, positive capital
accounts.    Third, they assert that the circuit court erred in
awarding Rogers  $129,500 in unpaid interest on his capital
account balance when his account allegedly was overdrawn with a
negative balance.    We address this third assignment first.
A.    INTEREST ON ROGERS’ EQUITY
The Plaintiffs assert that the circuit court erred by
awarding Rogers interest on his capital account balance when the
account allegedly was overdrawn.    Their assignment of error thus
challenges the circuit court’s interpretation of the interest
obligation set forth in the partnership agreement.                   “We review
the interpretation of a contract de novo.”    Uniwest Constr.,
Inc. v. Amtech Elevator Servs.,  280 Va.  428,  440,  699 S.E.2d
223,  229  (2010).
When the terms in a contract are clear and
unambiguous, the contract is construed according
to its plain meaning.    Words that the parties
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used are normally given their usual, ordinary,
and popular meaning.    No word or clause in the
contract will be treated as meaningless if a
reasonable meaning can be given to it, and there
is a presumption that the parties have not used
words needlessly.
Id.  (quoting PMA Capital Ins. Co. v. US Airways, Inc.,  271 Va.
352,  358,  626 S.E.2d  369,  372-73  (2006)).
The Plaintiffs’ argument on this assignment is founded on
an interpretation that the interest payable by the Firm under
Paragraph  3.5 of the partnership agreement accrues on the
balance of each partner’s respective total contributions to the
Firm.    The Plaintiffs contend that such contributions include
deferred or uncollected salary, fees, and other earnings, which
their forensic expert described at trial as capital
contributions.7    He testified that,  “[A] capital account balance
is increased by capital contributed to the firm and increased by
a share of income allocated to a partner, and it’s decreased by
distributions to a partner from the firm and losses allocated to
a partner.”    While his statement may be correct as an accounting
principle, it exposes a critical semantic divergence between a
“capital account” as contemplated by the partnership agreement
and each partner’s capital in the Firm under standard accounting
practices.
7 Each of the Plaintiffs had such deferred or uncollected
salary, fees, and other earnings between  2000 and  2002, which
according to their forensic expert should be applied to their
capital accounts.
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Under Paragraph  3.1, each partner’s  “capital account” is
defined as that amount he contributes to the capitalization of
the firm.    Under that paragraph,  “[t]he total capitalization of
the Firm shall be determined by the Partners.”    Under Paragraph
3.2, the partners must contribute to the Firm’s capitalization
equally:                                                             “Each Partner shall deposit to the account of the Firm
an equal share of the capitalization of the Firm and the
financial records of the Firm shall reflect the Capital Account
of each Partner individually.”                                       (Emphasis added.)    Under
Paragraph  3.3, capital contributions are made only after a call
for capital.    Under Paragraph  3.4, a partner’s failure to make
his equal contribution within five days of such a call for
capital suspends his participation in the management of the Firm
and places his continued role as a partner in jeopardy.
Based on these provisions it is clear that the phrase
“capital account” as contemplated by Paragraph  3.5 includes only
the partners’ equal contributions to the capitalization of the
Firm:    their equity in the Firm as opposed to any undrawn
surplus in the income accounts provided for in Paragraph  7.4.
While it may be standard accounting practice to apply such
undrawn surpluses  - in the form of salary, fees, and other
earnings a partner may be entitled to receive but has not
actually withdrawn  - to the partner’s capital account, there is
no provision in the partnership agreement directing that those
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undrawn surpluses be included in the equity on which the Firm is
required to pay interest under Paragraph  3.5.    The partnership
agreement does not provide for voluntary, unilateral increases
in a partner’s equity.    To the contrary, under Paragraphs  3.1
and  3.2 of the partnership agreement the total capitalization of
the Firm must be determined by the partners collectively, and
must remain equal among all of them; the agreement thus provides
only for mandatory increases through calls for additional
capitalization shared equally among the partners.    There were no
such calls for capital.
Accordingly, though Rogers’ capital or income accounts may
or may not have been overdrawn according to standard accounting
practices as the Plaintiffs allege, there was no reduction in
his partner’s equity as contemplated by the partnership
agreement, just as there was no increase in the Plaintiffs’
respective equity regardless of any undrawn surpluses in their
capital or income accounts.    The partners’ equity remained an
equal  $150,000 at all times after the execution of the
partnership agreement and concomitant agreement that each
partner contribute  $150,000 in capital.    The interest to which
each partner was entitled under Paragraph  3.5 thus accrued only
on his initial  $150,000 contribution notwithstanding any
deposits or withdrawals from the income accounts provided for in
Paragraph  7.4.
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We therefore will affirm the portion of the circuit court’s
judgment awarding Rogers interest on his  $150,000 capital
contribution.
B.    ACCOUNTING AND SETTLEMENT
The Plaintiffs argue that the circuit court correctly found
that they had met their burden for an order of judicial
dissolution of the partnership under Code  §  50-73.117 but then
erroneously failed to perform an accounting and winding up of
the Firm’s business, including the settlement of the partners’
accounts that is required by Code  §  50-73.123.    The Plaintiffs
thereby raise the question of whether the circuit court failed
to do that which Code  §  50-73.123 required it to do after it
determined a judicial dissolution was warranted under Code  §  50-
73.117.    This question presents an issue of statutory
interpretation, which we review de novo.    Jones v. Williams,  280
Va.  635,  638,  701 S.E.2d  405,  406  (2010).
Code  §  50-73.123(A) directs the circuit court to ascertain
the value of a partnership’s assets and liabilities and apply
the assets  “to discharge its obligations to creditors,
including, to the extent permitted by law, partners who are
creditors.”    Thereafter,  “[a]ny surplus shall be applied to pay
in cash the net amount distributable to partners in accordance
with their right to distributions under subsection B.”    Id.
Code  §  50.73-123(B) states that
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[e]ach partner is entitled to a settlement of all
partnership accounts upon winding up the
partnership business. In settling accounts among
the partners, the profits and losses that result
from the liquidation of the partnership assets
shall be credited and charged to the partners’
accounts. The partnership shall make a
distribution to a partner in an amount equal to
any excess of the credits over the charges in the
partner's account. A partner shall contribute to
the partnership an amount equal to any excess of
the charges over the credits in the partner's
account that is attributable to an obligation for
which the partner is liable under  §  50-73.96.
Historically, an accounting was a term of art describing a
particular remedy in equity available  “against any agent,
trustee, committee[, or] partner.”8    John L. Costello, Virginia
Remedies  §  16.01[1]  (3d ed.  2005).    Such an equitable accounting
included two steps.                                                      “First, the account is to be stated; this
is a determination of who owes what.    Second, the account is to
be settled; this is the payment by the debtor of the money found
to be owing.”    W. Hamilton Bryson, Bryson on Civil Procedure
§  12.03[2][c]  (4th ed.  2005).
Although Code  §  50-73.123 does not explicitly direct the
circuit court to perform the historical equitable accounting as
an incident to a judicial dissolution, the steps required by
Code  §  50-73.123(A) and  (B) are identical to those comprised by
8 Code  §  8.01-31 also affords a statutory right to an
accounting  “against any fiduciary or by one joint tenant, tenant
in common, or coparcener for receiving more than comes to his
just share or proportion, or against the personal representative
of any such party.”
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the historical accounting in equity.    Moreover, it simply is
common sense that the liabilities of the partnership must be
satisfied and that any residual surplus be distributed among the
partners, in that order.    The winding up of a partnership’s
business incident to a judicial dissolution thus necessarily
includes the completion of an accounting.    See Spencer W.
Symons,  4 Pomeroy’s Equity Jurisprudence  §  1421  (5th ed.  1941)
(An accounting is  “necessary to a final and complete relief” in
a judicial dissolution.)
The Plaintiffs alleged in their complaint that Rogers had
overdrawn his accounts while their own respective accounts were
underdrawn.9    Paragraph  7.4 of the partnership agreement provided
that  “[o]verdrawn accounts shall be considered by the Firm as
accounts receivable and underdrawn accounts shall be considered
by the Firm as accounts payable.”    Accordingly, the complaint
sought an accounting that would result in Rogers repaying the
allegedly overdrawn balance of his accounts and the
corresponding distribution of their underdrawn accounts.
9 The difference between partners’ equity on which interest
accrued under Paragraph  3.5 of the partnership agreement and
capital and income accounts as contemplated by Paragraph  7.4 is
immaterial here.    The Plaintiffs’ allegation that Rogers
overdrew his capital account is sufficient to embrace both his
capital and income accounts.    The Plaintiffs’ allegation is
clear:    Rogers’ withdrawals from the Firm created a deficit in
his accounts and this deficit is an account receivable due to
the Firm under Paragraph  7.4, regardless of whether it is
charged to his capital or income account.
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Although the Plaintiffs adduced evidence to support the
allegations of their complaint, the circuit court neither made
factual findings as to the value of the partners’ respective
account balances nor directed the repayment of any excessive
withdrawals or distribution of any surplus.    Both the letter
opinion and the final order focus on the Plaintiffs’ obligation
to repay Rogers and his wife under the terms of their respective
notes and the Firm’s obligation to pay unpaid interest on the
partners’ equity.    Both are silent as to the value of the
principal balances of the partners’ accounts in the Firm,
whether the Firm had any surplus after the satisfaction of its
outstanding liabilities, if any, and whether any partner either
owed any amount to the Firm or was entitled to any distribution
from it.10
10 Rogers argued below that some portion of the amount by
which his accounts allegedly were overdrawn was attributable to
the partners’ agreement that the Firm’s entire operating loss
for  1999 should be charged to his accounts but that the
Plaintiffs had agreed that this one-time charge would not need
to be repaid.    The circuit court found there was no evidence of
an agreement by the partners that such a charge need not be
repaid and no party has assigned error to that finding.
However, the circuit court never determined whether Rogers’
accounts were in fact overdrawn or by what amount, whether he
had an obligation to repay any overdrawn balance to the Firm, or
how such a repayment would ultimately be distributed among the
partners during the settlement of their accounts required by
Code  §  50-73.123(B).    Similarly, the court never determined
whether the Plaintiffs’ respective accounts were in fact
underdrawn or by what amount, and whether they were entitled to
distributions of their respective balances.
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Accordingly, it is clear that the circuit court failed to
perform the accounting necessarily inherent in a winding up of
the Firm’s business and prerequisite to a settlement of its
accounts among the partners and its final judicial dissolution.
We therefore will vacate the court’s judgment insofar as it
fails to account for all the assets and liabilities of the Firm,
including the principal balances of each partner’s accounts, and
fails to provide for the distribution of any residual surplus.
We will remand the case for further proceedings consistent with
this opinion, including factual findings as to the satisfaction
of any outstanding liabilities of the Firm, the extent of any
residual surplus, the value of each partner’s accounts based on
his respective contributions and withdrawals, and the proportion
to which any partner either is liable to the Firm or is entitled
to a distribution from the Firm based on the provisions of the
partnership agreement.
III.    CONCLUSION
For the foregoing reasons, we will vacate the judgment of
the circuit court and remand for an accounting and settlement of
the Firm’s assets and liabilities.    We will affirm the portion
of the judgment awarding Rogers unpaid interest on his  $150,000
capital contribution to the Firm.
Affirmed in part,
vacated in part,
and remanded.
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