Wash. Court of Appeals published opinion — 323820.opn.pdf

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No. 32382-0-111

SIDDOWAY, C.J. (dissenting) The initial decision of the administrative law

judge (ALI) in this matter, which the commissioner ofthe Department of Employment

Security adopted and the Superior Court then affirmed, was not based on the ALl's

resolution of factual disputes. It was based on four legal conclusions urged by the

department: (1) that the written employment agreements entered into at the time Dr.

Armand DeFelice's daughters joined his practice could not be replaced years later by a

partnership relationship without terminating the employment agreements in writing; (2)

that the Washington revised Uniform Limited Partnership Act (RUPA), chapter 25.05

RCW, mandates precisely equal profit sharing among partners; (3) that the RUPA

mandates an agreement to share all losses equally; and (4) that the conduct of business by

three professionals in a form other than a partnership, standing alone, supports the

conclusion that they are not partners.

The four legal conclusions were in error, and under the Administrative Procedure

Act, a court shall grant relief from an agency order in an adjudicative proceeding if it

determines that the agency has erroneously interpreted or applied the law. RCW

34.05.570(3)(d). The decision ofthe commissioner should be reversed.

The Department ofEmployment Security's assessment was based on
, form, not substance.

Department tax specialist Angela Hughes assumed upon beginning her audit of the

DeFelice Dentistry practice that it was a sole proprietorship because Dr. Armand

DeFelice v. Emp '( Sec. Dep '(
No. 32382-0-111- dissent

DeFelice (whom 1 will refer to hereafter as "Dr. Armand" for purposes of clarity, as the