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Keywords

motionwillpartnershipmotion to dismiss

contractpartnershipcorporation

Related Cases

Hillman v. Hillman, 910 A.2d 262

Facts

Howard B. Hillman, the former general partner of Venhill Limited Partnership, was removed from his position by the limited partners, who held 99% of the partnership interests. Following his removal, Hillman attempted to convert his 1% interest into a limited partner interest, claiming he complied with the partnership agreement. The limited partners and the new general partner, William J. Stallkamp, moved to dismiss Hillman's claims, arguing he did not have the right to convert his interest and lacked standing to bring claims against them.

The following facts are drawn from Howard's amended complaint. Venhill was formed in 1984. Venhill's purpose is 'the acquisition, ownership, investment in, and disposition of personal and/or real property of all kinds, including but not limited to providing capital to corporations, partnerships, and joint ventures….'

Issue

Did the Limited Partnership Agreement permit Howard to elect to become a limited partner after being removed as general partner, and did he have standing to pursue claims against the limited partners and the new general partner?

The first, and central, question is whether the Limited Partnership Agreement permitted Howard to elect, after being removed, to become a limited partner.

Rule

The court applied the plain terms of the Limited Partnership Agreement, which specified that a general partner removed under certain provisions does not have the right to elect to become a limited partner. Additionally, the court referenced the Delaware Revised Uniform Limited Partnership Act regarding the rights of partners upon withdrawal.

By the plain terms of the Limited Partnership Agreement, upon his removal as general partner, Howard was deprived of any option to become a limited partner.

Analysis

The court found that the language of the Limited Partnership Agreement clearly indicated that Howard's removal as general partner under § 15.2 did not grant him the right to elect to become a limited partner as outlined in § 15.3. The court emphasized that the agreement's provisions were distinct and that Howard's interpretation was unsupported by the text. Consequently, since he was not a limited partner, he lacked standing to pursue claims against the limited partners and the new general partner.

The problem for Howard, then, is that he was removed pursuant to § 15.2, and a general partner removed pursuant to § 15.2 is not provided with right to elect to become a limited partner under § 15.3.

Conclusion

The court granted the motion to dismiss, concluding that Howard did not have the right to convert his interest into a limited partner interest and lacked standing to bring his claims.

Therefore, Count I is dismissed.

Who won?

The limited partners and the new general partner prevailed because the court found that the former general partner did not have the right to elect to become a limited partner and lacked standing to pursue his claims.

The Limited Partners and Stallkamp have moved to dismiss all counts of the amended complaint because they assert that Howard did not have the contractual right to convert his former general partnership interest in Venhill into a limited partnership interest when he was removed as general partner.

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