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Keywords

plaintiffdefendantstatutemotionfiduciarypartnershipstatute of limitationsfiduciary dutybreach of fiduciary dutymotion to dismiss
plaintiffdefendantstatutemotionfiduciarypartnershipstatute of limitationsfiduciary dutybreach of fiduciary dutymotion to dismiss

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In re Dean Witter Partnership Litigation, Not Reported in A.2d, 1998 WL 442456, 24 Del. J. Corp. L. 203

Facts

The plaintiffs, investors in several limited partnerships sold by Dean Witter Reynolds, alleged that the defendants breached their fiduciary duties by misrepresenting the risks and financial conditions of the partnerships. The partnerships were marketed and sold from 1984 to 1989, and the plaintiffs claimed they relied on the defendants' assurances regarding the safety and profitability of their investments. However, the plaintiffs were aware of significant losses and issues with the partnerships well before they filed their complaints in 1996.

Plaintiffs are customers of Dean Witter Reynolds, who between 1984 and 1989, purchased from Dean Witter Reynolds units of the following limited partnerships: Dean Witter Realty Income Partnership I, L.P. (“Income I”); Dean Witter Realty Income Partnership II, L.P. (“Income II”); Dean Witter Realty Yield Income Partnership III, L.P. (“Income III”); Dean Witter Realty Income Partnership IV, L.P. (“Income IV”); Dean Witter Realty Yield Plus, L.P. (“Yield Plus”); Dean Witter Realty Yield Plus II, L.P. (“Yield Plus II”); Dean Witter Realty Growth Properties, L.P. (“Growth Properties”); and Falcon Classic Cable Income Properties, L.P. (“Falcon Classic Cable”).

Issue

Whether the plaintiffs' claims for breach of fiduciary duty were barred by the statute of limitations.

Whether the plaintiffs' claims for breach of fiduciary duty were barred by the statute of limitations.

Rule

Under Delaware law, a three-year statute of limitations applies to claims for breach of fiduciary duty, and the statute begins to run at the time of the alleged wrongful act, even if the plaintiff is unaware of the cause of action.

It is well-settled under Delaware law that a three-year statute of limitations applies to claims for breach of fiduciary duty.

Analysis

The court determined that the plaintiffs were on inquiry notice of their claims long before the statute of limitations expired. The information available in annual reports and other disclosures indicated that the partnerships were not performing as promised, which should have prompted the plaintiffs to investigate further. The court concluded that the plaintiffs' reliance on the defendants' representations was unreasonable given the contradictory information they received.

On the basis of this record, I conclude that the information in the annual reports alone should have provided plaintiffs with adequate notice of any alleged misconduct by defendants.

Conclusion

The court granted the defendants' motion to dismiss, ruling that the plaintiffs' claims were time-barred by the statute of limitations.

For these reasons, I grant defendants' motion to dismiss on the ground that the plaintiffs' claims are time-barred by operation of the statute of limitations.

Who won?

Defendants prevailed in the case because the court found that the plaintiffs' claims were barred by the statute of limitations due to their prior knowledge of the alleged wrongs.

Defendants prevailed in the case because the court found that the plaintiffs' claims were barred by the statute of limitations due to their prior knowledge of the alleged wrongs.

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