Ramsey County District Court File No. C2-03-003917.
Considered and decided by Wright , Presiding Judge; Kalitowski , Judge;
and Parker , Judge.
A removed general partner does not have standing to bring a derivative action under the limited partnership agreement or the uniform limited partnership act.
The opinion of the court was delivered by: Parker, Judge
Appellant challenges the district court's decision to grant summary judgment to respondent on the basis that appellant lacked standing to bring the action in district court. We affirm.
The parties entered into a limited partnership agreement forming Nina Properties in 1981. The partnership agreement designated respondent Dorothy Rittenhouse as limited partner and her daughter, appellant Terry Gale (formerly Terry Rittenhouse), as general partner. The partnership agreement provided that "[a] General Partner may be removed from the Partnership as General Partner, with or without cause, upon the majority vote of the Limited Partners[ ]... the General Partner may be replaced by a vote of a majority in interest of the Limited Partners." On July 22, 2002, Rittenhouse, the sole limited partner, voted to remove Gale as general partner effective August 10, 2002. Gale received a copy of the vote informing her that Rittenhouse voted to remove her as general partner. On September 6, Rittenhouse appointed SAM Group, LLC as replacement general partner effective August 10. Under the partnership agreement,
[I]f a replacement General Partner has been appointed, the departing General Partner shall sell its Partnership interest to the replacement General Partner at a purchase price based on the fair market value.... The fair market value shall be determined by agreement between the departing General Partner and the replacement General Partner within 90 days of departure, or if no agreement is reached, it shall be determined upon arbitration.
SAM offered to purchase Gale's partnership interest, but Gale declined the offer and presented a counteroffer. The parties attempted unsuccessfully to reach an agreement in January 2003, well over 90 days after Gale's departure on August 10, 2002. But neither party initiated arbitration proceedings.
Gale filed a complaint alleging that (1) the partnership was dissolved in either 1997 or 2002 and (2) she is entitled to 50% interest in the partnership's assets. Rittenhouse filed a counterclaim alleging that Gale waived her right to arbitrate the fair market value of her interest in the partnership by filing a civil action in district court. Both parties moved for summary judgment. The district court concluded that Gale had not waived her right to arbitrate the fair market value of her partnership interest and granted summary judgment in favor of Gale on Rittenhouse's counterclaim. The district court also granted summary judgment in favor of Rittenhouse on Gale's complaint, ...