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it’s an assignment about chapter 40, (limited liability companies and limited partnerships).
1)first is an Case brief and the case name is Lach v. Man O’War, LLC. it should be in IRAC format. I attach the case and format detals below.
2)answering question number 9. only question number 9. ( I will attach the question below.)
without his consent on the grounds that the LLC’s
operating agreement requires both members to execute
all deeds and sale contracts. Chapman refuses to sign
the contract of sale or the deed. Comer argues that as
operating manager, he is fully authorized to execute the
contract. Do you think the court will find in favor of
Comer or Chapman?
7. Judith Carpenter was an experienced businesswoman
and served on the board of directors of a bank. In 1984,
Carpenter invested in Briargate Homes, a business that
owned several condominiums. She believed that Briar-
gate was a limited partnership and that she was a limited
partner. In fact, Briargate was a partnership and she was
a general partner. No attempt had been made to comply
with the North Carolina limited partnership statute. By
1987, Carpenter had possession of documents stating
that Briargate was a partnership and she a partner. As
an owner of condominiums, the partnership was liable to
the condominium association for assessments for mainte-
nance, repairs, and replacement of common areas in the
complex. In 1988, the partnership failed to pay $85,000
in assessments. The partnership and its partners were
sued by the condominium association. May Carpenter
escape liability on the assessment because she thought
she was a limited partner?
8. Virginia Partners Ltd., a limited partnership organized
in Florida, was in the business of drilling oil wells. When
Virginia Partners injected acid into an oil well in Ken-
tucky, a bystander, Robert Day, was injured by acid that
sprayed on him from a ruptured hose. Virginia Partners
had failed to register as a foreign limited partnership in
Kentucky. Are the limited partners of Virginia Partners
liable to Day for his injuries?
9. Brookside Realty Ltd. was a limited partnership. In the
limited partnership certificate filed with the secretary
of state, four of its limited partners agreed to make capi-
tal contributions and be liable for future assessments
in amounts ranging between $36,000 and $145,000.
Brookside failed to pay for material Builders Steel sold
to Brookside. Because the limited partners had not paid
all the assessments required by the limited partnership
certificate, Builders Steel claimed that it was entitled to
require the limited partners to pay those assessments
to the extent of the debt to Builders Steel. Did the
court agree?
10. Blinder, Robinson & Co., as limited partner, and Com-
bat Promotions Inc., as general partner, created Combat
Associates to promote an eight-round exhibition match
between Muhammad Ali and Lyle Alzado, the pro foot-
ball player. Combat Associates promised to pay Alzado
$100,000 for his participation in the match.
Combat Promotions was owned entirely by Alzado,
his accountant, and his professional agent.Alzado wasalso
vice president of Combat Promotions. Blinder, Robinson
used its Denver office as a ticket outlet for the match, gave
two parties to promote the match, and provided a meeting
room for Combat Associates’s meetings. Meyer Blinder,
president of Blinder, Robinson, personally appeared on
a TV talk show and gave TV interviews to promote the
match.
Few tickets were sold, and the match was a financial
debacle. Alzado received no payments for participating
in the match. Alzado sued Blinder, Robinson, claim-
ing that because it acted like a general partner, it had
the liability of a general partner. The case was decided
under the law of the RULPA. Was Blinder, Robinson
liable to Alzado? Would Blinder, Robinson be liable to
Alzado under the ULPA of 2001?
11. Joshua and Regan Bowers join Addison Barnes to
form a private equity limited partnership, Kestrel
Investment Partners LP. They plan to sell to wealthy
investors limited partnership interests totaling
$42 billion, investing the funds in small businesses
that need capital infusion and management assist-
ance to become highly successful businesses. Joshua,
Regan, and Addison also form an LLC, Kestrel
Management LLC, as the sole general partner of
Kestrel Investment Partners LP. Each of the three own
one-third of the LLC and hold equal management power
as managing members of the LLC. In effect, through the
LLC, the three control the management of the limited
partnership. Are the three, therefore, general partners of
the limited partnership? Do they have unlimited liability
for the limited partnership’s obligations?To brief cases, use the following “IRAC” format:
(Before the issue, write a brief summary of the facts of the case in your own words. End the facts
section by explaining where the case is in the court system. Example: The trial court ruled against the
plaintiff, who then appealed.)
Issue: What question must be answered in order to reach a conclusion in the case? This should be a
legal question which, when answered, gives a result in the particular case. Make it specific (e.g. “Has
there been a false imprisonment if the plaintiff was asleep at the time of ‘confinement’?”) rather
than general (e.g. “Will the plaintiff be successful?”) You may make it referable to the specific case
being briefed (e.g. “Did Miller owe a duty of care to Osco, Inc.?”) or which can apply to all cases
which present a similar question, (e.g. “Is a duty owed whenever there is an employment
relationship?”) Most cases present one issue. If there is more than one issue, list all, and give rules
for all issues raised.
Rule: The rule is the law which applies to the issue. It should be stated as a general principal, (e.g. A duty
of care is owed whenever the defendant should anticipate that her conduct could create a risk of
harm to the plaintiff) not a conclusion to the particular case being briefed, (e.g. “The defendant was
negligent”). Here you should use the precise language as stated by the Court.
Application: The application is a discussion of how the rule applies to the facts of a particular case.
While the issue and rule are normally only one sentence each, the application is normally paragraphs
long. It should be a written debate – not simply a statement of the conclusion. Whenever possible,
present both sides of any issue. Do not begin with your conclusion. The application shows how you
are able to reason on paper and is the most difficult (and, on exams, the most important) skill you
will learn. This section should be written in your own words. Here you should be a reporter,
explaining to your reader the analysis the Court went through in coming to its conclusion.
Conclusion: What was the result of the case?Chapter Forty Limited Liability Companies and Limited Partnerships
40-19
and (3) to manage the partnership business in all aspects, which
should include, but should not be limited to… take such other
action, execute and deliver such other documents, and perform
such other acts as the general partners may deem necessary,
appropriate, or incidental to carrying out the business and affairs
of the partnership.” In this regard, they seek to distinguish Mist
Properties, Inc. v. Fitzsimmons Realty Co., 228 N.Y.S.2d 406 (Sup.
Ct. 1962), in which the court approved the general partner’s
transfer of title to property owned by the limited partnership as
against the claim of the receiver, because the limited partnership
agreement allowed the general partners to do so.
Mist Properties, Inc., however, had a partnership agreement that
gave the general partners the specific power to sell all of the part-
nership’s property, subject to written approval of sixty-five percent
of the limited partners. “There clearly appears to have been no viola-
tion of the statute since the conveyance was not without the written
consent of the limited partners but was specifically contemplated
and provided for by the agreement.” Id. at 410. As the court rec-
ognized therein, the agreement the partners had made with them-
selves through their partnership agreement controlled. “There is no
intervening public policy which prevents persons dealing at arm’s
length from entering into an agreement such as set forth above. It
has been repeatedly held that where a limited partnership agree-
ment has been entered into the partners cannot, inter se, set up that
their rights are not governed thereby….” Id. at 410.
Simply put, we find that the general partners’ rights under
the partnership agreement to (1) terminate the partnership at
any time upon agreement of the general partners, and (2) to act
upon behalf of the Partnership in matters that are “necessary,
appropriate, or incidental to carry out its business,” can be not
construed to allow them the power to transform the partnership
into a limited liability company, in order to favor a majority of
the partners in their selection, or substitution, of the general part-
ners/managers of the business, without the approval of all the
limited partners.
We therefore conclude that the transfer of the partnership assets
to the LLC was in violation of KRS 362.490 and thus a breach of the
general partners’ fiduciary duty to the non-consenting limited partner.
Judgment reversed in favor of Lach.
The Global Business Environment
Limited Partnerships in Other Countries
All modern commercial countries permit the creation
of limited partnerships, but almost none allow the
creation of LLLPs. England and its former colonies, including the
These business forms are mostly identical to American
limited partnerships, having general partners who man-
age the business and possess unlimited liability and lim-
ited partners who may not manage and are granted limited
liability Most countries also permit the partners to restrict.KRS 275.370 provides, in pertinent part:
(1) A partnership or limited partnership may be converted to
a limited liability company pursuant to this section.
(2) The terms and conditions of a conversion of a partnership
or limited partnership to a limited liability company shall, in
the case of a partnership, be approved by all the partners or by
a number or percentage specified for conversion in the part-
nership agreement or, in the case of a limited partnership, by
all the partners, notwithstanding any provision to the contrary
in the limited partnership agreement.
While conceding that the statute, in this instance, requires the
approval of all the limited partners before a limited partnership
can be converted into a limited liability company, the LLC and
Wiseman argue that the transformation constituted a “reorganiz-
ation,” not a “conversion” as envisioned under KRS 275.370(1).
They illustrate their distinction of the word “conversion,” by
pointing out that the statute envisions a limited partnership
redesignating itself as a limited liability company, whereas, in this
instance, the limited liability company was created separately
and existed concurrently with the Partnership (albeit without
any assets). Thus, the fact that the LLC acquired all the assets
of the Partnership and the Partnership then dissolved is simply
immaterial.
KRS 275.375(1) acknowledges that “[a] partnership or lim-
ited partnership that has been converted pursuant to this chapter
shall be for all purposes the same entity that existed before the
conversion.” KRS 275.375(2) recognizes that the property “shall
remain vested in the converted [business entity]… [and] [a]ll
obligations of the converting. . . limited partnership shall con-
tinue as obligations of the converted [business entity].” (Empha-
sis added.) All of which seem to confirm the LLC and Wiseman’s
argument that a “conversion” involves only one entity changing
its legal form pursuant to statutory authorizations, rather than
through interaction between two entities.
Looking at subsequent statutes for what light they cast on the ques-
tion, we note that the Kentucky Legislature adopted the new Kentucky
Uniform Limited Partnership Act in 2006. KRS 362.2-102, et. seq.
This Act was adopted, with some changes, from the Uniform Limited
Partnership Act (2001). The Act specifically provides “[i]n applying
and construing this uniform act, consideration shall be given to the
need to promote uniformity of the law with respect to its subject mat-
ter among states that enact it.” KRS 362.2-1201.
When the need for uniformity is acknowledged, courts may
consider the “Official Comments” to a Uniform Act, even where
they have not been officially adopted. Looking at the Official
Comments to § 1102 of the Uniform Limited Partnership Act,
which, with changes, corresponds to KRS 362.2-1102, the Com-
ment acknowledges, “[i]n contrast to a merger, which involves at
least two entities, a conversion involves only one. The converting
and converted organizations are the same entity.” Unif. Limited
Partnership Act § 1102-1105, GA U.L.A. 107 (2006).
Having thus considered the statutory scheme, its particular
language, the subsequent statute and Official Comments, we
answer the question that was presented to us-that the restructur-
ing of the business form of the Partnership, to that of the LLC,
in this instance, was not a conversion under, or subject to, KRS
275.370, for reasons that a conversion deals only with one entity.
We have not been asked, nor have we considered, whether the
restructuring of the Partnership into the LLC constituted a mer-
ger, pursuant to KRS 362.531.
Under Kentucky law, partners owe the utmost good faith to
each and every other partner. The scope of the fiduciary duty
has been variously defined as one requiring utter good faith or
honesty, loyalty or obedience, as well as candor, due care, and fair
dealing. Indeed, it has often been said, there is no relation of trust
or confidence known to law that requires of the parties a higher
degree of good faith than that of a partnership. Thus, the doing of
an act proscribed by law is a breach of that duty.
KRS 362.490 provides, in pertinent part:
A general partner shall have all the rights and powers and be
subject to all the restrictions and liabilities of a partner in a
partnership without limited partners, except that without the
written consent or ratification of the specific act by all the
limited partners, a general partner or all the general partners
have no authority to
(2) do any act which would make it impossible to carry on the
ordinary business of the partnership.
The LLC and Wiseman argue that Miller and Wiseman had
the authority to perform all the acts constituting the restructuring
without Lach’s consent because they did not make it impossible
to carry on the business of the partnership. They assert, it was
the only act which made it possible to carry on the business of the
partnership; suggesting that Lach would, by virtue of her right of
rejection, have destroyed the partnership’s business, something
she hadn’t done for the previous sixteen years. Moreover, the fact
that a limited partner with significant ownership interests in a
limited partnership would object to a transaction which would
deprive her of her say in who might be able to successfully man-
age her business interest as a general partner, in return for a min-
ority voting, or for that fact, a non-voting interest, in a limited
liability company controlled by a majority vote, is not evidence
that such limited partner has an interest in destroying the busi-
ness, including the value of her interest therein.
They further argue that under the certificate of partnership
and partnership agreement, the general partners had the absolute
right to “(1) terminate the partnership, (2) execute documents
agreements, contracts, leases, etc., on behalf of the partnership,Lach v. Man O’War, LLC
256 S.W.3d 563 (Ky. Sup. Ct. 2008)
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7
In 1986, Shirley Lach and her then husband, Lynwood Wiseman, formed Man O’War Limited Partnership for the purpose of leasing
real property and developing and operating shopping centers. Robert Miller became a general partner along with Wiseman. Lach was one of
eight limited partners. The partners’ ownership percentages were Robert Miller, 1 percent; Wiseman, 32 percent; Lach, 27 percent; Jonathan
Miller, 9 percent; Harry B. Miller, 12 percent; Harvey Morgan, 1 percent; Penny Miller, 3 percent; Jeffery Mullens, 1 percent; Jennifer Miller,
9 percent; and Sophie Wiseman, 5 percent. Wiseman, Lach, and Robert Miller also formed M.O.W. Place Ltd. to lease a shopping center
from the joint venture. In 1988, Wiseman and Lach were divorced but continued in business together.
In the spring of 2002, Robert Miller became ill with cancer. With his approaching death, he met with Lach concerning the shopping
center. Miller asked Lach to agree to naming Wiseman, Jeffery Mullens (brother-in-law of Robert Miller), and Jonathan Miller (son of
Robert Miller) as the new general partners of the Partnership. Under the original Partnership agreement, new general partners could
not be added without the consent of all the partners. Robert Miller also asked Lach to agree that when Wiseman died, the two remain-
ing general partners would select a new general partner. Lach objected because it would allow the Miller family, which owned less than
Lach’s individual interest, to manage and control the shopping center. The Millers would have two of the three general partners while
Wiseman, who was then of advancing age, was alive. Upon his death, Jonathan Miller and Jeffery Mullens would then select the third
general partner. Lach proposed substituting her daughter, Sherri McVay, an attorney, as a general partner in place of Jeffery Mullens.
Her proposal was rejected.
Robert Miller and Wiseman then sought to restructure the business form of the partnership to eliminate the need for Lach’s consent
to the proposed management change. They formed a new business entity, Man O’War Limited Liability Company. When operational,
the LLC would be manager-managed and controlled only by a majority vote of the owners. The initial managers were to be Wiseman,
Jonathan Miller, and Jeffery Mullens.
After forming the LLC, Robert Miller and Wiseman dissolved the Partnership, distributing its assets (the ownership of the LLC) to
the partners in identical proportions to their previous ownership of the Partnership, that is-with one catch. Unless a partner signed the
documents validating the restructuring, that partner would have no voting rights in the LLC. All the partners except Lach signed the
agreement, leaving only Lach without any voting rights.
Lach then sued the LLC and Wiseman, among others. She asked the court to set aside the transfer of Partnership assets to the LLC on the
grounds that the transfer and the Partnership’s subsequent termination was a violation of KRS 362.490 and a breach by the general partners
of their fiduciary duty to the Partnership and Lach. The trial court found for the LLC and Wiseman, granting them summary judgment. The
Kentucky appellate court affirmed the trial court’s decision. Lach appealed to the Supreme Court of Kentucky.
Scott, Justice
Lach argues that the restructuring of the Partnership business
form was invalid without her consent for two reasons: (1) the
restructuring was a conversion in violation of KRS 275.370, and
(2) the restructuring made it impossible for the Partnership to
carry on its business in violation of KRS 362.490.
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