File: 051471F - From documents transmitted: 08/16/2007
VACATED and DISMISSED; Opinion Filed August 16, 2007.
In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-05-01471-CV
............................
OAIC COMMERCIAL ASSETS, L.L.C., Appellant/Cross-Appellee
V.
STONEGATE VILLAGE, L.P., Cross-Appellant;
CAWC FINANCIAL, INC., Appellee/Cross-Appellant;
and LARRY B. WHITE, Appellee
.............................................................
On Appeal from the 116th District Court
Dallas County, Texas
Trial Court Cause No. 01-03277-F
.............................................................
OPINION
Before Justices Wright, Richter, and Lang
Opinion By Justice Lang
This
case involves a dispute respecting the ownership and operation of a
limited partnership, Stonegate Village, L.P. (“Stonegate”). At the trial court, OAIC Commercial
Assets, L.L.C. (“OAIC”), recovered judgment in the amount of $1,703,615 in damages and
$400,000 in attorney's fees against Stonegate and CAWC Financial, Inc. (“CAWC”), for
various claims based upon a limited partnership agreement (the “agreement”) respecting
Stonegate. OAIC appealed, complaining of the denial of two of its claims by the trial court
against CAWC and Larry B. White (“White”), the principal of CAWC. Before us, appellees
Stonegate and CAWC raise several cross- points. See Footnote 1
We focus upon OAIC's claimed status as an “unadmitted assignee”of an
original limited partner's interest as defined by the agreement. That status of “unadmitted
assignee” is pivotal regarding OAIC's standing to bring suit against appellees. For the reasons
set forth below, we vacate the trial court's judgment and dismiss this case because, on this
record, OAIC is not an “unadmitted assignee” under the agreement and, therefore, lacks
standing to bring its actions against appellees.
I. SUMMARY OF THE CLAIMS AND STANDING ISSUE
At
the heart of its claims, OAIC contends it was denied the return on its
capital investment to which it was entitled because it was a purchaser of a limited partner's interest or,
alternatively, a limited partner's assignee under the agreement. According to OAIC, it was
injured by the wrongful acts of CAWC, the general partner of Stonegate, and White, and was
damaged in the amount of at least $10,430,502.94.
After
a trial on the merits to the court, the trial court ruled in favor of
OAIC on its claims for breach of contract and attorney's fees. In addition, pursuant to OAIC's claims for
declaratory relief, the trial court: (1) declared OAIC a limited partner in Stonegate; (2)
appointed OAIC liquidator of Stonegate; and (3) affirmed its partial summary judgment that
OAIC, “with the status of at least an unadmitted assignee” in Stonegate, is entitled to all
distributions related to the interest of OAIC's assignor. OAIC's claims for breach of fiduciary
duty and conspiracy to breach fiduciary duty against CAWC and White were denied. Both sides
appeal the trial court's judgment.
On appeal, OAIC contends the trial court erred in denying its claims for breach
of fiduciary duty and conspiracy to breach fiduciary duty because CAWC and White owed a
fiduciary duty to OAIC as a limited partner, an unadmitted assignee, and/or the purchaser of an
interest in Stonegate. OAIC asserts that duty was breached when CAWC and White, working
in concert, “drained partnership assets” without paying OAIC the return to which it was
entitled under the agreement.
Pivotal to our disposition of this case is appellees' position that OAIC lacks
standing. Stonegate, CAWC, and White assert, inter alia, that OAIC lacked standing to bring its
claims because, pursuant to the terms of the agreement, OAIC was not a limited partner in
Stonegate, an unadmitted assignee, or “an assignee of any kind.” See Footnote 2
We conclude there is no evidence in the record to support OAIC's claim and
the trial court's judgment that, pursuant to the agreement, OAIC is “at least an unadmitted
assignee” in Stonegate or “a limited partner, an unadmitted assignee, and/or the purchaser of
[an interest in Stonegate].”
Therefore, OAIC lacks standing to bring any of its claims against appellees. Based upon those
conclusions, we vacate the trial court's judgment and dismiss OAIC's claims for lack of subject-
matter jurisdiction.
II. FACTUAL AND PROCEDURAL BACKGROUND
A. Events Giving Rise to This Action
Stonegate, a Georgia limited partnership, was formed in April 1998 for the
purpose of constructing and operating an apartment complex, Stonegate Village Apartments, in
Chandler, Arizona. CAWC, a Texas corporation, served as general partner. At the time of the
partnership's formation, the limited partners were Frey Ventures, L.L.C. (“Frey”), an Arizona
limited liability company; CAWC/Stonegate Partners, L.P. (“CAWC/Stonegate”), a Texas
limited partnership; and AFC Equities, L.P. (“AFC”), a Georgia limited partnership. Stonegate
was owned 1% by CAWC, 1% by AFC, 16% by Frey, and 83% by CAWC/Stonegate.
Pursuant to the terms of the agreement, Stonegate borrowed $14 million from
First American Bank of Texas to finance construction of the apartment complex. Stonegate
granted a first lien against the apartment complex to secure the loan. In 1999 and 2000,
Stonegate borrowed $1,158,349.31 pursuant to twenty-eight additional loans (the “second lien
loans”) which were secured by liens junior to the first lien granted to First American Bank of
Texas.
AFC purported to transfer its interest in Stonegate to OAIC, a Florida limited
liability company, effective January 18, 2000. See Footnote 3 According to an April
12, 2001 “Officer's Certificate and Release Agreement” executed by AFC's parent
corporation, a “certificate of termination of AFC” was filed with the Georgia Secretary of
State in November 2000. On March 22, 2001, Stonegate received a letter signed by attorney
Steven Chantelois, deputy general counsel of AFC's parent corporation. According to OAIC,
the letter met the agreement's requirement contained in section 9.3(d) that “the transferor shall
provide an opinion of counsel satisfactory to the Partnership, to the effect that the Transfer is
exempt from applicable registration requirements and will not violate any applicable laws
regulating the Transfer of securities.” The letter stated in relevant part:
You have asked us to provide you with our legal opinion as to whether the
offering and sale of AFC Equities, L.P.'s limited partnership interests in Stonegate Village, L.P.
(The “Interest”), as described in that Sale and Assignment Agreement (the “Sale
Agreement”) dated January 18, 2000, is exempt from applicable registration requirements and
not in violation of the applicable laws regulating the Transfer of securities.
. . . .
Based on and subject to the foregoing assumptions, we are of the opinion that
the offering and sale of the Interests from AFC Equities, L.P. to OAIC-Commercial Assets, Inc.
is exempt from registration under the Securities Act of 1933 and not otherwise in violation of
the applicable laws regulating the Transfer of securities.
. . . .
This opinion is delivered to you for the sole purpose of admitting
OAIC-Commercial Assets, Inc. as a Limited Partner in Stonegate Village, L.P. and may not be
delivered to or relied upon by any other party without prior written consent.
In April 2001, Stonegate transferred ownership of the apartment complex to
Stonegate Chandler Village
Holdings, L.L.C. (“Stonegate Chandler”), a holding company solely owned
by Stonegate, in return for a membership interest in Stonegate
Chandler. On April 24, 2001, Stonegate Chandler obtained financing from
General Electric Credit Corporation (“GECC”) to pay the first lien
loan, the second lien loans, and closing costs associated with the
transaction. Stonegate Chandler filed for bankruptcy in Texas on
September 29, 2003. In May 2004, the bankruptcy court ordered a sale of
the apartment complex. The $18,999,000.00 proceeds from the sale are
currently under control of the bankruptcy
court.
B. The Parties' Claims
On
April 20, 2001, OAIC filed this action.
OAIC contended in relevant part that, in consideration for a cash investment contributed by AFC to Stonegate,
AFC, and hence, OAIC, as AFC's assignee, was entitled, pursuant to the agreement, to be paid
“a preferred return prior to any distributions being made to the other partners (the 'Preferred
Return').” Further, according to OAIC, “On or about January 18, 2000, AFC sold and
assigned all of its Interest (the 'AFC Interest') in Stonegate Village to OAIC . . . for an assigned
price of $4,105,215.” OAIC contends in its fifth amended original petition, “Pursuant to
Section 9.2(a) of the Partnership Agreement, AFC had the absolute right to transfer all or any
portion of its ownership Interest, including all or part of its right to the Preferred Return.”
(emphasis original).
According to OAIC, the unauthorized acts of the defendants “deferred
indefinitely, and effectively eliminated, the Preferred Return to be paid on the AFC Interest and
eliminated the approval protection rights granted to the AFC Interest” in the agreement.
Specifically, OAIC contended defendants used excess cash from the GECC loan to pay off
unauthorized loans secured by second liens wrongfully placed against the apartment complex.
Further, OAIC asserted defendants breached the agreement by failing to fund construction
overruns and cash flow deficits in accordance with the agreement and by conveying the
apartment complex, without the consent of OAIC, to Stonegate Chandler.
In their answers, Stonegate, CAWC, and White (“defendants”) generally
denied OAIC's allegations, asserted counterclaims for breach of the agreement and attorney's
fees, and contended OAIC is not entitled to recover in this lawsuit because it lacked standing to
sue.
In their second plea to the jurisdiction, See Footnote 4 defendants
contended, “It is undisputed that prior to the attempted transfer of its interest to [OAIC], AFC
did not provide any securities opinion to the partnership pursuant to ¶ 9.3(d) of the partnership
agreement.” Therefore, defendants argued, there was “no valid assignment” to OAIC of
AFC's rights or interest in the partnership and “OAIC does not have STANDING to assert its
claims because, OAIC is not a substitute limited partner and is not a transferee.” (emphasis
original). Defendant's second plea to the jurisdiction was denied on November 9, 2004.
OAIC denied that consent of CAWC and CAWC Stonegate was required
with respect to the assignment of AFC's interest to OAIC. However, OAIC asserted that if
such consent was required, CAWC and CAWC Stonegate, through their unauthorized actions,
were “defaulting partners,” as defined by the agreement, on the date of the purported transfer.
Therefore, pursuant to the agreement, they were not entitled to vote on any matter related to the
partnership, and the transfer was recognized as valid by the only remaining voting partner,
AFC. See Footnote 5
C. Partial Summary Judgment in Favor of OAIC
The trial court granted OAIC's motion for partial summary judgment. Certain
findings, relevant to our discussion, were made by the trial court in the order granting partial
summary judgment. Finding number 3 states, “[W]ith the status of at least an unadmitted
assignee, OAIC is entitled to all of the distributions related to the AFC Interest, including the
amounts due on the AFC Preferred Return.”
D. Final Judgment on the Merits
Following
a six-day bench trial on the remaining issues, the trial court rendered
a final judgment in which the court declared OAIC “was a limited partner in Stonegate Village,
L.P. as of March 22, 2001.” Further, the court ordered OAIC recover from defendants
Stonegate and CAWC $1,703,615.00 in damages for breach of contract and $400,000.00 in
attorney's fees, but “take nothing by its causes of action for breach of fiduciary duty and
conspiracy to breach fiduciary duty against Defendants CAWC Financial, Inc., and Larry White,
Individually.” In addition, the court appointed OAIC liquidator of Stonegate and stated that its
partial summary judgment was “merged into and affirmed in this Final Judgment.” Defendants'
counterclaim was denied.
In response to a request from Stonegate and CAWC, the trial court issued
findings of fact and conclusions of law. The trial court stated, in its findings of fact numbers 8 and
23, that OAIC was at least “an unadmitted assignee” in Stonegate. In finding of fact number 7,
the trial court found, “OAIC Commercial Assets, L.L.C. (“OAIC”), is the owner of all of the
AFC Equities interest in Stonegate.” Then, in conclusion of law number 5, the trial court stated
that “OAIC was a limited partner in Stonegate as of March 22, 2001.” We focus upon these
findings in determining standing. This appeal followed.
III. DETERMINATION OF STANDING
Because the determination of OAIC's issues is dependent on our resolution of
appellees' first cross-point respecting whether OAIC has standing to bring its claims, we address
that cross-point at the outset.
A. Standard of Review
Standing, a necessary component of subject-matter jurisdiction, is a
constitutional prerequisite to maintaining a suit under Texas law. Tex. Ass'n of Bus. v. Tex. Air
Control Bd., 852 S.W.2d 440, 444 (Tex. 1993). As a necessary component of a court's
subject-matter jurisdiction, standing cannot be waived and can be raised for the first time on
appeal. Id. at 445-46. Appellate courts are obligated to review sua sponte issues affecting
jurisdiction. M.O. Dental Lab v. Rape, 139 S.W.3d 671, 673 (Tex. 2004). See also Bowles
v. Wade, 913 S.W.2d 644, 647 (Tex. App.-Dallas 1995, writ denied); Centurion Planning
Corp., Inc. v. Seabrook Venture II, 176 S.W.3d 498, 508 (Tex. App.-Houston [1st Dist.]
2004, no pet.).
Whether
a trial court has subject-matter jurisdiction is a question of law that
is reviewed de novo. See Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).
To have standing, the pleader bears the burden of alleging facts that affirmatively demonstrate the
court's jurisdiction to hear the cause. Tex. Air Control Bd., 852 S.W.2d at 446. We review the
pleadings and the entire record to determine if there is evidence establishing subject-matter
jurisdiction. Dallas County Appraisal Dist. v. Funds Recovery, 887 S.W.2d 465, 469 (Tex.
App.-Dallas 1994, writ denied).
In
an appeal from a bench trial, findings of fact carry the same weight as
a jury verdict. Walker v. Cotter Prop., Inc., 181 S.W.3d 895, 899 (Tex. App.-Dallas 2006, no
pet.). Unchallenged findings of fact are conclusive on appeal unless the contrary is established as
a matter or law or there is no evidence to support the findings. Toles v. Toles, 45 S.W.3d 252,
265 n.6 (Tex. App.-Dallas 2001, pet. denied) (citing McGalliard v. Kuhlmann, 722 S.W.2d
694, 696 (Tex. 1986)). Where an appellant attacks the trial court's findings of fact on legal or
factual sufficiency grounds, the applicable standard of review is the same as that to be applied in
the review of jury findings. Walker, 181 S.W.3d at 899. In evaluating the legal sufficiency of the
evidence to support a finding, we must determine whether the evidence as a whole rises to a
level that would enable reasonable and fair-minded people to differ in their conclusions.
Columbia Med. Ctr. Subsidiary, L.P. v. Meier, 198 S.W.3d 408, 414 (Tex. App.-Dallas
2006, pet. denied) (citing City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005)).
Anything more than a scintilla of evidence is legally sufficient to support a challenged finding.
Walker, 181 S.W.3d at 899. More than a scintilla of evidence exists if the evidence furnishes
some reasonable basis for differing conclusions by reasonable minds about the existence of some
vital fact. Id.
We review the trial court's conclusions of law de novo to determine whether
they are correct. See McIntyre v. Comm'n for Lawyer Discipline, 169 S.W.3d 803, 806
(Tex.App.-Dallas 2005, pet. denied); Travelers Indem. Co. of Rhode Island v. Starkey, 157
S.W.3d 899, 906 (Tex. App.-Dallas 2005, pet. denied). Conclusions of law must be upheld on
appeal if any legal theory supported by the evidence sustains the judgment, and will be reversed
only if the conclusions are erroneous as a matter of law. See McIntyre, 169 S.W.3d at 807.
B. Applicable Law
1. Standing, Generally
In Texas, the standing doctrine requires that (1) there be “a real controversy
between the parties,” and (2) that real controversy “will be actually determined by the judicial
declaration sought.” Nootsie, Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659,
662 (Tex. 1996) (quoting Tex. Air Control Bd., 852 S.W.2d at 446). “The issue of standing
focuses on whether a party has a sufficient relationship with the lawsuit so as to have a
'justiciable interest' in its outcome.” Austin Nursing Ctr. v. Lovato, 171 S.W.3d 845, 848
(Tex. 2005) (quoting 6A Charles Alan Wright, Arthur R. Miller, and Mary Kay Kane, Wright,
Miller & Kane, Federal Practice and Procedure: Civil 2d § 1559, 441 (2d ed. 1990)).
“The determination of whether a plaintiff possesses standing to assert a particular claim depends
on the facts pleaded and the cause of action asserted.” Everett v. TK-Taito, L.L.C., 178
S.W.3d 844, 853 (Tex. App.-Fort Worth 2005, no pet.). See also M.D. Anderson Cancer
Ctr. v. Novak, 52 S.W.3d 704, 707-08 (Tex. 2001) (analyzing standing in the context of
asserted claim).
When standing has been statutorily conferred, the statute itself serves as the
proper framework for a standing analysis. Everett, 178 S.W.3d at 851. The plaintiff must allege
and show how he has been injured or wronged within the parameters of the language used in the
statute. Id.
2. Construction of the Agreement
The agreement provides that “[t]he laws of the State of Georgia (without
regard to its conflicts of law principles) and any applicable Federal Laws shall govern the validity
of this Agreement, the construction of its terms, the interpretation of the rights and duties of the
Partners and any claims, counterclaims or any other matters relating hereto or in connection
herewith (whether based on contract, tort or otherwise).” Georgia law provides that
construction of a contract, at the outset, is a question of law. RLI Ins. v. Highlands on Ponce,
LLC, 635 S.E.2d 168, 171 (Ga. Ct. App. 2006); Woody's Steaks, LLC v. Pastoria, 584
S.E.2d 41, 43 (Ga. Ct. App. 2003). If the language of a contract is unambiguous, the court
simply enforces the contract according to its clear terms, and looks to the contract alone for
meaning. RLI, 635 S.E.2d at 171; Caswell v. Anderson, 527 S.E.2d 582, 582 (Ga. Ct. App.
2000). “Ambiguity” is defined as duplicity, indistinctness, or an uncertainty of meaning or
expression. RLI, 635 S.E.2d at 171.
C. Application
of Law to Facts
1. Breach of Contract Claims
In their first cross-point, Stonegate and CAWC claim OAIC has no standing to
bring its claims. The specific basis for that contention is that OAIC can only bring its claims if,
under the agreement, it is at least an “unadmitted assignee” of the interest of a former limited
partner, AFC, which OAIC claims to have purchased. Appellees assert the attempted transfer
of AFC's interest to OAIC on January 18, 2000, was “null and void” because AFC did not
provide a securities opinion “satisfactory” to Stonegate as required by section 9.3(d)(ii) of the
agreement. Therefore, Stonegate and CAWC argue, OAIC obtained no interest from AFC and
“is not an assignee of any kind.” Thus, according to appellees, OAIC lacks standing to bring
suit for breach of the agreement. Stonegate and CAWC “challenge the trial court's findings of
fact nos. 5, 6, 7, 8, 13, 14, 15, and 18 with respect to standing.” See Footnote 6
OAIC argues that under the agreement, it is at least an “unadmitted assignee”
and it asserts its standing is
well-founded. According to OAIC, the agreement expressly gave AFC an
“absolute right to transfer all or any portion of its interests.” Based
on that right, OAIC contends, AFC assigned all of its interests to OAIC
on January 18, 2000, thereby making OAIC the owner of the AFC interest.
OAIC argues the agreement provides that “following AFC's transfer of
its interest to OAIC, OAIC was either (1) an unadmitted assignee
entitled to receive all of the allocations and distributions of its
transferor or (2) a limited partner, by either registering the interest
or by obtaining an attorney opinion letter stating that registration is
not necessary under the securities laws.” OAIC contends, “As required
by [the agreement], OAIC obtained a letter from counsel rendering an
opinion that the offering and sale of the AFC Interest from AFC to OAIC
was exempt from registration under the Securities Act of 1933 and not
otherwise in violation of the applicable laws regulating the transfer
of securities.” Moreover, OAIC argues, “Even if the transfer was
somehow not otherwise sufficient, at the time it occurred, White's and
CAWC's actions had already placed them in default status, and the
transfer was recognized as valid by the only remaining voting
partner-AFC.” Finally, OAIC asserts counsel for White and CAWC
“expressly admitted” OAIC was at least an unadmitted assignee.
In order to establish
standing to maintain a breach of contract action, a plaintiff must show
either third-party beneficiary status or privity. Neal v. SMC Corp., 99
S.W.3d 813, 817 (Tex. App.-Dallas 2003, no pet.); Redmon v. Griffith, 202 S.W.3d 225,
239 (Tex. App.-Tyler 2006, pet. denied). For purposes of standing, “[p]rivity is established by
proving that the defendant was a party to an enforceable contract with either the plaintiff or a
party who assigned its cause of action to the plaintiff.” Id.
We conclude, and the parties do not dispute, that in order to have standing to
sue for breach of the agreement, OAIC must be at least an “unadmitted assignee” as defined
by the agreement. According to section 9.5 of the agreement, an “unadmitted assignee” is “a
Person who acquires one or more Interests but who is not admitted as a Limited Partner
pursuant to Section 9.6.” However, it is our conclusion, for the reasons described below, there
is no evidence in the record to support the following pivotal findings of fact and conclusion of
law: (1) finding of fact number 7 that OAIC “is the owner of all of the AFC Equities interest in
Stonegate”; (2) finding of fact number 8, where the trial court stated that “[a]t a minimum,
OAIC on January 18, 2000 was an unadmitted assignee in Stonegate”; (3) finding of fact
number 23 that “OAIC, who is at least an unadmitted assignee in the Limited Partnership, is
qualified to serve as the Liquidator”; and (4) conclusion of law number 5, that “OAIC was a
limited partner in Stonegate as of March 22, 2001.”
a. Requirements of Section 9.3(d)(ii) of the Agreement
We begin our analysis with an examination of whether OAIC acquired AFC's
interest in Stonegate through the purported transfer by AFC on January 18, 2000. The
agreement provides in section 9.2(a) that “AFC shall have an absolute right to Transfer all or
any portion of its Interest (any such Transfer being referred to as a 'Permitted Transfer.').”
However, section 9.3, titled “Conditions to and Restrictions on Permitted Transfers,” contains
the following provision:
(d)
Restrictions. Either (i) the interests shall be registered under the
Securities Act of 1933, as amended, and any applicable state securities laws, See Footnote 7 or
(ii) the transferor shall provide an opinion of counsel satisfactory to the Partnership, to the effect
that the Transfer is exempt from applicable registration requirements and will not violate any
applicable laws regulating the Transfer of securities.
Further, section 9.3 specifically provides, “This Section 9.3 does not apply to a Permitted
Transfer under Section 9.2(a) or (b), except that Section 9.3(d) shall apply to any Permitted
Transfer under Section 9.2(a).”
The record shows OAIC asserted in its original and first two amended
petitions, “The Partnership Agreement provides that AFC had an absolute right to assign its
interest (art. 9.2a), subject only to an opinion of counsel either that the partnership interest had
been registered as a security or that such transfer is exempt from applicable reporting
requirements under the securities laws (art. 9.3d).” No party contends the agreement is
ambiguous. Accordingly, we “simply enforce the contract according to its clear terms.” See
Caswell, 527 S.E.2d at 582. We conclude that, under the clear and unambiguous language of
the agreement, a “Permitted Transfer” pursuant to section 9.2(a) is subject to the restrictions
of section 9.3(d).
OAIC argues, “As required by the Partnership Agreement, OAIC obtained a
letter from counsel rendering an opinion that the offering and sale of the AFC Interest from AFC
to OAIC was exempt from registration under the Securities Act of 1933 and not otherwise in
violation of the applicable laws regulating the transfer of securities.” We are directed to an
opinion letter in the record of March 22, 2001, provided by OAIC to Stonegate.
According to the record, the March 22, 2001 opinion letter sent to Stonegate
by OAIC was specifically “rejected” in a March 23, 2001 letter to Steven Chantelois from
James Mosser, counsel for Stonegate. In the March 23, 2001 letter, Mosser stated that AFC
“did not in the past and has not presently supplied an opinion of counsel satisfactory to
[Stonegate].” Importantly, the language of section 9.3(d)(ii) provides in relevant part that “the
transferor shall provide an opinion of counsel satisfactory to the Partnership, to the effect that
the Transfer is exempt from applicable registration requirements and will not violate any
applicable laws regulating the Transfer of securities.” (emphasis added). Moreover, AFC's
parent corporation acknowledged in an April 12, 2001, “Officer's Certificate and Release
Agreement” signed by Steven Chantelois that “AFC, as assignor of the subject Stonegate
interest, did not at the time of sale or assignment of the AFC interest in Stonegate provide and
has not yet provided an opinion of counsel satisfactory to Stonegate, or to Stonegate's General
Partner, to the effect that the sale and assignment is exempt from applicable registration
requirements and will not violate any applicable laws regulating the sale, assignment or transfer of
securities.” (emphasis added). Accordingly, the record contains no evidence OAIC or AFC
provided an opinion letter “satisfactory to the Partnership,” as required by section 9.3(d)(ii).
As a counter-point to Stonegate's claim it “rejected” the section 9.3(d)(ii)
opinion letter, OAIC contends CAWC, as a “defaulting partner” did not have the right to
“approve or disapprove the [March 22, 2001] opinion letter, and, in any event, did not need to
do so.” OAIC asserts:
At the time that AFC sold and assigned its interest to OAIC on January 18, 2000, CAWC
was already in default because of the secret, unapproved, self-dealing loans with affiliates. AFC
was the only non-defaulting partner entitled to approve documentation regarding its Permitted
Transfer under 9.2(a), and it did so by executing the transfer documents. See
Footnote 8
In support of its argument, OAIC cites the trial court's partial summary judgment order, in
which the trial court found, as a matter of law, that “the General Partner and CAWC/Stonegate
L.P. are 'Defaulting Partners' under the terms of the Limited Partnership Agreement from and
after June 23, 1999.” Stonegate, CAWC, and White argue that “whether CAWC lacked
formal 'Approval' or voting rights is inapplicable to § 9.3(d)(ii).”
The agreement provides no definition of “satisfactory.” To support its
argument that CAWC could not, as a defaulting partner, make a determination whether the
opinion letter was “satisfactory” under section 9.3(d)(ii), OAIC relies on the definition of
“Approval or Approved” set out in section 1.10 of the agreement:
“Approval” or “Approved” means the affirmative written approval on that matter pursuant
to Article VII See Footnote 9 of (i) Partners (or a specified class thereof) [other than
AFC] that hold more than seventy-five percent (75%) of the Interests then held by Partners, or
the Partners in that class, if applicable and (ii) AFC; provided, however, a Defaulting Partner
and any Affiliate thereof shall not have a right to vote on any matter (either directly or through
the Designated Representatives of that Defaulting Partner or its Affiliates). . . .
The defined terms “Approval” and “Approved” are used throughout the agreement,
including Article IX. For example, section 9.3(b), which sets forth conditions and restrictions on
transfers of partnership interests by Frey and CAWC, states that the requirement that a
transferor “furnish to the Partnership an opinion of counsel satisfactory to the Partnership that
the Transfer shall not cause the Partnership to terminate for Federal income tax purposes” can
be waived “upon the Approval of the Partners.” Section 9.7(a) provides partners will not
transfer interests on securities markets or secondary markets “not Approved by the Partners.”
Section 9.8 allows for profits and losses with respect to transferors and transferees to be divided
and allocated “using any conventions permitted by law and Approved by the Partners.” The
terms “Approval” and “Approved,” as used in the agreement, clearly provide for a vote as
specified in section 1.10.
However, the terms “Approval” and “Approved” are absent from section
9.3(d)(ii). OAIC identifies nothing in the agreement that indicates the determination of whether a
letter is “satisfactory” under section 9.3(d)(ii) requires a vote of the partners, as certain actions
require under section 9.3. Further, even assuming, without deciding, that CAWC was in default
of the agreement “from and after June 23, 1999,” we see nothing in the agreement that would
disqualify CAWC from taking part in the determination, under section 9.3(d)(ii), of whether the
opinion of counsel obtained by OAIC was “satisfactory to the Partnership.” Accordingly, there
is no evidence in the record to support OAIC's argument that AFC was the only partner
entitled to approve documentation regarding its “Permitted Transfer.”
We conclude that, under the unambiguous language of the agreement, in order
for AFC's purported transfer of its interest to constitute a “Permitted Transfer” pursuant to
section 9.2(a) of the agreement, AFC was required, pursuant to the restrictions of section
9.3(d)(ii), to “provide an opinion of counsel satisfactory to the Partnership, to the effect that
the Transfer is exempt from applicable registration requirements and will not violate any
applicable laws regulating the Transfer of securities.” (emphasis added). Further, we conclude
that because the record contains no evidence AFC or OAIC provided such an opinion, AFC's
purported transfer of its interest on January 18, 2000, was not a “Permitted Transfer,” but
rather, pursuant to section 9.4 of the agreement, was “null and void and of no effect
whatever.” Accordingly, OAIC did not acquire AFC's interest in Stonegate pursuant to that
purported transfer in compliance with the terms of the agreement.
b. Recognition of Purported Transfer Under Section 9.4 of the Agreement
Next, as its counter-argument, OAIC contends that even if the transfer was
somehow not otherwise sufficient, “at the time it occurred, White's and CAWC's actions had
already placed them in default status, and the transfer was recognized as valid by the only
remaining voting partner-AFC.” OAIC contends AFC's approval of the transfer, at a time the
other partners were “defaulting partners” and disqualified from voting, constitutes “Unanimous
Consent” to the transfer as required by section 9.4. Section 9.4 of the
agreement provides in relevant part:
Prohibited Transfers. Any purported Transfer of Interests that is not a Permitted Transfer is null
and void and of no effect whatever; provided that, if the Partnership is required to recognize a
Transfer that is not a Permitted Transfer (or if the Partnership, by Unanimous Consent and in its
sole discretion elects to recognize a Transfer that is not a Permitted Transfer), then the Interest
Transferred shall be strictly limited to the transferor's rights to allocations and distributions
provided by this Agreement with respect to the Transferred Interests. . . .
Section 1.10 of the agreement provides, “'Unanimous Consent' means, with
respect to any matter, the affirmative written approval on that matter pursuant to Article VII of
all of the Partners (or a specified class thereof); provided, however, a Defaulting Partner and
any Affiliate thereof shall not have a right to vote on any matter (either directly or through the
Designated Representatives of that Defaulting Partner or its Affiliate).” (emphasis original).
Article VII of the agreement, titled “Approval,” provides in relevant part in
section 7.1 that “[a]ctions and decisions requiring Consent may be authorized or made either by
vote of the required Partners taken at a meeting of the required Partners or by written consent of
same without a meeting.” Section 7.4 of Article VII, titled “Records,” provides that the
partnership shall maintain permanent records of all actions taken by the partners pursuant to any
provision of the agreement, including “copies of actions on which the Partners have given
Consent.” Even assuming, without deciding, that, as OAIC argues, AFC was the only partner
qualified to vote on partnership matters on January 18, 2000, OAIC points to no evidence in the
record of “affirmative written approval” by AFC pursuant to the express terms of the
agreement to “recognize a Transfer that is not a Permitted Transfer.”
c. Alleged Admissions OAIC is “Unadmitted Assignee”
Now, we address OAIC's counter-argument that counsel for Stonegate,
CAWC, and White “expressly admitted” OAIC was at least an unadmitted assignee and those
parties are therefore “judicially estopped” from denying OAIC holds such status. Under the
doctrine of judicial estoppel, a judicially admitted fact is established as a matter of law, and the
admitting party may not dispute it or introduce evidence contrary to it. Peck v. Peck, 172
S.W.3d 26, 31 (Tex. App.-Dallas 2005, pet. denied); see also Webb v. City of Dallas, 211
S.W.3d 808, 820 (Tex. App.-Dallas 2006, pet. filed). This doctrine is based on the public policy
that it would be absurd and manifestly unjust to permit a party to recover after he has sworn
himself out of court by a clear and unequivocal statement. Peck, 172 S.W.3d at 31. Although
the doctrine is most commonly applied to the sworn statements of witnesses, it also applies to
the statements of attorneys explaining their clients' position in the litigation. Webb, 211 S.W.3d
at 820. Five conditions must have occurred for a party's admission to be conclusive against him:
(1) the declaration relied upon must have been made in the course of a judicial proceeding; (2)
the declaration was contrary to an essential fact embraced in the theory of recovery of defense
asserted by the party; (3) the statement was deliberate, clear, and unequivocal; (4) giving
conclusive effect to the declaration would not run contrary to public policy; and (5) the
declaration related to a fact upon which a judgment for the opposing party was based. Peck,
172 S.W.3d at 31. The party asserting judicial estoppel has the burden to conclusively prove
each of the elements. DeWoody v. Rippley, 951 S.W.2d 935, 944 (Tex. App.-Fort Worth
1997, writ dism'd by agr.)
In its reply brief on appeal, OAIC contends counsel for Stonegate, CAWC,
and White “expressly admitted in a letter to AFC that OAIC was at least an unadmitted
assignee.” OAIC cites a March 2, 2001 letter from James Mosser to AFC and various
“persons claiming interests in Stonegate Village, L.P.” in which Mosser questions the validity of
AFC's purported assignment of its partnership interest and states he has been unable to obtain
any documentary evidence of such a transfer. However, OAIC has not shown the March 2,
2001 letter to be a declaration “made in the course of a judicial proceeding.” Moreover,
Mosser states in the letter, “The effect of these events is that whomever takes or owns the
former interests of AFC Equities, L.P., shall only be an Unadmitted Assignee. . . . The AFC
Equities, L.P., assignees are not and shall not be admitted as partners.” The letter does not
make the precise admission asserted by OAIC. Rather than constituting a “deliberate, clear,
and unequivocal” admission that OAIC is “at least an unadmitted assignee,” Mosser's letter,
on its face, merely clarifies that if evidence is produced that a proper transfer of AFC's interest
did, in fact, take place, the transferees will not be admitted as partners.
In
addition, OAIC argues that in a July 30, 2001 letter brief to the trial
court, Mosser: (1) admitted that “[i]n January of 2000, AFC transferred its Interest in Stonegate by
assignment to [OAIC], as AFC's assignee;” (2) admitted that “[t]he AFC interests were
conveyed to [OAIC] under the Agreement by sale and assignment;” and (3) argued that the
purported failure of OAIC to satisfy the requirements of section 9.3 merely prevented OAIC
from being admitted as a partner, not from obtaining the status of an assignee. In the July 30,
2001 letter brief cited by OAIC, Mosser disputes OAIC's contention that it is a limited partner
in Stonegate. Mosser states, “Plaintiff maintains that as an assignee it somehow subsumes to
the legal status of Limited Partner.” Mosser then asserts arguments respecting OAIC's failure
to meet the requirements to become a limited partner as set out in the agreement.
These two clauses quoted by OAIC, indeed, do appear in the letter brief.
However, Mosser also states, in the same section in which these two quoted clauses appear,
“To this date Plaintiff has never been a limited partner in Stonegate and cannot demonstrate that
they are the owner's [sic] of an interest in Stonegate.” We conclude the alleged admissions in
the July 30, 2001 letter brief cited by OAIC are not deliberate, clear and unequivocal.
Therefore, those alleged admissions do not meet the requirements for judicial admissions.
On this record, we conclude there is no evidence that OAIC acquired AFC's
interest in Stonegate pursuant to the agreement or that OAIC is at least “an unadmitted
assignee” in Stonegate, as stated in findings of fact numbers 8 and 23. We decide in favor of
Stonegate and CAWC on their first cross-point.
2. Breach of Fiduciary Duty Claims
Now, we move to OAIC's first issue, where it argues the trial court erred in
denying its claim for breach of fiduciary duty because CAWC and White owed a fiduciary duty
to OAIC “as a limited partner, an unadmitted assignee, and/or the purchaser of AFC's
interest.” CAWC and White contend the trial court lacked jurisdiction to enter judgment on
OAIC's causes of action, including claims for breach of fiduciary duty, because OAIC lacked
standing.
The
elements of a breach of fiduciary duty claim are: (1) a fiduciary
relationship must exist between the plaintiff and defendant; (2) the defendant must have breached his fiduciary
duty to the plaintiff; and (3) the defendant's breach must result in injury to the plaintiff or benefit
to the defendant. Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App.-Dallas 2006, pet.
denied). We determined above that the record contains no evidence OAIC is “at least an
unadmitted assignee” in Stonegate pursuant to the agreement. Accordingly, no fiduciary
relationship based on status as an “unadmitted assignee” existed between OAIC and CAWC
or White pursuant to the agreement.
Next, we examine whether CAWC and White owed a fiduciary duty to OAIC
“as a limited partner.” Section 9.6 of the agreement provides, “Subject to the other provisions
of this Article IX, a transferee of Interests may be admitted to the Partnership as a Limited
Partner only on satisfaction of the conditions set forth below in this Section 9.6.” Those
conditions include, in relevant part:
(a) The admission is approved by Unanimous Consent, which consent may be
withheld or granted in each Partner's sole discretion, or the Interests with respect to which the
transferee is being admitted were acquired by means of a Permitted Transfer; [and]
. . . .
(d)
If the transferee is not an individual, the transferee provides the
Partnership with evidence satisfactory to counsel for the Partnership of the power and authority of the
transferee to become a Partner and to be bound by the terms and conditions of this Agreement.
OAIC argues that, following AFC's assignment of its interest to OAIC
pursuant to section 9.2(a), “OAIC had the status of a limited partner in [Stonegate].” Further,
OAIC contends, “If there were any conditions precedent to OAIC becoming a limited partner
under the agreement, which OAIC denies, such conditions were met at the latest by March 22,
2001.” In support of its argument, OAIC cites the trial court's finding of fact number 13, which
states, “No later than March 22, 2001, OAIC had provided the general partner, CAWC, with
all paperwork necessary under the Stonegate Village Limited Partnership Agreement to establish
its right to be a limited partner as an assignee of AFC Equities Limited Partnership.”
CAWC and White argue OAIC is not an assignee of AFC's interest and,
therefore, cannot be a limited partner. In addition, CAWC and White assert that “[e]ven if the
assignment [of AFC's interest to OAIC] was somehow valid, OAIC was not entitled to
admission as a limited partner because OAIC also failed to present evidence that the conditions
to admission contained in § 9.6 were satisfied.”
With respect to the conditions set out in section 9.6(a), we concluded above
that the record contains no evidence OAIC acquired an interest in Stonegate “by means of a
Permitted Transfer.” Further, OAIC does not identify, and we do not find, evidence in the
record of approval of OAIC's admission as a limited partner by “Unanimous Consent.”
Moreover, the record contains no evidence OAIC provided “evidence satisfactory to counsel
for the Partnership” to meet the condition of section 9.6(d). We conclude there is no evidence
in the record to support the trial court's finding of fact number 13 or the trial court's conclusion
of law number 5, that OAIC was a limited partner. See McIntyre, 169 S.W.3d at 806-07 (trial
court's conclusions of law are reviewed de novo and will not be upheld on appeal if erroneous
as a matter of law). Accordingly, CAWC and White owed no fiduciary duty to OAIC as a
limited partner.
Finally,
OAIC argues it brought its breach of fiduciary duty claims “not only in
its own right, but also as a successor of AFC and assignee of the AFC limited partnership
interest.” OAIC asserts that because AFC had an absolute right under section 9.2(a) of the
agreement to transfer all of its interest, “[t]o the extent the direct duty owed to OAIC was
limited or delayed due to its status as an unadmitted assignee, OAIC stands in the shoes of AFC
and is entitled to maintain a breach of fiduciary duty [claim] as AFC's assignee.” Based on the
foregoing conclusion that the record contains no evidence OAIC acquired AFC's interest in
Stonegate, we decide against OAIC on this argument.
We conclude there is no evidence in the record that CAWC and White owed a
fiduciary duty to OAIC “as a limited partner, an unadmitted assignee, and/or the purchaser of
AFC's interest.” We decide against OAIC on its first issue. In addition, based on that
determination, we conclude OAIC lacked standing to bring its claims against CAWC and
White for breach of fiduciary duty and conspiracy to breach fiduciary duty. See Jones, 196
S.W.3d at 447.
3. Declaratory Relief
Another part of Stonegate and CAWC's first cross-point asserts there is an
error in the trial court's declaratory judgment. In the final judgment, the trial court declared
OAIC a limited partner in Stonegate as of March 22, 2001, granted declaratory relief
appointing OAIC liquidator of Stonegate, and affirmed its partial summary judgment that OAIC,
“with the status of at least an unadmitted assignee,” is entitled to all distributions related to the
interest of AFC. Specifically, Stonegate and CAWC assert, in a footnote to their argument in
support of their first cross-point, that if this Court determines OAIC was not admitted as a
limited partner as of March 22, 2001, the trial court's declaratory judgment respecting OAIC's
status as a limited partner should be reversed “because it cannot be used to alter OAIC's
status and make OAIC a limited partner, but only declare OAIC's status as of March 22,
2001.” (emphasis original). Further, Stonegate and CAWC argue that, to the extent the trial
court erred in finding OAIC an unadmitted assignee as of January 18, 2000, the trial court also
erred in finding OAIC qualified to be liquidator because the sole qualification relied upon by
OAIC was its alleged status as an unadmitted assignee. OAIC does not specifically address
these contentions on appeal. However, with respect to the second contention, OAIC asserted
in the trial court that because it has “the status of at least an unadmitted assignee” (emphasis
original), it is a person, as defined in the agreement, interested in the winding up of Stonegate,
and thus, should be entitled to act as liquidator for Stonegate.
Under the Uniform Declaratory Judgments Act, “[a] person interested under a
. . . contract . . . or whose rights, status, or other legal relations are affected by a . . . contract . .
. may have determined any question of construction or validity arising under the . . . contract . . .
and obtain a declaration of rights, status, or other legal relations thereunder.” Tex. Civ. Prac. &
Rem. Code Ann. § 37.004(a) (Vernon 1997). “Further relief based on a declaratory judgment
or decree may be granted whenever necessary or proper.” Tex. Civ. Prac. & Rem. Code Ann.
§ 37.011 (Vernon 1997). Declaratory judgment under the statute is appropriate only when a
real controversy exists between the parties and the entire controversy may be determined by the
judicial declaration. Brooks v. Northglen Ass'n, 141 S.W.3d 158, 163-64 (Tex. 2004);
Adams v. First Nat'l Bank of Bells/Savoy, 154 S.W.3d 859, 873 (Tex. App.-Dallas 2005, no
pet.); Park Cities Ltd. P'ship v. Transpo Funding Corp., 131 S.W.3d 654, 661 (Tex.
App.-Dallas 2004, pet. denied).
We concluded above that the record contains no evidence OAIC met the
requirements under the agreement to become a limited partner or at least “an unadmitted
assignee.” Therefore, we conclude OAIC has not shown it is “interested under” or has
“rights, status, or other legal relations affected by” the agreement, as required by the Uniform
Declaratory Judgments Act. See Tex. Civ. Prac. & Rem. Code Ann. § 37.004(a). Accordingly,
OAIC has no standing to assert its claims for declaratory relief respecting the agreement. See
Grinnell v. Munson, 137 S.W.3d 706, 712-14 (Tex. App.-San Antonio 2004, no pet.)
(plaintiff not in privity to written contract lacked standing to seek declaratory relief respecting
contract) (citing Bruner v. Exxon Co., U.S.A., 752 S.W.2d 679, 683 (Tex. App.-Dallas 1988,
writ denied) (party not in privity to written lease agreement could not maintain action for wrongful
cancellation of lease)). We vacate the trial court's judgment declaring OAIC “a limited partner
in Stonegate Village, L.P. as of March 22, 2001,” appointing OAIC liquidator of Stonegate,
and affirming the partial summary judgment that OAIC, “with the status of at least an
unadmitted assignee,” is entitled to all distributions related to the interest of AFC. OAIC's
claims for declaratory relief are dismissed for lack of jurisdiction.
4. Attorney's Fees
OAIC claimed attorney's fees based on chapter 38 of the Texas Civil Practice
and Remedies Code and the Uniform Declaratory Judgments Act. Chapter 38 of the Texas Civil
Practice and Remedies Code, titled “Attorney's Fees,” allows recovery of “reasonable
attorney's fees from an individual or corporation, in addition to the amount of a valid claim and
costs,” on a claim for an oral or written contract. Tex. Civ. Prac. & Rem. Code Ann. §
38.001(8) (Vernon 1997). The Uniform Declaratory Judgments Act provides, “In any
proceeding under this chapter, the court may award costs and reasonable and necessary
attorney's fees as are equitable and just.” Tex. Civ. Prac. & Rem. Code Ann. § 37.009
(Vernon 1997).
Stonegate and CAWC argue in their fifth cross-point that, to the extent this
Court reverses the trial court's judgment with respect to OAIC's breach of contract claim, this
Court should also reverse the trial court's award of attorney's fees because OAIC is not entitled
to attorney's fees under chapter 38 unless it prevails on its breach of contract claim. Further,
Stonegate and CAWC contend that to the extent this Court reverses the trial court's judgment
on OAIC's declaratory judgment claims, the issue of attorney's fees should be reversed and
remanded for reconsideration by the trial court.
The
trial court does not state the basis for its award of $400,000 in
attorney's fees to OAIC. However, because we concluded above that OAIC lacks standing to bring its
claims for breach of contract and declaratory relief, OAIC is not entitled to attorney's fees under
either chapter 38 or the Uniform Declaratory Judgments Act. See Tex. Civ. Prac. & Rem. Code
Ann. § 38.001(8); Tex. Civ. Prac. & Rem. Code Ann. § 37.009. We vacate the trial court's
award of attorney's fees to OAIC and dismiss OAIC's claim for attorney's fees for lack of
jurisdiction.
IV. CONCLUSION
We conclude the record contains no evidence OAIC was “at least an
unadmitted assignee” in Stonegate pursuant to the limited partnership agreement. Accordingly,
OAIC lacks standing to bring its claims against appellees.
We decide in favor of Stonegate and CAWC on their first and fifth
cross-points. OAIC's first issue is decided against it. Because our decisions on those issues are
dispositive of this appeal, we need not address the parties' remaining issues. See
Tex. R. App. P. 47.1. The judgment of the trial court is vacated and
this case is dismissed for lack of jurisdiction.
-----------------------------
DOUGLAS S. LANG
JUSTICE
051471f.p05
Footnote 1 Before this Court, Stonegate is solely a cross-appellant, while CAWC is an
appellee with respect to OAIC's appeal and a cross-appellant. White, who does not
cross-appeal, is solely an appellee. However, for purposes of this opinion, we refer to
Stonegate, CAWC, and White as “appellees.”
Footnote 2 We specifically address only the first of OAIC's four issues, in which OAIC
asserts White and CAWC owed a fiduciary duty to OAIC as “a limited partner, an unadmitted
assignee, and/or the purchaser of AFC's interest.” In addition, we address only the first and fifth
cross-points of Stonegate and CAWC, in which they: (1) contend the trial court lacked
jurisdiction to enter judgment against Stonegate and CAWC and in favor of OAIC for breach of
contract because OAIC lacked standing to bring suit for breach of the agreement; and (2)
challenge the trial court's award of attorney's fees to OAIC. Because of our disposition on those
issues, we need not address the other issues presented.
Footnote 3 The agreement provided in relevant part with respect to transfers of interest:
ARTICLE IX. TRANSFERS AND ADMISSIONS
9.1
Restrictions on Transfers. Except as expressly permitted or required by
this Agreement, no Partner shall Transfer all or any portion of its Interest or any rights therein . . .
without Unanimous Consent. Any Transfer or attempted Transfer in violation of the preceding
sentence shall be null and void and of no effect whatever. The Partners hereby acknowledge the
reasonableness of the restrictions on Transfer imposed by this Agreement in view of the
Partnership's purposes and the relationship of the Partners. Accordingly, the restrictions on
Transfer contained herein shall be specifically enforceable. . . .
.2 Permitted Transfers.
(a) AFC. AFC shall have an absolute right to Transfer all or any portion of its
Interest (any such Transfer being referred to as a “Permitted Transfer”).
. . . .
9.3 Conditions to and Restrictions on Permitted Transfers. A Transfer is not
treated as a Permitted Transfer under Section 9.2 (c) or Section 10.4(a) unless and until the
following conditions are satisfied:
. . . .
(d)
Restrictions. Either (i) the Interests shall be registered under the
Securities Act of 1933, as amended, and any applicable state securities laws, or (ii) the transferor shall
provide an opinion of counsel satisfactory to the Partnership, to the effect that the Transfer is
exempt from applicable registration requirements and will not violate any applicable laws
regulating the Transfer of securities.
This Section 9.3 does not apply to a Permitted Transfer under Section 9.2(a)
or (b), except that Section 9.3(d) shall apply to any Permitted Transfer under Section 9.2(a).
. . . .
9.4. Prohibited Transfers. Any purported Transfer of Interests that is not a
Permitted Transfer is null and void and of no effect whatever; provided that, if the Partnership is
required to recognize a Transfer that is not a Permitted Transfer (or if the Partnership, by
Unanimous Consent and in its sole discretion elects to recognize a Transfer that is not a
Permitted Transfer), then the Interest Transferred shall be strictly limited to the transferor's rights
to allocations and distributions provided by this Agreement with respect to the Transferred
Interests. . . .
9.5. Rights of Unadmitted Assignees. A Person who acquires one or more
Interests but who is not admitted as a Limited Partner pursuant to Section 9.6 is entitled only to
allocations and distributions with respect to the Interests in accordance with this Agreement,
but, unless otherwise required by the [Georgia Revised Uniform Limited Partnership Act], (i)
has no right to any information or accounting of the affairs of the Partnership, (ii) is not entitled
to inspect the books or records of the Partnership, and (iii) has none of the rights of a partner
under the [Georgia Revised Uniform Limited Partnership Act] or this Agreement.
9.6.
Admission of Assignees as Partners. Subject to the other provisions of
this Article IX, a transferee of Interests may be admitted to the Partnership as a Limited Partner only
on satisfaction of the conditions set forth below in this Section 9.6:
(a) The admission is approved by Unanimous Consent, which consent may be
withheld or granted in each Partner's sole discretion, or the Interests with respect to which the
transferee is being admitted were acquired by means of a Permitted Transfer;
(b) The transferee agrees in writing to be bound as a Limited Partner by the
terms and conditions of this Agreement;
(c) The transferee pays or reimburses the Partnership for all reasonable legal,
filing, and publication costs that the Partnership incurs in connection with the admission of the
transferee as a Limited Partner with respect to the Transferred Interests; and
(d)
If the transferee is not an individual, the transferee provides the
Partnership with evidence satisfactory to counsel for the Partnership of the power and authority of the
transferee to become a Partner and to be bound by the terms and conditions of this Agreement.
Footnote 4 The record on appeal does not contain defendants' first plea to the jurisdiction,
but shows the denial of that plea on April 18, 2003.
Footnote 5 OAIC contends limited partner Frey was not entitled to vote on the matters at
issue, as section 1.10 of the agreement limits Frey's voting rights to amendments to the
agreement that would adversely affect Frey's economic rights under the agreement.
Footnote 6 Specifically, Stonegate and CAWC assert there is legally insufficient evidence to
support the trial court's findings of fact numbers 5, 6, 7, 8, and 13. Those findings read as
follows:
5. Pursuant to the Stonegate Limited Partnership Agreement, AFC Equities had an absolute
right to transfer any or all of its interest at any time.
6. On or about January 18, 2000, AFC Equities assigned all of its right, title and interest in and
to Stonegate to Plaintiff.
7. OAIC Commercial Assets, L.L.C. (“OAIC”), is the owner of all of the AFC Equities
interest in Stonegate.
8. At a minimum, OAIC on January 18, 2000 was an unadmitted assignee in Stonegate.
. . . .
13. No later than March 22, 2001, OAIC had provided the general partner, CAWC, with all
paperwork necessary under the Stonegate Village Limited Partnership Agreement to establish its
right to be a limited partner as an assignee of AFC Equities Limited Partnership.
Footnote 7 The parties do not assert applicability of section 9.3(d)(i) of the agreement to this
case.
Footnote 8 OAIC asserts the requirements of section 9.3(d)(ii) were satisfied on both
January 18, 2000, and March 22, 2001. According to OAIC:
At the time of the [January 18, 2000] sale, the transaction documents for each financial
institution [AFC and OAIC] contained appropriate investment representations and warranties,
and counsel for both [AFC] and [OAIC] signed . . . opinion letters confirming that no consent,
approval, or filing with governmental authorities was required to consummate the transaction.
While there was a problem locating original transaction documents, signed copies of original
documents were validated by witnesses as part of the trial.
Footnote 9 Article VII of the agreement, titled “Approval,” sets out requirements for
actions and decisions requiring “Consent.” Section 1.10 of the agreement provides that
“'Consent' means, on any matter, Approval or Unanimous Consent, on that matter, as the case
may be.”
File Date[08/16/2007]
File Name[051471F]
File Locator[08/16/2007-051471F]