Limited Partnership Fees Clause Was Broad, And Judicial Dissolution Statute Did Not Retard Fee Exposure.
Limited partnerships (LPs), unfortunately, do foment a lot of legal disputes. No less, in this next case. The problem is that the losing litigant, although dismissing an involuntary dissolution cross-claim, lost both that as well as contractually-based claims in the complaint brought by siblings/partners of the LP following a bench trial. Loser was hit with over $527,700 in attorney’s fees below, prompting an appeal
Pellegrino v. Pellegrino, Case No. D062635 (4th Dist., Div. 1 Oct. 9, 2013) (unpublished) is a situation where plaintiffs, two siblings and LP partners, sued for declaratory relief to determine rights and obligation of the LP, with another sibling/partner filing but later voluntarily dismissing an involuntary dissolution cross-claim. Following a bench trial, plaintiffs prevailed on all aspects and the lower court ordered defendant/cross-complainant sibling to pay over $527,700 in attorney’s fees under a broadly-worded LP agreement fees clause. (The clause covered “any dispute between partners.”)
Fee losing sibling did not succeed on appeal.
Obviously, plaintiff prevailed in the litigation which was actually tried. So, the issue focused on the voluntary dismissal of the involuntary dissolution cross-claim. Appellant claimed fees were foreclosed by Corporations Code section 15908.02(d), but the problem was that the fee-shifting statute was never triggered–no judicial dissolution was ordered; no “purchasing parties” to abort the dissolution ever developed; and there was no court-specified time to act. Given that this, the broad contractual fees clause applied, because it covered both the complaint wins and cross-claim dismissal.