Limited Partnerships. Mige Associates II was a limited partnership. Mige owned an apartment building that could have been converted into a cooperative (a housing complex jointly owned by the residents) at a substantial profit. The conversion required,

Question

under the voting provisions of the partnership agreement, the consent of Jon Meadow, one of the general partners. Before consenting, Meadow demanded that he receive more money than the other general partners. When his demand was rejected, he blocked the conversion. Ronald Drucker and Ronald Schaffer, two of the limited partners, filed a suit in a New York state court against Meadow, contending that Meadow had breached a fiduciary duty to the other partners. The court ruled in Meadow's favor. Drucker and Schaffer appealed. What will the appellate court decide?

Answer 1

Limited partnerships
The appellate court held that Meadow had breached a fiduciary duty to the other partners. The court terminated Meadow's rights as a general partner. The court concluded that "Meadow breached his fiduciary responsibility to the general and limited partners." His conduct was "neither economically nor otherwise justified and can only fairly be viewed as an attempt to use the voting provisions of the partnership agreement for personal gain in contravention of the fundamental implied covenant of good faith and fair dealing governing the partners' fiduciary obligations to one another, and as a threat of irreparable harm to his own as well as plaintiffs' partnership interests."