C.A. No. 1198-VCN (Del. Ch. April 3, 2009)
Robert H. Harris (“Harris”), the sole limited partner of RHH Partners, LP (the “Limited Partnership”) brought suit against 1015 Broadway, Inc., as the sole general partner (the “General Partner”) of the Limited Partnership and against the Limited Partnership. Harris brought the suit for the purported purpose of removing and replacing the General Partner due to certain alleged breaches of the limited partnership agreement and breaches of fiduciary duty by the General Partner. In a letter opinion by Vice Chancellor Noble of the Delaware Court of Chancery, the Court explained its understanding of the action as being motivated by an intention by Harris to obtain control of the Limited Partnership’s sole asset, certain real property located in Valley Stream, NY.
The Court addressed two issues in its letter opinion. First, it held that, as a general rule, juristic entities like the Limited Partnership and the General Partner may appear in Delaware courts only through an attorney admitted to practice law in Delaware. Counsel for the General Partner and the Limited Partnership had withdrawn earlier in the case. Due to the failure of the individuals involved in the suit to timely secure counsel for such entities, all claims and defenses of the entities were deemed abandoned and were dismissed by the Court. All counterclaims made against the Limited Partnership and the General Partner by Harris did not require representation by counsel. As such, the Court entered judgment against the Limited Partnership and the General Partner with respect to those counterclaims.
The second issue addressed by the Court was a motion to intervene under Chancery Court Rule 24(a) by non-party, Don Hartman (“Hartman”), who purportedly owned the General Partner. Hartman claimed an interest in the subject matter of the litigation by alleging he became the sole owner of the General Partner for the purpose of controlling the Limited Partnership’s property to protect a security interest he held in that property. The Court found that if the General Partner were replaced, as requested by Harris, Hartman would lose his claimed interest in the Limited Partnership’s property. As a result, the Court held that Hartman satisfied the requirements of Chancery Court Rule 24(a) and granted his motion to intervene.
The full opinion is available here.