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In re USACafes, L.P. Litigation

Court of Chancery of Delaware
600 A.2d 43 (1991)


Facts

USACafes, L.P. (the Partnership) was a limited partnership consisting of USACafes General Partner, Inc. (the General Partner) (defendant) and a large group of limited partners who owned partnership units (the Unitholders) (plaintiffs). In 1989, Metsa Acquisition Corp. (Metsa) (defendant) purchased substantially all of the Partnership’s assets. The unitholders sued the General Partner, the directors of the General Partner (the Directors) (defendants) and Metsa, alleging that the asset sale price had been unfairly low. They claimed that Metsa made side payments to the Directors to induce the Directors to cause the General Partner to accept the low price. The Unitholders alleged that the General Partner and its Directors had breached their duty of loyalty to the Unitholders by failing to obtain the best price, and that Metsa had induced the breach by offering the side payments. The Directors moved to dismiss the charges against them for failure to state a claim, asserting that while the General Partner owes a duty of loyalty to the Unitholders, the Directors themselves do not.

Rule of Law

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Issue

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Holding and Reasoning (Allen, J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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