Johnson v. Superior Court

Manchester Hawaii Properties, Ltd. (MHP) was established as a partnership for the purpose of land investment. MHP was the leaseholder of an industrial park. MHP’s general partner was Torrey Enterprises, Inc., which was controlled by Douglas Manchester. The owner of the industrial park offered to sell the lot to MHP on favorable terms. Christopher Neils (defendant) gave legal advice to MHP and Manchester about the potential purchase. Manchester agreed that MHP would buy the industrial park. Manchester sent MHP’s limited partners (plaintiffs) a letter asking them to sell their interests in MHP or contribute more capital to fund the purchase. The letter did not include details about the favorable terms of the purchase or that the purchase had already been agreed to. The letter to the limited partners had been approved by Neils. The limited partners with one exception not relevant agreed to sell their interests in MHP. The limited partners had not been aware of Neils’s representation of MHP. After the limited partners learned the details of the purchase, the limited partners sued Neils for professional negligence and breach of fiduciary duty. The partners claimed that the purchase was an appropriation of a partnership opportunity by Manchester. Neils moved for summary judgment, claiming that he owed no legal duty to the limited partners. The superior court granted Neils summary judgment, finding that there were no communications between Neils and the limited partners and that the limited partners did not rely on Neils’s legal advice. The limited partners appealed, filing a petition for writ of mandamus.