KE Property Management Inc. v. 275 Madison Management Corp.
Court of Chancery of Delaware
1993 WL 285900 (1993)
275 Madison Associates L.P. was a Delaware limited partnership. KE Property Management Inc. (KE) (plaintiff) was one of its general partners, and KJ Capital Management, Inc. (KJ), an affiliate of KE Property, was a limited partner. 275 Madison Management Corp. (275 Madison) (defendant) was the limited partnership’s managing general partner. Harry Skydell, 275 Madison’s president, misappropriated $2 million of the limited partnership’s funds. 275 Madison’s partnership agreement provided that the limited partners could expel any general partner that injured the partnership by fraud or willful misconduct, if at least 25 percent of the units outstanding were in favor. KJ, with 25 percent of the units outstanding in favor, sent a letter to 275 Madison removing it as managing general partner, claiming that Skydell’s misappropriation constituted fraud or willful misconduct on 275 Madison’s part. 275 Madison then filed a bankruptcy petition on behalf of the limited partnership. KE Property brought suit, seeking a declaratory judgment that the removal of 275 Madison was effective, and seeking to enjoin 275 Madison from purporting to act as the managing general partner. KE moved for summary judgment.
Rule of Law
Holding and Reasoning (Hartnett, V.C.)