Perretta v. Prometheus Development Company, Inc.
United States Court of Appeals for the Ninth Circuit
520 F.3d 1039 (2008)
Prometheus Development Co., Inc. (PDC) (defendant) was the general partner of Prometheus Income Partners, LP (Partnership). The Perrettas (plaintiffs) were limited partners in the Partnership. PDC was wholly owned by DNS Trust (DNS). Diller was PDC’s sole director, President, and CFO. PDC notified the limited partners that it was considering merging the Partnership into PIP Partners-General, LLC (PIP Partners), which was owned by Diller and which also owned 18.2 percent of the limited partner units in the Partnership. The merger, if approved, would have resulted in PDC buying out the limited partners for $1,736 per partner unit. PDC sent a proxy statement to the limited partners, which described the merger and stated that PIP Partners would vote its units for or against the merger in the same proportion as the total number of units voted by the unaffiliated partners. The partnership agreement of the Partnership (Partnership Agreement) stated that an absolute majority of the limited partner interests entitled to vote was necessary to approve a merger. The results of the limited partners voting were that 50.7 percent approved the merger. The winning votes included the affiliated PIP Partners. But, only 73.6 percent of the unaffiliated partners voted and of those, only 46.0 percent voted in favor of the merger. If the PIP Partners’ votes were not counted, there would not have been an absolute majority of votes in favor of the merger. The Partnership Agreement allows PIP Partners to vote as limited partners, even with their affiliation with the general partner PDC. The Perrettas sued for damages, alleging that the PDC violated its duty of loyalty to the limited partners by self-dealing in the merger, and setting an artificially low price for the limited partner units. The district court found in favor of PDC.
Rule of Law
Holding and Reasoning (Smith, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 160,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 13,700 briefs, keyed to 186 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.