The Delaware Court of Chancery dismissed claims that, inter alia, the general partner of a publicly-traded Delaware limited partnership, K-Sea Transportation Partners L.P. (“K-Sea”), and the general partner’s directors breached their fiduciary duties in approving a merger of K-Sea with an unaffiliated third party in which the general partner received a separate payment for certain partnership units it held exclusively. The Court found that K-Sea’s limited partnership agreement effectively eliminated the fiduciary duties of the general partner and its directors, with the exception of the duty to act in good faith. Further, the Court upheld a provision in the limited partnership agreement creating a conclusive presumption of good faith for decisions made by the general partner and its directors in reliance on expert opinions. Here, the general partner and its directors relied on a fairness opinion obtained by the general partner’s conflicts committee. Finally, the Court held that the plaintiffs could not state a claim for breach of the implied covenant of good faith and fair dealing where the defendants acted in a manner that ensured that they were entitled to a conclusive contractual presumption of good faith.
