In Wenske v. Blue Bell Creameries, Inc., C.A. No. 2017-0699-JRS (Nov. 13, 2018), following the discovery of bacterial contamination in their ice cream products, a limited partnership suspended production and distribution of its dairy products and paid a fine due to poor food safety policies and practices. The general partner of the limited partnership and its parent were sued for breach of the limited partnership agreement.
Noting that the limited partnership agreement vested the general partner with the exclusive authority to manage the limited partnership, the Court rejected an argument to the effect that the general partner formed a joint venture with the general partner and, as a result, was liable to the limited partners. A provision to the effect that “the [general partner] on [the partnership’s] behalf, may engage itself or another [p]artner to provide management or other services to [the partnership]” simply allowed the general partner to separately engage the services of another partner and did not reflect an agreement that the parent of the general partner would assist in the management of the limited partnership.
BOTTOM LINE: If you want the parent of a general partner liable to a limited partnership and its partners, include the obligation in the limited partnership agreement!