Meredith v. Caldwell Communications Corp.

786 So. 2d 257, 2001 La. App. LEXIS 933, 2001 WL 487357
Louisiana Court of Appeal·Decided May 9, 2001·No. No. 34,611-CA·Published

Opinion

|¶BROWN, J„

It is undisputed that the purpose for the formation of the limited partnership has ended. What remains is the liquidation and distribution of the partnership’s assets. The business of the partnership was managed solely by the general partner. The general partner did not invoice for services rendered as they were performed but now seeks compensation for its work over the 11 year period of the partnership’s existence. Plaintiffs, the limited partners, appeal a judgment in favor of the general partner recognizing its right to be paid for managing the partnership and attorney fees. Finding no error, we affirm.

Facts and Procedural Background

I. The Partnership

Caldwell Broadcasting Limited Partnership (“the partnership”) was formed in 1987. Its purpose was to apply for a Federal Communications Commission (“FCC”) license, and, if successful, to own and operate a television station in Caldwell Parish, Louisiana. Following the advice of counsel, the partnership was structured such that it was managed by a corporation as its general partner. This corporation was to be owned and operated by women and minorities to enhance the partnership’s chances of obtaining the FCC license. Thus, Caldwell Communications Corporation (“CCC”) was created and its stock was owned by Mary Lou Winters, Clarice Kenney and Betty Robinson.

The partnership agreement provided that: CCC as the general partner was to own a 20% interest in the partnership; the remaining 80% was to owned by the limited partners; both the general and limited partners were required to make capital contributions in accordance with their ownership | ^percentage; and, the business and affairs of the partnership was to be managed solely by the general partner.

The limited partners were Robert F. Meredith, III, Frank Spooner, Kay LaF-rance, John Cooksey, Joseph H. Miller, [259]*259Cynthia Woodard, and H.I. Schendle.1

There were several competing applications filed with the FCC for the license. After approximately 11 years of effort, the partnership had not obtained the license. On January 3-4, 1999, the partnership assigned/sold its application to a competitor for $1,000,000, with the net proceeds of $990,000 going to the partnership.

II. The Petition

On January 6, 1999, plaintiffs2 filed a petition naming CCC and H.L. Schendle as defendants, seeking an accounting, distribution of the assets and to dissolve the partnership.3 They also sought and obtained an order sequestering the partnership banking account.

III. The Reconventional Demand

The general partner, CCC, filed an answer and reconventional demand against all of the limited partners. The reconven-tional demand states that: the corporation was formed to conduct the affairs of the [.-¡partnership; the corporation consisted of minority and gender ownership which would enhance the chances of being awarded the FCC license; and throughout the 11 years of “laborious efforts by CCC and its officers,” no compensation was paid. The general partner thus sought compensation for its labors and attorney fees.

IV. The Proceedings

The parties agreed to a distribution of all but $250,000 of the partnership funds.

The Schendle Trusts joined with the other limited partners in a motion for summary judgment. CCC also filed a motion for summary judgment. The parties stipulated that there were no genuine issues of material fact. The issues were whether, under the partnership agreement, the general partner was entitled to compensation and if not, whether the general partner was entitled to compensation on any other basis (quantum meruit and/or unjust enrichment); whether certain expenses paid by CCC from partnership funds were proper (costs associated with the incorporation, annual report, taxes and accounting fees of CCC); and whether CCC was entitled to attorney fees incurred pursuing its claim for compensation.

The trial court held that: the articles of limited partnership recognized the right to compensation by the general partner; the enumerated expenses of CCC were incurred on behalf of the limited partnership; and CCC was entitled to recover attorney fees.4 Thus, CCC’s motion for summary judgment was granted.

14Discussion

The first issue is whether the Limited Partnership Agreement provides for the payment of fees to CCC for its services. A contract is interpreted according to the common intent of the parties. La. C.C. Art.2045. If the words of a contract are clear and explicit and lead to no absurd consequences, no further interpre[260]*260tation may be made in search of the parties’ intent. La. C.C. Art.2046.

Section 9.1(b)(iii) of the Limited Partnership Agreement states the following:

To the extent that any fees are paid to the General Partner for service in a Partnership capacity and the amount of any such fee is considered to have been determined with reference to Partnership income within the meaning of Section 707(c) of the Code, such fee shall be treated as a distribution of Partnership income to the General Partner and an equal amount of the taxable income of the Partnership shall be specially allocated to the General Partner.

Section 9.2 states the following:

Net Cash Flow-available from operations and/or funds available for distribution from the sale of all or any part of the Partnership’s assets or business shall be distributed by the General Partner to all Partners in the following manner:
(a) First, to pay all Partnership fees and expenses including payments of fees, if any, to the General Partner or Affiliates or other parties related to the General Partner.

The Partnership Agreement clearly provides for compensation to CCC for its services and it clearly dictates that CCC has priority over the limited partners in the distribution of the proceeds.

|sThe limited partners rely on Section 7.2 of the Partnership Agreement in claiming that it does not allow payment to CCC for its services. The provision states as follows:

The general partner shall not be paid any fee for its services in connection with the management of the Station and the Partnership, provided, however, that the president, vice president, and secretary of the general partner may be paid for their individual services as management-level employees of the Station. (Emphasis added).

The limited partners’ reliance is misplaced. Section 7.2 does not disallow the payment of fees to CCC. Instead, it prohibits the payment of fees for both the management of the station and the management of the partnership. In other words, it prevents CCC from receiving double compensation.

The limited partners next argue that CCC was not entitled to be compensated for its necessary expenses. We find, however, that the trial court was correct in awarding CCC reimbursement for its expenses. Section 6.1 of the Partnership Agreement states that “...

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Meredith v. Caldwell Communications Corp., 786 So. 2d 257, 2001 La. App. LEXIS 933, 2001 WL 487357 (La. Ct. App. 2001).

786 So. 2d 257 (Meredith v. Caldwell Communications Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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