Reilly v. Rangers Management, Inc.

717 S.W.2d 442, 1986 Tex. App. LEXIS 8801
CourtCourt of Appeals of Texas
DecidedSeptember 10, 1986
DocketNo. 2-85-107-CV
StatusPublished
Cited by2 cases

This text of 717 S.W.2d 442 (Reilly v. Rangers Management, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reilly v. Rangers Management, Inc., 717 S.W.2d 442, 1986 Tex. App. LEXIS 8801 (Tex. Ct. App. 1986).

Opinion

OPINION

FENDER, Chief Justice.

This is an appeal from the granting of a summary judgment. Appellees, Rangers Management, Inc., hereinafter RMI, and CCK, Inc., the general partners of the Texas Rangers, Ltd., hereinafter TRL, sued for declaratory judgment pursuant to the Texas Uniform Declaratory Judgments Act, TEX.REV.CIV.STAT.ANN. art. 2524-1 (Vernon 1965), repealed by TEX. CIV.PRAC. & REM.CODE ANN. sec. 37.-005 (Vernon 1986), to have certain amendments to their Limited Partnership Agreement declared adopted and also to declare the Second Amended Limited Partnership Agreement in full force and effect. Both parties moved for partial summary judgment. On April 22, 1985, the trial court overruled appellant’s motion for partial summary judgment and granted appellees’ motion for partial summary judgment. The trial court ruled that the amendments to the limited partnership agreement and the Second Amended Limited Partnership Agreement were in full force and effect as of March 13, 1984. A hearing was subsequently held with regard to appellees’ attorneys’ fees and a final judgment was entered.

We affirm.

[444]*444 Factual Background

RMI has been the managing general partner of TRL since May 29, 1974, when TRL was first formed. The Original Limited Partnership Agreement, hereinafter Original Agreement, of TRL was adopted on May 29, 1974, by unanimous consent of all the partners, including appellant, Michael Reilly.

On April 29, 1980, the First Amended Limited Partnership Agreement, hereinafter First Agreement, was adopted. This First Agreement was unanimously approved by all of the partners, both general and limited.

At a meeting of the partners of TRL held on March 13, 1984, RMI and CCK, the general partners, proposed to amend the First Agreement. The amendments are contained in the Second Amended Limited Partnership Agreement, hereinafter Second Agreement, of TRL. The amendments are:

1. to change the value for which newly issued units of TRL could be issued from at least $50,000.00 to at least their fair market value determined by the managing general partner of TRL on an annual basis;
2. to change the number of authorized units of TRL from 300 to an unlimited number; and
3. to give each limited partner in TRL a pre-emptive right to purchase its pro rata portion of any of the newly issued units.1 Under the First Agreement, no more

than 300 partnership units could ever be issued. Also, the price per unit was set by the First Agreement to be no less than $50,000.00 each.

At the time the Second Agreement was proposed for adoption on March 13, 1984, there were two general partners, CCK and RMI, and 17 limited partners, including appellant. The general partners owned 83.78% of the outstanding units of TRL.2 Appellant owns .69% of TRL. A vote was taken on the amendments and the two general partners and five limited partners voted in favor of the amendments. Eleven limited partners, including appellant, did not vote. One limited partner voted against the amendments.

The Issue

The central issue in this case is whether the written consent of only 66% percent of the outstanding units of TRL was required to adopt the amendments, rather than the consent of the owners of all the outstanding units of TRL. Appellant contends in his first ground of error that the trial court erred in granting summary judgment because as a matter of law unanimous consent was needed to adopt the amendments. In effect, appellant is saying that the trial court erred in not granting his own motion for summary judgment. Article XV of the First Agreement concerns when unanimous consent is necessary to pass an amendment. Article XV provides in relevant part:

C. Unanimous Consent of Limited Partners. Subject to the provisions of ARTICLE XIV hereof, any amendment to this Agreement which would adversely affect the general liabilities of the Limited Partners, or change the method of allocation of the profits or losses or the distribution of the Partnership funds or assets shall require the consent in writing of all Limited Partners.
D. Two-Thirds Consent of Partners. Subject to the provisions of ARTICLE XII and XIV hereof, any other amendment to this Agreement shall require the approval in writing of Partnership Percentages aggregating sixty-six and two-thirds percent (66%).

Appellant contends that unanimous consent is required under art. XV(C) to adopt the amendments because the amendments:

1. would adversely affect the general liabilities of the limited partners;
[445]*4452. would change the method of allocation of profits or losses; or
3. would change the distribution of partnership funds or assets.

Appellees’ Motion for Summary Judgment

In their motion for summary judgment, appellees contended that the summary judgment evidence establishes the following:

1. more than 66⅜ of the limited partners voted to approve the Second Agreement and Amendments;
2. as a matter of law, the amendments were adopted.

Appellees asked that the amendments and Second Agreement be declared in full force and effect.

Appellant responded to the motion contending that:

1. the summary judgment evidence of appellees does not show that the amendments do not change the method of allocation of profits and losses and the distribution of funds and assets;
2. the summary judgment evidence shows the opposite; and
3. the method of allocation and the distributions are changed because the limited partners are required, under the new amendments, to contribute more capital in order to maintain their percentage ownership of the partnership.

Appellant filed an additional response contending that the summary judgment should not be granted because:

1. the amendments were not properly adopted;
2. the amendments were adopted in violation of appellees’ fiduciary duty to the limited partners; and
3. the amended certificate was not signed by all the partners.

Appellant’s Motion for Summary Judgment

Appellant also filed a motion for summary judgment contending that:

1. the amendments are invalid because unanimous consent was required to adopt them; and
2. unanimous consent was required because the amendments change the method of allocation of the profits or losses or the distribution of the partnership funds or assets.

Appellees responded to appellant’s motion asserting that:

1. the affidavit of Reilly is objectionable and of no probative value to the extent that it contains testimony concerning the fair market value of the limited partnership units;
2. the affidavit of Reilly is objectionable because it is insufficient to qualify him as an expert on the value of the units;

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Related

Reilly v. Rangers Management, Inc.
727 S.W.2d 527 (Texas Supreme Court, 1987)

Cite This Page — Counsel Stack

Bluebook (online)
717 S.W.2d 442, 1986 Tex. App. LEXIS 8801, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reilly-v-rangers-management-inc-texapp-1986.