Republic Properties Corp. v. MISSION WEST PROPERTIES, LP.

895 A.2d 1006, 391 Md. 732, 2006 Md. LEXIS 172
CourtCourt of Appeals of Maryland
DecidedApril 10, 2006
Docket41 Sept. Term, 2005
StatusPublished
Cited by12 cases

This text of 895 A.2d 1006 (Republic Properties Corp. v. MISSION WEST PROPERTIES, LP.) is published on Counsel Stack Legal Research, covering Court of Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Republic Properties Corp. v. MISSION WEST PROPERTIES, LP., 895 A.2d 1006, 391 Md. 732, 2006 Md. LEXIS 172 (Md. 2006).

Opinion

*736 HARRELL, Judge.

“In the late 1930s, Winston Churchill disclaimed any ability to forecast the Soviet Union’s reaction to Nazi aggression, reputedly terming the Russian colossus ‘a riddle wrapped in a mystery inside an enigma.’ That phrase might just as aptly describe the doctrinal vagaries of the concept of personal jurisdiction.” Donatelli v. National Hockey League, 893 F.2d 459, 462 (1st Cir.1990). The numerous interconnected business entities involved in the present case further complicate this already challenging area of the law. We consider here whether a Maryland state court may exercise personal jurisdiction over a foreign limited partnership whose only connection to Maryland consists of its corporate managing general partner’s re-incorporation in Maryland. We consider also whether that general partner itself may be held liable for the actions of the foreign limited partnership entity, occurring outside of Maryland, in a contractual dispute among the partners of a second, distinct foreign limited partnership of which the first foreign limited partnership is the general partner.

I.

The premise of the cause of action underlying this case is about its only relatively straight-forward aspect. 1 Hellyer Avenue Limited Partnership (“HALP”) was established in the summer of 2000, pursuant to the California Uniform Limited Partnership Act, for the purpose of developing, constructing, and managing a headquarters building in California for a communications company. The principal office and place of business of HALP also is in California. HALP consists of: Mission West Properties, L.P. (“MWLP”), the managing general partner and registered agent of HALP; Republic Properties Corporation (“Republic”), also a general partner of HALP; and Steven Grigg (“Grigg”), David Peter (“Peter”), *737 and Mentmore Partners LLC (“Mentmore”), the three limited partners of HALP. The present action was brought by Republic, Grigg, Peter, and Mentmore (collectively the “Suing HALP Partners”) against MWLP, the managing general partner of HALP, and Mission West Properties, Inc. (“MWINC”), the general partner of MWLP.

MWLP was formed as a limited partnership under Delaware law, but maintains its principal place of business in California. MWINC, the general partner of MWLP, was incorporated initially under the laws of California as a real estate investment trust, but later was re-incorporated in 1999 under the laws of Maryland. As required under Maryland law, MWINC named a registered agent in Maryland as part of its re-incorporation under Maryland law.

The Suing HALP Partners filed a complaint in the Circuit Court for Baltimore City alleging that MWLP, acting through its general partner MWINC, breached the HALP partnership agreement by improperly diluting the interests of the Suing HALP Partners in HALP and failing to make owed distributions. The complaint named as defendants MWLP and MWINC. The Circuit Court denied MWLP’s and MWINC’s motions to dismiss for lack of personal jurisdiction. After a week-long bench trial, the trial judge concluded that, under California law, MWLP and MWINC breached the partnership agreement. Accordingly, judgments for damages were entered in favor of the Suing HALP Partners against both defendants jointly and severally.

The Court of Special Appeals, in a reported opinion, Mission West Properties, L.P. v. Republic Properties Corporation, 162 Md.App. 17, 873 A.2d 372 (2005), vacated the judgments against MWLP and MWINC. The intermediate appellate court determined that the Circuit Court lacked personal jurisdiction over MWLP. Mission West, 162 Md. App. at 38, 873 A.2d at 384. Because MWLP was not domiciled in Maryland, and although “MWLP was properly served with process in Maryland,” it “never conducted any activity of any kind in Maryland.” Mission West, 162 Md. *738 App. at 30, 37, 873 A.2d at 380, 384 (Emphasis in original). Derivative of its conclusion regarding MWLP, the Court of Special Appeals vacated the judgment against MWINC as “MWINC face[d] liability only by virtue of its status as corporate general partner of MWLP.” Mission West, 162 Md.App. at 38, 873 A.2d at 385.

We granted the Suing HALP Partners’ Petition for Writ of Certiorari to consider whether: (1) the Court of Special Appeals erred in concluding that the Circuit Court lacked personal jurisdiction over MWLP where the foreign limited partnership was served with process upon the Maryland resident agent of its general partner, MWINC, 2 a corporation that re-incorporated in Maryland, and (2) the Court of Special Appeals erred in vacating the judgment of the Circuit Court against MWINC “because MWINC face[d] liability only by virtue of its status as corporate general partner of MWLP.” 3 Republic v. Mission West, 388 Md. 97, 879 A.2d 42 (2005).

*739 II.

The Court of Special Appeals ably stated the relevant facts and procedural posture of this case: 4

Stellex Microwave Systems, Inc. (Stellex Microwave) was a high-tech communications company with its principal place of business in Palo Alto, California. The company’s management wanted to relocate its headquarters to the Silicon Valley region of California, but the company could not afford to build such a facility and could not obtain suitable financing. Stellex Microwave was a wholly-owned subsidiary of Stellex Industries, Inc. (“Stellex Industries”), also known as Stellex Technologies, Inc. Stellex Industries was a wholly-owned subsidiary of Mentmore Holdings Corporation, which, in turn, was owned by two trusts.
Stellex Microwave’s management tried to negotiate a deal with Carl Berg, a prominent Silicon Valley real estate developer. He “controls” a California construction company called Berg & Berg Enterprises (B & B).n Berg is also president and CEO of MWINC, a real estate investment trust incorporated under the laws of California and reincorporated under the laws of Maryland, with its principal place of business in California. MWINC is the corporate general partner of MWLP, which itself is a Delaware limited partnership with its principal place of business in California. Nothing in the record shows that either MWINC or MWLP ever transacted any business in Maryland.
*740 Stellex Microwave’s negotiations with Berg were unsuccessful. As a fallback measure, Stellex Microwave contracted with Republic, a corporation organized under the laws of the District of Columbia, with its principal place of business there. Under their agreement, Republic was to provide a headquarters to Stellex Microwave.
Steven Grigg and David Peter, both officers of Republic, restarted negotiations with Berg on behalf of Stellex Microwave.

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Bluebook (online)
895 A.2d 1006, 391 Md. 732, 2006 Md. LEXIS 172, Counsel Stack Legal Research, https://law.counselstack.com/opinion/republic-properties-corp-v-mission-west-properties-lp-md-2006.