Total Holdings USA, Inc. v. Curran Composites, Inc.

999 A.2d 873, 2009 WL 3238186, 2009 Del. Ch. LEXIS 177
CourtCourt of Chancery of Delaware
DecidedOctober 9, 2009
DocketC.A. 4494-VCS
StatusPublished
Cited by21 cases

This text of 999 A.2d 873 (Total Holdings USA, Inc. v. Curran Composites, Inc.) is published on Counsel Stack Legal Research, covering Court of Chancery of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Total Holdings USA, Inc. v. Curran Composites, Inc., 999 A.2d 873, 2009 WL 3238186, 2009 Del. Ch. LEXIS 177 (Del. Ct. App. 2009).

Opinion

OPINION

STRINE, Vice Chancellor.

I. Introduction

This opinion addresses the request of defendant Curran Composites, Inc. to dismiss this action because this court supposedly lacks personal jurisdiction over it. Curran, a Missouri corporation with no operations in Delaware, argues that, despite its status as a general partner of Cook Composites and Polymers, a general partnership that was established by its governing agreement “in, and in accordance with the laws of, the State of Delaware,” there is no statutory or constitutional basis for this court to exercise personal jurisdiction over it. Moreover, Curran says there is no need for this case to proceed and seeks alternatively to dismiss or stay this action in favor of a second-filed Missouri action that it brought in response to this action.

Although Curran raises a number of issues I must address that require consideration of Cook Composites’ status as a general partnership and how that affects whether Curran, as a non-resident partner of a Delaware general partnership, is subject to this court’s jurisdiction, at bottom *875 the problem the court faces is familiar and is answered by the Delaware Revised Uniform Partnership Act’s inclusion of a consent provision, § 15-114, analogous to 10 Del. C. § 3114 in the Delaware General Corporation Law (“DGCL”). That consent provision clearly provides for this court to exercise personal jurisdiction over Curran in a dispute “involving or relating to the business of the partnership or a violation by the partner ... of a duty to the partnership or any partner of the partnership” and also gives Curran sufficient notice that it could face suit here in the event of such a dispute. In particular, I conclude that § 15-114 of the Delaware Revised Uniform Partnership Act (“DRU-PA”) clearly provides a basis for the exercise of personal jurisdiction where: (1) the general partnership agreement clearly chooses Delaware law and provides that the general partnership was established “in, and in accordance with the laws of, the State of Delaware”; (2) the controversy involves a dispute between the partners over the meaning of the partnership agreement; and (3) the non-resident partner remained a partner to the general partnership, the partners executed an amended and restated partnership agreement, and the dispute arose all after the DRUPA and its consent to jurisdiction provision clearly became applicable to the general partnership.

Consistent with this analysis, I also conclude that there is no due process problem with applying § 15-114 of the DRUPA to a non-resident partner of a general partnership for a dispute involving the meaning of the general partnership agreement. Having chosen to avail itself of the advantages of Delaware as a domicile for the general partnership and being charged with knowledge that the DRUPA subjected general partners of Delaware general partnerships to the jurisdiction of the Delaware courts, Curran cannot claim unfair surprise over having to litigate in this court a dispute among the partners about the meaning of a critical provision in the general partnership agreement. Nor does it face any burden from defending suit here that would otherwise support dismissal or a stay of this first-filed action in deference to Curran’s own second-filed Missouri action.

II. Factual Background

A. The Parties

Plaintiff Total Composites, Inc., a subsidiary of Total Holdings USA, Inc., is a Delaware corporation whose principal place of business is in the Kansas City, Missouri area. The ultimate parent entity of Total Composites and Total Holdings is Total S.A., a French oil & gas company that is among the largest firms in its industry (collectively “Total”). Defendant Curran and its subsidiary C-Two, LLC, which was formed solely to hold a portion of Curran’s interest in the general partnership with Total, are both Missouri entities whose principal places of business are also in Missouri. Neither Curran nor C-Two (collectively “Curran”) operate facilities in Delaware or do any business in Delaware.

In 1990, Curran and Total formed a joint venture, a general partnership named Cook Composites and Polymers, to develop, market, and manufacture composite materials and to pursue acquisitions of other businesses. Cook Composites operated in Missouri and other states; however, it did not do business in Delaware. Also, Cook Composites never filed a statement of partnership existence with the Delaware Secretary of State.

B. The Joint Venture Agreement Establishing Cook Composites As A Delaware General Partnership

The original Joint Venture Agreement (“JVA”), dated February 9, 1990, establishing Cook Composites was negotiated and executed outside of the State of Delaware. A number of the agreement’s pro *876 visions are noteworthy. First, the JVA indicates that “the Participants shall ... organize and associate themselves as partners in a general partnership ... in, and in accordance with the laws of, the State of Delaware.” 1 Second, the JVA includes a choice of law provision indicating that “this Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Delaware.” 2 The JVA does not include a forum selection clause.

When the 1990 JVA was executed, the Delaware Uniform Partnership Act (“DUPA”) governed general partnerships organized under Delaware law. On July 12, 1999, however, the Delaware General Assembly enacted the DRUPA, which repealed the DUPA and governed all Delaware general partnerships after a two year grace period expired. Specifically, § 15-1206(b) of the DRUPA plainly states that “[o]n and after January 1, 2002, this chapter governs all partnerships.” 3 In other words, the General Assembly provided for a two year grace period before the DRU-PA applied to all partnerships. 4

On July 8, 2004, Curran and Total entered into a second joint venture agreement, which restated the original 1990 JVA and the amendments to which the parties had agreed over the years. In the recitals in the 2004 JVA, the parties indicate that they “do not intend to alter any rights or remedies currently in effect under the JVA.” Accordingly, the 1990 and 2004 agreements are, for the purposes of this litigation, nearly identical. For example, just like in the original agreement, § 1.1 of the 2004 JVA says that “the Participants have organized and associated themselves as partners in a general partnership ... in, and in accordance with the laws of, the State of Delaware.” 5

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Bluebook (online)
999 A.2d 873, 2009 WL 3238186, 2009 Del. Ch. LEXIS 177, Counsel Stack Legal Research, https://law.counselstack.com/opinion/total-holdings-usa-inc-v-curran-composites-inc-delch-2009.