§ 121-1002 — Limited partners' derivative action

New York § 121-1002

• Jurisdiction: New York
• Law PTR: Partnership
• Art. 8-A: Revised Limited Partnership Act

Text

§ 121-1002. Limited partners' derivative action. (a) A limited partner\nmay bring an action in the right of a limited partnership to recover a\njudgment in its favor if all general partners with authority to do so\nhave refused to bring the action or if an effort to cause those general\npartners to bring the action is not likely to succeed.\n (b) In a derivative action, at least one plaintiff must be a limited\npartner at the time of bringing the action and (i) at the time of the\ntransaction of which he complains, or (ii) his status as a limited\npartner had devolved upon him by operation of law or in accordance with\nthe terms of the partnership agreement from a person who was a partner\nat the time of the transaction of which he complains.\n (c) In a derivative action, the complaint shall set forth with\nparticularity the efforts of the plaintiff to secure the initiation of\nsuch action by a general partner, or the reasons for not making such\neffort.\n (d) A derivative action shall not be discontinued, compromised or\nsettled without the approval of the court having jurisdiction of the\naction. If the court shall determine that the interests of the limited\npartners will be substantially affected by such discontinuance,\ncompromise or settlement, the court, in its discretion, may direct that\nnotice, by publication or otherwise, shall be given to the limited\npartners whose interests it determines will be so affected. If notice is\nso directed to be given, the court may determine which one or more of\nthe parties to the action shall bear the expenses of giving the same, in\nsuch amount as the court shall determine and find to be reasonable in\nthe circumstances, and the amount of such expense shall be awarded as\nspecial costs of the action and recoverable in the same manner as\nstatutory taxable costs.\n (e) If the derivative action on behalf of the limited partnership is\nsuccessful, in whole or in part, or if anything is received by the\nplaintiff or plaintiffs or a claimant or claimants as a result of a\njudgment, compromise or settlement of an action or claim, the court may\naward the plaintiff or plaintiffs, claimant or claimants reasonable\nexpenses, including reasonable attorneys' fees, and shall direct him or\nthem to account to the limited partnership for the remainder of the\nproceeds so received by him or them. This subdivision shall not apply to\nany judgment rendered for the benefit of injured limited partners only\nand limited to a recovery of the loss or damage sustained by them.\n