Summary
affirming dismissal of breach of contract claim where plaintiff identified the agreement alleged to have been breach but "there are no factual allegations" asserted in support of breach
Summary of this case from Setai Grp., LLC v. 400 Fifth Realty LLCOpinion
June 8, 2000.
Order, Supreme Court, New York County (Charles Ramos, J.), entered March 4, 1999, which granted defendants' motions to dismiss the complaints in these two consolidated actions, unanimously affirmed, without costs.
Diane Zilka, for plaintiffs-appellants.
Jeffrey S. Burman, Irwin H. Warren, Bradley I. Ruskin, for defendants-respondents.
Diane Zilka, for plaintiffs-appellants.
Irwin H. Warren, Bradley I. Ruskin, for defendants-respondents.
Before: Williams, J.P., Mazzarelli, Lerner, Andrias, Friedman, JJ.
Plaintiffs in the second action, the Bendas plaintiffs, a group of limited partners in a Delaware public limited partnership, lack standing, under both New York and Delaware law, to assert individual or class action claims for breach of contract and breach of fiduciary duty against the partnership, the general partner and the entities controlling the general partner, for the wrongful deferral of management fees and payment of such fees out of the proceeds of the sale of partnership assets, since the claims are derivative in nature, in that they allege no more than the mismanagement and diversion of assets, and do not implicate any injury to plaintiffs distinct from the harm to the partnership (see, Kramer v. W. Pac. Indus., 546 A.2d 348, 354 [Del]; Strain v. Seven Hills Assocs., 75 A.D.2d 360, 369-370).
However, plaintiffs in the first action, the Broome plaintiffs, a group of limited partners in another Delaware public limited partnership, do have standing, since they allege the general partner breached the contractual term in the partnership agreement to return capital contributions to the limited partners if not invested by April 1990 (cf., Litman v. Prudential-Bache Props., Inc., 611 A.2d 12, 15-16 [Del, Court of Chancery]). However, since the uninvested capital was to be returned in April 1990, that is the date the claim accrued, and the Broome plaintiffs' claims are thus barred as untimely, not having been brought until August 1997. Although a tolling agreement in a prior, discontinued Federal action preserved the timeliness of the claims as against defendants Merrill Lynch Company and Merrill Lynch, Pierce, Fenner Smith, Inc., the complaint should nonetheless be dismissed as to those defendants because the Broome plaintiffs have failed to state a cause of action against them. It is acknowledged by plaintiffs in their complaint that the Merrill Lynch entities returned $23.6 million to the partnership for distribution to the limited partners, which represents the $18.5 million of capital that was uninvested, plus certain expenses, plus 9% interest. There are no factual allegations in their complaint to meet even the most basic pleading requirements of CPLR 3013 and support the Broome plaintiffs' assertion that $30 or $32 million should have been returned. Even under the common fund doctrine, the Broome plaintiffs are not entitled to recover attorneys' fees from defendants, over and above the $23.6 million defendants voluntarily paid the limited partners, for purportedly compelling them to return such funds (see, Proskauer Rose Goetz Mendelsohn v. Natl. Westminster Bank, 179 A.D.2d 611, 612).
THIS CONSTITUTES THE DECISION AND ORDER OF SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.