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Panakosta Partners, Lp et al v. Hammer Lane Management

September 27, 2011

PANAKOSTA PARTNERS, LP ET AL., PLAINTIFFS AND APPELLANTS,
v.
HAMMER LANE MANAGEMENT, LLC ET AL., DEFENDANTS AND RESPONDENTS.



APPEAL from judgments of the Superior Court of Sacramento County, Loren E. McMaster, Judge. (Super. Ct. No. 34201000075573CUPTGDS)

The opinion of the court was delivered by: Hoch , J.

CERTIFIED FOR PUBLICATION

Affirmed in part and reversed in part.

Hammer Lane R.V. and Mini-Storage is a limited partnership that owns and operates a storage facility in Stockton, California. After disagreeing about whether to sell the facility, appellants Panakosta Partners, LP, and other limited partners*fn1 sought to wrest control from respondents Hammer Lane Management, LLC, and other limited partners who collectively held a majority interest in the partnership.*fn2 Management filed an action seeking judicial dissolution of the partnership as well as declaratory and injunctive relief. Panakosta sought to avoid dissolution and petitioned to buy out Management's share of the business in a "special proceeding" pursuant to Corporations Code section 15908.02.*fn3 Management dismissed with prejudice its cause of action for judicial dissolution and filed an "anti-SLAPP"*fn4 motion under Code of Civil Procedure section 425.16. The trial court granted the anti-SLAPP motion and denied Panakosta's petition for buyout.

On appeal, Panakosta contends the trial court erred by (1) disallowing it to buy out Management's interest under section 15908.02, and (2) granting the anti-SLAPP motion and awarding fees and costs to Management. Management counters that Panakosta cannot appeal from the order denying the petition for buyout.

We conclude that Panakosta has properly appealed from the denial of its petition for buyout under section 15908.02. We affirm the order denying the petition for buyout, but conclude that the trial court erroneously granted the anti-SLAPP motion. Accordingly, we reverse the award of attorney fees and costs to Management under Code of Civil Procedure section 425.16.

FACTUAL AND PROCEDURAL HISTORY

Complaint and Cross-Complaint

In September 2008, Management filed a complaint alleging that the partnership had operated the storage facility for years with a consistently negative cash flow. Management eventually decided to sell the facility on the open market. Panakosta disagreed with the decision to sell and attempted to assume control of the partnership from Management. In an effort to remove Management as general partner, Panakosta held a meeting with other limited partners who collectively held only a minority interest in the partnership. Panakosta then filed a purported amendment to the certificate of limited partnership with the California Secretary of State. The amendment listed HLMS, LLC, as the new general partner. HLMS, LLC, began receiving funds from operations of the partnership in a new bank account.

Based on these events, Management concluded that it was "not reasonably practicable for the partnership to continue" and sought judicial dissolution under the terms of the partnership agreement and pursuant to former section 15636, subdivision (f)(1)(A).*fn5 Management also sought declaratory relief confirming that Panakosta had acted wrongfully in attempting to usurp control over the partnership. Additionally, Management requested that Panakosta be enjoined from exercising any further control over the partnership.

In June 2009, Panakosta filed a cross-complaint asserting that Management had breached the partnership agreement and its fiduciary duties, and engaged in conversion and fraud. The cross-complaint also stated a cause of action for "determination of partner's buyout price" under terms of the partnership agreement. In support, Panakosta alleged that "[b]y refusing to submit to the provisions of the buy-out section contained in Section 9 of the Partnership Agreement, [Management] acted in breach of the Partnership Agreement, violated [its] fiduciary duty, and duty of loyalty. [Panakosta] respectfully request[s] that this Court stay the dissolution of the Partnership and order the Cross-Defendants to participate in the buy-out provisions of Section 9 of the Partnership Agreement."

"Special Proceeding" under Section 15908.02

On April 14, 2010, Panakosta filed a "special proceeding to elect to purchase partnership interests" under a new case number in order to buy out Management's partnership interests under section 15908.02.*fn6 Concurrently with the petition, Panakosta filed a motion for appointment of appraisers to value the partnership and for a stay of the related dissolution proceeding.

On April 20, 2010, Management dismissed with prejudice its cause of action for judicial dissolution. Three days later, Panakosta dismissed its cross-complaint. On April 27, 2010, Management filed an opposition to the petition for buyout. In the opposition, Management pointed out that no cause of action for judicial dissolution remained pending.

Also on April 27, 2010, Management filed an anti-SLAPP motion directed at the petition for buyout. Panakosta opposed the motion.

In May 2010, the trial court granted Panakosta's motion for appointment of appraisers and a stay of the related case.

Ruling on Petition for Buyout (§ 15908.02)

In June 2010, after initially granting Panakosta's petition for buyout, the trial court sua sponte issued an order denying the petition. In pertinent part, the court explained:

"[Panakosta's] Motion for an Order Appointing Appraisers and Stay of Dissolution Proceedings is denied

"No Judicial Dissolution Proceeding is Pending

"The basis for this petition was the pending cause of action in the related civil action for Judicial Decree of Dissolution That cause of action has been dismissed by [Management.] Therefore no request for judicial dissolution of the limited partnership remains as the condition precedent for the 'buy out'

"No voluntary dissolution is currently proceeding under the facts before the Court.

"The related civil action is the proper forum for any request to buy-out shares. This Petition violates the one action rule or primary rights doctrine, which seeks to avoid splitting causes of action to enforce a single right. The cases have invoked the rule against splitting a cause of action in order to abate a later suit or bar it on res judicata grounds when that suit alleged a different theory of recovery for the same injury Grisham v. Philip Morris (2007) 40 Cal.4th 623, 642.

"No legitimate reason exists to have filed this separate special proceeding, it should have been filed as part of the related civil action

"Agreement of the Parties

"As an alternate sufficient basis for the denial of this motion, [] sec 15901.10(a) provides '[e]xcept as otherwise provided in subdivision (b), the partnership agreement governs relations among the partners and between the partners and the partnership To the extent the partnership agreement does not otherwise provide, this chapter governs relations among the partners and between the partners and the partnership

"The Cross-complaint filed in the related civil action by [Panakosta], reflects an 8th cause of action for determination of partner's buyout price, attaching the Agreement of Limited Partnership of Hammer Lane RV & Mini Storage, LP ('Agreement')

"Section 9, et seq of the Agreement provides for the terms of the Buy-Out of partners by each other, including a procedure for appointment of appraisers

"Thus, since the written Agreement between [Panakosta] and [Management] already sets forth provisions by its terms for the buy out of partnership shares, which procedure was initially pursued by [Panakosta], but then subsequently abandoned, the terms of the parties' written Agreement controls the manner of partnership buy-out, not the Corp Code statutory scheme, except where the Agreement does not otherwise provide

"No showing has been made by [Panakosta] that the procedure for a buy out in the Agreement is absent or deficient, and therefore reliance on the statutory scheme in the Corp [C]ode is not appropriate The Court will not proceed under [] sec 15908.02"

Ruling on the Anti-SLAPP Motion

On June 18, 2010, the trial court granted Management's anti-SLAPP motion. The court's ruling explained in pertinent part:

"[Management] move[s] to strike the unverified Petition to Elect to Purchase Partnership Interest in this action, under [] sec. 15908.02, which seeks to buy out [Management's] partnership interests, to avoid judicial dissolution of the partnership pled in the related civil action (case no 2008-00023098), currently scheduled for trial . . .

"The Petition was clearly filed in response to the cause of action for dissolution of partnership contained in the related civil action, and thus necessarily 'arises from' the related civil action, within the meaning of the anti-SLAPP statute

"As the related civil action is clearly an 'act in furtherance of a person's right to petition' which includes all judicial proceedings, moving parties have met their initial burden on an anti-SLAPP motion

"The civil action contained a cause of action for judicial dissolution of the partnership, which has since been dismissed by ...


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