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Ben M. Eastman v. Charles R. Boggs

January 30, 2013

BEN M. EASTMAN, PLAINTIFF AND RESPONDENT,
v.
CHARLES R. BOGGS, DEFENDANT AND APPELLANT.



(Super. Ct. No. 34-2008-00010731-CU-MC-GDS)

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

Eastman v. Boggs

CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Defendant Charles R. Boggs appeals from a nearly $2.8 million bench trial judgment, which found he self-dealed while acting as the sole general partner of a limited partnership.

Boggs's one and only claim on appeal is that this litigation should never have proceeded to trial because the trial court should have sustained without leave to amend Boggs's demurrer to the complaint. Boggs's demurrer alleged that former Corporations Code section 15526 of the Uniform Limited Partnership Act of 1949 (ULPA), which governs here, foreclosed plaintiff Ben M. Eastman, as a limited partner, from bringing a derivative action on behalf of the limited partnership for breach of fiduciary duty against Boggs as the general partner.

A case that is directly on point, that has been on the books for 18 years, and that has never been criticized, Wallner v. Parry Professional Bldg., Ltd. (1994) 22 Cal.App.4th 1446 (Wallner), rejects the basis of Boggs's demurrer. We agree with Wallner. Consequently, we disagree with Boggs and shall affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

This appeal asks us to review a demurrer ruling. Thus, we accept as true those facts alleged in the complaint and those of which we may take judicial notice. (Wallner, supra, 22 Cal.App.4th at p. 1448.) Those facts are as follows.

Cordova Investments (Cordova), a limited partnership, was formed in 1983 to acquire, operate and eventually sell 20 duplexes in Rancho Cordova. Cordova is governed by the ULPA.*fn1 Eastman was a general partner in Cordova from its formation until May 1991; since then, Eastman has been a limited partner.

Eastman, as a limited partner, has brought a derivative action on behalf of Cordova against Boggs for an accounting and breach of fiduciary duty. The lawsuit alleges that Boggs engaged in self-dealing regarding the Cordova duplexes (the last of which sold in 2006) and refused to account for partnership affairs, to Cordova's financial detriment.

DISCUSSION

To set the legal context here, we note that a "limited partnership 'can generally be described as a type of partnership comprised of one or more general partners who manage the business and who are personally liable for partnership debts, and one or more limited partners who contribute capital and share in the profits, but who take no part in running the business and incur no liability with respect to partnership obligations beyond their capital contribution.' " (Sacramento Suncreek Apartments, LLC v. Cambridge ...


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