Unpublished Disposition, 925 F.2d 1469 (9th Cir. 1989)

MEMORANDUM^* 

In this appeal, Diamond Bar Estates No. 10 ("Diamond Bar") challenges the district court's judgment affirming the bankruptcy court's order for distribution of proceeds from the sale of Diamond Bar's sole asset. The bankruptcy court determined that Teresa Thompson was a one-half share limited partner, that Diamond Bar could not require particular limited partners to pay Chapter 7 attorney fees, and that, under the partnership agreement, limited partners who were delinquent in paying a capital call could nonetheless participate in the distribution, subject to payment of any unpaid portions of the call. We have jurisdiction under 28 U.S.C. § 158(d) and we affirm.

DISCUSSION

Diamond Bar contends that Teresa Thompson is not a limited partner, but merely an assignee of an interest in the partnership. It argues her status as an assignee terminated when she failed to pay the capital call made on her. We disagree.

Teresa Thompson received her partnership interest by assignment from Delbert L. Driver, a limited partner. She attended partnership meetings. On two occasions when the partners amended the partnership agreement, Teresa Thompson signed both times as a limited partner. When the partnership needed money, a capital call was made on all of its partners, including Teresa Thompson. When the partnership property was sold, Teresa Thompson was included in the proposed distribution as a limited partner.

The evidence amply supports the bankruptcy court's finding that Teresa Thompson is a limited partner.

Because we conclude that the bankruptcy court did not err in determining that Teresa Thompson is a limited partner, it is plain that she has standing.

Diamond Bar contends certain limited partners should be required to pay attorney fees awarded to the counsel for the Chapter 7 trustee, and that it appropriately charged these partners for those fees. We disagree.

As the district court noted, " [t]he services of [the] lawyers ... were for the benefit of the entire entity during the Chapter 7. And the entity ... should pay for them...." Reporter's Transcript, United States District Court In re Diamond Bar Estates No. 10, August 7, 1989, at 31.

Whether the partnership agreement was orally modified is a question of fact subject to the clearly erroneous standard of review. See Laborers Health and Welfare Trust Fund v. Kaufman & Broad, 707 F.2d 412, 418 (9th Cir. 1986).

The evidence amply supports the finding that the partnership agreement was not orally modified. As the district court stated,

[i]t is ridiculous to claim that an oral modification of a partnership agreement that would impair in substantial respects the rights and remedies of non-contributing partners, was put into effect in the haphazard fashion that [Diamond Bar] ... claims. [Diamond Bar] ... does not claim any document was signed by all of the partners. What [it] ... says is that the general partner made a proposal, a statement of what he intended to do, and by the silence of everyone else, that became an amendment to the partnership agreement.... [Diamond Bar] simply has made out no factual basis for the alleged agreement....

Reporter's Transcript at 89-90.

5. Due Process Rights of Absent Limited Partners

Diamond Bar contends that the due process rights of nonparty limited partners were violated. We disagree.

Due process requires "notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). Here, even though some limited partners were not parties to the lawsuit filed by Victor F. Thompson, Teresa Thompson, Alex La Brie, Richard Noke and Allen J. Silverman, all of the limited partners had notice that this litigation was pending and that their shares of the proceeds from the sale of the partnership's property would be determined in this trial. The lawsuit was filed in connection with bankruptcy court proceedings of the Diamond Bar partnership. The bankruptcy court conducted the trial and resolved the issues. Under these circumstances, we conclude that the limited partners who were not named as parties in the litigation were not deprived of due process.

Based upon the findings and conclusions of the bankruptcy court, as affirmed by the district court, the distribution scheme imposed is in accord with the partnership agreement.

CONCLUSION

The district court's judgment affirming the order of the bankruptcy court is affirmed in all respects.

AFFIRMED.