Golden Tee, Inc. v. Venture Golf Schools, Inc. and Cooper Communities, Inc.

GOLDEN TEE, INC. v. VENTURE GOLF SCHOOLS,
INC., and Cooper Communities, Inc.

97-878                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered May 14, 1998


1.   Judgment -- summary judgment -- standard of review. -- The remedy of summary
     judgment should only be granted if there exists no genuine
     issue of material fact and the party moving for summary
     judgment is entitled to judgment as a matter of law; the issue
     is viewed in the light most favorable to the party opposing
     the judgment, and the court resolves all inferences and doubts
     against the moving party; if the party moving for summary
     judgment makes a prima facie showing that no issues of fact
     exist, and the nonmoving party fails to show that such issues
     do exist, then the court must affirm the trial court's grant
     of a summary judgment.

2.   Judgment -- summary judgment -- response and supporting material must show genuine
     issue of fact. -- With respect to a summary-judgment motion, the
     response and supporting material must set forth specific facts
     showing that there is a genuine issue of fact for trial; the
     trial court may only consider "pleadings, depositions, answers
     to interrogatories and admissions on file, together with the
     affidavits, if any" for purposes of summary judgment.  [Ark.
     R. Civ. P. 56(c).]

3.   Partnership -- derivative or individual action by limited partner -- criteria. -- A
     derivative suit may be instituted by a limited partner in
     certain circumstances; for a plaintiff to bring an individual
     action, he must be injured directly or independently of the
     corporation; when the individual limited partner alleges
     wrongs to the partnership that indirectly damage him by
     rendering his contribution or interest in the limited
     partnership valueless, the limited partner is required to
     bring his claim derivatively on behalf of the partnership.


4.   Corporations -- derivative and individual actions -- distinction. -- In the
     corporate context, the real distinction between a derivative
     and an individual action is whether it is the corporation that
     has been injured by the action complained of or whether it is
     only the individual shareholder who has suffered harm; the
     primary purpose of the derivative action is to allow one or
     more shareholders to bring a suit on behalf of the
     corporation; if the alleged wrong is one primarily against the
     corporation, the action should be brought in a derivative
     capacity.

5.   Corporations -- direct action by shareholder -- when appropriate. -- Individual
     stockholders have no standing to sue in their individual
     capacities for injuries allegedly suffered primarily by the
     corporation and its shareholders; direct suits are appropriate
     only where a shareholder asserts a direct injury to the
     shareholder distinct and separate from harm caused to the
     corporation.

6.   Partnership -- action for breach of partnership agreement -- may be brought as
     individual or partnership action. -- Actions for breach of a partnership
     agreement may be brought as individual actions or partnership
     actions, depending on which entity or party is primarily
     injured; if the injuries alleged were those for which relief
     should have been granted to the partnership and not to an
     individual partner, then derivative action should be the
     appropriate route for relief.

7.   Partnership -- action for breach of partnership agreement -- limited partner should
     have asserted claims in derivative suit -- summary judgment affirmed. -- The
     supreme court concluded that the allegations for breach of the
     partnership agreement complained directly of injuries to the
     partnership, while appellant limited partner was injured only
     to the extent of its proportionate interest therein; the court
     affirmed the trial court's grant of summary judgment on this
     point because appellant should have asserted its claims in a
     derivative suit.

8.   Partnership -- fiduciary obligation of partners. -- A general partner owes a
     fiduciary duty to the limited partners; an individual or a
     derivative claim may be required, depending on whether the
     duty is deemed owed to the partners as individuals or to the
     partnership.

9.   Partnership -- statutory fiduciary duty. -- The Arkansas Revised Limited
     Partnership Act provides that a general partner of a limited
     partnership has the rights and powers and is subject to the
     restrictions of a partner in a partnership without limited
     partners [Ark. Code Ann.  4-43-403(a)]; the Arkansas Uniform
     Partnership Act provides that every partner must account to
     the partnership for any benefit and hold as trustee for it any
     profits derived by him without the consent of the other
     partners from any transaction connected with the formation,
     conduct, or liquidation of the partnership or from any use by
     him of its property; a breach of this fiduciary obligation
     entitles the injured partner to an accounting [Ark. Code Ann.
      4-42-405 (Repl. 1996)].

10.  Partnership -- fiduciary duty owed by general partners to partnership -- derivative
     action required. -- The supreme court determined that the general
     partners clearly owed a fiduciary duty to the partnership;
     where, however, the injuries that appellant limited partner
     alleged were injuries to the partnership, a derivative action
     for damages to the partnership was required.

11.  Fraud -- elements of. -- The tort of fraud consists of five elements
     that the plaintiff must prove by a preponderance of the
     evidence: (1) a false representation of a material fact; (2)
     knowledge that the representation is false or that there is
     insufficient evidence upon which to make the representation;
     (3) intent to induce action or inaction in reliance upon the
     representation; (4) justifiable reliance on the
     representation; and (5) damage suffered as a result of the
     reliance.

12.  Fraud -- failure to prove essential element -- summary judgment appropriate. --
     Further, if a respondent to a motion for summary judgment
     cannot present proof on an essential element of the claim, the
     movant is entitled to summary judgment as a matter of law.

13.  Partnership -- action for fraud may be brought as individual or derivative suit. --
     Fraud is a cause of action that may be brought individually or
     as a derivative suit, depending on the allegations; if the
     plaintiff alleges fraud in the inducement to enter into the
     partnership agreement, the claim is generally individual in
     nature; if, however, the plaintiff alleges fraudulent actions
     that primarily harm the partnership, then the action must be
     plead as a derivative suit.

14.  Fraud -- future events or conduct may not form basis of claim -- Projections of
     future events or a promise of future conduct may not form the
     basis of a fraud claim; a misrepresentation sufficient to form
     the basis of a deceit action may be made by one prospective
     party to another and must relate to a past event or a present
     circumstance, but not a future event; an assertion limited to
     a future event may be a promise that imposes liability for
     breach of contract or a mere prediction that does not, but it
     is not a misrepresentation of that event.

15.  Words & phrases -- "pro forma statement" defined. -- A pro forma statement
     is a financial statement showing the forecast, or projected,
     operating results or impact of a particular transaction.

16.  Fraud -- appellant did not meet burden of proving misrepresentations -- trial court
     did not err in granting summary judgment. -- Where the pro formas at issue
     were projections of future operating expenses, which could not
     sustain a fraud charge; appellant limited partner did not meet
     its burden of proving that appellees made any
     misrepresentations that would give rise to a cause of action
     for fraud; the supreme court could not say that the trial
     court erred in granting summary judgment on the claim. 

17.  Fraud -- appellant's allegations concerning charging of future lease payments against
     partnership should have been pursued in derivative suit. -- Where the claimed
     injury, which entailed appellant's allegations concerning
     appellees fraudulently charging future lease payments against
     the partnership, was primarily against the partnership rather
     than against the individual limited partners, the limited
     partner should have pursued the cause of action in a
     derivative suit.

18.  Partnership -- when limited partner may bring action in right of limited partnership. -
     - A limited partner may bring an action in the right of a
     limited partnership to recover a judgment in its favor if
     general partners with authority to do so have refused to bring
     the action or if an effort to cause those general partners to
     bring the action is not likely to succeed.  [Ark. Code Ann. 
     4-43-1001 (Repl. 1996).]

19.  Partnership -- derivative actions -- policy considerations. -- The procedural
     requirements for derivative suits differ from those required
     in individual or class actions; the interests of the
     individual limited partners may not be the same as the
     interests of the partnership entity; if less than all limited
     partners were allowed to sue to enforce rights belonging to
     the partnership, the general partners would be exposed to
     future liability for the same claims; the monetary damages in
     a derivative suit belong to the partnership to be distributed
     to the limited partners, instead of belonging to those
     individual partners who bring the suit.


     Appeal from Garland Circuit Court; Walter G. Wright, Judge;
affirmed.
     Timothy O. Dudley; Arnold, Grobmyer & Haley, by: Lee
Thalheimer; and Gary Lax, for appellant.
     Rose Law Firm, by: David C. Williams and Grant E. Fortson, for
appellees.

     Ray Thornton, Justice.
     Appellant Golden Tee, Inc. (Golden Tee), a limited partner in
Hot Springs Village Golf School Limited Partnership (Golf
Partnership), filed this action for fraud, breach of contract, and
breach of fiduciary duty against another limited partner, Cooper
Communities, Inc. (Cooper), and against the general partner,
Venture Golf Schools, Inc. (Venture).  The action was filed as an
individual action directed against appellees Venture and Cooper,
and was not brought as a derivative action asserting rights on
behalf of the Golf Partnership for recovery of alleged damages to
the Golf Partnership.  The trial court found that Golden Tee could
not present proof to show a genuine dispute of material fact
required to support essential elements of its claims for fraud, and
that Golden Tee lacked standing to bring an action for injuries to
the Golf Partnership except as a derivative action, and granted
appellees' motion for summary judgment.  Golden Tee appeals,
asserting that the trial court erred because issues of material
fact remained.  We find no error and affirm.
     Mr. Roger C. Kluska, who later became President of Golden Tee,
was a golf professional who began a dialogue with Mr. Randy
Brucker, his next-door neighbor, in early 1992 about the
development of a golf school in Hot Springs Village.  Mr. Kluska
submitted a design for a three-hole golf school, driving range,
putting green, clubhouse, and other facilities to Mr. Brucker, who
later became President of Venture.  Mr. Brucker was a
representative of Cooper, and in May, Mr. Kluska was invited to
Bella Vista to show his plans for a golf school to the corporate
management of Cooper.  In late September, Cooper expressed an
interest in the project and indicated that if Mr. Kluska would come
up with $200,000, for a 25% share in the project, Cooper would put
up $800,000 for a 75% share.  Mr. Kluska persuaded three other golf
professionals to join with him, and in November, informed Cooper
that they were ready to go forward with the project.  The four golf
professionals formed Golden Tee.  Venture was also incorporated,
and Cooper joined in the formation of the limited Golf Partnership
on November 19.  In addition to the general partner, Venture, and
Golden Tee and Cooper as limited partners, the agreement forming
the limited Golf Partnership was signed by the four golf
professionals who owned all the shares of stock in Golden Tee.
     The Golf Partnership was formed pursuant to the Arkansas
Revised Limited Partnership Act of 1991, Ark. Code Ann.   4-43-
101 to -1206, and specifically provided that all the parties to the
agreement consented and agreed to employment agreements between the
general partner, Venture, and the four golf professionals; as well
as to the leasing and use of Cooper's property for the Golf
Partnership's business.  It was further provided that upon the
termination and dissolution of the Golf Partnership, properties
leased from Cooper and all leasehold improvements should revert to
Cooper.  All parties agreed that in the event there should be a
negative cash flow produced from operations of Golf Partnership
exceeding a cumulative loss of $200,000, Venture had authority to
terminate and dissolve the Golf Partnership.  The golf school
opened for business in the summer of 1993.
     Cooper had planned for the contingency that the project might
fail by developing an exit strategy involving the donation of the
improvements to the Hot Springs Village Property Owners'
Association (POA), and it did not disclose this plan to Golden Tee. 
Cooper had also prepared some pro forma projections of operations
over a ten-year period, with estimates of a monthly management fee
of $400 and the depreciation of improvements at $10,000 per year. 
Mr. Kluska had seen these pro forma projections at about the time
the Golf Partnership was formed.
     By October of 1994, the Golf Partnership had sustained a
negative cash flow of more than $500,000, and even if the
management fees that were charged by Cooper and objected to by
Golden Tee are entirely eliminated as an expense, the negative cash
flow was $438,582.  Mr. Kluska stated that he knew that the Golf
Partnership had experienced a negative cash flow in excess of
$200,000.  Based upon the provisions of the agreement, Venture
terminated and dissolved the partnership, and the school closed in
November 1994.  The real estate and improvements reverted to
Cooper, who donated the property, together with other property to
the POA for development as a golf course. 
     After the school closed, Cooper charged the Golf Partnership
the present value of future lease payments left on the lease
agreement with the Golf Partnership.  The total amount due was
$376,000, with $94,000 of the liability charged to Golden Tee. 
This reduced the amount left in Golden Tee's capital account to
$587.
     Our standard for reviewing a grant of summary judgment is well
settled.  The remedy of summary judgment should only be granted if
there exists no genuine issue of material fact and the party moving
for summary judgment is entitled to judgment as a matter of law. 
Ark. R. Civ. P. 56; Smothers v. Clouette, 326 Ark. 1017, 1020, 934 S.W.2d 923, 925 (1996).  We view the issue in the light most
favorable to the party opposing the judgment, and the court
resolves all inferences and doubts against the moving party.  Id. 
If the party moving for summary judgment makes a prima facie
showing that no issues of fact exist, and the non-moving party
fails to show that such issues do exist, then the court must affirm
the trial court's grant of a summary judgment.  Pyle v. Robertson,
313 Ark. 692, 694, 858 S.W.2d 662, 663 (1993).
     The response and supporting material must set forth specific
facts showing that there is a genuine issue of fact for trial. 
Norris v. Bakker, 320 Ark. 629, 632, 899 S.W.2d 70, 71 (1995).  Our
rules of civil procedure clearly provide that the trial court may
only consider "pleadings, depositions, answers to interrogatories
and admissions on file, together with the affidavits, if any" for
purposes of summary judgment.  Ark. R. Civ. P. 56(c).

Standing
     Our analysis begins with the issue whether the party who is
seeking damages has standing.  If we conclude that Golden Tee has
standing, then we must decide whether Golden Tee has alleged facts
upon which relief can be granted.
     The Arkansas General Assembly has recognized that a derivative
suit may be instituted by a limited partner in certain
circumstances.  See Ark. Code Ann.  4-43-1001 (Repl. 1996). 
Recognizing this possibility, we must distinguish between causes of
action that accrue to the Golf Partnership and those that accrue to
one or more of the limited partners as individuals.  See Edwin W.
Hecker, Jr., Limited Partners' Derivative Suits Under the Revised
Uniform Partnership Act, 33 Vanderbilt L. Rev. 343, 355 (1980).  The
"prevailing criterion is whether the claimed injury is primarily to
the partnership and only indirectly to the partners through their
interest in the partnership -- a partnership claim -- or is direct
and unique to the partner(s) -- an individual claim."  4 Alan R.
Bromberg and Larry E. Ribstein on Partnership  15.04(f), at 15:31
(1997).  Similarly, other courts have stated that "for a plaintiff
to bring an individual action, he must be injured directly or
independently of the corporation."  Lenz v. Associated Inns &
Restaurants Co. of America, 833 F. Supp. 362, 380 (S.D.N.Y. 1993)
(quoting Kramer v. Western Pac. Indus., Inc., 546 A.2d 348, 351
(Del. Supr. 1988)).  Looking to the federal court for guidance,
when the individual limited partner alleges wrongs to the Golf
Partnership that indirectly damage him by "rendering his
contribution or interest in the limited partnership valueless, the
limited partner is required to bring his claim derivatively on
behalf of the partnership."  Kenworthy v. Hargrove, 855 F. Supp. 101, 106 (E.D. Pa. 1994), aff'd, 27 F.3d 557 (3d Cir. 1994).
     This is consistent with our corporate law regarding derivative
suits.  In ascertaining whether a cause of action is derivative, it
is appropriate to look to corporate law for guidance.  See Alpert
v. Haimes, 315 N.Y.S.2d 332 (Sup. Ct., Sp. Div. 1970).  In the
corporate context, we have stated:
     The real distinction between a derivative and an individual
     action is whether it is the corporation that has been injured
     by the action complained of or whether it is only the
     individual shareholder who has suffered harm.  The primary
     purpose of the derivative action is to allow one or more
     shareholders to bring a suit on behalf of the corporation.  If
     the alleged wrong is one primarily against the corporation,
     the action should be brought in a derivative capacity....
Brandon v. Brandon Constr. Co., 300 Ark. 44, 48, 776 S.W.2d 349,
352 (1989).
     Similarly, we recently determined that individual stockholders
had no standing to sue in their individual capacities for injuries
allegedly suffered primarily by the corporation and its
shareholders in Hames v. Cravens, 332 Ark. 437, 441, ___ S.W.2d ___
(1998).  We noted that our decision did not imply that shareholders
may never bring a direct suit.  Id. at 442.  However, direct suits
are appropriate only where a shareholder asserts "a direct injury
to the shareholder distinct and separate from harm caused to the
corporation."  Id.
     With these guiding principles in mind, we examine each of
Golden Tee's claims to determine whether, based on the nature of
the wrong, the injury is primarily to the Golf Partnership, and
only indirectly to the partners, or whether it is direct and unique
to the partners.

A.   Breach of Contract
     Golden Tee argues on appeal that the trial court erred in
granting summary judgment on two of its breach-of-contract claims: 
(1) that appellees breached the partnership agreement by disposing
of Golf Partnership property without Golden Tee's consent, and (2)
that Cooper breached the partnership agreement by managing and
controlling the affairs of the Golf Partnership.  We have
determined that the trial court did not err, and we affirm.
     Actions for breach of the partnership agreement may be brought
as individual actions or partnership actions, depending on which
entity or party is primarily injured.  See 4 Bromberg & Ribstein,
 15.04(h), at 15:37.  Analogizing to corporate law, if the
injuries alleged were those for which relief should have been
granted to the Golf Partnership, and not to an individual partner,
then derivative action should be the appropriate route for relief. 
See Walker v. Hyde, 303 Ark. 615, 798 S.W.2d 435 (1990) (reviewing
the propriety of a derivative claim in a shareholder setting).  
     The injuries that Golden Tee asserted under its breach-of-
contract claims were loss of its initial investment, loss of future
profits, and diminishment of the capital account.  The first injury
alleged, loss of Golden Tee's initial investment capital, is an
injury inflicted on the Golf Partnership.  Looking again to the
corporate setting for guidance, a federal court has stated:
     where a corporation suffers loss because of the acts of
     officers, directors, or others which diminish or render
     valueless shares of stock of a stockholder, the stockholder
     does not have a direct cause of action for such damages, but
     has a derivative cause of action on behalf of the corporation
     to recover the loss for the benefit of the corporation.
Lenz, 833 F. Supp.  at 381.  The Lenz court applied this reasoning
to limited partnerships, stating that a limited partner has no
greater right to vindicate an injury to the limited partnership for
the loss or diminution of the value of his interest than a
stockholder in a corporation has.  Id.  Similarly, the loss of
capital, which Golden Tee claims here, involves a primary injury to
the Golf Partnership rather than to the individual limited
partners.
     By their express terms, the latter two claims seek redress of
injuries inflicted directly on the Golf Partnership by any breach
of the agreement.  Although Golden Tee, as a limited partner,
undoubtedly suffered injuries, they were indirect damages by way of
injury to the Golf Partnership, not only to the individual
partners.  As such, the injury suffered was derivative, and the
claims for breach of contract should have been brought in a
derivative action.  See, e.g., Oncology Associates v. McGraw-Hill
Corp., 109 A.D.2d 616, 486 N.Y.S.2d 181 (Sup. Ct. App. Div. 1985).
     Golden Tee asserts that the trial court erred in granting
summary judgment on the basis that the claim that appellees
disposed of Golf Partnership property without Golden Tee's consent
should have been brought in a derivative action.  Golden Tee makes 
this same argument regarding the alleged breach of fiduciary duty
as its first claim under part B below; therefore, we address them
concurrently under part B.
     Golden Tee's other claim of breach of contract was based on
the allegation that Cooper breached the partnership agreement by
managing and controlling the affairs of the Golf Partnership.  The
trial court granted summary judgment on the ground that Golden Tee
failed to present proof that they were damaged by Cooper's
management and control.
     The CEO of Cooper, Roger McMennemy, testified that he made the
decision to close the golf school and terminate the Golf
Partnership.  Golden Tee alleges that this breached the partnership
agreement because only Venture had the authority to terminate the
Golf Partnership when the negative cash flow exceeded $200,000. 
However, Randy Brucker, president of Venture, testified that he and
Mr. McMennemy made the decision to close the golf school.  Further,
Michael Dial, vice-president and treasurer of Venture, testified
that the Golf Partnership had begun experiencing a negative cash
flow in excess of $200,000 in September 1993, and that "the
decision was made to terminate the Golf Partnership pursuant to
paragraph 5.3 and Article XI of the Partnership Agreement" in
October 1994, after the Golf Partnership had experienced a negative
cash flow of over $523,282.
     In light of the evidence showing that the negative cash flow
was increasing over time, Golden Tee does not prove how it was
individually injured by the decision to terminate operations in
accordance with the partnership agreement, which all parties had
approved.  The decision to terminate the partnership was one that
primarily affected the Golf Partnership, with only derivative
effect on the limited partners.
     Golden Tee also asserts that Cooper controlled the winding up
of affairs and disposing of Golf Partnership assets in derogation
of the partnership agreement.  This claim is likewise for alleged
injuries to the Golf Partnership rather than to the individual
limited partners.  Golden Tee asserts that Cooper's actions reduced
the amount of capital that should have been returned to it;
however, an action for diminution of capital in the Golf
Partnership account should be a derivative cause of action to
recover the loss for the benefit of the Golf Partnership.  See
Lenz, 833 F. Supp.  at 381.
     We conclude that the allegations for breach of the partnership
agreement complain directly of injuries to the Golf Partnership,
and Golden Tee was injured only to the extent of its proportionate
interest therein.  We affirm the trial court's grant of summary
judgment on this point because Golden Tee should have asserted
these claims in a derivative suit.

B.   Breach of Fiduciary Duty
     Golden Tee alleges that the trial court erred in granting
summary judgment on the basis that its breach-of-fiduciary-duty
claims were partnership rather than individual claims.  Golden Tee
argues that the following actions constituted a breach of
appellees' fiduciary duty: (1) negotiating with the POA to
construct a golf course that might incorporate the facilities owned
by the Golf Partnership for use in constructing a new golf course
without the knowledge and consent of Golden Tee, (2) failing to
account for value received by appellees after dissolution of the
Golf Partnership, (3) charging the Golf Partnership for payments
due in the future under the land-lease agreement between the Golf
Partnership and Cooper because it reduced Golden Tee's capital
account, (4) charging management fees to the Golf Partnership far
in excess of the actual value of services rendered by Cooper to the
Golf Partnership; and (5) failing to fully disclose all material
facts to Golden Tee.  The trial court granted summary judgment
based on its belief that these were claims that belonged to the
Golf Partnership, and must therefore be brought in a derivative
action.  We agree.
     A general partner owes a fiduciary duty to the limited
partners.  St. Joseph's Regional Health Center v. Munos, 326 Ark.
605, 615, 934 S.W.2d 192, 197 (1996); see also Ark. Code Ann.  4-
42-404(1) (Repl. 1996).  The critical question before us is
"whether the fiduciary duty owed by the general partner is owed to
each limited partner or to the limited partnership or both." 
Phillips v. Kula 200 II, 667 P.2d 261, 265 (Haw. App. 1983).  An
individual or a derivative claim may be required, "depending on
whether the duty is deemed owed to the partners (as individuals) or
to the partnership."  4 Bromberg & Ribstein,  15.04(h), at 15:35-
36.
     Golden Tee argues that nothing in Arkansas's version of the
Revised Limited Partnership Act, Ark. Code Ann.   4-43-101 to
-1206 (Repl. 1996 & Supp. 1997), requires that this suit must have
been instituted as a derivative suit.  But cf. Hooper v. Ragar, 289
Ark. 152, 711 S.W.2d 148 (1986) (allowing limited partners to bring
a derivative claim in circuit court against general partners). 
However, while Golden Tee asserts that partners owe one another a
fiduciary duty, it does not tell us how the limited partners have
sustained separate or individual injuries, independent of the Golf
Partnership, as a result of the purported breach.  Golden Tee
alleges damages in its complaint that were caused by the breach of
contract, but does not allege separate damages as a result of the
breach of fiduciary duty.
     We look to our statutes for guidance on the issue of to whom
the fiduciary duty is owed.  Arkansas's Revised Limited Partnership
Act provides that:
     [A] general partner of a limited partnership has the rights
     and powers and is subject to the restrictions of a partner in
     a partnership without limited partners.
Ark. Code Ann.  4-43-403(a).  Arkansas's Uniform Partnership Act
provides that a partner is accountable as a fiduciary as follows:
          Every partner must account to the partnership for any
     benefit and hold as trustee for it any profits derived by him
     without the consent of the other partners from any transaction
     connected with the formation, conduct, or liquidation of the
     partnership or from any use by him of its property.
Ark. Code Ann.  4-42-404(1) (Repl. 1996).  A breach of this
fiduciary obligation entitles the injured partner to an accounting. 
Ark. Code Ann.  4-42-405 (Repl. 1996).
     In this case, the general partners clearly owed a fiduciary
duty to the Golf Partnership.  However, we have determined that the
injuries that Golden Tee alleges were injuries to the Golf
Partnership, and, as such, must be brought in a derivative action
for damages to the Golf Partnership.

C.   Fraud
     Golden Tee also alleges that the trial court erred in granting
summary judgment on its three fraud claims.  For reversal, Golden
Tee alleges: (1) that Cooper and Venture fraudulently induced
Golden Tee to enter into the partnership agreement by representing
that it would charge the Golf Partnership only $400 a month in
management fees, and would depreciate the equipment and the
property at $10,000 a year; (2) that Cooper and Venture committed
fraud in failing to divulge their plans to donate the property on
which the golf school was built to the POA; (3) that the appellees
fraudulently charged the Golf Partnership the present value of
future lease payments after the land had been donated to the POA
and when no future payments were due.  In its complaint, Golden Tee
asserted that its damages were losses of its investment and future
profits.
     The tort of fraud consists of five elements that the plaintiff
must prove by a preponderance of the evidence: (1) a false
representation of a material fact; (2) knowledge that the
representation is false or that there is insufficient evidence upon
which to make the representation; (3) intent to induce action or
inaction in reliance upon the representation; (4) justifiable
reliance on the representation; and (5) damage suffered as a result
of the reliance.  Medlock v. Burden, 321 Ark. 269, 273, 900 S.W.2d 552, 555 (1995).  Further, if a respondent to a motion for summary
judgment cannot present proof on an essential element of the claim,
the movant is entitled to summary judgment as a matter of law. 
O'Mara v. Dykema, 328 Ark. 310, 316, 942 S.W.2d 854, 857 (1997).
     Fraud is a cause of action that may be brought individually or
as a derivative suit, depending on the allegations.  If the
plaintiff alleges fraud in the inducement to enter into the
partnership agreement, the claim is generally individual in nature. 
4 Bromberg & Ribstein,  15.04(f), at 15:32.  If, however, the
plaintiff alleges fraudulent actions that primarily harm the
partnership, then the action must be plead as a derivative suit.
     As its first contention of fraud on appeal, Golden Tee alleges
that appellees induced it to enter into the partnership agreement
by fraudulently misrepresenting Cooper's management and
depreciation projections.  Because Golden Tee alleges fraud in the
inducement, this claim for fraud may be plead individually.  We
therefore examine whether Golden Tee has proven the elements of
fraud to exist.
     The trial court found that the pro formas at issue could not
sustain a fraud charge because they were projections of future
operating expenses.  Golden Tee asserts that the pro formas were
sufficient to constitute a basis for fraud because appellees either
knew that the projections were false or else not knowing asserted
them to be true, particularly since the untrue projections were
within appellees' control.
     We have often declared that projections of future events or a
promise of future conduct may not form the basis of a fraud claim. 
See, e.g., South County, Inc. v. First Western Loan Co., 315 Ark.
722, 727, 871 S.W.2d 325, 327 (1994).  We have stated:
          In the context of negotiating a contract, a
     misrepresentation sufficient to form the basis of a deceit
     action may be made by one prospective party to another and
     must relate to a past event, or a present circumstance, but
     not a future event.  An assertion limited to a future event
     may be a promise that imposes liability for breach of contract
     or a mere prediction that does not, but it is not a
     misrepresentation of that event.
Id. at 727-28, 871 S.W.2d  at 327 (quoting P.A.M. Transport, Inc. v.
Arkansas Blue Cross & Blue Shield, 315 Ark. 234, 240, 868 S.W.2d 33, 36 (1993).  A pro forma statement is defined as a "financial
statement showing the forecast  (or projected) operating results or
impact of a particular transaction."  Black's Law Dictionary 842
(Abr. 6th ed. 1991).
     The pro formas at issue before us are clearly projections of
future operating expenses, which cannot sustain a fraud charge. 
Golden Tee did not meet its burden of proving that appellees made
any misrepresentations that would give rise to a cause of action
for fraud, and we cannot say that the trial court erred in granting
summary judgment on this claim.
     In its second and third fraud claims, Golden Tee argues that
the trial court erred in granting summary judgment because
appellees committed fraud by charging future lease payments against
the Golf Partnership after they knew the land had been donated to
the POA for the purpose of reducing any return of capital due to
Golden Tee, and by failing to divulge their plans to donate the
property on which the golf school was built to the POA.  However,
under our criteria set forth above, the claimed injury here is
primarily against the Golf Partnership, rather than against the
individual limited partners.  As such, Golden Tee should have
pursued this cause of action in a derivative suit.
     No question of fact remains to be resolved, and we affirm the
trial court's decision granting summary judgment on all fraud
claims.

Conclusion
     Although Golden Tee argues that it had the option of bringing
its causes of action as either individual or derivative claims
under our statutory language, we disagree.  Our statute provides
that:
          A limited partner may bring an action in the right of a
     limited partnership to recover a judgment in its favor if
     general partners with authority to do so have refused to bring
     the action or if an effort to cause those general partners to
     bring the action is not likely to succeed.
Ark. Code Ann.  4-43-1001 (Repl. 1996).  We agree with the
analysis of the New York court in Alpert v. Haimes, where the court
reasoned that the purpose of their statute was not to allow a
choice between bringing an individual action or a derivative one,
but was to give the plaintiffs the right to bring a suit in a
derivative capacity that had been unavailable prior to the
statute's adoption.  Alpert v. Haimes, 315 N.Y.S.2d  at 335.  The
court stated that "to hold otherwise would undermine the intent of
the Legislature in providing safeguards to both limited partners
and general partners in derivative suits."  Id.
     We note that procedural requirements for derivative suits
differ from those required in individual or class actions.  See
Hecker, 33 Vanderbilt L. Rev. at 355.  Also, the interests of the
individual limited partners may not be the same as the interests of
the partnership entity.  R.S. Ellsworth v. Amfac Financial Corp.,
65 Haw. 345, 351, 652 P.2d 1114, 1118 (1982).  If we allow less
than all limited partners to sue to enforce rights belonging to the
partnership, we would be exposing the general partners to future
liability for the same claims.  Id.  Also, the monetary damages in
a derivative suit belong to the partnership to be distributed to
the limited partners, instead of belonging to those individual
partners who bring the suit.  Id.
     We conclude that all of the claims, with the exception of the
claim alleging fraud in inducing the limited partners to sign the
limited-partnership agreement, should have been brought in a
derivative action and that the trial court's finding that Golden
Tee did not prove essential elements of its claim of fraud was not
erroneous.  Accordingly, we affirm the trial court's grant of
summary judgment.
     Affirmed.