Unpublished Disposition, 887 F.2d 1089 (9th Cir. 1989)Annotate this Case
Walter HIEKEL, Plaintiff-Appellant,v.268 LIMITED, a Nevada Limited Partnership; Edward Kiefaber;Mark Lueck, Defendants-Appellees.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Jan. 13, 1989.Decided Oct. 2, 1989.
Before JAMES R. BROWNING, BEEZER and KOZINSKI, Circuit Judges.
We conclude that under the version of the Uniform Limited Partnership Act (ULPA) in effect in Nevada1 at the time of the events in this case,2 appellant Walter Hiekel was entitled to a share of the profits of appellee 268 Limited.
Under the version of the ULPA effective in Nevada prior to 1987, the rights and liabilities of general partners in limited partnerships were the same as their counterparts in traditional partnership arrangements. Nev.Rev.Stat. Sec. 88.100.
Appellees argue Hiekel was legitimately expelled from the partnership and his interest ceased. We reject this argument for two reasons. First, to be legitimate, the expulsion must be "bona fide under the partnership agreement," Nev.Rev.Stat. Sec. 87.380(1); and contrary to the appellees' assertion, nothing in Article X of the agreement gives the general partners expulsion powers. Second, even if Hiekel's expulsion was proper, it extinguished Hiekel's partnership interest only if the other partners agreed to and did buy out Hiekel's interest, Nev.Rev.Stat. Sec. 87.380(1)-(2), and they did not do so.
The parties agree that Hiekel's ouster from the partnership dissolved 268 Limited. Accord Nev.Rev.Stat. Secs. 87.290 & 87.310. Whether Hiekel wrongfully left the partnership or was wrongfully expelled is irrelevant. In either case dissolution of the partnership entitled Hiekel to payment of his interest in 268 Limited. See Nev.Rev.Stat. Sec. 87.380. This interest was his share in the profits or surplus of the partnership. Nev.Rev.Stat. Sec. 87.260; see Balaban v. Bank of Nevada, 477 P.2d 860, 862 (Nev.1970). Nevada's courts refuse to calculate this interest until the partnership debts have been paid and the partnership accounts have been settled. As the Nevada Supreme Court said in State v. Elsbury, " [u]ntil that time arrives, it cannot be known what property will have to be used to satisfy the debts and, therefore, what property will remain after the debts are paid." 175 P.2d 430, 433 (Nev.1946) (citations omitted); accord Balaban, 477 P.2d at 862.
Hiekel was therefore entitled to the value of his interest after the sale of the Shenandoah Apartments. Accordingly, we reverse the district court's holding that Hiekel was ineligible for any interest in the partnership proceeds and remand for calculation of the amount owing Hiekel.3
Contrary to the district court's view, this works no inequity. Since the partners had no power to expel Hiekel under the certificate of agreement he remained liable as a general partner for any debts 268 Limited might have incurred. See Nev.Rev.Stat. Sec. 88.100(2). Moreover, if the district court finds Hiekel was responsible for wrongfully dissolving the partnership, his share should be reduced by the amount of the damage, if any, resulting therefrom. Nev.Rev.Stat. Sec. 87.380(2) (c).4
REVERSED and REMANDED.
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
We apply state law in analyzing assignments and the rights of limited partners. See In re Herbert, 806 F.2d 889, 892 (9th Cir. 1986) (assignments); Heritage Hills v. Zion's First Nat'l Bank, 601 F.2d 1023, 1026 (9th Cir. 1979) (limited partners). Here, Nevada law applies. See In re B.I. Financial Servs. Group, Inc., 854 F.2d 351, 354 (9th Cir. 1988) (where parties and property are of same state, that state's law applies)
Nevada amended its ULPA in 1985. See 1985 Nev.Stat. ch. 445, Secs. 1-72, at 1279-97. But those amendments did not take effect until January 1, 1987, see id. Sec. 72, at 1297, eight months after the order of the district court in this case was filed
We agree with Hiekel that he is entitled to his 16.369% general partnership interest and his children to their 7.32% limited partnership interest. We agree with the district court, however, that Hiekel is not entitled to the 50% interest he originally possessed in the proceeds from the sale of the apartments, since Hiekel's assignment of the interest to limited partnership was irrevocable absent consent of the assignee, which was never given. See In re Marriage of Shore, 139 Cal. Rptr. 349, 353 (Cal.App.1977). Nevada courts often look to California law where, as here, Nevada law is silent. See, e.g., Commercial Standard Ins. Co. v. Tab Constr., Inc., 583 P.2d 449, 451 (Nev.1978)
It seems unlikely Hiekel's withdrawal of the $75,000 worked any damage at all, however, since escrow would not have closed at that time and since the subsequent court action against the recalcitrant seller was obviously not hindered; appellees won the suit and purchased the apartments, which were later sold at a substantial profit