Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:The limited partners of Kenworthy Tank Co. included Cherokee Rental, Gary Watkins, Mary Kenworthy and Lynette Franklin. Winston Kenworthy is the general partner. The limited partners filed suit seeking dissolution of the limited partnership. More than 120 days after they filed suit, they moved for partial summary judgment, arguing that under Article 6132a-1, 4.02(a)(5) of the Texas Revised Limited Partnership Act, after more than 120 days without a dismissal of the suit, an “event of withdrawal” had occurred and Winston Kenworthy was no longer the general partner and the partnership was automatically dissolved. They further claimed that once the partnership had been dissolved, they were entitled to have a trustee appointed to wind of the affairs of the partnership. The trial court granted a partial summary judgment, saying the limited partnership was dissolved. The trial court also appointed a trustee. Winston Kenworthy appeals. HOLDING:Reversed and remanded. The court says it knows of no cases deciding whether a limited partnership has been automatically terminated under the TRLPA under circumstances such as these. An “event of withdrawal” has occurred under the act when, among other times, “120 days expire after the date of the commencement of a proceeding against the general partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any law if the proceeding has not been previously dismissed[.]“ The court disagrees that the filing of a lawsuit is part of this “event of withdrawal” scheme. The court agrees with Winston Kenworthy that this provision speaks to lawsuits against the general partner in which relief is sought against the general partner for the general partner’s reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief. The provision does not apply to actions seeking dissolution of the partnership itself or the dissolution of the general partner. “Limited partners should be able to avoid continuing in a business relationship with a general partner who finds himself in conditions such as those described in Article 6132a-1, section 4.02(a)(5). They should not be required to continue to leave their investments and the conduct of the business of the partnership in the hands of one so situated. We believe that to be the purpose and intent of Section 4.02(a)(5). . . . Otherwise, displeased limited partners could file a lawsuit seeking dissolution of the partnership, name the general partner as a defendant, wait for 120 days (which is not at all an inordinate time for a lawsuit to be pending in litigation between partners), and then recover more or less by default on contested issues involved in the dissolution of the partnership, not the dissolution of the general partner, simply because the suit was not over in 120 days.” In the absence of an “event of withdrawal,” there was no automatic dissolution; and, as a matter of law, the limited partners were not entitled to have a trustee appointed. OPINION:Jim R. Wright, J.; Arnot, C.J., and Wright and McCall, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.