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Scott E. Mollen Scott E. Mollen

Partnership Dispute Among Owners of Low-Income Housing Development—Alleged Breach of Fiduciary Duty—General Partner Accused of Charging Too Little Rent, i.e., Below Market Rates and Fair Market Rents Set By HUD and Refusing To Sell the Development—Investor’s Request for Injunction Denied—Failure To Show Irreparable Harm—Substantial Likelihood of Success on the Merits or a Balancing of the Equities in Their Favor

This litigation involved a dispute “over the direction and control of a limited partnership that was formed to own and operate a real estate investment.” The general and managing partner (GP), had commenced a lawsuit to block an attempt by the limited partners (LPs), to oust the GP from control of the partnership, based on alleged breaches of fiduciary duties. The LPs had moved for a preliminary injunction. The court denied the injunction.

A group of churches had formed the GP entity to create a low-income housing development (development). HUD held a $4.7 million on the development. The GP was required to operate the development in accordance with HUD regulatory agreements. The GP “always intended (the development) to serve low-and moderate-income tenants even without regard to HUD’s requirement that it do so.”

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