court asked us to come prepared to discuss a few cases and some of the facts that are relevant with regard to what constitutes a stockholder or shareholder action in this context in delaware law and under the partnership agreement so that's what i intend to do the as i'm sure the you all are well aware this case turns on a single e mail that was a hastily written one and that's the entire basis for liability in this case and today and under the trial court's logic if the e mail been written prior to the initial investment there wouldn't be anything to have an action on so does that e mail constitute the required shareholder action or stockholder action under delaware law as translated into the partnership context obviously we wouldn't be here if we thought it did so the cases that are relevant to this and really  what what's important is that in delaware corporate law which is where the malone baloney versus brink case and it's progeny were decided that predominately has to do with corporate issues here we're not looking at a partnership issue partnership issue is  creature of the contract that created you have to look at that particular contract to look at the rights it's not a corporate you know what is this going to teach me but the best case though that distinguishes that there should be a difference for  partnership contracts kubrick trying to make a distinction here is that i'm not making a distinction only to point out the the laws in delaware the cover corporate action are distinct from the laws that cover under there was a contractual obligation to put in additional capital no such obligation here there was no requirement on goodman to put in the other five hundred thousand dollars correct that's correct it was purely voluntary that th was a second investment he decided to make a second and your client and that the critical moments in are you going to put in the other five hundred thousand dollars now is that not a request for something that's not mandatory that would require discretionary action  in certain contexts yes but not in the context that we're looking at that would require the analysis that the carve out really that the malone case and its progeny would would talk about that type of request for shareholder action is different than a simple hey do you want to invest or not it has to do more with what are the rights of a limited partner and if you dream that the rights of the limited partners are divine defined very clearly in the limited partnership going casey you're in line upon to make that distinction well there but there's the statement i'm not persuaded by metro's argument that the regular request for capital calls made to the members of fidelity brazil constituted a request for interaction that triggered each time a requirement for dish retort or any other legal principles disclose all material facts and it goes on at one fifty six to say when the fiduciaries communicate with the beneficiaries in the context of asking the beneficiary to make a discretionary decision such as whether to grant a proxy to vote yes or no on a particular matter or to seek appraisal or accept merger consideration the fiduciary has the duty to disclose all the material facts and that's what i mean they go that's what happened here was not there was a request for the beneficiary goodman to make a discretionary decision to put in that additional five hundred thousand dollars he wasn't required to do there wasn't that fit squarely with under this language in metro because in that context and i think it's fair to read that especially when you look at the rest of the metro case where they  discuss at one fifty eight in particular all these other acts that might fit within this there are illustrative they're not exclusive or limiting i understand and i agree i'm i'm arguing that that the malone case and it this metra communications case all of these other cases they are all in the context requesting unit holder vote shareholder vote things like this that are actually things that require a vote a discretionary act and then  partnership khan this is a partnership and you're not suggesting that because it's a partnership this doesn't this rule we'll call it from metro in milan doesn't apply our lessing it doesn't apply but you have to look at the partnership agreement to decide what does the partnership agreement allow the partner to vote on what is it that the partnership agreement says constitutes a voting requirement what triggers that so in your view what in the what's the governing language in the party agreement that takes the pinpoint for five point zero to a high which grants all authorities and rights to the general partner that's very broad it is very broad and it needs to be read in the context of what does the limited partner then get to vote on what are the rights  and i said this at the outset the point is the trial court made this very clear if this particular request for investment wasn't the second one but was in fact the first one the e mail that triggered this liability that the trial court found that using that logic this would not be actionable this would have fallen away because there wouldn't be this preexisting duty to disclose everything under the sun that  exist not what we have here that's not well i understand that's not what we have for you because you were telling us are you telling this unless the partnership agreement specifically calls out these are things that would require discretion discretionary decision then metro in milan don't apply in essence you're saying it's got to be expressly called out in the partnership agreement to fall within this area of discretionary action yes because partnership law is governed by what authority do you have for that proposition i thought all raise it was discuss it was it was raised in passing the trial court sort of took it upon itself to decide that this was the basis for awarding this we didn't think it amounted to partnership action because partnership actions are typically as every case that you asked us to look at cited to every case is in the context of hey we need to get a proxy vote or hey in this partnership i think it was water going to one of these cases that said hey we need to get you're going was an lp unit holders vote we need to get the unit holders to vote on this that was something we actually had to do because that lp agreement required it this is not that setting these are not these facts so do i understand  know the delaware court held that there was a request for shareholder action when the directors of cooperation offered a program to minority shell shareholders where they could buy or sell their shares at lower transaction c five in particular and the subsections there a and i believe is the one that reserves all sorts of rights to the general partnership that it has a list of the types of things that the limited partners would be built of loyalty that he owed to goodman as a limited partner by concealing material facts and by not speaking money had a duty and obligation to do so and the primary issue has to do with this second influx of five hundred thousand outside investor in the fund when goodman is making that decision what's your response to opposing counsel's argument that unless it's called out expressly in delaware or unless it is expressly itemized in the partnership agreement then it shouldn't it shouldn't give rise to this exception in one or purses miller technologies the courts held that limited partnership law allows for the restriction or elimination of finish your duties by contract however the parties to a limited partnership must make the plainly intent clear to limit the finish area in two days by means of the partnership agreement otherwise the court had stated the  partnership wanted to limit fishery duties it had opportunity to do so in the agreement and we would actually argue that the limited partnership agreement express it recognizes that there could be breaches  the examples cited by the courts in that area are decisions whether to grant a proxy to vote yes or no on a particular matter to seek appraisal or to accept murder murder considerations i guess my question is where are the limited partnership equivalents of these types of fundamental corporate decisions and can you point us to delaware limited partnership law or the fun partnership agreement in this case to give example honor first of all the limited partnership agreement has provisions that provide for the voter consent approvals by them and partner and they are very limited in this case there's only five sections in the which describes the opportunity for the partnership to pay for premiums for breaches a fiduciary duty there'd be no reason for the punch agreement to authorize the pun ship to only encompasses these types of fundamental decisions what's your best argument as to why the action here which was investing more money is included in this situation her certification to the delaware courts i think that there is a case out there that actually does apply this to the extent that it can be decided here the limitations that were listed and in these cases always started with partners alleged that the general partner breached the future duties by misstating that he had retained twenty two million dollars in incentive fees in the capital account and that he had withdrawn those fees but did not inform the limited partner situation they claim that they have relied on that decision in the failure to disclose that information by staying in the fund the court found the specs not to be true however at which point the plaintiff switch course and decided that funds from the partnership from the fund they stayed in the fund even after they knew that the partner had jumped on the had withdrawn those piece for over a year and was insulated that they've been decided they want court noted some of the policy reasons that a broad general definition of partnership action or partner action would not make sense in the court specifically noted that it would undermine the effective operation of entities if every time the managers made a capital call to members there was judicially imposed requirement that they and they quote provide proxy statement like disclosures in quote because this would threaten to convert the duty to disclose to disclose all material facts in connection with the discretionary decision into what they called a pervasive across the board ruling governing all so my question to you is that this policy equal equally at issue in this case and why should we impose a judicial requirement that general partners have to make a comprehensive disclosure every time they seek additional capital from limited partners or metro was different in metro the limit partners were obligated to make the couple contributions in this case goodman was not required to do so and you have the fiduciary duties that are owed by the general punit to the limited partner not to disclose everything in terms of a proxy type statement but at least to disclose those material facts relevant to the decision and here good domain knew very well that was very important to goodman that he know how many investors are where and how big the fund was there were multiple communications from goodman to dominate in that respect and goodman was intentionally misled by gentleman with respect to that information conclusion of law do you actually hold and address that issue this was not a call for an outside individual to invest in a fund but do you agree that this conduct at issue in this case is the same or sale interest in a small hedge fund is covered by section ten b i did not not mean with respect to an existing partner with limited partner within the fund so do you see this is a see a distinction between a breach of honor in this situation and yeah and there's no outside information that would be able to able to mr goodman to be able to have a fair market price determined there is no market in such a small hedge fund all the information was held answers only in situations where the partners have not expressed made provisions in their partnership agreement i believe that last sentence i'm sorry sorry i was quoting the part the quote starts at the quote basic approach is to permit partners to have the broadest possible discretion in drafting the partnership agreements and to furnish answers only in situations where the partners have not expressly made provisions in their partnership agreement that's the end of the quote gives them the broadest interacting  in drafting their treatments yes in drafting the agreement and the agreement is the only contract that governs the investing relationship here so what's in the contract is what governs that's what you have to look at the contract rather than the delaware corporate laws to decide what governs the rights and responsibilities of the partners but how does that limit the duty of loyalty where does it where does it provide that the terms of the partnership agreement while they instruct the relationship between the general and limited partners goes beyond that and actually serves as a limitation on this duty of loyalty so that if it's not called out as something as of a discretionary nature within the partnership agreement the exception posing counsel is relying on doesn't apply well it's a question of where you draw the line not every not every we're looking for something that tells us where to draw the line not not attorney argument and i understand that and frankly there isn't any case law that either side has found that draws us to a conclusion that can say this is absolutely the right answer we can look at the cases like metro communications and some of the other say they've given examples of what partnership action is so good here view on whether this should be certified to the dell or court depends on how you decide