Title: Gotham Partners v. Hollwood Realty Partners, L.P. et al
Citation: N/A
Docket Number: 372, 2001
State: Delaware
Issuer: Delaware Supreme Court
Date: October 11, 2002

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
GOTHAM PARTNERS, L.P., 
§ 
No. 372, 2001 
 
 
§ 
     
 
 
Plaintiff Below, 
§ 
 
 
Appellant, 
§ 
Court Below: Court of Chancery of  
 
 
 
§ 
the State of Delaware in and for 
              v. 
 
§ 
New Castle County 
 
 
 
§ 
HALLWOOD REALTY  
§ 
C.A. No. 15754 
PARTNERS, L.P.,HALLWOOD  
§ 
REALTY CORPORATION, THE  
§ 
HALLWOOD GROUP  
§ 
INCORPORATED, ANTHONY J. 
§ 
GUMBINER and WILLIAM L. 
§ 
GUZZETTI, 
 
§ 
 
 
 
§ 
 
 
Defendants Below, § 
 
 
 
 
 
Appellees/ 
§ 
 
 
Cross-Appellants. 
§ 
 
 
 
 
 
 
 
 
Submitted: March 26, 2002 
 
  Decided:   August 29, 2002 
 
  Revised:  October 11, 2002* 
 
Before VEASEY, Chief Justice, WALSH, HOLLAND, and BERGER, Justices, 
and HARTNETT, Justice (Retired),** constituting the Court en Banc. 
 
 
Upon appeal from the Court of Chancery.  AFFIRMED IN PART, 
REVERSED IN PART, and REMANDED.  
 
 
                                                 
*The August 29, 2002 opinion has been revised to delete the paragraph that began on page 10 and ended on page 11, 
including the deletion of footnotes 15, 16 and 17.  This revision eliminates a factual misstatement regarding the 
legislative history of DRULPA and does not affect the outcome of the appeal or the Court’s rationale. 
 
**Sitting by designation pursuant to Del. Const. art. IV, § 38 and 29 Del. C. § 5610. 
 
Edward M. McNally, Esquire, of Morris, James, Hitchens & Williams LLP, 
Wilmington, Delaware: Of Counsel:  Philip H. Schaeffer, Esquire (argued), 
Dwight A. Healy, Esquire, Karen M. Asner, Esquire, and David G. Hille, Esquire, 
of White & Case LLP, New York, New York; and Theodore N. Mirvis, Esquire, 
and Jed I. Bergman, Esquire, of Wachtell, Lipton, Rosen & Katz, New York, New 
York, for Appellant. 
 
 
Michael D. Goldman, Esquire (argued), Stephen C. Norman, Esquire, and 
Matthew E. Fischer, Esquire, of Potter Anderson & Corroon LLP, for 
Appellees/Cross-Appellants. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VEASEY, Chief Justice: 
 
In this appeal, we hold that a limited partnership agreement may provide for 
contractually created fiduciary duties substantially mirroring traditional fiduciary 
duties that apply in the corporation law.  The Court of Chancery held that the 
limited partnership agreement here provided for such fiduciary duties by requiring 
the general partner and its controlling entity to treat the limited partners in 
accordance with the entire fairness standard.  We agree with this holding and also 
agree with the trial court that the defendants are jointly and severally liable because 
the challenged transaction breached the entire fairness provisions of the partnership 
agreement.  
 
With respect to remedies for that breach, the plaintiff limited partner had 
demanded rescission or an adequate damage award and sterilization of the voting 
rights attached to the partnership units involved in the challenged transaction.  The 
Court of Chancery refused to order rescission and awarded damages.  We affirm 
the holding of the Vice Chancellor that he was not necessarily required to order 
rescission by the limited partnership contract or the application of equitable 
principles.  Such a decision is properly within the discretion of a court of equity, 
but here the Court of Chancery did not fashion a remedy that is an appropriate 
substitute for rescission under the circumstances. 
 
As the Court of Chancery noted, one effect of the challenged transaction was 
that the general partner and its corporate parent gained control of the limited 
 
2
partnership as a result of wrongdoing.  In our view, the value of the control thus 
achieved was not properly compensated for by the award of damages because the 
trial court did not account properly for a control premium in its remedy calculation.   
 
Consequently, we reverse the damages award and remand for such 
proceedings as may be necessary and appropriate: (1) to quantify how the 
challenged transaction would have been consummated had the defendants adhered 
to the entire fairness standards and procedures of the limited partnership 
agreement; and (2) to consider and award one or more of the various equitable 
remedies available to the limited partnership, including rescission, rescissory 
damages, sterilization of voting rights, or other appropriate methods of accounting 
for the control premium. 
Facts 
 
Hallwood Realty Partners, L.P. (“the Partnership”) is a Delaware limited 
partnership that owns commercial office buildings and industrial parks in several 
locations in the United States and lists its partnership units on the American Stock 
Exchange.  Gotham Partners, L.P. (“Gotham”) is a hedge fund, the investments of 
which include real estate.  It is the largest independent limited partner in the 
Partnership with approximately 14.8 percent of the outstanding partnership units.  
Hallwood Realty Corporation (“the General Partner”) is the sole general partner 
and is a wholly-owned subsidiary of Hallwood Group Incorporated (“HGI”), which 
 
3
owned 5.1 percent of the outstanding partnership units before the transactions 
challenged in this case.  Anthony Gumbiner and William Guzzetti were members 
of the board of directors of the General Partner.  They were also officers of HGI at 
the time of the challenged transaction.1 
 
In 1994, the Partnership’s units were trading at a low price because of the 
ongoing economic recession in real estate.  On October 12, 1994, Guzzetti 
proposed to the Partnership’s board of directors that it approve a reverse split,2 a 
unit option plan,3 and an odd lot tender offer4 subject to HGI’s willingness to 
finance the transactions by buying any fractional units generated by a reverse split 
and any units purchased by the Partnership in an odd lot tender offer.  At the time, 
more than half of the Partnership’s units were held in odd lots and could be resold 
to HGI.  Guzzetti told the board that HGI was the only source of financing 
available and that the transactions would, among other things, raise the trading 
price of the Partnership’s units, reduce the Partnership’s administrative costs, and 
                                                 
1Gumbiner, a corporate lawyer, owned 30 percent of HGI’s shares between 1994 and 1995 and was the chairman of 
the board of directors and chief executive officer of the General Partner at the time of the challenged transactions.  
Guzzetti, a former lawyer, is an executive vice-president of HGI and was the president of the Partnership and a 
member of the General Partner’s board of directors at the time of the challenged transactions. 
2A reverse split reduces the number of outstanding units and consequently increases the per unit value of each unit.  
Reverse splits usually create odd lots. 
3In this case, the option plan would sell post-reverse split units to officers and employees of the General Partner, 
including Gumbiner and Guzzetti. 
 
4An odd lot offer is a tender offer by the issuer for blocks of fewer than one hundred outstanding units or shares.  
Such “odd lots” are considered small and thus create inefficient administrative costs for issuers and may be difficult 
to sell at an attractive price.  Odd lot offers are designed to provide liquidity to small holders and to reduce issuer 
costs.   
 
4
give odd lot holders the chance to sell at market price without incurring brokerage 
fees.  The Partnership’s board approved the transactions, citing Guzzetti’s reasons. 
 
At first, HGI declined to provide funding for the reverse split and odd lot 
offer.  But, by March 1995, HGI was willing to fund the Reverse Split and Option 
Plan, which were approved by the non-HGI directors on the General Partner’s 
board.  HGI purchased 30,000 units, approximately 1.6 percent of the Partnership’s 
equity, through the Reverse Split.  The Option Plan resulted in officers and 
employees of the General Partner purchasing 86,000 units or 4.7 percent of the 
Partnership’s equity.  Through these two transactions, HGI increased its ownership 
of outstanding Partnership units from 5.1 percent to approximately 11.4 percent. 
 
By May 1995, HGI was willing to fund an odd lot tender offer.  Guzzetti 
called a special meeting of the General Partner’s board of directors after circulating 
a memorandum indicating that 55 percent of the Partnership’s units were held in 
odd lots and thus could be tendered in the odd lot offer.  The non-HGI directors 
voted as a “special committee” to approve the Odd Lot Offer.  The purchase price 
of an odd lot was putatively set at the five-day market average referenced in 
Section 9.01(b) of the Partnership Agreement.5  No valuation information was 
shared with the board.  
                                                 
5Section 9.01(b) of the Partnership Agreement states: “Except as set forth above, the number of Units issued to the 
General Partners or any such Affiliate in exchange for any Capital Contribution shall not exceed the Net Agreed 
Value of the contributed property or amount of cash, as the case may be, divided by the Unit Price of a Unit as of the 
day of such issuance.” 
 
5
 
The Odd Lot Offer began on June 5, 1995.  The accompanying press release 
indicated that the Partnership would resell any tendered odd lot units to HGI, 
affiliates of HGI, or other institutional investors.  The Odd Lot Offer and Resale 
was pitched to the public and the American Stock Exchange as a resale to HGI of 
existing, listed Partnership units, not as an issuance of new, unlisted units.  
Consequently, the Partnership never filed a listing application with the American 
Stock Exchange for the units sold to HGI, and the Partnership’s accounting books 
did not treat the Odd Lot Resale to HGI as an issuance of units.  
 
From June 9 to July 25, 1995, when the Odd Lot Offer closed, the 
Partnership purchased 293,539 units from odd lot holders and placed them in a 
holding account.  The Partnership then resold the units to HGI at the same price the 
Partnership paid for them, approximately $4.1 million.   The Odd Lot Resale 
resulted in HGI purchasing approximately 23.4 percent of the Partnership’s 
outstanding units.  Thus, HGI increased its stake in the outstanding Partnership 
units from 11.4 percent to 29.7 percent and solidified its control over the 
Partnership.  The Partnership Agreement requires the written consent or 
affirmative vote by at least 66 and 1/3 percent of the limited partners to remove a 
general partner.6 
                                                 
6Section 14.09(a) of the Partnership Agreement states in relevant part: “The General Partner may be removed as 
General Partner, with or without cause, only upon the written consent or affirmative vote of Record Holders who 
are, or are nominees for, Limited Partners owning at least 66-1/3% of the Outstanding Units.” 
 
6
 
Gotham began purchasing Partnership units in 1994 and owned 14.8 percent 
of the outstanding units as of September 1996.  Gotham was aware of the Odd Lot 
Offer and Resale but did not complain to the Partnership until January 1997 when 
it requested access to the Partnership’s books and records.  The Partnership denied 
the request. 
Preliminary Proceedings in the Court of Chancery 
 
Gotham filed a books and records action in the Court of Chancery in 
February 1997.  On June 20, 1997, Gotham filed another action in the Court of 
Chancery alleging derivative claims in connection with the Odd Lot Offer and 
Resale, the Reverse Split, and the Option Plan.  Gotham alleged that these 
transactions were unfair to the Partnership’s unitholders because HGI paid an 
unfairly low price to acquire control over the Partnership.  Gotham’s claims 
included breaches by the General Partner of traditional fiduciary duties and 
contractually based fiduciary duties.  The claims also charged Gumbiner and 
Guzzetti, the General Partner’s HGI-affiliated directors, and HGI itself with aiding 
and abetting those breaches.  Gotham and the Partnership negotiated a settlement 
of the books and records action but the derivative action continued.    
 
On summary judgment, the Court of Chancery sustained the contractual 
fiduciary duty claims and dismissed the traditional fiduciary duty claims on the 
ground that the Partnership Agreement supplanted traditional fiduciary duties and 
 
7
provided for contractual fiduciary duties by which the defendants’ conduct would 
be measured.7  The Vice Chancellor found that Sections 7.058 and 7.10(a)9 of the 
Partnership Agreement operate together as a contractual statement of the entire 
fairness standard, with Section 7.05 substantively requiring fair price and Section 
7.10(a) substantively requiring fair dealing.10  No appeal has been taken from this 
ruling. 
The Vice Chancellor’s summary judgment opinion in this case, however, 
creates a separate problem.  We refer to one aspect of the Vice Chancellor’s 
discussion of the Delaware Revised Uniform Limited Partnership Act 
(“DRULPA”) in his summary judgment opinion in this case where he stated that 
section 17-1101(d)(2) “expressly authorizes the elimination, modification or 
enhancement of . . . fiduciary duties in the written agreement governing the limited 
partnership.”11  It is at least the second time the Court of Chancery has stated in 
                                                 
7Gotham Partners, L.P. v. Hallwood Realty Partners, L.P. (“Gotham S.J. Op.”), Del. Ch., C.A. No. 15754 (Sept. 
27, 2000), at 23-29.   
8Section 7.05 of the Partnership Agreement states:  “Transactions with General Partner or Affiliates.  The 
Partnership is expressly permitted to enter into transactions with the General Partner or any Affiliate thereof 
provided that the terms of any such transaction are substantially equivalent to terms obtainable by the Partnership 
from a comparable unaffiliated third party.” 
 
9Section 7.10(a) of the Partnership Agreement states in relevant part:  “Audit Committee; Resolution of Conflicts of 
Interest.  (a)  The General Partner shall form an Audit Committee (the “Audit Committee”) to be comprised of two 
members of the board of directors of the General Partner who are not affiliated with the General Partner or its 
Affiliates except by reason of such directorship.  The functions of the Audit Committee shall be to review and 
approve . . . (ii) transactions between the Partnership and the General Partner and any of its Affiliates.” 
 
10Gotham S.J. Op., at 28. 
 
11Id. at 24 (emphasis added). 
 
 
8
dicta that DRULPA at 6 Del. C. § 17-1101(d)(2) permits a limited partnership 
agreement to eliminate fiduciary duties.12   
Because the Vice Chancellor’s summary judgment order in this matter has 
not been appealed, his opinion on this point is not before us for review on this 
appeal.  In our view, however, this dictum should not be ignored because it could 
                                                 
12Id.  See also Sonet v. Timber Co., 722 A.2d 319, 323 (Del. Ch. 1998) (stating that § 17-1101(d) “apparently 
[allows] broad license to enhance, reform, or even eliminate fiduciary duty protections . . .”) (emphasis added).  
 
 
 
9
be misinterpreted in future cases as a correct rule of law.13  Accordingly, in the 
interest of avoiding the perpetuation of a questionable statutory interpretation that 
could be relied upon adversely by courts, commentators and practitioners in the 
future, we are constrained to draw attention to the statutory language and the 
underlying general principle in our jurisprudence that scrupulous adherence to 
fiduciary duties is normally expected.     
 
Section 17-1101(d)(2) states: “the partner’s or other person’s duties and 
liabilities may be expanded or restricted by provisions in the partnership 
agreement.”14  There is no mention in § 17-1101(d)(2), or elsewhere in DRULPA 
                                                 
13Commentators have already noted some uncertainty on this subject.  See, e.g., Martin I. Lubaroff and Paul M. 
Altman (“Lubaroff & Altman”), Delaware Limited Partnerships § 13.1.2 at 13-2 (2002 Supp.) § 11.2.6 at 11-26.8 to 
11-26.9: 
 
 
     Although on its face Section 17-1101(d) permits the fiduciary duty of a general partner to be 
expanded or restricted without limit by the terms of a partnership agreement, it is not clear 
whether a restriction can be such as to totally eliminate all fiduciary duties.  The issue of the extent 
to which a fiduciary duty may be restricted has not yet been resolved.  The question has been left 
to the courts to determine as the area develops. . . .  In Sonet I, however, the Court of Chancery did  
note, in passing, that Section 17-1101(d) “apparently [allows] broad license to enhance, reform, or 
even eliminate fiduciary duty protections. . . .”  722 A.2d at 323. . . .  Nevertheless, given the 
contractual nature of a partnership agreement and the relationship among partners, and the Act’s 
provisions and recognition of the principle of freedom of contract, at a minimum, a very 
substantial and material limitation and restriction on the duties of a general partner, including a 
general partner’s fiduciary duties, should be permitted and enforced. 
 
* * * 
  
             In Gotham Partners, L.P. v. Hallwood Realty Partners, L.P., C.A. No. 15754 (Del. Ch. Sept. 
27, 2000) (memo opinion), the Court again examined contractual modification of fiduciary duties. 
 
                                                                                      * * * 
 
              In its discussion of Section 17-1101(d)(2), the Court stated that such section “expressly 
authorizes the elimination, modification, or enhancement of . . . fiduciary duties in the written 
agreement governing the limited partnership.”  Id. at 24 (emphasis added).       
 
146 Del. C. § 17-1101(d)(2) (emphasis added). 
 
10
at 6 Del. C., ch. 17, that a limited partnership agreement may eliminate the 
fiduciary duties or liabilities of a general partner.   
Finally, we note the historic cautionary approach of the courts of Delaware 
that efforts by a fiduciary to escape a fiduciary duty, whether by a corporate 
director or officer or other type of trustee, should be scrutinized searchingly.15  
Accordingly, although it is not appropriate for us to express an advisory opinion on 
a matter not before us,16 we simply raise a note of concern and caution relating to 
this dubious dictum in the Vice Chancellor’s summary judgment opinion.17    
Decision After Trial 
 
After trial, the Court of Chancery found the defendants liable for their 
conduct associated with the Odd Lot Resale to HGI, but upheld their conduct 
connected with the Reverse Split and the Option Plan.18  The Vice Chancellor 
                                                 
15See McNeil v. McNeil, 798 A.2d 503 (Del. 2002) (discussing the fiduciary duties of trustees generally and holding 
that the trustees breached those duties); Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 360 (Del. 1993) (stating that 
“directors are charged with an unyielding fiduciary duty to protect the interests of the corporation and to act in the 
best interests of its shareholders”); Smith v. Van Gorkom, 488 A.2d 858, 872 (Del. 1985) (“In carrying out their 
managerial roles, directors are charged with an unyielding fiduciary duty to the corporation and its shareholders.”); 
Blum v. Kauffman, 297 A.2d 48, 49 (Del. 1972) (noting “the policy of this Court to look with disfavor upon clauses 
which exonerate a  party from the consequences of his own negligence or that of his agent”).   
 
16 See Paramount Communications Inc. v. QVC Network, Inc., 637 A.2d 34, 51 (Del. 1973) (“It is the nature of the 
judicial process that we decide only the case before us . . .”); Stroud v. Milliken Enterprises, Inc., 552 A.2d 476, 480 
(Del. 1989) (“The law is well settled that our courts will not . . . render advisory opinions.”) (internal quotation 
omitted). 
  
17The Vice Chancellor also noted in his summary judgment opinion that “Any interstitial issues in this case are best 
dealt with through cautious application of the implied covenant of good faith and fair dealing.”  Gotham S.J. Op. at 
29 n.37.  We note that the implied covenant of good faith and fair dealing that inheres in every contract is not 
pertinent to the issues in this case and any discussion in the Vice Chancellor’s summary judgment about the 
contractual duty of good faith and fair dealing is also dictum.  The issue of good faith and fair dealing is not before 
us, and we need not express any opinion on that issue in this case.   
 
18Gotham Partners, L.P. v. Hallwood Realty Partners, L.P., 795 A.2d 1, 4-5 (Del. Ch. 2001). 
 
11
found that the Odd Lot Resale, unlike the other two transactions, did not involve an 
issuance of units, but rather a resale of existing units to HGI.19  As a result, the 
Vice Chancellor found “inapplicable” the protections of Section 9.01 of the 
Partnership Agreement, which authorizes the General Partner to issue Partnership 
Units of any kind to any person without the consent or approval of the Limited 
Partners.20  Instead, the Vice Chancellor continued, the Odd Lot Resale was subject 
to Partnership Agreement Sections 7.05 and 7.10(a), which provide for the 
contractually created fiduciary duties of entire fairness.21 
 
The Vice Chancellor found that the General Partner breached the contractual 
fiduciary duties of entire fairness because (1) the General Partner never formed the 
Audit Committee as required by Section 7.10(a) to review and approve the Odd 
Lot Offer and Resale, and (2) the General Partner failed to perform a market check 
or obtain any reliable financial analysis indicating that the Odd Lot Resale would 
be conducted on the same terms obtainable from a third party.22  The Court of 
Chancery thus held the General Partner liable for breach of the contractually 
created fiduciary duties of entire fairness contained in the Partnership Agreement 
                                                                                                                                                             
 
19Id. at 26. 
 
20Id. 
 
21Id. 
 
22Id. at 26-27. 
 
 
12
and found HGI, Gumbiner, and Guzzetti jointly and severally liable with the 
General Partner for aiding and abetting its breach.23  
 
Gotham requested rescission, or money damages and sterilization of voting 
rights.24  The Court of Chancery awarded money damages plus compound interest 
instead of rescission, in part because it found that Gotham delayed challenging the 
transaction “for nearly two years, and then filed suit to rescind only after it was 
clear that the market price [of the Partnership units] was up substantially and on a 
sustainable basis.”25  The Vice Chancellor then went on to find that the challenged 
transactions were not “conceived of as a conscious scheme to entrench the General 
Partner’s control and enrich HGI” improperly.  He stated that if he had been 
convinced otherwise, “I might be inclined to grant rescission despite Gotham’s 
torpid pace.”26  
 
Gotham then filed a direct appeal in this Court contesting the remedy.  The 
General Partner, HGI, Gumbiner, and Guzzetti filed cross appeals asserting that the 
Court of Chancery erred by finding Section 9.01(a) of the Partnership Agreement 
inapplicable to the Odd Lot Offer and Resale or, alternatively, by holding HGI, 
Gumbiner, and Guzzetti liable for aiding and abetting the General Partner’s breach 
                                                 
23Id. at 34. 
 
24Appellant’s Post-Trial Memorandum (March 21, 2001). 
 
25Gotham Partners, 795 A.2d at 36-38. 
26Id. at 36. 
 
 
13
of its contractually created fiduciary duties and by awarding compound interest on 
a damages award.27 
Issues on Appeal 
 
On appeal, Gotham argues that the Court of Chancery was required to award 
rescission as a matter of law and, even if an award of monetary damages were 
appropriate, the Court of Chancery erred in its calculation of the damages by 
failing to account for a control premium.  Gotham seeks reversal in part of the 
judgment of the Court of Chancery and a remand to the court with instructions to 
order rescission of the Odd Lot Resale to HGI.  Alternatively, Gotham seeks an 
award of rescissory damages or sterilization of HGI’s voting rights connected to 
the Odd Lot Resale units, or both. 
 
The General Partner, HGI, Gumbiner, and Guzzetti, contend in their cross 
appeal that the Court of Chancery erred: (1) by finding the Odd Lot Resale to HGI 
subject to Sections 7.05 and 7.10(a) of the Partnership Agreement, which provide 
for contractual fiduciary duties of entire fairness, instead of Section 9.01, which 
authorizes the General Partner to issue Partnership Units of any kind to any person 
without the consent or approval of the Limited Partners; (2) by finding HGI, 
Gumbiner, and Guzzetti jointly and severally liable with the General Partner for 
                                                 
27The Partnership did not file briefs in this appeal but wrote a letter to this Court stating that it does not believe the 
Court of Chancery abused its discretion by awarding monetary damages to the Partnership instead of another form 
of relief and that it does not take a position on any other issue on appeal.  Letter from Elizabeth M. McGeever of 
Prickett, Jones & Elliott, Counsel to the Partnership, to the Clerk to the Supreme Court of Delaware (Dec. 5, 2001). 
 
14
aiding and abetting a breach of a contractually created fiduciary duty; and (3) by 
awarding compound interest on money damages.  We will address the cross 
appeals first. 
Whether the Court of Chancery Erred By Ruling  
That the Odd Lot Resale to HGI Was A Resale of Partnership Units  
 
 
This Court reviews de novo the Court of Chancery’s interpretation of written 
agreements28 and Delaware law.29 
 
As the Vice Chancellor noted at summary judgment, a general partner owes 
the traditional fiduciary duties of loyalty and care to the limited partnership and its 
partners,30 but DRULPA § 17-1101(d)(2) “expressly authorizes the . . . 
modification, or enhancement of these fiduciary duties in the written agreement 
governing the limited partnership.”31  Indeed, we have recognized that, by statute, 
the parties to a Delaware limited partnership have the power and discretion to form 
and operate a limited partnership “in an environment of private ordering” 
                                                 
28Shock v. Nash, 732 A.2d 217, 224 (Del. 1999). 
 
29Rapid-American Corp. v. Harris, 603 A.2d 796, 804 (Del. 1992). 
 
30See also Boxer v. Husky Oil Co., 429 A.2d 995, 997 (Del. Ch. 1981) (stating that the general partner in a limited 
partnership is generally required “to exercise the utmost good faith, fairness, and loyalty”) (citing Meinhard v. 
Salmon, 164 N.E. 545 (N.Y. 1928), aff’d 483 A.2d 633 (Del. 1984)). 
 
31Gotham S.J. Op., at 24.  DRULPA § 17-1101(d)(2), codified at 6 Del. C. § 17-1101(d)(2), reads:  “To the extent 
that, at law or equity, a partner or other person has duties (including fiduciary duties) and liabilities relating thereto 
to a limited partnership or to another partner or to another person that is a party to or is otherwise bound by a 
partnership agreement, . . . (2) the partner’s or other person’s duties and liabilities may be expanded or restricted by 
provisions in the partnership agreement.”    
 
 
15
according to the provisions in the limited partnership agreement.32  We have noted 
that DRULPA embodies “the policy of freedom of contract”33 and “maximum 
flexibility.”34  DRULPA’s “basic approach is to permit partners to have the 
broadest possible discretion in drafting their partnership agreements and to furnish 
answers only in situations where the partners have not expressly made provisions 
in their partnership agreement”35 or “where the agreement is inconsistent with 
mandatory statutory provisions.”36  In those situations, a court will “look for 
guidance from the statutory default rules, traditional notions of fiduciary duties, or 
other extrinsic evidence.”37  But, if the limited partnership agreement 
unambiguously provides for fiduciary duties, any claim of a breach of a fiduciary 
duty must be analyzed generally in terms of the partnership agreement.38 
 
The Vice Chancellor found, and the parties do not contest, that Partnership 
Agreement Sections 7.05 and 7.10(a) set forth fiduciary duties of entire fairness 
owed by the General Partner to its partners generally in self-dealing transactions, 
                                                 
32Elf Atochem North America, Inc. v. Jaffari, 727 A.2d 286, 287 (Del. 1999). 
 
33Id. at 290.  See also Lubaroff & Altman, supra at n.13 (noting that “[o]verarching principles reflected in 
[DRULPA]” include “the principle of freedom of contract”) .  
34Elf Atochem, 727 A.2d at 291 n.27. 
 
35Id. at 291. 
 
36Id. at 292. 
 
37Sonet,  722 A.2d at 324. 
  
38See id. (“[U]nder Delaware limited partnership law a claim of breach of fiduciary duty must first be analyzed in 
terms of the operating governing instrument—the partnership agreement—and only where that document is silent or 
ambiguous, or where the principles of equity are implicated, will a Court begin to look for guidance from the 
statutory default rules, traditional notions of fiduciary duties, or other extrinsic evidence.”);  
 
 
16
such as the Odd Lot Resale.  Section 7.05 expressly permits the Partnership to 
enter into self-dealing transactions with the General Partner or its affiliate 
“provided that the terms of any such transaction are substantially equivalent to 
terms obtainable by the Partnership from a comparable unaffiliated third party.”39  
Section 7.10(a) requires the General Partner to form an independent Audit 
Committee that shall review and approve self-dealing transactions between the 
Partnership and the General Partner and any of its affiliates.40  The Vice Chancellor 
found, and the parties do not contest, that Sections 7.05 and 7.10(a) “operate 
together as a contractual statement of the traditional entire fairness standard [of fair 
price and fair dealing], with § 7.05 reflecting the substantive aspect of that standard 
and § 7.10 reflecting the procedural aspect of that standard.”41 
 
Because the Partnership Agreement provided for fiduciary duties, the Vice 
Chancellor properly held that the Partnership Agreement, as a contract, provides 
the standard for determining whether the General Partner breached its duty to the 
Partnership through its execution of the Odd Lot Resale.  As the Vice Chancellor 
                                                 
39Section 7.05 of the Partnership Agreement states in its entirety:  “The Partnership is expressly permitted to enter 
into transactions with the General Partner or any Affiliate thereof provided that the terms of any such transaction are 
substantially equivalent to terms obtainable by the Partnership from a comparable unaffiliated third party.” 
 
40Section 7.10(a) states in its entirety:  “The General Partner shall form an Audit Committee (“the Audit 
Committee”) to be comprised of two members of the board of directors of the General Partner who are not affiliated 
with the General Partner or its Affiliates except by reason of such directorship.  The functions of the Audit 
Committee shall be to review and approve (i) the expense reimbursements and compensation paid by the Partnership 
to the General Partner or any of its Affiliates and (ii) transactions between the Partnership and the General Partner 
and any of its Affiliates.” 
 
41Gotham Partners, 795 A.2d at 26. 
 
 
17
stated, the Partnership Agreement “leaves no room for the application of common 
law fiduciary duty principles to measure the General Partner’s conduct”42 because 
the Partnership Agreement “supplanted fiduciary duty and became the sole source 
of protection for the public unitholders of the Partnership.”43  Thus, “the General 
Partner was subject, by contract, to a fairness standard akin to the common law one 
applicable to self-dealing transactions by fiduciaries.”44   
 
The General Partner, HGI, Gumbiner, and Guzzetti apparently concede:  (1) 
the General Partner’s conduct associated with the Odd Lot Resale did not comply 
with Sections 7.05 and 7.10(a) of the Partnership Agreement because, as the Vice 
Chancellor found; (2) the Audit Committee never reviewed or approved the Odd 
Lot Resale to HGI; and (3) the General Partner never obtained a reliable financial 
analysis indicating that the Odd Lot Resale would be conducted on the same terms 
obtainable from an independent third party.  Nonetheless, they argue that they are 
not liable for failing to comply with Sections 7.05 and 7.10(a) because Section 
9.01 alone governed the Odd Lot Resale.  They assert that the Odd Lot Resale was 
an issuance rather than a resale of Partnership units to HGI.  The defendants seek 
the protection of Section 9.01, which gives the General Partner absolute and 
                                                 
42Gotham S.J. Op., at 25. 
 
43Gotham Partners, 795 A.2d at 24.  See also Gotham S.J. Op., at 28 n.36 (noting that the court will apply 
“agreement provisions to the exclusion of [common law] fiduciary duty principles while recognizing that some of 
the agreement’s provisions were ‘in some sense . . . an explicit acceptance of the default duty of loyalty and fair 
dealing . . . .’”) (quoting Sonet, 722 A.2d at 324 n.12). 
 
44Gotham S.J. Op., at 28.   
 
18
independent authority to issue additional Partnership units to any person or entity, 
including affiliates such as HGI. 
 
The Vice Chancellor properly found that the Odd Lot Resale was a resale of 
Partnership units to HGI and thus Section 9.01 is inapplicable.  It is undisputed that 
the Partnership’s accounting books did not treat the sale of odd lots to HGI as an 
issuance of units.  Furthermore, the Partnership units from the Odd Lot Resale 
were listed on the American Stock Exchange, but the Resale was presented to the 
Exchange as a resale, not as an issuance. The Vice Chancellor properly found that 
the Odd Lot Resale was structured as a resale, in part to avoid American Stock 
Exchange Rule 713, which requires that holders approve additional issuances as a 
prerequisite to the shares or units’ listing on the Exchange.  Thus, the General 
Partner is liable for breaching the contractually created fiduciary duties of entire 
fairness provided by Sections 7.05 and 7.10(a) of the Partnership Agreement.  
Whether the Court of Chancery Erred by Holding  
HGI, Gumbiner, and Guzzetti Jointly and Severally Liable  
with the General Partner for Aiding and Abetting  
 
 
HGI, Gumbiner, and Guzzetti argue that only the General Partner was a 
party to the Partnership Agreement, and therefore they cannot be held liable for 
breach of the Agreement.  They also assert that there is no cause of action under 
 
19
Delaware law for aiding and abetting a breach of contract.  This Court reviews de 
novo the Court of Chancery’s interpretation of Delaware law.45 
 
HGI, Gumbiner, and Guzzetti are correct that they cannot be held liable for 
breach of the Partnership Agreement because they were not parties to it.  “It is a 
general principle of contract law that only a party to a contract may be sued for 
breach of that contract.”46  But, the Court of Chancery properly held HGI, 
Gumbiner, and Guzzetti jointly and severally liable with the General Partner for 
aiding and abetting the General Partner’s breach of fiduciary duties created by the 
Partnership Agreement.  “The elements of a claim for aiding and abetting a breach 
of a fiduciary duty are:  (1) the existence of a fiduciary relationship, (2) the 
fiduciary breached its duty, (3) a defendant, who is not a fiduciary, knowingly 
participated in a breach, and (4) damages to the plaintiff resulted from the 
concerted action of the fiduciary and the non-fiduciary.”47 
 
In this case, the General Partner had a fiduciary relationship with the 
Partnership and its limited partners as defined by the Partnership Agreement.  The 
General Partner breached Sections 7.05 and 7.10(a), which impose the fiduciary 
duties of entire fairness.  HGI, Gumbiner, and Guzzetti knowingly participated in 
the breach of fiduciary duties, and the limited partners consequently were injured.  
                                                 
45Rapid-American Corp., 603 A.2d at 804. 
 
46Wallace v. Wood, 752 A.2d 1175, 1180 (Del. Ch. 1999) (citation omitted). 
 
47Fitzgerald v. Cantor, 1999 WL 182573 (Del. Ch.), at *1. 
 
 
20
The Vice Chancellor correctly noted that “where a corporate General Partner fails 
to comply with a contractual standard [of fiduciary duty] that supplants traditional 
fiduciary duties and the General Partner’s failure is caused by its directors and 
controlling stockholder, the directors and controlling stockholders remain liable.”48  
The Court of Chancery thus properly held HGI, Gumbiner, and Guzzetti jointly 
and severally liable with the General Partner for the General Partner’s breach of 
the Partnership Agreement’s fiduciary duties of entire fairness. 
Whether the Court of Chancery Erred by 
Awarding Compound Interest on a Damages Award 
 
 
The Court of Chancery awarded damages including “pre-judgment interest 
at the statutory amount, compounded monthly from August 1, 1995 until the date 
of judgment.”49  The defendants assert that the Court of Chancery may not award 
compound interest as a matter of law.  This Court reviews de novo the Court of 
Chancery’s interpretation of Delaware law.50 
 
Delaware courts have traditionally disfavored compound interest.51  But, we 
agree with the Court of Chancery that its uncontested “discretion to select a rate of 
interest higher than the statutory rate . . . include[es] the lesser authority to award 
                                                 
48Gotham Partners, 795 A.2d at 34. 
 
49Id. at 38. 
 
50Rapid-American Corp., 603 A.2d at 804. 
 
51Summa Corp. v. Trans World Airlines, Inc., 540 A.2d 403, 410 (Del. 1988) (noting that “Delaware courts have 
traditionally disfavored the practice of compounding interest”). 
 
 
21
compounding.”52  The Court of Chancery has noted that, in Delaware, “no rule of 
simple interest exists in the General Corporation Law” and “[t]he rule or practice 
of awarding simple interest, in this day and age, has nothing to commend it—
except that it has always been done that way in the past.”53  We agree, and even 
before this appeal, we recognized the discretion of the Court of Chancery to award 
compound interest.54  Thus, we find that the Vice Chancellor had the discretion to 
award compound interest in this case and did not abuse that discretion.  
Whether the Court of Chancery Had Discretion 
Not to Grant Rescission in This Case 
 
Gotham makes three arguments to support its claim that the Court of 
Chancery erred by refusing to order rescission of the Odd Lot Resale:  (1) 
rescission is required by law; (2) rescission is appropriate because the Odd Lot 
Resale was the result of a breach of a contractually created fiduciary duty or the 
aiding and abetting of that breach; and (3) rescission is appropriate because, 
without it, the defendants will retain their ill-gotten advantage of control over the 
Partnership and will be unjustly enriched by their breach of the Partnership 
Agreement.   
                                                 
52 Brandin v. Gottlieb, 2000 WL 1005954 (Del. Ch.), at *29 n.83. 
 
53Onti, Inc. v. Integra Bank, 751 A.2d 904, 929 (Del. Ch. 1999). 
54See, e.g., Smith v. Nu-West Indus., 2001 WL 50206 (Del. Ch.), at *1 (granting an award of prejudgment interest at 
ten percent compounded monthly), aff’d, 781 A.2d 695 (Del. 2001). 
 
 
22
Gotham’s first contention is incorrect.  Rescission “is not given for every 
serious mistake and it is neither given nor withheld automatically, but is awarded 
as a matter of judgment.”55   
Gotham’s second and third arguments might be persuasive but for the fact 
that the Court of Chancery found that:  (1) Gotham delayed bringing suit for an 
injunction or rescission until it “tested the waters” and the Partnership’s publicly 
listed units rose in value; and (2) the Odd Lot Resale was not “a conscious scheme 
to entrench the General Partner’s control and enrich HGI through sales of 
Partnership units on the cheap in deals effected without procedural safeguards or 
full disclosure.”56  We cannot conclude on this record that these findings of fact are 
clearly erroneous.  
The Court of Chancery has noted:  “It is a well-established principle of 
equity that a plaintiff waives the right to rescission by excessive delay in seeking 
it.”57  Furthermore, “[i]t is not a matter of laches and there is no requirement that 
the defendant show prejudice from the delay.  [Rather, i]t is the plaintiff’s burden 
to prove promptness, not the defendant’s to prove delay.”58  The Court of Chancery 
                                                 
55Gaffin v. Teledyne, Inc., 1990 WL 195914 (Del. Ch.), at *16, aff’d in part and rev’d in part on other grounds, 611 
A.2d 467 (Del. 1992). 
 
56Gotham Partners, 795 A.2d at 36. 
 
57Gaffin, 1990 WL 195914, at *18. 
 
58Id. 
 
 
23
thus has the discretion not to grant rescission where delay allows the plaintiff “to 
sit back and ‘test the waters,’ waiting to assert a claim for rescission until after 
[the] stock price ha[s] increased.”59  Gotham never sought an injunction despite its 
knowledge as early as June 5, 1995 that the Odd Lot Offer units would be resold to 
HGI.  Rather, Gotham waited until nearly two years had passed before seeking 
rescission.  Gotham attempts to persuade this Court that any delay on its side was 
the result of Gotham complying with this Court’s instruction that prospective 
plaintiffs request access to books and records before filing suit.60  But Gotham did 
not request access to the Partnership’s books and records until almost a year and a 
half after the Odd Lot Resale.   
The Vice Chancellor thus properly found that Gotham failed to meet its 
burden to prove promptness because it substantially and unjustifiably delayed 
seeking rescission.  As the Vice Chancellor stated, Gotham’s delay enabled it “to 
see what the market price for Partnership units would do, and to sue only if the 
Odd Lot Offer resales turned out to be favorable to HGI.”61  Indeed, “Gotham sat 
back and let HGI take the risk of its purchases for nearly two years, and then filed 
                                                 
59Gaffin, 1990 WL 195914, at *17. 
 
60See, e.g., White v. Panic, 783 A.2d 543, 549 n.15 (Del. 2001) (urging prospective plaintiffs to use the “tools at 
hand,” such as books and records requests, to obtain information to support their claims and to avoid dismissal for 
failure to state a claim). 
 
61Gotham Partners, 795 A.2d at 36. 
 
 
24
suit to rescind only after it was clear that the market was up substantially on a 
sustainable basis.”62 
The Vice Chancellor properly did not view Gotham’s delay alone as the 
determinative factor.  As he noted, rescission nonetheless might be a possible 
remedy if the Odd Lot Resale had been “a conscious scheme to entrench the 
General Partner’s control and enrich HGI through sales of Partnership units on the 
cheap in deals effected without procedural safeguards or full disclosure.”63  
Because Gotham unjustifiably delayed challenging the Odd Lot Resale and the 
defendants did not intend to entrench the General Partner or improperly enrich 
HGI, we find that the Vice Chancellor was within his discretion in refusing to grant 
rescission in this case, even though the result of the challenged transaction was to 
secure control by the defendants.  Given the result of control and the defendants’ 
conduct, however, an adequate, rationally-articulated substitute remedy must be 
awarded. 
Whether the Court of Chancery Abused Its Discretion  
by Failing to Account for a Control Premium 
 
The Court of Chancery awarded money damages of approximately $3.4 
million based on a per unit value of $25.84 for each Partnership unit resold to 
                                                 
62Id. 
 
63Id.  (noting “in particular the evidence that indicates the reluctance of HGI to fund the Odd Lot Offer”).  See also 
id. at 13 (stating that HGI first declined to provide funding for the Reverse Split and Odd Lot Offer). 
 
 
25
HGI.64  The court gave equal weight to four factors:  book value, Gotham’s 
comparables for minority stakes in other limited partnerships, the per unit price of 
an unrelated Spring 1996 repurchase of Partnership units, and the average price 
paid by the Partnership during the Odd Lot Offer.65  Gotham notes that none of the 
four factors “takes account of the lock on control that HGI obtained in the 
Resale.”66  Gotham emphasizes that, at trial, Gumbiner valued control of the 
Partnership at $50 to $55 million and that only a mere $3.4 million was awarded as 
monetary damages.  Gotham argues that this Court should reverse on this issue and 
remand to the Court of Chancery for a new remedy calculation that accounts for 
the value of control of the Partnership.  This Court reviews the Court of 
Chancery’s fashioning of remedies for abuse of discretion.67 
The Partnership Agreement provides for contractual fiduciary duties of 
entire fairness.  Although the contract could have limited the damage remedy for 
breach of these duties to contract damages, it did not do so.  The Court of 
Chancery is not precluded from awarding equitable relief as provided by the entire 
fairness standard where, as here, the general partner breached its contractually 
                                                 
64Id. at 38. 
 
65Id. 
 
66Appellant’s Op. Brief at 39. 
 
67Weinberger v. UOP, Inc., 457 A.2d 701, 715 (Del. 1983) (noting “the broad discretion of the Chancellor to fashion 
such relief as the facts of a given case may dictate”); Int’l Telecharge, Inc. v. Bomarko, Inc., 766 A.2d 437, 439 
(Del. 2000) (noting that this Court “defer[s] substantially to the discretion of the trial court in determining the proper 
remedy”). 
 
 
26
created fiduciary duty to meet the entire fairness standard and the partnership 
agreement is silent regarding damages.  The Court of Chancery in this case may 
award equitable relief as provided by the entire fairness standard and is not limited 
to contract damages for two reasons:  (1)  this case involves a breach of the duty of 
loyalty and such a breach permits broad, discretionary, and equitable remedies; and 
(2) courts will not construe a contract as taking away other forms of appropriate 
relief, including equitable relief, unless the contract explicitly provides for an 
exclusive remedy. 
 
In this case, as the Vice Chancellor properly found, the fiduciary duties 
provided for by the Partnership Agreement supplanted common law fiduciary duty 
principles,68 but “some of the agreement’s provisions were ‘in some sense   . . . an 
explicit acceptance of the default duty of loyalty and fair dealing.’”69  The General 
Partner breached its duty of loyalty by failing to comply with the contractually 
created entire fairness standard during the Odd Lot Resale, which resulted in the 
General Partner and its corporate parent solidifying their control over the 
Partnership.  Where there is “a breach of the duty of loyalty, as here, ‘potentially 
harsher rules come into play’ and ‘the scope of recovery for a breach of the duty of 
loyalty is not to be determined narrowly [because t]he strict imposition of penalties 
                                                 
68Gotham S.J. Op., at 23-29. 
 
69Id. at 28 n.36 (quoting Sonet, 722 A.2d at 324 n.12). 
 
 
27
under 
Delaware 
law 
are 
designed 
to 
discourage 
 
28
disloyalty.’”70  Therefore, the Court of Chancery’s “powers are complete to fashion 
any form of equitable and monetary relief as may be appropriate.”71 
 
In addition, courts will not construe a contract “as taking away a common 
law remedy unless that result is imperatively required.”72  For example, this Court 
has held that, even if a contract specifies a remedy for breach of that contract, “a 
contractual remedy cannot be read as exclusive of all other remedies [if] it lacks 
the requisite expression of exclusivity.”73  The Maryland Court of Appeals also has 
held that “mere inclusion” of a money damages clause as the specified remedy for 
a breach will not “negate the possibility of injunctive [or other equitable or legal] 
relief in a proper case.”74  Therefore, even where a partnership agreement specifies 
a remedy for breach of that contract, the Court of Chancery is not prohibited from 
awarding other equitable or legal remedies, at least unless the partnership 
agreement explicitly states that the specified remedy is the exclusive remedy.  In 
                                                 
70Cantor Fitzgerald, L.P. v. Cantor, 2001 WL 536911 (Del. Ch.), at *3 (quoting Int’l Telecharge, 766 A.2d at 441 
(quoting Thorpe v. CERBCO, Inc., 676 A.2d 436, 445 (Del. 1996))). 
 
71Weinberger, 457 A.2d at 714.  See also Int’l Telecharge, 766 A.2d at 440 (stating that “the powers of the Court of 
Chancery are very broad in fashioning equitable and monetary relief under the entire fairness standard as may be 
appropriate”); Cantor Fitzgerald , L.P. v. Cantor, 2000 WL 307370 (Del. Ch.), at *29-*30 (stating that “equity must 
try to right the wrongs with adequate remedies” and awarding a declaratory judgment and money damages for a 
breach of a contractually created fiduciary duty). 
 
7217A Am. Jur. 2d Contracts § 727 (1991) (quoted in Massachusetts Indem. & Life Ins. Co. v. Dresser, 306 A.2d 
213, 217 (Md. 1973); Local 248 UAW v. Natzke, 153 N.W.2d 602, 609 (Wis. 1967)). 
 
73Oliver B. Cannon & Son, Inc. v. Dorr-Oliver, Inc., 336 A.2d 211, 214 (Del. 1975) (reviewing an action brought to 
recover damages from the deterioration of chemical process tank linings applied by a subcontractor). 
 
74Dresser, 306 A.2d at 217 (interpreting an employment contract’s damages provision for breach of a covenant not 
to compete). 
 
 
29
addition, where the partnership agreement is silent regarding remedies, the Court 
of Chancery has the discretion to award any form of legal and/or equitable relief 
and is not limited to awarding contract damages for breach of the agreement.  The 
Vice Chancellor thus had the discretion to apply any equitable and/or legal remedy 
applicable in corporate cases where the controlling entity fails the test of entire 
fairness.75  The question is whether he abused that discretion by not ordering 
adequate damages or equitable remedies to account for the control premium. 
 
In this case, Gotham requested rescission, or rescissory damages and 
sterilization of the voting rights attached to the Odd Lot Resale units.  The Vice 
Chancellor, as discussed above, had the discretion not to grant rescission because 
Gotham unjustifiably delayed contesting the Odd Lot Resale and the defendants 
did not intend to entrench the General Partner or unfairly enrich HGI through the 
challenged transaction.  Although the Vice Chancellor found that the defendants 
did not intend for the General Partner to become entrenched or HGI to be unjustly 
enriched, the Odd Lot Resale had that effect.  The Court of Chancery was thus 
required to remedy that effect by compensating the limited partners for a control 
                                                 
75Weinberger, 457 A.2d at 714 (stating that if a transaction does not meet the entire fairness standard, the Court of 
Chancery’s “powers are complete to fashion any form of equitable and monetary relief as may be appropriate”); Int’l 
Telecharge, 766 A.2d at 442 (rejecting the argument that a finding of a breach of the duty of loyalty requires 
disgorgement); Gaffin, 1990 WL 195914, at *17 (holding that “a plaintiff waives the right to rescission by excessive 
delay” and must prove promptness), aff’d in part and  rev’d in part on other grounds, 611 A.2d 467 (Del. 1992); 
Ryan v. Tad’s Enterprises, Inc., 709 A.2d 682, 699 (Del. Ch. 1996) (“[T]he Court will exercise its discretion to craft 
from the ‘panoply of equitable remedies’ a damage award that approximates a price the board would have approved 
absent a breach of duty.”); Thorpe, 676 A.2d at 445 (remanding for determination of damages incidental to a breach 
of duty so that the fiduciary will would “not profit personally from his conduct, an that the beneficiary [would] not 
be bound by such conduct”). 
 
 
30
premium.  As the Vice Chancellor recognized, the Audit Committee—whose 
contractually-mandated functions were not implemented—conceivably would have 
“taken into account the fact that the Odd Lot resales were of particular advantage 
to HGI and demanded value for that advantage in exchange” because “the Odd Lot 
resales solidified HGI’s control.”76  Consequently, we find that the Vice 
Chancellor abused his discretion in fashioning the remedy in this case by failing 
(1) to address and decide the applicability of rescissory damages, and (2) to include 
in the damages calculation a premium for the control acquired by HGI through the 
Odd Lot Resale. 
 
The Partnership is entitled to receive, at a minimum, what the Partnership 
units sold to HGI would have been worth at the time of the Odd Lot Resale if the 
General Partner had complied with the Partnership Agreement.77  We thus reverse 
the judgment of the Court of Chancery regarding the remedy in this case, and we 
remand for procedures, such as expansion of the record, as may be necessary and 
appropriate to accomplish two objectives.  First, the Court of Chancery should seek 
to quantify how the challenged transaction would have been consummated had the 
defendants adhered to the Partnership Agreement’s contractual entire fairness 
provisions.  Specifically, the court should determine and consider what price the 
                                                 
76Gotham Partners, 795 A.2d at 37. 
 
77Int’l Telecharge, 766 A.2d at 441 (finding no abuse of discretion where the Court of Chancery concluded that 
plaintiffs were entitled to receive, “at a minimum, what their shares would have been worth at the time of the 
Merger if [the chief executive officer and controlling stockholder] had not breached his fiduciary duties”) (internal 
quotation omitted). 
 
31
Audit Committee would have approved for the Odd Lot Offer resales to HGI if the 
Audit Committee had been aware that the transaction would result in HGI 
solidifying control over the Partnership.  Second, the Court of Chancery should 
reconsider and award some form or combination of the various equitable remedies 
available to the limited partnership, including rescissory damages, sterilization of 
voting rights, and other appropriate methods of accounting for a control premium.  
We note that the Court of Chancery has the discretion to consider afresh in light of 
the above analysis whether or not to order rescission. 
Conclusion 
 
We affirm the judgment of the Court of Chancery that (1) the contractual 
fiduciary duties of entire fairness contained in the Partnership Agreement applied 
to the disputed transaction in this case; (2) defendants HGI, Gumbiner, and 
Guzzetti are jointly and severally liable with the General Partner because they 
aided and abetted the General Partner’s breach of the contractually created 
fiduciary duties of entire fairness; (3) the Court of Chancery has the discretion not 
to grant rescission where the plaintiff unjustifiably delays seeking that remedy, 
provided that the court articulates and orders a reasonable alternative remedy; and 
(4) the court has discretion to award compound interest on the resulting damage 
remedy. 
 
32
 
We reverse the judgment of the Court of Chancery regarding the calculation 
of damages.  We remand, as discussed above, for the court to fashion a remedy 
according to its discretion that accounts for a control premium. 
Jurisdiction is not retained.