Opinion ID: 714979
Heading Depth: 2
Heading Rank: 5

Heading: Defendants' Motion for Directed Verdict for Lack of Personal Liability

Text: 92 At the completion of Life Care's case, the Defendants moved for the entry of a judgment as a matter of law, FED. R. CIV. P . 50(a), arguing that they were not jointly and severally liable under Tennessee Law for the breach of contract claim because there was no evidence that their conduct had been exercised in bad faith, without ordinary prudence, or contrary to the best interests of Charles Town. The statute upon which the Defendants relied, TENN.CODE ANN. § 61-2-405(b), reads in pertinent part as follows: 93 (a) A general partner shall discharge his duties as a party, including his duties as a member of a committee: 94 (1) In good faith; 95 (2) With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and 96 (3) In a manner he reasonably believes to be in the best interests of the partnership. 97 .... 98 (d) A general partner is not liable for any action taken as a partner, or any failure to take any action, if he performed the duties of his office in compliance with this section. 99 The district court correctly denied the motion. The Tennessee code provides: 100 61-2-403. Rights and powers--Liabilities.... 101 (b) Except as provided in this chapter, a general partner of a limited partnership has the liabilities of a partner in a partnership without limited partners to persons other than the partnership and the otherpartners. Except as provided in this chapter or in the partnership agreement, a general partner of a limited partnership has the liabilities of a partner in a partnership without limited partners to partnership and to other partners. 102 TENN.CODE ANN. § 61-2-403 (1980). It is clear, therefore, that general partners in a limited partnership are liable to third parties in the same manner as general partners in a general partnerships. 103 Partners in a general partnership are liable jointly and severally for everything chargeable to the partnership. TENN.CODE ANN. § 61-1-114 (1989). Thus, general partners in a limited partnership are equally liable to third parties. See, e.g., In re Pioneer Inv. Servs. Co., 141 B.R. 635, 648 (Bankr.E.D.Tenn.1992) ([The] general partner of The Cain Partnership, [a limited partnership,] is jointly and severally liable for everything chargeable to the limited partnership). 104 The Defendants' reliance on TENN.CODE ANN. § 61-2-405(b) is misplaced. This statute does not govern a general partner's liability to third parties, but merely provides the operative rule for a general partner's liabilities to the partnership and the other partners. See, e.g., Wilder Richman Corp. v. Willey, 1995 WL 247954 (Tenn.App.1995). 105