Opinion ID: 714979
Heading Depth: 3
Heading Rank: 1

Heading: Eighth Affirmative Defense

Text: 7 In connection with the breach of contract issue, the Defendants asserted in their eighth affirmative defense that Life Care had violated the following provisions of the management agreement: 8 1.1 Control Retained in Board. Owner, acting through its duly elected officers, shall at all times exercise control over the assets and operation of the nursing home and [Life Care] shall perform the duties herein required to be performed by it as the agent of Owner and in accordance with the reasonable policies and directives of Owner. 9 1.2 Methods of Operation. [Life Care] shall make substantial changes in the method of operating the nursing home only after timely notification to, and with consent of Owner. Changes made to conform to governmental laws, regulations and ordinances shall not be deemed substantial for the purposes of this agreement. 10 On March 17, 1993, Life Care filed a motion to strike, in which it challenged the efficacy of the Defendants' eighth affirmative defense. In support of this position, Life Care asserted that it only owed a fiduciary duty to the partnership as a whole--not to the individual partners. The district court agreed, holding that the Defendants had not shown that Life Care's solicitation efforts had violated its fiduciary duty to Charles Town. In its ruling, the district court concluded that the challenged activity of Life Care was not implicated by the solicitation of proxies from the limited partners because the pertinent sections of the management agreement only referred to the methods by which it could implement procedures for its day to day operation of the nursing home. 11 The Defendants asked the district court to reconsider its decision, arguing that (1) the issue of the fiduciary duty of a limited partnership's agent was novel and, thus, should not have been decided on a motion to strike, (2) their eighth affirmative defense was legally sufficient as pleaded, and (3) genuine issues of a material fact remained as to whether Life Care's actions were detrimental to Charles Town and, hence, violative of its fiduciary duty. On August 13, 1993, the Defendants' motion for reconsideration was denied. 12 Acting on the belief that the district court had turned Life Care's motion to strike into a motion for summary judgment without giving them an opportunity to demonstrate that a genuine issue of a material fact existed, the Defendants filed a motion to supplement the record on August 27, 1993. On February 7, 1994, the district court granted their motion, but declared that these additional matters did not create a genuine issue of any material fact to warrant the reversal of its earlier rulings.