Opinion ID: 173130
Heading Depth: 2
Heading Rank: 2

Heading: Withdrawal and enforceability of the buy/sell offer

Text: In his withdrawal notice and buy/sell offer, the trustee offered to sell the 99% limited partnership interest for $297,000 or to purchase the general partner's 1% interest for $3000, based on a $3,000 price per percentage point of partnership interest. The bankruptcy court and district court concluded that this notice and offer were valid and enforceable under the partnership agreement's withdrawal provision. On appeal, Defendants argue both that the trustee was not entitled to withdraw from the partnership and that the buy/sell offer violated the partnership agreement's requirement that sale and purchase offers be on identical terms. Paragraph 16 of the partnership agreement provides in relevant part as follows: 16. Withdrawal of a Partner. 16.1 Notice of Withdrawal. A Partner may withdraw from the Partnership after delivering written notice of his intention to withdraw to the other Partner at least thirty (30) days prior to the proposed date of withdrawal.... Such notice of withdrawal shall include an offer by the Withdrawing Partner to purchase the interest of the Remaining Partner (the purchase offer) on stated terms and for a stated amount and, in the alternative, to sell the Withdrawing Partner's interest (the sale offer) on identical terms. 16.2 Option of Remaining Partner. For thirty (30) days after the delivery of such notice of withdrawal, the Remaining Partner shall have the option to accept the purchase offer o[r] the sale offer, or serve notice that the Partnership be terminated and liquidated in accordance with Section 15.3 herein. (Appellants' App., Case No. 09-7004, at 36.) Defendants argue that the trustee was not entitled to withdraw from the partnership, notwithstanding this provision, because withdrawal of the limited partner would result in a dissolution. This argument is premised on a misreading of the BAP's decision. Defendants argue that the BAP held that the limited partner was not permitted to cause dissolution of the partnership agreement, and they assert this holding applied either to a direct dissolution or to actions that might result in dissolution. However, the BAP simply heldand we agreethat neither the partnership agreement nor Oklahoma law permitted the trustee to directly dissolve the partnership. Indeed, the BAP specifically noted that ¶ 16 provided for a separate withdrawal right which was not affected by the BAP's ruling on dissolution. Nothing in the BAP's ruling or our affirmance thereof negates the partnership agreement's withdrawal provision, even if dissolution is a possible result of its enforcement. We are also not persuaded that other provisions in the partnership agreement trump ¶ 16. The fact that ¶ 15 does not list withdrawal by the limited partner as an event potentially triggering dissolution of the partnership does not mean that ¶ 16 should be disregarded. Nor do provisions describing entitlement to capital contributions outside of the withdrawal context trump ¶ 16's specific description of the buy/sell procedure that may be used by either partner to withdraw from the partnership. By its clear terms, ¶ 16 entitles the limited partner to withdraw by making a buy/sell offer in accordance with the provisions off ¶ 16. The parties also dispute the validity of the trustee's buy/sell offer under ¶ 16 based on this provision's requirement that the sell offer be on identical terms with the purchase offer. Defendants argue that identical terms means that the limited partner must be willing to buy or sell for an identical total amount, while the trustee argues that identical terms means that the buy and sell offers must be based on the same price per percentage point of partnership interest and the same proposed payment terms. We agree with the bankruptcy court and district court that the more natural reading of ¶ 16 is the interpretation asserted by the trustee  that the terms that must be identical under ¶ 16 include the proposed payment terms and the pro rata value for a percentage of partnership interest. [1] We are simply not persuaded that on identical terms means for an identical total amount, particularly where ¶ 16 distinguishes between the terms and amount in the context of the purchase offer. We thus agree with the bankruptcy court and district court that the trustee's buy/sell offer satisfied the requirements of ¶ 16 because it was based on the same $3000 value per percentage point of partnership interest and the same term that the price be paid immediately in cash. Defendants further argue that the buy/sell offer was invalid because it was intrinsically inequitable and did not account for the management and control differences between the general and limited partnership interests. While it is true that the trustee's buy/sell offer did not distinguish between these interests, such was not required by the partnership agreement's withdrawal provision. Under Oklahoma law, which controls our review of the partnership agreement, [i]t is the duty of the court to enforce valid voluntary contracts as written. Barnes v. Helfenbein, 548 P.2d 1014, 1021 (Okla.1976); see also Heskett v. Heskett, 896 P.2d 1200, 1202 (Okla.Civ.App.1995) (applying Oklahoma laws regarding contract interpretation to a written partnership agreement). The fairness or unfairness, folly or wisdom, or inequality of contracts are questions exclusively within the rights of the parties to adjust at the time the contract is made. Barnes, 548 P.2d at 1021. While the language of a contract does not govern if it involve[s] an absurdity, Okla. Stat. tit. 15, § 154 (1993), we are not persuaded that calculating the sale and purchase amounts for disparate partnership interests on a pro rata basis is absurd. For similar reasons, we reject Defendant's argument that the withdrawal provision should not be enforced because it defeats the purpose of forming a family partnership. This potential problem with the partnership agreement is simply not sufficient to prevent its enforcement under Oklahoma principles of contract interpretation.