Court Opinion

ID: 6938209
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:49:06.603738+00
Date Added: 2024-06-11T16:07:35.195650
License: Public Domain

BATCHELDER, Circuit Judge,
concurring in part and dissenting in part.
I would affirm the district court in all respects. Even if I could agree with the majority’s apparent conclusion that in Tennessee, as a matter of law, an agent’s fiduciary duty runs to the individual limited partners, I cannot agree with its conclusion that the conduct of the agent in this case, ie., soliciting the votes of the individual limited partners, could constitute a breach of fiduciary duty. As the district court correctly pointed out, “Life Care simply solicited the proxies of the limited partners who were required to make the decision whether to retain the incumbent general managing partner, LPIMC. Life Care had no control over the vote and could not force the elimination of [the] incumbent general partner.” The district court went on to hold that if Life Care owed a fiduciary duty at all, that duty was to the limited partnership and not to the individual limited partners. I am hard-pressed to see how, even if the duty were to the limited partners, the agent’s mere solicitation of those individuals’ proxies, without at least some demonstrated power on the part of the agent to force the individuals to comply with the solicitation, could constitute a breach of that duty.
Although the majority opinion appears to overrule the district court’s “total rejection of the ‘aggregate’ theory of partnership and ... complete endorsement of the ‘entity' theory,” (pursuant to which the district court held that Life Care’s duty, if any, was to the limited partnership), it does not clearly hold to whom Life Care owed a fiduciary duty. Rather, the majority opinion states, “while it is important to recognize that fiduciary duties flow to the individual partners of a limited partnership, it is also appropriate to subordinate those interests to those of the entity when a conflict of interest arises.” The majority then holds that a genuine issue of fact remains as to whether Life Care’s solicitation of proxies from the limited partners was warranted “notwithstanding its fiduciary duty to the general partners.” (emphasis added).
*516Finally, the majority cites no authority (and I have found none) for its conclusion that Life Care’s mere solicitation of proxies was a breach of its fiduciary duty unless Life Care could demonstrate the reasonableness of its basis for making the solicitation.
The district court’s opinion is clear, its reasoning is cogent, and I would affirm.