Court Opinion

ID: 9851587
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:15:28.753616+00
Date Added: 2024-06-11T09:22:07.669127
License: Public Domain

Ringold, J.*
(dissenting) — I disagree with the majority holding that RCW 25.10.440 mandates the nonjudicial dissolution of the partnership. The effect of the majority's opinion is to hold that, upon the removal of the general partner and the failure of "all" the partners to provide a written agreement appointing the Pace Corporation as the successor general partner, the limited partnership is dissolved.
The majority misperceives the meaning and purpose of the Washington statutes and comes to an unreasonable result.
Statute and Partnership Agreement
The following statutes and sections of the partnership agreement are pertinent.
RCW 25.10.220:
Admission of additional general partners. Unless otherwise provided in the partnership agreement, after the filing of a limited partnership's original certificate of limited partnership, additional general partners may be admitted only with the specific written consent of each partner.
RCW 25.10.230:
Events of withdrawal of general partner. Except as approved by the specific written consent of all partners at the time, a person ceases to be a general partner of a *91limited partnership upon the happening of any of the following events:
(2) The general partner ceases to be a member of the limited partnership as provided in RCW 25.10.400;
(3) The general partner is removed as a general partner in accordance with the partnership agreement;
RCW 25.10.440:
Nonjudicial dissolution. A limited partnership is dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:
(2) Upon the happening of events specified in the partnership agreement;
(3) Written consent of all partners;
(4) An event of withdrawal of a general partner unless at the time there is at least one other general partner and the partnership agreement-permits the business of the limited partnership to be carried on by the remaining general partner and that partner does so, but the limited partnership is not dissolved and is not required to be wound up by reason of any event of withdrawal if, within ninety days after the withdrawal, all partners agree in writing to continue the business of the limited partnership and to the appointment of one or more additional general partners if necessary or desired; or
The certificate and agreement of limited partnership of Campus Park Associates provides:
14. Rights, Powers and Voting Rights of Limited Partners.
14.1 Limited Partners shall take no part in or interfere in any manner with the control, conduct or operation of the Partnership and shall have no right or authority to act for or bind the Partnership.
14.2 Limited Partners shall only have the right to vote upon the following matters affecting the basic structure of the Partnership:
14.2.1 Removal of the General Partner for cause;
14.2.2 Election of a successor General Partner;
14.2.3 Termination and dissolution of the Partnership;
*9214.7 Matters upon which the Limited Partners may vote shall require a majority vote, as defined in paragraph 3.8 of this Agreement, to pass and become effective.
Section 18 of the agreement headed "Termination and • Dissolution of the Partnership" provides as follows:
18.1 The Partnership shall be terminated and dissolved upon the happening of any of the following events:
18.1.2 The expulsion of the General Partner unless, prior to the effective date upon which the General Partner is to be expelled, a successor General Partner is elected by a unanimous vote of the holders of the outstanding units, which successor elects to continue the business of the Partnership;
The partnership agreement at paragraph 14.7 provides that a majority vote is as defined in paragraph 3.8 of the agreement, i.e., 66 percent of the outstanding units.
The majority correctly analyzes the agreement as being ambiguous and requiring a 66 percent vote to discharge the general partner, but wrongfully concludes that Washington's limited partnership act compels dissolution when a successor is elected by less than a unanimous vote.
Any statutory interpretation that would render an unreasonable and illogical consequence should be avoided. Puyallup v. Pacific Northwest Bell Tel. Co., 98 Wn.2d 443, 450, 656 P.2d 1035 (1982). The majority's interpretation mandates such a result. It forces Campus Park into dissolution 3 years after the replacement of ERADCO as general partner. During that period the partnership has functioned to the profit and benefit of the limited partners, in whose nominal interest the majority would dissolve the partnership. The limited partners have resisted dissolution in this action, so it cannot be said that they desire dissolution or that it would protect their interest. The majority allows two limited partners to frustrate the actions of 74.4 percent of the ownership of the limited partnership units by forcing *93an unwanted, costly, and undesirable dissolution of the partnership. The majority's result engenders additional burdens on the courts with attendant costs and expanses for attorneys fees upon the parties. This is an unreasonable outcome. This cannot be the purpose of the limited partnership act.
Furthermore, the majority's statutory interpretation effectively eliminates limited partners' rights to remove and replace a general partner for cause by not permitting such removal if but one limited partner dissents. A general partner may also be a limited partner. See RCW 25.10.250. By construing the statutes to require unanimous approval by the limited partners to replace a general partner, a person who is both the general and a limited partner could prevent the removal of the general partner by denying approval of a replacement. In this situation, where the general partner has improperly performed its duties, the majority forces on limited partners choices between Scylla and Charybdis, i.e., either to dissolve the partnership or to persevere with the general partner. This result does not protect the interests of the limited partners.
The statutes upon which the majority relies instead should be construed to apply only to those situations where there is or has been more than one general partner or where there is one general partner and the general partner desires to appoint an additional general partner. Such a construction is consistent with the language of the statutes and the majority's authorities. RCW 25.10.440(4) concerns "[a]n event of withdrawal of a general partner" (italics mine) rather than the general partner. By referring to "a" general partner the section suggests that it is limited to situations where there is more than one general partner. Under this construction the section operates to prevent a general partner from replacing a general partner without the consent of all of the limited partners.
The majority relies upon Wasserman v. Wasserman, 7 Mass. App. Ct. 167, 386 N.E.2d 783, 788, 6 A.L.R.4th 1268 (1979). Wasserman, however, concerns the addition of *94another general partner by appointment of the general partner. The court's rationale was that the purpose of Massachusetts' statutory equivalent to RCW 25.10.220 is to prevent the limited partners' investment from falling into the hands of an unknown or unwanted general partner. The American Law Reports annotation to Wasserman is entitled "Limited Partnership: Sufficiency of Procedure for Designating or Admitting Additional General Partner." (Italics mine.) The annotator states
In a case decided under the Uniform Limited Partnership Act, which provides that a general partner in a limited partnership has no authority to admit a new general partner without the written consent of all the limited partners, the court in Wasserman v Wasserman held that a partnership agreement which granted the general partner in a limited partnership the authority to designate as a new general partner, without the approval of the limited partners, any officer or director of two named corporations constituted the written consent required by the Uniform Act.
(Citation omitted.) Annot., 6 A.L.R.4th 1278 (1981).
Wasserman accordingly held that a person who was designated by the general as his successor was properly appointed. The court reasoned that the act leaves the members of a limited partnership free to determine their rights with respect to each other by any contractual agreement that does not violate public policy or the common law. The court explained that the purpose of the act "is to give each limited partner, who has no voice in the operation of the partnership business, the opportunity to prevent his investment from falling into the hands of an unknown or unwanted general partner." Wasserman, at 175.
The majority's reference to Beebe v. Allison, 112 Wash. 145, 192 P. 17 (1920) and RCW 25.04.180(7) is meaningless because those authorities relate only to the formation and dissolution of a general partnership.
It is evident that the purpose of RCW 25.10.440(4) is to preclude the general partner from adding additional general *95partners and thus exceeding its delegated power. Accordingly, I dissent from the majority's determination that Campus Park Associates was dissolved, and would hold that Pace Corporation was properly elected as the successor general partner.
Review granted by Supreme Court October 4, 1988.

The Honorable Solie M. Ringold is serving as a judge pro tempore of the Court of Appeals pursuant to CAR 26.