Court of Appeals of Arizona, First Division, Department A
Appeal from the Superior Court in Maricopa County Cause Nos. CV2010-022308, CV2010-022311, Honorable John A. Buttrick, Judge (Retired)
Stinson Morrison Hecker LLP, Michael Charles Manning James M. Torre Attorneys for Plaintiff/Counter-defendants/Appellants
Greenberg Traurig LLP, E. Jeffrey Walsh Stacey F. Gottlieb Nicole M. Goodwin Attorneys for Defendant/Counter-claimants/Appellees
PETER B. SWANN, Judge
¶1 This case presents the question whether Arizona law requires the automatic removal of a general partner from a limited partnership when a legally defective proceeding for dissolution remains pending against the general partner for more than 120 days. We hold that the relevant provision of Arizona's Limited Partnership Act, A.R.S. § 29-323(5), does not require removal in such circumstances.
FACTS AND PROCEDURAL HISTORY
¶2 This appeal arises from a dispute between two brothers, Jerry Simms and Ron Simms. Jerry and RASCD, Inc., a corporation of which Ron is the sole officer and shareholder, each own 50% of J&R Racing, LLC. Jerry is J&R Racing's manager and has authority to conduct its day-to-day business, but RASCD's consent is required for all other decisions.
¶3 J&R Racing is the sole general partner of TP Racing, LLLP, which owns and operates a horse-racing facility. J&R Racing was formed for the express purpose of acting as TP Racing's general partner, and has exclusive authority to manage TP Racing's affairs. TP Racing's limited partners include Jerry, Ron, and the Ronald A. Simms Perpetual Asset Shield Trust and The RAS Trust (referred to herein, collectively and individually, as "the Trusts"), for which Ron is trustee.
¶4 In July 2010, TP Racing commenced two actions, which were later consolidated: an action against Ron, alleging that he had defaulted on his obligations under a promissory note; and an action against Bruin Corporation, a company owned by Ron, alleging that Bruin had wrongly refused to take over the management of a trailer park when TP Racing's lease of the property from Bruin expired. In response, in February 2011, Ron, the Trusts, and RASCD filed a pleading styled a "Verified Third-Party Complaint, " asserting claims against Jerry related to his management of TP Racing through his role as J&R Racing's manager. The pleading named J&R Racing as a third-party defendant and included the following claim, by which Ron and the "Ron Simms Limited Partners" (defined in the pleading as the Trusts) requested TP Racing and J&R Racing's dissolution:
Judicial Dissolution of TP Racing, L.L.L.P. (A.R.S. § 29-345)
429. The allegations set forth in the preceding paragraphs are incorporated by reference as if fully set forth herein.
430. Jerry Simms has been adjudicated unsuitable to hold gaming certification. 431. Gaming certification is necessary for TP Racing to achieve its business objectives.
432. There is a strong likelihood that other jurisdictions will deny TP Racing continued permission to simulcast horse racing events to their jurisdictions.
433. Ron Simms and the Ron Simms Limited Partners seek a declaratory judgment from this Court under A.R.S. § 29-345 that it is no longer reasonably practicable for TP Racing to carry on its business in conformity with the partnership agreement.
434. Ron Simms and the Ron Simms Limited Partners further seek, in the alternative to removal of Jerry Simms and J&R Racing only, a decree from this Court pursuant to A.R.S. § 29-345 dissolving J&R Racing and TP Racing, ...