Leigh v. Crescent Square, Ltd.

Ohio Court of Appeals, Montgomery County · 1992 · Corporations

608 N.E.2d 1166 (1992)

Updated August 22, 2026

Corporationspartnership expulsionfiduciary dutieslimited partnershipgeneral partnerexpulsionnoticepartnership agreement

Facts

Crescent Square, Ltd. was a limited partnership whose amended agreement provided that a developer general partner could be removed with the written consent of a majority in interest of the limited partners upon written notice to the general partner being removed. After disputes between Leigh and Francis, Francis sought support from March and the limited partners for Leigh's removal, and ballots were sent to limited partners in 1986 without Leigh's knowledge. Once the required majority returned signed ballots, Leigh was notified on May 8, 1987 that he had been expelled. Leigh claimed he was entitled to advance notice under the agreement and under fiduciary duties owed by Francis and March.

Issue

Did the partnership agreement require advance notice to a general partner before removal proceedings were instituted, and did fiduciary duties independently require Francis or March to notify Leigh of the impending expulsion? Also, if the agreement could be read to require advance notice, did the lack of such notice warrant relief?

Rule

Partnership relations are governed by the partnership agreement so long as its terms do not conflict with statute or public policy, and courts will not imply additional notice, hearing, or due-process requirements into an expulsion clause absent explicit contractual language. In this setting, a general partner's fiduciary duty applies only where a partner uses the partnership position for personal profit or gain or acts to the partnership's detriment; expulsion undertaken in good faith to resolve a partnership schism does not itself violate that duty.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Riverbend Housing Partners, a limited partnership in Columbus, has an agreement stating that a managing general partner "may be removed by written consent of 60% of the limited partners upon written notice to the managing general partner being removed." The limited partners sign consents in private and send Nora Patel notice after the threshold is met; the agreement says nothing else about hearings, cause, or timing of notice.

If Nora sues claiming the court should require pre-removal notice because expulsion is a serious deprivation, how should the court rule?

Explanation. The majority held that courts will not imply additional notice, hearing, or due-process requirements into an expulsion provision unless the partnership agreement expressly provides them. Language like "upon written notice" does not justify adding procedural protections by implication. The analysis turns on the agreement's text, not on a generalized fairness principle. (Derived from Leigh v. Crescent Square, Ltd. (1992).)