Waite v. Sylvester

Supreme Court of New Hampshire · 1989 · Corporations

560 A.2d 619 (N.H. 1989)

Updated August 22, 2026

CorporationsPartnershipsLimited partnershipsFiduciary dutiesContract interpretationGeorgia lawchoice of lawpartner removal

Facts

BWAC was a Georgia limited partnership formed to own and operate the Bretton Woods resort, and its agreement named Waite and Sylvester as co-managing partners. After financial problems and disagreements about the resort's future, partners holding more than 60% of the partnership interest removed Sylvester as co-managing partner and his related employment with MWMC was terminated. The trial court upheld the removal, limited Sylvester's post-removal distributions to those of a limited partner, ordered sale proceeds distributed under the BWAC agreement, rejected a claim that Sylvester owed fiduciary duties during BWAC's formation negotiations, and awarded him accrued MWMC salary. Both sides appealed.

Issue

Whether Sylvester's removal and the resulting distribution consequences complied with the BWAC agreement and fiduciary obligations; whether sale proceeds had to be distributed under the BWAC agreement or under other entity agreements; whether a fiduciary duty existed during pre-formation negotiations; and whether Sylvester's conduct gave Waite a defense to Sylvester's claim for accrued salary.

Rule

Where a limited partnership agreement expressly authorizes removal of a managing partner by an affirmative vote of partners holding a stated percentage interest and requires only written notice of removal, courts will not imply additional pre-removal notice or hearing requirements. Specific voting provisions granting authority to 'Partners' include limited partners notwithstanding broader limits on their participation. Contract language providing that a removed managing partner's rights as managing and general partner cease terminates future distribution rights in those capacities. Under Georgia law as applied here, fiduciary duties among partners did not attach during negotiations before the partnership was formed.

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Blue Mesa Lodging, L.P., a Georgia limited partnership based in Denver, names Kara Nolan as managing partner. The partnership agreement allows removal of a managing partner by the affirmative vote of partners holding at least 55% of partnership interests and requires delivery of written notice of removal, but says nothing about meetings or advance notice. Partners holding 58% sign a written consent removing Kara and send her notice the next day.

Was Kara's removal valid?

Explanation. The majority enforced the removal provision according to its plain terms. Where the agreement requires only an affirmative vote of partners holding the stated percentage interest and written notice of removal, a court will not imply additional procedural protections such as a formal meeting, advance notice, or a hearing. Here, the required percentage approved the removal and post-removal written notice was given, so the removal is valid.