Brown v. Panish

California Court of Appeal Dec 6, 1979 No. Civ. 55301Published

Before: Ashby

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Holding. The court held that a proceeding under Corporations Code section 15525 to compel the recordation of a partnership certificate amendment is limited to ensuring public notice of partnership events and does not encompass collateral disputes regarding partnership dissolution or breach of fiduciary duty.

Issues

Whether the removal of a general partner and subsequent election of a successor requires an amendment to the certificate of limited partnership.
Whether claims of partnership dissolution and breach of fiduciary duty are proper defenses in a summary proceeding to compel recordation of a certificate amendment.
Whether the petitioners had standing to seek the court-ordered recordation of the amendment.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Such remedies are beyond the scope of a proceeding under Corporations Code section 15525, subdivisions (3) and (4), which should be a simple procedure to enable the public to have notice of important events in the partnership’s history.”

“Appellants’ allegations of breach of fiduciary duty are similarly beyond the scope of this proceeding.”

“The code does not impose the narrow standing requirement advocated by appellants.”

Opinion

ASHBY, J.

This is an action under Corporations Code section 15525, subdivisions (3) and (4), to compel the recordation of an amendment to the recorded certificate of the limited partnership known as Garden Grove Enterprise. Respondents Brown et al. are the majority of limited partners, who voted at a duly noticed meeting of the partnership June 1, 1977, to remove and replace the general partner, C & W Associates, Inc. Appellants Cheng et al. are the minority, who refused to execute an amendment to the certificate of limited partnership to reflect the action taken at the June 1 meeting. Respondents petitioned the trial court for an order directing recordation of the amendment, which the trial court granted.

Appellants asserted three defenses to the petition, which they reiterate here: (1) that the removal of the former general partner dissolved the partnership; (2) that respondents lacked standing to petition; and (3) that the election was void because during discussions which took place at the election meeting, respondents failed to disclose certain facts, which omission breached respondents’ fiduciary duty toward appellants.

Discussion

A limited partnership can exist only if a certificate of limited partnership is signed and recorded pursuant to Corporations Code section 15502. The purpose of this requirement is to give notice to the public of the limited liability assumed by the limited partners and of the pertinent terms of the partnership agreement.

(Tiburon Nat. Bank

Wagner,

265 Cal.App.2d 868, 874-875 [71 Cal.Rptr. 832]; Advising Cal. Partnerships (Cont.Ed.Bar 1975) § 1.4, pp.3-4.) The statute requires that at least the 15 designated items of information about the

[432]

limited partnership agreement be matters of public notice. (Corp. Code, § 15502; see Advising Cal. Partnerships,

supra,

at § 4.5, p. 132, § 4.79, p. 169.) For the continued protection of the public, the certificate must be amended when certain designated events occur or when necessary to make the certificate accurately reflect the agreement. (Corp. Code, § 15524.) The procedure for amending the certificate is set forth in Corporations Code section 15525, and that section also provides the remedy when one or more members of the partnership refuse to execute the amendment.

Brown v. Panish

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ASHBY, J.

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