A general partner took from the partnership "success fees" that were hidden from the limited partners. The limited partners sought to dissolve the partnership on the grounds that although the partnership agreement stipulated that the partner would be entitled to success fees, the partner determined their own rate and hid it from the limited partners. The dissolution of the partnership was sought despite the fact that the partnership agreement stipulated that the partnership would be dissolved only by the decision of the general partner, or if the general partner entered insolvency proceedings.
The Court granted the request and ordered that a receiver would be appointed to the partnership. A limited partnership is a partnership in which the limited partners are liable only in the amount of their investment whereas the general partner has unlimited liability but is the only one who manages the partnership. Nevertheless, the limited partner is required to an increased degree of trust and good faith towards the limited partners, including prohibition of conflict of interest, and a duty of full disclosure. Breach of these duties by the limited partner justifies the dissolution of a partnership despite limitations on its dissolution in the partnership agreement. Here, the fees charged by the general partner were not predetermined when entering into the partnership agreement with the other partners and, in fact, the general partner negotiated the amount of the fees with itself, while concealing this fact from the other partners. Under these circumstances, the duty of trust was breached and the partnership should be dissolved.