SUZAN D. FRITCHEL; ALEXANDRA J. WHITE, DREW ANN WHITE; GAVIN M. TERRY; ISAAC T. WHITE; JACOB A. TERRY; and KERRY P. WHITE, Appellants (Plaintiffs),
MARCUS WHITE, in his capacity as the Personal Representative of the Estate of John E. White, and THE ESTATE OF JOHN E. WHITE, a/k/a JOHN EDWARD WHITE, Appellees (Defendants).
from the District Court of Laramie County The Honorable
Steven K. Sharpe, Judge.
Representing Appellant: Robert J. Walker of Hickey &
Evans, LLP, Cheyenne, Wyoming. Argument by Mr. Walker.
Representing Appellee: Justin Newell Hesser of Hesser Law,
LLC, Cheyenne, Wyoming. Argument by Mr. Hesser.
DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.
Appellants, a sub-group of limited partners in the John E.
White Family Limited Partnership (the Limited Partnership),
filed a direct action against the Appellees to remedy losses
incurred when John E. White (the Decedent) disposed of the
Limited Partnership's real property. The Appellees
moved to dismiss the complaint, arguing that the limited
partners alleged derivative harms that had to be filed as a
derivative action. The district court agreed and dismissed
the complaint. Because the Decedent's property
transaction injured the Limited Partnership, not the limited
partners directly, Appellants must seek their remedy through
a derivative action on behalf of the Limited Partnership.
Consequently, we affirm.
The Appellants raise two issues on appeal:
1. Did the [d]istrict [c]ourt err by failing to recognize an
independent right of a limited partner of a partnership in
dissolution, without a general partner, to bring a direct
action against the former general partner; and
2. Did the [d]istrict [c]ourt err by failing to recognize
that the Appellants pled separate and distinct injuries from
those suffered by the partnership as a whole.
The dispositive issue is whether the Appellants'
complaint asserts any facts which would entitle them to
relief in the form of a direct action.
The Decedent created the Limited Partnership for estate
planning purposes, gifting small ownership interests to his
four children, their spouses, and his grandchildren (the
Limited Partners). He was the sole general partner. The
Limited Partnership held in its name real property in Pueblo,
Colorado (the Pueblo Property), which it acquired in 1999. In
February 2006, the Decedent, acting alone as the sole general
partner, sold the Pueblo Property to Robert D. Kennedy for
$600, 000 in a seller-financed transaction. The Limited
Partnership retained a promissory note in its name for $545,
000, with a deed of trust over the property as security. More
than two years later, in June 2008, the Decedent, again
acting alone as the sole general partner, consented to Mr.
Kennedy's sale of the Pueblo Property directly to William
B. Gradishar and Tiffany Moruzzi. Mr. Gradishar and Ms.
Moruzzi assumed the promissory note with the Decedent's
The critical event for this appeal occurred in November 2012,
when the Decedent, acting in his individual capacity,
released Mr. Gradishar and Ms. Moruzzi from the
"contract for deed purchase" and from "all
real estate taxes, back payments, late payments charges,
interest, etc." Instead of transferring the Pueblo
Property to the Limited Partnership, however, Mr. Gradishar
and Ms. Moruzzi deeded the Pueblo Property by quitclaim deed
to Decedent in return for $30, 000. At no point during this
transaction did the Decedent reimburse or consult the Limited
Partnership or its limited partners.
The Decedent died in November 2017 with the Pueblo Property
in his estate. His estate plan-a combination of a pour-over
will and a revocable trust-required distribution in equal
shares to his four children. Per the terms of the Partnership
Agreement, the Decedent's death constituted an event of
withdrawal of the sole general partner- dissolving the
Limited Partnership, and requiring it to wind up and
After discovering the transaction, all of the limited
partners except the Decedent's children and two
granddaughters, Sara L. White and Miranda J. White, filed a
complaint, which focuses on the Decedent's transaction
concerning the Pueblo Property and sets forth the same facts
outlined above. In the complaint, Appellants allege they were
injured because the Decedent never "reimbursed the
[Limited Partnership], and by extension the [Appellants], for
the [Limited Partnership's] lost income resulting from
[the Decedent's] forgiving of the Promissory Note and
taking back of the [Property] in his individual name."
They allege four causes of action: Breach of Partnership
Agreement; Breach of Fiduciary Duty; Constructive Fraud; and
Conversion. Appellants also sought a Declaratory Judgment.
Appellees moved to dismiss the complaint because the
Appellants failed "to allege any direct injury" to
themselves and, instead, claimed a derivative injury to the
Limited Partnership which must be brought in a derivative
action. The district court granted Appellees' motion, and
the Appellants timely appealed.
Additional facts are set forth below as necessary.