## Facts

- Appletree Square I Limited Partnership and affiliated entities purchased One Appletree Square, a 15-story office building, in a 1981 transaction.
- In 1985, the purchasers also acquired an additional 25% interest in the partnership through a separate sale transaction.
- The sellers (Investmark, Inc. and related parties) designed, built, and sold the building and held partnership interests when the transactions occurred.
- A syndication firm affiliated with the purchasers represented them in the transactions and requested in writing any information material to investors’ participation.
- The sellers responded that the purchasers should inspect the property and records themselves and stated they could not know what information would be material to the purchasers’ investors.
- In 1986, the purchasers learned the building’s structural steel had asbestos-based fireproofing that was deteriorating and releasing fibers; abatement costs were estimated at approximately $10 million.
- The purchasers sued, alleging the sellers failed to disclose the asbestos condition and hazards and asserting fraud-based claims, breach of contract, statutory claims under the Minnesota Uniform Limited Partnership Act and the Deceptive Trade Practices Act, and negligent misrepresentation.
- The district court granted summary judgment for the sellers, finding fraud pleadings insufficient and holding many claims time-barred; it also denied leave to amend (including to plead fraudulent concealment for tolling).

## Issues

1. Whether partners in a limited partnership owed fiduciary duties requiring disclosure of material information, including latent asbestos hazards, in connection with partnership-related sale transactions.
2. Whether statutory disclosure provisions in the Minnesota Uniform Limited Partnership Act or provisions in the partnership agreement limited or displaced common-law fiduciary disclosure duties among partners.
3. Whether genuine issues of material fact as to knowledge, reliance, and reasonable diligence precluded summary judgment on the purchasers’ claims.
4. Whether limitations defenses and fraudulent concealment/tolling theories raised fact questions that should not be resolved on summary judgment.

## Decision

- The Minnesota Court of Appeals reversed the grant of summary judgment dismissing all claims and remanded for further proceedings.
- The court held that the partnership relationship created fiduciary obligations, including a duty to disclose material facts such as asbestos conditions affecting value and safety.
- The court concluded that neither the Uniform Limited Partnership Act’s disclosure provisions nor the partnership agreement eliminated or narrowed the partners’ common-law fiduciary duty of candor.
- The court determined that disputed fact questions concerning the sellers’ knowledge (as builders/insiders) and the purchasers’ reliance and diligence made summary judgment improper.

## Legal Principles

- Partners in a limited partnership may owe fiduciary duties to one another, including an affirmative duty to disclose material facts when one partner has superior access to information relevant to the partnership property and transaction.
- Statutory disclosure rights requiring production of information “on demand” do not, without clear exclusivity, displace broader common-law fiduciary disclosure obligations.
- Contractual provisions in a partnership agreement generally cannot negate core fiduciary duties of loyalty and candor among partners, particularly as to material, latent conditions affecting health and safety.
- Where claims turn on disputed facts concerning knowledge, reliance, and reasonable diligence in discovering latent defects, summary judgment is inappropriate.

## Conclusion

The court reversed summary judgment because the sellers’ status as partners and insiders supported a fiduciary duty to disclose material asbestos hazards, and the record presented fact disputes on knowledge, reliance, and diligence that required adjudication beyond summary judgment; ULPA and partnership terms did not eliminate these common-law duties.


Appletree Square I Ltd. P’ship v. Investmark, Inc., 494 N.W.2d 889 (Minn. Ct. App. 1993)