## Facts

- A New Jersey limited partnership owned and operated a licensed nursing home.
- Seniors Healthcare, Inc. (SHI) was the limited partner, holding about 84% of the partnership interests.
- The general partner was a corporation wholly owned by SHI; a management company, also owned by SHI, provided administrative services under a management contract.
- The nursing home’s day-to-day operations were handled by the management company’s administrator, not by SHI directly.
- A resident, Sanford Canter, alleged he was injured due to negligent nursing home care and sued the nursing home entities and SHI.
- Canter sought to impose liability on SHI by piercing the limited partnership veil, alleging SHI controlled and dominated the partnership through ownership and overlapping personnel.

## Issues

1. Whether equitable veil-piercing principles may apply to a New Jersey limited partnership to impose liability on a limited partner despite statutory liability protections.
2. Whether the summary-judgment record showed a genuine dispute that SHI participated in control outside statutory safe-harbor activities and dominated or misused the partnership to justify veil piercing.

## Decision

- The Appellate Division held that veil piercing can apply to limited partnerships and limited partners in limited circumstances consistent with the Uniform Limited Partnership Law.
- The court reversed the denial of SHI’s partial summary judgment and the denial of reconsideration.
- The court concluded the record did not show SHI’s control beyond statutory safe harbors or the level of domination and improper use required for veil piercing.
- SHI was dismissed from the case to the extent liability depended on a veil-piercing theory.

## Legal Principles

- Under N.J.S.A. 42:2A-27, a limited partner is generally not liable for partnership obligations unless it is also a general partner or participates in control of the business.
- N.J.S.A. 42:2A-27(b) provides safe-harbor activities that do not constitute participation in control (e.g., consulting with or advising the general partner, certain voting and oversight functions, and certain service relationships).
- Equity may disregard a limited partnership’s separate existence only when a limited partner goes beyond safe-harbor involvement and so dominates and misuses the entity to perpetrate a fraud or injustice, or to circumvent the law, that liability is required to prevent an inequitable result.
- Common ownership, overlapping officers/directors, or operating within an affiliated corporate structure, without evidence of domination plus improper use, is insufficient to pierce the veil.
- The proponent of veil piercing must establish the required domination and misuse by clear and convincing evidence.

## Conclusion

The Appellate Division recognized a narrow equitable basis to pierce a limited partnership veil against a limited partner but held that ownership ties and overlapping personnel, without clear and convincing evidence of control beyond statutory safe harbors and misuse to work a fraud or injustice, could not support liability; summary judgment for the limited partner was required.


Canter v. Lakewood of Voorhees Assocs., L.P., 420 N.J. Super. 508, 22 A.3d 68 (N.J. Super. Ct. App. Div. 2011)