## Facts

- Gateway Potato Sales sold seed potatoes on credit to Sunworth Packing Limited Partnership and was not paid.
- G.B. Investment Co. was a limited partner in Sunworth Packing.
- Gateway sued Sunworth and G.B. Investment, alleging G.B. Investment lost limited-liability protection by “participat[ing] in the control of the business” under A.R.S. § 29-319.
- Gateway’s owner claimed he extended credit based on representations that G.B. Investment was actively involved in, and had approved, the purchase.
- G.B. Investment submitted an affidavit from its vice-president stating it exercised no control over daily operations or management.
- Gateway submitted an affidavit from Sunworth’s president stating that G.B. Investment’s employees controlled day-to-day management and required him to report to them on nearly all actions.
- The trial court granted summary judgment for G.B. Investment and denied reconsideration.

## Issues

1. Whether the record presented genuine issues of material fact that G.B. Investment, though a limited partner, participated in control of the limited partnership’s business within the meaning of A.R.S. § 29-319.
2. Whether those factual disputes made summary judgment improper on Gateway’s claim seeking to impose liability on G.B. Investment for the partnership’s debt.

## Decision

- The Arizona Court of Appeals reversed the summary judgment in favor of G.B. Investment.
- The court remanded for further proceedings.
- The court held that conflicting affidavits created genuine issues of material fact regarding participation in control under A.R.S. § 29-319.

## Legal Principles

- A limited partner may incur liability for partnership obligations if the limited partner participates in control of the business under A.R.S. § 29-319.
- Whether a limited partner’s involvement is substantially similar to that of a general partner can be determinative of control-based liability.
- Summary judgment is improper when material facts are disputed on the statutory elements (including the extent of control and related creditor-knowledge considerations) needed to impose liability on a limited partner.

## Conclusion

Because the evidence sharply conflicted on whether G.B. Investment’s personnel controlled Sunworth’s day-to-day management, the court held that a factfinder, not the trial court on summary judgment, had to determine whether A.R.S. § 29-319 could impose liability on the limited partner for the partnership’s debt.


Gateway Potato Sales v. G.B. Inv. Co., 170 Ariz. 137, 822 P.2d 490 (Ct. App. 1991)