## Facts

- Environmental Research & Development Corporation (ERADCO) was the sole general partner of Campus Park Associates, a Washington real-estate limited partnership formed in 1978.
- Campus Park had 28 limited partners, including Doug Obert and others, who invested under a written limited partnership agreement.
- The partnership agreement allowed the limited partners to remove the general partner and elect a successor general partner by a 66% majority vote.
- After years of little or no progress in the venture, limited partners holding 74.4% of the partnership interests voted to remove ERADCO and name Pace Corporation as successor general partner.
- The limited partners sued ERADCO (and ERADCO’s owner) for misconduct and breach of fiduciary duties, seeking (among other relief) transfer of control over partnership finances and termination of ongoing contractual liabilities to ERADCO.
- ERADCO contended that its removal triggered dissolution because Washington’s Revised Uniform Limited Partnership Act (RULPA) allegedly required unanimous limited-partner approval of a successor general partner for the partnership to continue.
- After a bench trial, the superior court ruled for the limited partners on key claims, treated the removal and replacement as effective, and permitted Campus Park to continue with Pace as general partner.
- ERADCO appealed several adverse rulings, including the findings on removal/replacement, fiduciary breaches, and denial of ERADCO’s claimed economic interests (including a claimed 25% interest in profits and a claimed 1% interest in net value).
- The limited partners cross-appealed on additional claims and remedies, including challenges to expense awards and the trial court’s rejection of claims under the Washington Securities Act and Consumer Protection Act, as well as the denial of prejudgment interest and attorney’s fees.

## Issues

1. Did RULPA require unanimous limited-partner consent to appoint a successor general partner and continue the partnership, despite the partnership agreement’s 66% voting provision?
2. Were the limited partners’ actions effective to remove ERADCO and install Pace Corporation as successor general partner under the agreement and Washington law?
3. Did ERADCO breach fiduciary duties owed to the limited partners, and if so, what effect did that have on ERADCO’s claimed contractual interests in partnership profits or net value?
4. On the cross-appeal, did the trial court err in its rulings on expense reimbursements, statutory claims (Securities Act and Consumer Protection Act), and requests for prejudgment interest and attorney’s fees?

## Decision

- The Court of Appeals held that the limited partners’ removal of ERADCO and replacement with Pace Corporation was effective under the partnership agreement and Washington limited partnership law.
- The court rejected ERADCO’s argument that RULPA automatically displaced the agreement and forced dissolution absent unanimous consent; the partnership could continue with the successor general partner selected as the agreement allowed.
- The court upheld the trial court’s determinations that ERADCO, as general partner, owed fiduciary duties to the limited partners and that ERADCO breached fiduciary obligations found by the trial court.
- The court affirmed the trial court’s denial of ERADCO’s claimed economic entitlements tied to continuing service as general partner (including claims to a 25% interest in profits and a 1% interest in net value), given ERADCO’s valid removal and the trial court’s findings.
- On the limited partners’ cross-appeal, the court largely left intact the trial court’s rejection of Securities Act and Consumer Protection Act liability and the denial of prejudgment interest and attorney’s fees, while reversing in part on certain accounting and expense-related aspects of the judgment.
- Overall disposition: affirmed in part and reversed in part.

## Legal Principles

- A limited partnership agreement can set governance rules for removal of a general partner and selection of a successor; statutory dissolution provisions operate as default rules unless displaced by valid agreement terms.
- A general partner owes fiduciary duties to the limited partners, including duties of loyalty, honesty, and fair dealing, because the general partner controls partnership business and assets.
- A removed general partner’s claimed contractual right to profit participation or value payments may depend on continued status and performance as general partner; courts may decline to award such benefits where entitlement is conditioned on service or where the claim would reward misconduct found by the trier of fact.
- On appeal, a reviewing court may affirm liability and core governance rulings while adjusting discrete monetary components (such as expense reimbursements and accounting items) when the record shows error in part of the trial court’s calculation or award.
- Claims under the Washington Securities Act, the Consumer Protection Act, and related remedies such as attorney’s fees and prejudgment interest require proof of the elements set by statute and Washington precedent; fiduciary-duty wrongdoing does not automatically establish those statutory violations.

## Conclusion

Obert v. Environmental Research & Development Corp. held that Campus Park’s limited partners could remove ERADCO and install a successor general partner under the partnership agreement’s majority-vote provision, and that RULPA did not force dissolution through a unanimity requirement where the agreement provided another method. The Court of Appeals also upheld findings that ERADCO breached fiduciary duties and affirmed denial of ERADCO’s claimed profit and value interests tied to its role as general partner, while otherwise affirming most trial-court rulings and reversing only limited portions of the expense and accounting relief.


Obert v. Environmental Research & Development Corp., 752 P.2d 924 (1988)