Hanaway, L. v. The Parkesburg Group
132 A.3d 461
| Pa. Super. Ct. | 2015Background
- In 1998 the Hanaways joined limited partnerships Sadsbury Associates, L.P. and later The Parkesburg Group, L.P. (TPG); they owned 32.4% of TPG.
- TPG held three parcels/options (Davis Tract, Loue Tract option, Quarry). T.R. White was the general partner with broad managerial discretion under the LPA.
- In November 2007 TPG sold the Davis tract and the Loue option to PMP (a partnership formed by T.R. White and the other limited partners excluding the Hanaways) for substantially less than prior offers; PMP then exercised the Loue option.
- The Hanaways sued in 2011 claiming conversion, breach of fiduciary duty, breach of contract, and sought equitable relief; tort claims were dismissed on statute-of-limitations grounds and some equitable relief was later denied after a bench trial.
- On appeal the Superior Court affirmed dismissal of the tort claims (two-year limitations) and found the laches challenge waived, but reversed summary judgment on the contract claim alleging breach of the implied covenant of good faith and fair dealing by T.R. White, remanding that claim for trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether failure to comply with LPA notice (registered/certified mail) prevents accrual of tort limitations | Hanaway: certified/registered-mail requirement in LPA meant no proper notice, so statute did not start | T.R. White: actual/constructive knowledge controls accrual; technical notice method irrelevant | Held: technical breach of notice provision irrelevant where plaintiffs had actual/constructive knowledge; limitations ran |
| Whether recording deeds listing only LPs (not individual owners) precluded constructive notice of transfer | Hanaway: deed did not disclose PMP owners, so constructive notice insufficient to start limitations | T.R. White: deed recording and other facts gave constructive/actual notice; ownership of PMP irrelevant to accrual | Held: recording plus other facts gave constructive/actual notice; limitations period commenced |
| Whether discovery rule or concealment/fraud tolling applied | Hanaway: defendants concealed material facts, misrepresented finances, withheld records, so limitations tolled | T.R. White: Hanaways had appraiser report, deed search, and internal memos showing transfers and undervaluation; no concealment that prevented inquiry | Held: discovery rule and fraudulent concealment inapplicable; plaintiffs had facts to inquire and did so, so tolling denied |
| Whether LPA's grant of broad discretion bars implied covenant claim for bad-faith sale | Hanaway: implied covenant of good faith/fair dealing limits exercise of discretion and was breached when assets sold below market to PMP | T.R. White: LPA conferred "full, exclusive and complete discretion"; implied covenant cannot add terms or override express rights | Held: Pennsylvania recognizes implied covenant in contracts; despite broad discretion, general partner must exercise discretion in good faith — genuine issues of fact exist as to breach; summary judgment reversed on this contract claim |
Key Cases Cited
- Fine v. Checcio, 870 A.2d 850 (Pa. 2005) (explains discovery rule and fact-intensive accrual analysis)
- Dalrymple v. Brown, 701 A.2d 164 (Pa. 1997) (discovery rule applies where injury and cause are latent)
- Weik v. Estate of Brown, 794 A.2d 907 (Pa. Super. 2002) (recording deeds can supply constructive notice for statute of limitations)
- Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d 418 (Pa. 2001) (good faith duty tied to contractual obligations; doctrine of necessary implication)
- Gerber v. Enterprise Products Holdings, LLC, 67 A.3d 400 (Del. 2013) (limited partner agreement context: implied covenant constrains exercise of contractual discretion)
- Summers v. Certainteed Corp., 997 A.2d 1152 (Pa. 2010) (standard for reviewing summary judgment in context of entire record)