In re Parkcentral Global Litigation
884 F. Supp. 2d 464
N.D. Tex.2012Background
- Plaintiffs are investors in Parkcentral Global, L.P. who suffered total loss of their limited partnership interests.
- The SAC rereads the CAC, dropping some entities from the case while preserving core theories.
- Counts allege mismanagement, misrepresentation/non-disclosure, and related theories including aiding and abetting and vicarious liability.
- Delaware law governs mismanagement claims and Texas law governs claims involving The Perot Family Trust; other aspects involve common-law principles of fiduciary duties.
- Court previously dismissed certain derivative claims for lack of demand futility and now analyzes futility and control issues across Perot Entities and individuals.
- Court notes Blasnik and Karmin served in roles at PCCM and Petrus; “change hats” principle governs their accountability across the corporate structure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Derivative mismanagement demand futility at Parkcentral level | Plaintiffs plead demand futility on PCCM given Blasnik and The Perot Family Trust's participation. | Defendants contend issues about Foreign Fund control and lack of standing; demand on PCCM may not have been futile. | Plaintiffs adequately plead demand futility; derivative claims survive against mismanagement theory. |
| Perot Investments' fiduciary duty to Parkcentral | Perot Investments controlled Parkcentral via integrated operations and oversight. | Plaintiffs fail to show Perot Investments exercised control over Parkcentral. | Perot Investments cannot be held liable for fiduciary breach by mismanagement based on asserted control. |
| The Perot Family Trust fiduciary duty to Parkcentral | Ownership/control through PCCM and representations show oversight and decision influence. | Texas law requires demonstrable control; pleadings insufficient. | The Perot Family Trust cannot be held liable for fiduciary breach due to lack of control showing. |
| Misrepresentation/non-disclosure and aiding/abetting by Blasnik and Karmin | Defendants issued misleading periodic reports; plaintiffs relied and suffered damages; Karmin aided Blasnik. | Claims fail for lack of control evidence and improper reliance; heightened pleading concerns. | Misrepresentation/non-disclosure claims by Blasnik and Karmin sufficiently pleaded; Karmin aided and abetted; unjust enrichment permissible; vicarious liability dismissed as to Perot Entities. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standards require plausible claims, not mere conclusory allegations)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (heightened plausibility standard for pleadings in fraud and other claims)
- In re Bennett, 989 F.2d 779 (5th Cir. 1993) (agency/control concepts inform fiduciary-duty liability in two-tier structures)
- Lusk v. Foxmeyer Health Corp., 129 F.3d 773 (5th Cir. 1997) (directors may act for parent and subsidiary; hats can be changed; control matters for liability)