Mariner Chestnut Partners, L.P. Ex Rel. Lamm v. Lenfest
152 A.3d 265
| Pa. Super. Ct. | 2016Background
- Mariner Chestnut Partners (the Partnership) owned prime Philadelphia real estate; in 2009 Chestnut Property (controlled by Lenfest) became General Partner and later sold the property at an absolute auction in October 2010 to an entity controlled by Lenfest.
- Limited partners (including Lamm) sued in the original Lamm litigation (filed 2009); that action resulted in various rulings, appointment of a Liquidating Trustee, and ultimately a Liquidating Trustee report (July 31, 2012) identifying possible fiduciary breaches and concealed development plans with Starwood.
- Judge Bernstein accepted the Trustee’s report and, on September 20, 2012, appointed Lamm as Receiver and ordered any litigation based on the Trustee’s report to be filed within 90 days or the Partnership would be dissolved.
- Lamm (as Receiver) filed a new suit December 20, 2012 (first amended April 9, 2013) alleging breach of fiduciary duty, fraud, usurpation of opportunity, conversion, fraudulent transfer, and equitable subordination, based largely on the Trustee’s report.
- The trial court sustained preliminary objections to fraud, conversion, fraudulent transfer, and equitable subordination claims, and later granted summary judgment dismissing the remaining fiduciary-duty and usurpation claims as time-barred under the two-year statute of limitations.
- The Superior Court affirmed: it held the discovery rule did not save the claims because the limited partners knew (or should have known) of the LOI and sale by October 2010; adverse-domination tolling did not apply; Judge Bernstein’s 90-day order did not extend the statute of limitations; and some claims were barred by claim/issue preclusion from the earlier litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the discovery rule tolled the 2-year statute of limitations for fiduciary-duty and usurpation claims | Lamm: concealment by Lenfest prevented discovery of injury until the Liquidating Trustee’s July 2012 report, so limitations tolled until then | Defendants: partners knew of LOI, auction, and purchaser by Oct 2010; any failure to investigate defeats discovery rule | Court: discovery rule does not apply as matter of law—partners knew or should have known by Oct 18, 2010; suit filed Dec 19, 2012 was time-barred |
| Whether adverse-domination or equitable tolling excused late filing | Lamm: adverse-domination applied because Lenfest controlled General Partner and concealed wrongdoing, so limitations tolled until receiver appointment | Defendants: Lamm as limited partner had means to discover and sue earlier; adverse-domination (if recognized) wouldn't fit these facts | Court: even if recognized, adverse-domination inapplicable here; Lamm had opportunity and means to pursue claims earlier |
| Whether Judge Bernstein’s 90-day order extended the statute of limitations (law of the case / coordinate-jurisdiction) | Lamm: obeying Judge Bernstein’s order to file within 90 days should not expose Receiver to time-bar defenses; law of the case bars later judge from dismissing on statute grounds | Defendants: Judge Bernstein’s order set a filing deadline but did not (and could not) extend statutory limitations under 42 Pa.C.S. § 5504 | Court: law-of-the-case/coordinate-jurisdiction does not prevent Glazer from applying statute; Bernstein made no finding extending limitations or finding fraud to permit extension |
| Whether the Receiver’s suit is a continuation of the original action (so not subject to a new limitations period) or precluded by prior judgment | Lamm: this action arises from claims identified in earlier Trustee report and was ordered by Judge Bernstein; thus it should relate back or be part of the earlier case | Defendants: the new suit was filed as a separate action; earlier litigation reached final judgment adverse to plaintiffs so claim/issue preclusion applies to overlapping matters | Court: the Receiver filed a new action; where claims are new they are subject to fresh limitations and some overlapping claims are barred by res judicata / collateral estoppel from the earlier final judgment |
Key Cases Cited
- P.J.S. v. Pa. State Ethics Comm’n, 723 A.2d 174 (Pa. 1999) (summary judgment standard and no genuine issue of material fact)
- Fine v. Checcio, 870 A.2d 850 (Pa. 2005) (discovery rule and requirement of due diligence to toll statute of limitations)
- Gleason v. Borough of Moosic, 15 A.3d 479 (Pa. 2011) (statute of limitations framework and discovery rule tolling)
- Daley v. A.W. Chesterton, Inc., 37 A.3d 1175 (Pa. 2012) (second action permitted only for separate and distinct injury known after first action)
- Hopewell Estates, Inc. v. Kent, 646 A.2d 1192 (Pa. Super. 1994) (res judicata bars future action on same cause between same parties)