Ratner, S. v. Iron Stone Real Estate
2021 Pa. Super. 226
| Pa. Super. Ct. | 2021Background
- Iron Stone Real Estate Fund I, L.P. (Iron Stone LP) formed in 2005; Iron Stone Real Estate Group I, LLC was general partner. Stephen and Audrey Ratner hold 2% (two units); Dr. Robert Ostoyich holds 1% (one unit).
- Dispute arose after Iron Stone unilaterally extended/dissolved the partnership; Appellants sought payment, accounting, and dissolution and sued asserting multiple claims.
- In Ratner I, this Court affirmed dismissal of some claims but reversed on breach of contract, accounting, and dissolution, and remanded directing the trial court to wind up the partnership under 15 Pa.C.S. § 8682.
- On remand the trial court (Nov. 10, 2020) appointed a receiver, finding good cause because Iron Stone had proceeded to wind up without limited partners’ participation; the court initially directed parties to share receiver fees equally.
- The trial court then sua sponte discharged the receiver (Dec. 18, 2020), stating the partnership had been dissolved; Appellants appealed.
- The Superior Court vacated the discharge, held the trial court abused its discretion, and remanded for reappointment of a receiver with receiver fees to be paid from partnership funds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred in discharging the receiver when remand required winding up under § 8682 | Receiver necessary; Iron Stone dissolved partnership unilaterally and remand authorized court supervision | Appointment exceeded remand scope; partnership already wound up | Court vacated discharge: appointment proper and discharge was an abuse of discretion; remand requires reappointment |
| Whether discharging the receiver after parties briefed fee allocation was an abuse of discretion | Court improperly penalized Appellants for disputing fee allocation and rewarded Iron Stone’s unilateral dissolution | Discharge was justified because winding up had occurred | Court held discharge was an abuse of discretion and remanded for reappointment |
| Whether receiver’s fees must be paid from partnership assets or split between parties | Fees should be charged against partnership funds/recovered assets | Appellants who sought receiver should bear fees | Court directed that receiver’s fees and costs be paid from partnership funds (funds recovered) on remand |
| Whether it was proper to allocate 50% of receiver fees to Appellants despite their 3% interest | No equitable basis to burden minority limited partners with half the cost | Equal split justified because Appellants requested receivership | Court found no equitable basis for 50/50 allocation and ordered fees charged to partnership funds |
Key Cases Cited
- Ratner v. Iron Stone Real Estate Fund I, L.P., 212 A.3d 70 (Pa. Super. 2019) (appellate decision reversing on contract, accounting, dissolution and directing winding up under § 8682)
- Commonwealth v. Sepulveda, 144 A.3d 1270 (Pa. 2016) (lower court must follow the specific scope of remand)
- Metropolitan Life Ins. Co. v. Liberty Center Venture, 650 A.2d 887 (Pa. Super. 1994) (standard of review for appointment/removal of receiver)
- Atlantic Trust Co. v. Chapman, 208 U.S. 360 (U.S. 1908) (receiver expenses are a charge upon the property/fund under court control)
- In re Estate of Whitley, 50 A.3d 203 (Pa. Super. 2012) (executors may charge estates for expenses)