Suzan D. Fritchel Alexandra J. White, Drew Ann White Gavin M. Terry Isaac T. White Jacob A. Terry and Kerry P. White v. Marcus White, In His Capacity as the Personal Representative of the Estate of John E. White, and the Estate of John E. White, A/K/A John Edward White, 452 P.3d 601

Background

John E. White (Decedent) was sole general partner of the John E. White Family Limited Partnership, which owned real property in Pueblo, Colorado (the Pueblo Property).
In 2006 Decedent sold the Pueblo Property in a seller-financed sale; the partnership retained a promissory note and deed of trust as security.
Decedent later consented to a resale; in 2012 he released buyers from the contract/note and the buyers quitclaimed the property to Decedent for $30,000; the Limited Partnership received no reimbursement or notice.
Decedent died in 2017; his death dissolved the partnership under the Partnership Agreement, and his estate inherited the Pueblo Property.
A subset of limited partners (excluding Decedent’s children and two granddaughters) sued the estate alleging breach of partnership agreement, breach of fiduciary duty, constructive fraud, conversion, and sought declaratory relief.
The district court dismissed the complaint under W.R.C.P. 12(b)(6) as asserting derivative, not direct, claims; the plaintiffs appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether limited partners in dissolution without a general partner may bring a direct action against a former general partner	Plaintiffs: limited partners have an independent right to sue the former general partner directly after dissolution and absence of a general partner	Defendants: alleged harms are to the partnership and must be pursued derivatively on the partnership's behalf	Held: No; claims allege injury to the partnership and are derivative, so plaintiffs cannot bring a direct action
Whether plaintiffs alleged "special" or individual injuries distinct from partnership-wide harms	Plaintiffs: Decedent’s children recover via his estate while plaintiffs do not—so plaintiffs suffered a different, special injury	Defendants: any devaluation affected all limited partners equally; plaintiffs identify no legally distinct injury to themselves	Held: No special injury alleged; harm is uniformly derivative to partners’ equity interests
Whether courts should have discretion to treat derivative harms as direct (adopt ALI §7.01(d)-style rule)	Plaintiffs: courts should allow direct suits in closely held/dissolved partnerships to avoid inequity	Defendants: precedent requires derivative procedure; direct suits would risk multiplicity and inequitable recoveries	Held: Court declines to adopt discretionary rule; adherence to derivative-action requirement affirmed
Whether plaintiffs can satisfy the demand rule for a derivative suit (demand futility)	Plaintiffs: cannot make demand because partnership is in dissolution without a general partner	Defendants: statutory demand rule still applies	Held: Demand futility can be pleaded here; dissolution without a general partner makes demand futile, so derivative suit can proceed if futility is pled

Key Cases Cited

Wallop Canyon Ranch, LLC v. Goodwyn, 351 P.3d 943 (Wyo. 2015) (articulates test for direct vs. derivative claims in partnership context)
Sullivan v. Pike & Susan Sullivan Found., 412 P.3d 306 (Wyo. 2018) (distinguishes individual versus derivative harms)
Dowlin v. Dowlin, 162 P.3d 1202 (Wyo. 2007) (standard of review for dismissal under Rule 12(b)(6))
Mantle v. North Star Energy & Constr. LLC, 437 P.3d 758 (Wyo. 2019) (reaffirms requirement that derivative injuries be pursued derivatively)
Golden Tee, Inc. v. Venture Golf Sch., Inc., 333 Ark. 253 (Ark. 1998) (refused direct suit where alleged injuries were to the partnership, not individual partners)
Arndt v. First Interstate Bank of Utah, N.A., 991 P.2d 584 (Utah 1999) (declined to apply ALI §7.01(d) where harms were non-particularized and derivative)
El Paso Pipeline GP Co., L.L.C. v. Brinckerhoff, 152 A.3d 1248 (Del. 2016) (economic harms to a limited partner from devaluation are classically derivative)
Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90 (U.S. 1991) (explains purpose of demand requirement and role of business-judgment in demand futility)
Rales v. Blasband, 634 A.2d 927 (Del. 1993) (standard for pleading demand futility in derivative suits)