A Funny Thing Happened to Limited Partnerships When the Revised Uniform Partnership Act Came Along

MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

Linkage and Delinkage: A Funny Thing Happened to Limited Partnerships When the Revised Uniform Partnership Act Came Along

I. Introduction “Linkage” of the law governing general partnerships to the law governing limited partnerships has received a good deal of attention in the last few years.1 The concept of filling the gaps in limited partnership law with the general partnership law, or “linkage,” is embodied in provisions of the Uniform Partnership Act of 1914 (UPA),2 the Uniform Limited Partnership Act of 1916 (ULPA),3 and the Revised Uniform Limited Partnership Act of 1976 (RULPA).4 The promulgation of the revised Uniform Partnership Act in 1994 (RUPA)5 unsettled this long-standing tradition, as the drafters of RUPA made significant changes in the general partnership context and declined to address linkage in the Act. How well linkage of limited partnership law to the UPA has worked historically would be the subject of some debate.6 There is less

† Professor of Law, Baylor University School of Law. Professor Miller is the incoming Chair of the Partnerships and Unincorporated Business Organizations Committee of the American Bar Association Section of Business Law. 1. See, e.g., Larry E. Ribstein, Linking Statutory Forms, 58 LAW & CONTEMP. PROBS. 186 (1995) [hereinafter Ribstein 95]; Allan W. Vestal, Comprehensive Uniform Limited Partnership Act? The Time Has Come, 28 U.C. DAVIS L. REV. 1195 (1995); see also Larry E. Ribstein, Limited Partnerships Revisited, 67 U. CIN. L. REV. 953 (1999) [hereinafter Ribstein 99]. Additionally, at the 1995 Spring Meeting of the Business Law Section of the American Bar Association, the Committee on Partnerships and Unincorporated Business Organizations presented a program entitled “A Workshop—Linkage Between RULPA and RUPA: Is There a Problem or Is It a ‘Tempest in a Teapot?’” 1995 A.B.A. SEC. BUS. LAW 1. 2. UNIF. P’SHIP ACT (1914) [hereinafter UPA], 6 Pt. I U.L.A. 275 (2001). 3. UNIF. LTD. P’SHIP ACT (1916) [hereinafter ULPA], 6A U.L.A. 312 (1995). 4. REVISED UNIF. LTD. P’SHIP ACT (1976, amended 1985) [hereinafter RULPA], 6A U.L.A. 125 (2003). 5. [REVISED] UNIF. P’SHIP ACT (1994, amended 1997) [hereinafter RUPA], 6 Pt. I U.L.A. 1 (2001). Though the official name of the general partnership statute approved by NCCUSL in 1994 and amended in 1997 is the “Uniform Partnership Act,” it is commonly referred to as the “Revised Uniform Partnership Act” or the acronym “RUPA” to distinguish it from the original Uniform Partnership Act of 1914. 6. See Ribstein 95, supra note 1 (recognizing certain benefits of linkage but concluding costs of linkage outweigh benefits of linkage as general proposition); Vestal, supra note 1, at 1196 (stating link between general partnership law and limited partnership law historically worked well); see also UNIF. LTD. P’SHIP ACT Prefatory Note (2001) [hereinafter Re-RULPA], 6A U.L.A. 2 (2003) (noting that linkage has not been completely satisfactory because its consequences are not always clear and the UPA does not always furnish an appropriate rule for limited partnerships). MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

892 SUFFOLK UNIVERSITY LAW REVIEW [Vol. XXXVII:891 disagreement between the two most vocal commentators in this area with regard to the results of linking limited partnership law to RUPA. Professor Ribstein states that linking RUPA to the limited partnership statutes will create “possible interpretation problems,”7 and Dean Vestal predicts “chaos.”8 Indeed, RUPA has been the catalyst for the recent thoughtful commentary in this area, and it certainly appears to have exacerbated the problems and uncertainties associated with the linkage of general and limited partnership law. Ultimately, the concerns associated with linkage led to the decision to draft the Uniform Limited Partnership Act of 2001 (Re-RULPA) as a “stand alone” statute, i.e., to “delink” the limited partnership statute from the statutory law governing general partnerships, as called for by commentators.9 In this regard, the story appears to have a happy ending; however, Re-RULPA is not yet effective in any jurisdiction.10 RULPA (with or without the 1985 amendments) is in effect in all states except Louisiana.11 A few states enacted RULPA without repealing ULPA,12 and there are thus some limited partnerships that are still governed by ULPA. Both ULPA and RULPA link to general partnership law. Prior to the promulgation of RUPA, all states except Louisiana had adopted the UPA.13 Thirty-one states and the District of Columbia have now adopted RUPA14 though the UPA is still in effect in some of those jurisdictions for transition purposes.15 Thus, the issue of linkage is still very much with us. In Part II, this article reviews the manner in which limited partnership law has historically been linked to the UPA and discusses how the change in approach under RUPA has been addressed in state statutes and cases. In Part III, this article discusses case law addressing linkage issues in the context of the

7. Ribstein 99, supra note 1, at 960. 8. Vestal, supra note 1, at 1195-96. 9. See, e.g., Ribstein 99, supra note 1; Ribstein 95, supra note 1; Vestal, supra note 1. 10. See Uniform Limited Partnership Act (2001) Fact Sheet, at http://www.nccusl.org/nccusl/uniformact_ factsheets/uniformacts-fs-ulpa.asp (last visited Mar. 12, 2004). Hawaii is the only state in which Re-RULPA has been adopted, and the statute does not become effective until July 1, 2004. See 2003 Haw. Sess. Laws 210 (S.B. 1319). Kentucky, Illinois, Iowa, and Minnesota are the only other jurisdictions in which Re-RULPA has been introduced. Uniform Limited Partnership Act (2001) Fact Sheet, supra. 11. See RULPA Table of Jurisdictions Wherein Act Has Been Adopted, 6A U.L.A. 125-26 (2003). The last two jurisdictions to replace ULPA with RULPA were the Virgin Islands in 1998 and Vermont in 1999. See id. 12. See id. (listing Colorado, Georgia, Minnesota, New York, and Oklahoma). 13. RUPA Prefatory Note, 6 Pt. I U.L.A. 5 (2001). 14. See Uniform Partnership Act (1994 & 1997) Fact Sheet, at http://www.nccusl.org/nccusl/uniformact_ factsheets/uniformacts-fs-upa9497.asp (last visited Mar. 12, 2004). 15. See RUPA Table of Jurisdictions Wherein Act Has Been Adopted, 6 Pt. I U.L.A. 1 (Supp. 2003); RUPA § 1206, 6 Pt. I U.L.A. 266 (2001). RUPA provides that, on or after a future date established by the adopting state, RUPA governs all partnerships. RUPA § 1206, 6 Pt. I U.L.A. 266 (2001). Before that future date, however, RUPA governs only a partnership formed either: (1) after the effective date of the act, except a partnership that is continuing the business of a dissolved partnership under the UPA; or (2) before the effective date of RUPA, that elects to be governed by RUPA. Id. This section provides for a transition period similar to that in the Texas Revised Partnership Act, which was actually enacted prior to the completion of RUPA. Id. at Comment (citing TEX. REV. CIV. STAT. ANN. art. 6132b-10.03 (Vernon Supp. 1994)). MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

2004] LINKAGE AND DELINKAGE 893 traditional linkage to the UPA. In Part IV, this article identifies selected linkage problems created or exacerbated by the advent of RUPA. In Part V, this article summarizes the decision making process that led the Re-RULPA drafting committee to draft a delinked Re-RULPA and explains how the appendix to this article summarizes the gap-filling and expansion accomplished by Re-RULPA.

II. STATUTORY PROVISIONS LINKING LIMITED PARTNERSHIP AND GENERAL PARTNERSHIP LAW

A. Linkage of the UPA to ULPA and RULPA The UPA generally excludes limited partnerships from the scope of its definition of a partnership by carving out any association formed under any other statute; however, it goes on to provide that the UPA applies to limited partnerships “except in so far as the statutes relating to such partnerships are inconsistent with” the UPA.16 Thus, the UPA exports its provisions into ULPA or RULPA, as the case may be, unless stopped by an “inconsistency” in the limited partnership statute.17 The UPA remains in effect in approximately twenty-one states.18 ULPA and RULPA each contain provisions that incorporate by reference general partnership law.19 Though ULPA is not the primary limited partnership statute in any United States jurisdiction,20 its linkage provisions are noted here for purposes of completeness and historical background. ULPA and RULPA suggest or explicitly direct the application of general partnership law to limited partnerships in several ways. First, both ULPA and RULPA suggest the application of basic partnership principles by defining a limited partnership as a type of “partnership.”21 By way of contrast, the stand- alone Re-RULPA defines a limited partnership as a type of “entity.”22 The second way in which ULPA and RULPA import general partnership law is by explicitly providing for the application of such law to the rights, powers,

16. UPA § 6(2), 6 Pt. I U.L.A. 393 (2001). 17. Id. This provision has been referred to as the “downstream link.” See ROBERT W. HILLMAN ET AL., THE REVISED UNIFORM PARTNERSHIP ACT 18-19 (2003); Vestal, supra note 1, at 1199. 18. See UPA Table of Jurisdictions Wherein Act Has Been Adopted, 6 Pt. I U.L.A. 30 (Supp. 2003). The table lists twenty-two states in which the UPA is in effect. The notes to the table reflect that three of the twenty-two states have adopted RUPA and have repealed the UPA effective after a transition period. Id. The transition period has expired in one of those states. See id. Colorado adopted RUPA without repealing the UPA. Id. 19. ULPA § 1, 6A U.L.A. 312 (1995); ULPA § 9, 6A U.L.A. 346 (1995); RULPA § 101(7), 6A U.L.A. 223 (2003); RULPA § 403, 6A U.L.A. 365 (2003). These provisions have been referred to as the “upstream link.” See HILLMAN ET AL., supra note 17; Vestal, supra note 1, at 1199. 20. See supra note 11. 21. ULPA § 1, 6A U.L.A. 312 (1995); RULPA § 101(7), 6A U.L.A. 223 (2003). 22. Re-RULPA § 102(11), 6A U.L.A. 13-14 (2003). MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

894 SUFFOLK UNIVERSITY LAW REVIEW [Vol. XXXVII:891 restrictions, and liabilities of a general partner. Section 9 of ULPA provides: A general partner shall have all the rights and powers and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners, except that without the written consent or ratification of the specific act by all the limited partners, a general partner . . . [shall] have no authority to [take action in any of seven specified ways].23 Building on and refining the premise of Section 9 of ULPA, Section 403 of the 1976 version of RULPA provides: “Except as provided in this Act or the partnership agreement, a general partner of a limited partnership has the rights and powers and is subject to the restrictions and liabilities of a partner in a partnership without limited partners.”24 Further refining this approach, Section 403 of RULPA as amended by the 1985 amendments provides: (a) Except as provided in this [Act] or the partnership agreement, a general partner of a limited partnership has the rights and powers and is subject to the restrictions of a partner in a partnership without limited partners.

(b) Except as provided in this [Act], a general partner of a limited partnership has the liabilities of a partner in a partnership without limited partners to persons other than the partnership and the other partners. Except as provided in this [Act] or in the partnership agreement, a general partner of a limited partnership has all the liabilities of a partner in a partnership without limited partners to the partnership and to the other partners.25 ULPA and RULPA differ in the manner in which they qualify or limit the application of general partnership law to a general partner because the two acts differ in the extent to which they address the rights, powers, restrictions, and liabilities of a general partner. While ULPA contains very few provisions addressing the role of the general partner, RULPA contains a number of provisions specifically applicable to general partners. Thus, Section 403 of RULPA acknowledges that RULPA provides for the rights, powers, restrictions, and liabilities of general partners to some extent and calls for the application of general partnership law only where the Act does not “otherwise provide.”26 Further, RULPA recognizes the role of the partnership agreement in defining the rights, powers, restrictions, and liabilities of the general partners. Finally, both ULPA and RULPA provide for other law to fill the gaps left in those statutes. Section 29 of ULPA contains the following general statement: “In any case not provided for in this act the rules of law and equity, including

23. ULPA § 9, 6A U.L.A. 346 (1995). 24. RULPA § 403, 6A U.L.A. 365 (2003). 25. Id. 26. Id. MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

2004] LINKAGE AND DELINKAGE 895 the law merchant, shall govern.”27 Section 1105 of RULPA is more specific, stating: “In any case not provided for in [this Act] the provisions of the Uniform Partnership Act govern.”28 This reference to the “Uniform Partnership Act” obviously referred to the original UPA when RULPA was drafted. One of the linkage issues raised by the advent of RUPA is whether the reference in RULPA to the “Uniform Partnership Act” does or should refer to RUPA.29

B. RUPA Silence on Linkage; State Approaches to RUPA Linkage The drafters of RUPA avoided the issue of linkage. As explained in RUPA’s Prefatory Note: Partnership law no longer governs limited partnerships pursuant to the provisions of RUPA itself. First, limited partnerships are not “partnerships” within the RUPA definition. Second, UPA Section 6(2), which provides that the UPA governs limited partnerships in cases not provided for in the Uniform Limited Partnership Act (1976) (1985) (“RULPA”) has been deleted. No substantive change in result is intended, however. Section 1105 of RULPA already provides that the UPA governs in any case not provided for in RULPA, and thus the express linkage in RUPA is unnecessary. Structurally, it is more appropriately left to RULPA to determine the applicability of RUPA to limited partnerships. It is contemplated that the [National Conference of Commissioners on Uniform State Laws (NCCUSL)] will review the linkage question carefully, although no changes in RULPA may be necessary despite the many changes in RUPA.30 Thus, any linkage to RUPA was to be accomplished solely through the provisions of RULPA, a result that left linkage in a precarious condition. The drafters appear to be correct in their observation that express provisions in RUPA are not necessary to achieve linkage, and certainly commentators have agreed that linkage to RUPA is not necessarily a desirable result for limited partnerships.31 In fact, NCCUSL has now resolved the issue by promulgating Re-RULPA as a stand-alone statute. In the interim, however, NCCUSL promoted RUPA for adoption by the states. Because the impact of RUPA on limited partnerships is not evident in RUPA itself, the stage was set for states to adopt RUPA with potentially confusing, unworkable, or unsatisfactory results for limited partnerships. If a state adopts RUPA without amending its limited partnership statute, there may be confusion over whether the state’s UPA or RUPA is the “Uniform Partnership Act” incorporated by reference into the

27. ULPA § 29, 6A U.L.A. 422 (1995). 28. RULPA § 1105, 6A U.L.A. 547 (2003). 29. See infra text accompanying notes 30-54. 30. RUPA Prefatory Note, 6 Pt. I U.L.A. 6 (2001). 31. See, e.g., HILLMAN ET AL., supra note 17, at 18-21; Ribstein 99, supra note 1, at 960. See generally Ribstein 95, supra note 1; Vestal, supra note 1. MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

896 SUFFOLK UNIVERSITY LAW REVIEW [Vol. XXXVII:891 state’s limited partnership statute. In a worst case scenario, the state’s limited partnership statute refers to the UPA by specific statutory citation, and the repeal of the UPA in connection with the adoption of RUPA leaves the limited partnership act linked to a repealed statute. Further, questions regarding the application of a state’s RUPA transition provision to limited partnerships may arise if a state does not specifically address transition in the limited partnership context. Only a few states have fallen into the trap of repealing the UPA upon adoption of RUPA while leaving a specific statutory reference to the repealed UPA in the state’s Section 1105 equivalent.32 In these states, the link to general partnership law in the context of a general partner’s rights, powers, restrictions, and liabilities is still viable,33 but in “cases not provided for” the link is a statutory dead end.34 A number of other states have adopted RUPA without amending their limited partnership acts, but have apparently avoided the “dead end” result because their Section 1105 equivalents refer only generally to the “Uniform Partnership Act”35 or because the accompanying statutory reference to the chapter or article in which the original UPA was codified is also the chapter or article in which the state’s RUPA is codified.36 In these states, there may well be confusion about whether the statute refers to the old or new “Uniform Partnership Act,” but the reference will likely be interpreted to refer

32. West Virginia, Arkansas, and New Jersey apparently fell into this trap. West Virginia’s limited partnership act reads as follows: “In any case not provided for in this article, the provisions of the uniform partnership act, article eight-a of this chapter, shall apply.” W. VA. CODE ANN. § 47-9-63 (LexisNexis 1999). The editor’s note in Michie’s West Virginia Code Annotated helpfully points out that “[t]he reference to ‘article eight-a of this chapter’ is a reference to former 47-8A-1 et seq., which has been repealed. For present law see § 47B-1-1 et seq. [West Virginia RUPA].” Id. at Editor’s notes. The Arkansas limited partnership act states: “In any case not provided for in this chapter, the provisions of the Uniform Partnership Act, § 4-42-101 et seq., govern.” ARK. CODE ANN. § 4-43-1107 (2001). Sections 4-42-101 through 4-42-702 are repealed effective January 1, 2005. 1999 Ark. Acts 1518, § 1204. Arkansas RUPA is codified at §§ 4-46-101 through 4-46-1207. New Jersey’s limited partnership act reads: “In any case not provided for in this chapter, the provisions of the ‘Uniform Partnership Law’ (R.S. 42:1-1 et seq.) shall govern.” N.J. STAT. ANN. § 42:2A-3 (West 1993). Chapter 42:1 has been repealed in connection with the adoption of New Jersey RUPA, which is found at Chapter 42:1A. 2000 N.J. Laws 161, § 59. The District of Columbia and Iowa originally fell into this trap, but subsequently amended their limited partnership acts to specifically refer to RUPA. D.C. CODE ANN. § 33-201.08 (LexisNexis 2001), formerly D.C. CODE ANN. § 41-408, as amended by D.C. Law 13-313, §15 (eff. June 19, 2001); IOWA CODE ANN. § 487.1103 (West Supp. 2003), as amended by 2000 Iowa Acts 1024, § 4 (eff. Jan. 1, 2001); see also Shenandoah Assocs. Ltd. P’ship v. Tirana, 182 F. Supp. 2d 14, 19-20 (D.D.C. 2001) (recognizing District’s UPA had been repealed and replaced by RUPA, thus rendering reference to UPA in section 41-408 “erroneous and inconsistent with the legislative intent”). 33. See ULPA § 9, 6A U.L.A. 346 (1995), quoted in text accompanying note 23, supra; RULPA § 403, 6A U.L.A. 365 (2003), quoted in text accompanying note 25, supra. 34. See Matthew G. Dore, Partnership Law and Practice Under the New Iowa Uniform Partnership Act, 47 DRAKE L. REV. 497, 503 n.29 (1999) (noting Iowa’s Section 1105 upstream link would become “statutory dead-end” unless amended prior to repeal of UPA effective January 1, 2001). 35. HAW. REV. STAT. § 425D-1106 (2002); IDAHO CODE § 53-266 (LexisNexis 2002); 805 ILL. COMP. STAT. ANN. 210/1203 (West 1999); S.D. CODIFIED LAWS § 48-7-1105 (LexisNexis 1999); VT. STAT. ANN. tit. 11, § 3502 (2002). 36. See MD. CODE ANN., CORPS. & ASS’NS § 10-108 (1999); N.M. STAT. ANN. § 54-2-62 (LexisNexis 2002); TENN. CODE ANN. § 61-2-1205 (2002). MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

2004] LINKAGE AND DELINKAGE 897 to RUPA.37 The fact that RUPA itself omits a limited partnership from the definition of a partnership should not stop a court from reading the RULPA linkage provisions to require application of RUPA provisions in cases calling for linkage. In fact, one case has already illustrated that courts probably will not be hesitant to do so. In a case involving the District of Columbia’s RULPA and RUPA, the court noted that a limited partnership does not fall within RUPA’s definition of a “partnership,” but nevertheless applied RUPA principles under the District of Columbia’s RULPA Section 1105 equivalent.38 In fact, the court applied RUPA even though the linkage provision still specifically referred to the UPA, which had been repealed.39 The court concluded that “supplying the proper provisions . . . harmonizes the statute with the remainder of the D.C. Code.”40 The most common approach to linkage in states adopting RUPA has been to amend the state’s version of Section 1105 of RULPA to make clear that RUPA is the general partnership law that links to the state’s RULPA by specifically citing RUPA.41 In these states, it has been made clear that courts are to look to RUPA even though RUPA itself does not invite application of its provisions to limited partnerships.42 Some of these states included transition provisions

37. A number of arguments point to this result. First, the RUPA Prefatory Note indicates that RUPA’s approach was not intended to prevent its linkage to RULPA. See RUPA Prefatory Note, 6 Pt. I U.L.A. 6 (2001). Additionally, if the state repeals the UPA (usually after a transition period), as most states have done in connection with the adoption of RUPA, the reference would logically point to RUPA. Other commentators have concluded that linkage to RUPA is the likely result under RULPA provisions that do not specifically refer to either the original or revised Uniform Partnership Act. See ALAN R. BROMBERG & LARRY E. RIBSTEIN, BROMBERG & RIBSTEIN ON PARTNERSHIP § 17.01(b)(2) (Supp. 2002); HILLMAN ET AL., supra note 17, at 19-20 n.35; Vestal, supra note 1, at 1204-07. 38. Shenandoah Assocs. Ltd. P’ship v. Tirana, 182 F. Supp. 2d 14, 19-20 (D.D.C. 2001). The case actually involved a Virginia limited partnership. Id. at 19. As a threshold matter, the court addressed whether the D.C. RUPA provision allowing a partnership to sue and be sued in the partnership name should supply capacity to sue. Id. at 19-20. The court determined that the limited partnership was not formed under a statute of another jurisdiction “comparable” to D.C.’s RUPA, but concluded, based on the D.C. RULPA linkage provision applicable “in any case not provided for,” that the legislature “must have intended that section 41-408 [the Section 1105 equivalent] serve as a gap-filling provision, catching all possibilities not expressly covered by the ULPA.” Id. at 20. 39. Id. 40. Id. 41. ALA. CODE § 10-9B-1205 (2002); ALASKA STAT. § 32.11.890 (LexisNexis 2002); ARIZ. REV. STAT. ANN. § 29-363 (West 1998); CAL. CORP. CODE § 15722 (West 2003); CONN. GEN. STAT. § 34-37 (2002); D.C. CODE ANN. § 33-201.08 (1997); FLA. STAT. ANN. § 620.186 (West 2003); IOWA CODE ANN. § 487.1103 (West Supp. 2003); KAN. STAT. ANN. § 56-1a604 (2002); MINN. STAT. § 322A.87 (2002); MONT. CODE ANN. § 35- 12-503 (2002); NEB. REV. STAT. § 67-294 (2002); OKLA. STAT. ANN. tit. 54, § 363 (West 2002); OR. REV. STAT. § 70.615 (2001); TEX. REV. CIV. STAT. ANN. art. 6132a-1, § 13.03 (Vernon 2002); VA. CODE ANN. § 50- 73.75 (LexisNexis 1999); WASH. REV. CODE ANN. § 25.10.660 (West 2003)); WYO. STAT. ANN. § 17-14-1009 (LexisNexis 2002). 42. In Koros v. Doctors’ Special Surgery Center of Jacksonville, Ltd., a Florida court of appeals addressed in a footnote the RUPA rule that an accounting is not a prerequisite to a partner’s suit against the partners or the partnership. 717 So. 2d 137, 138 n.2 (Fla. Dist. Ct. App. 1998). The court held that the limited partner in that case could not maintain the suit absent dissolution and an accounting, noting that no party had argued the applicability of RUPA and that the law in effect on the date of the dismissal being appealed was the MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

898 SUFFOLK UNIVERSITY LAW REVIEW [Vol. XXXVII:891 specifically applicable to limited partnerships to clarify the impact of RUPA on existing limited partnerships.43 Colorado amended both its ULPA Section 29 and RULPA Section 1105 equivalents to permit a limited partnership to elect whether the UPA or RUPA will apply in a case not provided for by the limited partnership statute.44 If a limited partnership does not elect to be governed by RUPA in cases not provided for, the UPA is the applicable statute.45 The election is made by a declaration in the limited partnership’s certificate of limited partnership or an amended certificate of limited partnership.46 Delaware chose to keep its version of RULPA linked to the UPA by specifically referring to the UPA in its Section 1105 equivalent.47 Delaware RUPA repealed the UPA effective January 1, 2002, except with respect to limited partnerships.48 Thus, the only partnerships to which the Delaware UPA currently applies are limited partnerships. There is no provision expressly authorizing a limited partnership to elect RUPA as its gap filler. While California amended its RULPA Section 1105 equivalent to specifically add a reference to California RUPA in 1996 when it adopted RUPA,49 it amended its RUPA definition of a “partnership” in 1999 to specifically exclude limited partnerships.50 The status of RUPA linkage in California is therefore somewhat muddied. A federal district court applying California law to a limited partnership governed by California ULPA concluded that the amendment to the definition of a “partnership” in RUPA reflected a “clear intent on the part of the legislature to delink RUPA from limited partnership law so that the RUPA would no longer be used as a gap-

UPA, not RUPA. Id. at 138-39. The court’s discussion implied that it would have applied the RUPA rule if the issue had arisen after Florida’s 1996 adoption of RUPA. Id. at 138 n.2. 43. See TEX. REV. CIV. STAT. ANN. art. 6132a-1, § 13.03 (Vernon 2002) (linking Texas version of RULPA to Texas version of RUPA with respect to limited partnerships formed on or after effective date of new Act and with respect to limited partnerships formed prior to effective date that elected to be governed by new Act, but providing for five-year transition period during which limited partnership act continued to link to Texas UPA with respect to existing limited partnerships); MINN. STAT. § 322A.87 (2002) (providing for similar three-year transition period); OR. REV. STAT. § 20.86 (2001) (providing for similar five-year transition period). 44. COLO. REV. STAT. ANN. §§ 7-61-129, 7-62-1104 (West 1999). 45. COLO. REV. STAT. ANN. §§ 7-61-129, 7-62-1104 (West 1999). 46. COLO. REV. STAT. ANN. §§ 7-61-129, 7-62-1104 (West 1999). 47. DEL. CODE ANN. tit. 17 § 1105 (2002). Delaware’s RULPA provides: “In any case not provided for in this chapter, the Delaware Uniform Partnership Act in effect on July 11, 1999 (6 Del. C. § 1501, et seq.) and the rules of law and equity, including the Law Merchant, shall govern.” Id. 48. DEL. CODE ANN. tit. 15 § 205 (2002). 49. CAL. CORP. CODE § 15722 (West 2003) (“In any case not provided for in this chapter, limited partnerships shall be governed in the same manner as general partnerships would be governed pursuant to Section 16111, by the Uniform Partnership Act (Chapter 1 (commencing with Section 15001)), or the Uniform Partnership Act of 1994 (Chapter 5 (commencing with Section 16100)).”). 50. CAL. CORP. CODE § 16101 (West 2003). The 1999 amendment amended the definition of “partnership” by adding the words “and excludes any partnership formed under Chapter 2 (commencing with Section 15501) or Chapter 3 (commencing with Section 15611),” referring to California’s versions of ULPA and RULPA. Id. MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

2004] LINKAGE AND DELINKAGE 899 filler for the ULPA and RULPA.”51 The court discussed at some length RUPA’s Prefatory Note and the controversy surrounding linkage of RUPA to limited partnership statutes.52 While the ULPA Section 29 equivalent in issue referred only generally to application of the “rules of law and equity” in cases not provided for by ULPA,53 the court couched its conclusion that the legislature intended to delink RUPA from limited partnership law in terms of both ULPA and RULPA.54 Because the partnership in issue was governed by ULPA, the court did not have occasion to examine the specific reference to RUPA in California’s RULPA Section 1105 equivalent nor to address how delinkage squares with that reference.

III. CASE LAW ADDRESSING LINKAGE QUESTIONS IN THE CONTEXT OF TRADITIONAL UPA LINKAGE Linkage is an awkward proposition because it is often difficult to determine whether RULPA “otherwise provides” with respect to a provision in the UPA that might be applied to determine a general partner’s rights, powers, restrictions, and liabilities.55 Likewise, it is not always clear whether a matter is a “case not provided for” by the limited partnership statute.56 Finally, determining if a provision of the UPA is “inconsistent” with the limited partnership statute57 is a challenge in some cases. A number of courts have been confronted with arguments involving the application of UPA provisions in the limited partnership context. These cases illustrate that linkage has never been an ideal approach. Courts dealing with charging orders in the limited partnership context have reached different conclusions with regard to whether the charging order provisions of the UPA supplement those in RULPA.58 RULPA provides that a court may charge the limited partnership interest of a partner with payment of the unsatisfied amount of a judgment against the partner and specifies that, to the extent so charged, the judgment creditor has “only the rights of an assignee”

51. Mieuli v. DeBartolo, No. C-00-3225 JCS, 2001 WL 777091, at *9 (N.D. Cal. May 7, 2001). 52. Id. at *8-10. 53. CAL. CORP. CODE § 15529 (West 2003). 54. Mieuli, 2001 WL 777091, at *9. 55. See RULPA § 403, 6A U.L.A. 365 (2003). 56. See RULPA § 1105, 6A U.L.A. 547 (2003); ULPA § 29, 6A U.L.A. 422 (1995). 57. See UPA § 6(2), 6 Pt. I U.L.A. 393 (2001). 58. See infra notes 61-62. The charging order is the remedy of a judgment creditor of a partner with respect to the partner’s partnership interest. See UPA § 28, 6 Pt. II U.L.A. 341 (2001); RULPA § 703, 6A U.L.A. 454 (2003). The charging order functions somewhat like a lien on the partnership interest in favor of the judgment creditor of a partner. It entitles the holder of the charging order to receive distributions due the partner to the extent of the unsatisfied judgment, but does not entitle the holder to exercise the management rights of the partner or otherwise interfere in the business of the partnership. The charging order is neither “fish nor fowl. It is neither an assignment nor an attachment.” Bank of Bethesda v. Koch, 408 A.2d 767 (Md. Ct. Spec. App. 1979). See J. Gose, The Charging Order Under the Uniform Partnership Act, 28 WASH. L. REV. 1 (1953), for an extensive discussion of the charging order. MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

900 SUFFOLK UNIVERSITY LAW REVIEW [Vol. XXXVII:891 of the limited partnership interest.59 The UPA charging order provisions go further and indicate that the court may order foreclosure of the charged partnership interest.60 A number of courts have concluded that the UPA charging order provisions supplement the RULPA charging order provisions, i.e., that they address a case “not provided for” in RULPA in a manner that is “not inconsistent” with RULPA.61 Thus, these courts have concluded that a judgment creditor may obtain foreclosure on a charged interest in a limited partnership. In contrast, a Florida court of appeals concluded that the RULPA charging order provision “means what it says” and that “[n]othing in the Revised Uniform Limited Partnership Act authorizes foreclosure of the charged interest,” foreclosure being “inconsistent with the statute’s limitations upon the creditor’s remedies.”62 The dissolution context has been a somewhat fertile source of litigation involving the application of UPA provisions to limited partnerships. Because ULPA and RULPA fail to comprehensively address the consequences of dissolution and the conduct of winding up, courts have looked to the UPA to fill the gaps. Not surprisingly, courts have found that a limited partnership does not terminate on dissolution, but continues for the purposes of winding up, and that a general partner of a limited partnership has the power and authority to wind up the partnership’s affairs.63 This is an unremarkable and logical supplementation of the sketchy provisions of the limited partnership dissolution provisions. However, once the door is opened to the UPA dissolution provisions, more difficult questions arise. For instance, courts in two cases addressed whether a limited partner had a right to receive post-dissolution interest or profits under the provisions of Section 42.64 One court concluded that Section 42 conferred such a right on the limited partner65 and the other court concluded it did not.66 Whether the causes of dissolution specified in the limited partnership statutes are exclusive and whether the dissolution provisions of the UPA are limited to circumstances in which dissolution has actually occurred are questions that have also arisen. One court found it “inconceivable” that the list of grounds for a limited partner to obtain dissolution in ULPA was intended to

59. RULPA § 703, 6A U.L.A. 454 (2003). 60. UPA § 28(2), 6 Pt. II U.L.A. 341 (2001). 61. See Madison Hills Ltd. P’ship II v. Madison Hills, Inc., 644 A.2d 363 (Conn. App. Ct. 1994); Lauer Constr. Inc. v. Schrift, 716 A.2d 1096 (Md. Ct. Spec. App. 1998); Baybank v. Catamount Constr., Inc., 693 A.2d 1163 (N.H. 1997); see also Centurion Corp. v. Crocker Nat’l Bank, 255 Cal. Rptr. 794 (Ct. App. 1989). 62. Givens v. Nat’l Loan Investors, L.P., 724 So. 2d 610, 611 (Fla. Dist. Ct. App. 1998); see also In re Stocks, 110 B.R. 65, 66 (Bankr. N.D. Fla. 1989). 63. See Cheyenne Oil Corp. v. Oil & Gas Ventures, Inc., 204 A.2d 743, 745 (Del. 1964); Lebanon Trotting Ass’n v. Battista, 306 N.E.2d 769, 771-72 (Ohio Ct. App. 1972). 64. See Frye v. Manacare Ltd., 431 So. 2d 181, 183 (Fla. Dist. Ct. App. 1983); Porter v. Barnhouse, 354 N.W.2d 227, 333 (Iowa 1984). 65. Frye, 431 So. 2d at 183-84. 66. Porter, 354 N.W.2d at 333. MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

2004] LINKAGE AND DELINKAGE 901 preclude a limited partner from relying on other grounds.67 In another case, a court adapted UPA dissolution concepts to a situation involving withdrawn general partners, although dissolution had been avoided by continuation of the business under the conditions specified by the limited partnership act.68 Though a limited partner may bring a derivative action on behalf of the limited partnership,69 some courts have concluded that general partnership law precludes a general partner from bringing an action against another general partner in the name of the limited partnership without first obtaining a dissolution and accounting.70 This rule has also been applied to a limited partner where the limited partner’s claims were not brought in a derivative action.71 Whether a limited partner is a “partner” for purposes of linkage to the UPA depends upon whether the court finds it appropriate to apply a particular provision to the limited partner. In one case, a court found that a limited partner’s knowledge may be attributed to the partnership because ULPA is silent on the matter and the UPA “clearly states that notice to any partner operates as notice to the partnership, and the knowledge of any partner is to be imputed to the partnership.”72 Another case where the court’s reasoning was set forth in somewhat oversimplified terms is a Delaware Chancery case in which the court analyzed whether a limited partner stated a claim for breach of fiduciary duty by another limited partner.73 After addressing the breach of fiduciary duty claim against the general partner, the court observed that the situation was somewhat more complex with respect to the limited partner because of the partner’s status as a limited, rather than general, partner.74 The court first pointed out that Delaware RULPA provides that the Delaware UPA governs in cases not provided for by RULPA.75 The court then looked to the Delaware UPA and quoted Section 21 to the effect that every partner must account to the partnership for any benefit, and hold as trustee any profits,

67. Cusano v. Cusano, 88 A.2d 342, 349 (N.J. Super Ct. App. Div. 1952). 68. Baltzell-Wolfe Agencies, Inc. v. Car Wash Invs. No. 1, Ltd., 389 N.E.2d 517, 519-20 (Ohio Ct. App. 1978). 69. RULPA § 1001, 6A U.L.A. 516 (2003). 70. See, e.g., Dulles Corner Props. II Ltd. P’ship v. Smith, 431 S.E.2d 309, 311 (Va. 1993); Rogal v. Hughes & Smith, Inc., 34 Va. Cir. 120, 120-21 (Cir. Ct. 1994); see also Koros v. Doctors’ Special Surgery Ctr. of Jacksonville, Ltd., 717 So. 2d 137, 138-39 (Fla. Dist. Ct. App. 1998). 71. Koros, 717 So. 2d at 139. 72. Bedolla v. Logan & Frazer, 125 Cal. Rptr. 59, 66 (Ct. App. 1975) (emphasis in original). While the result in the particular case is perhaps understandable based on the context (as the issue involved whether the limited partners were time-barred from asserting the partnership’s professional negligence claim when the limited partners knew or should have known of the material facts several years earlier), the broad manner in which the court stated its conclusion regarding the application of Section 12 to limited partners is somewhat incongruous with the agency concepts underlying that provision. 73. RJ Assocs., Inc. v. Health Payors’ Org. Ltd. P’ship, HPA, Inc., No. 16873, 1999 WL 550350, at *10 (Del. Ch. July 16, 1999). 74. Id. 75. Id. MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

902 SUFFOLK UNIVERSITY LAW REVIEW [Vol. XXXVII:891 derived without consent of the other partners in a transaction connected with the conduct of the partnership or from use of partnership property.76 The court concluded that, unless modified by the partnership agreement, the duties set forth in Section 21 applied to the limited partner.77 In other cases, the courts have firmly stated that a limited partner is not a “partner” for purposes of applying provisions of the UPA requiring the vote of all partners on a matter in contravention of the partnership agreement78 or for purposes of authorizing a lien in favor of a partner who obtains rescission of the partnership contract based on fraud.79 As previously noted, courts have reached different conclusions on the question of whether a limited partner is a partner entitled to receive post-dissolution interest or profits under Section 42.80

IV. LINKAGE PROBLEMS CREATED OR EXACERBATED BY RUPA As the cases demonstrate, the overall consequences of linkage have been neither predictable nor consistent. Inasmuch as there are not a great many cases dealing with linkage issues one might infer that the issues are relatively clear and do not generate many controversies. A comparison of the provisions of the UPA with ULPA and RULPA, however, reveals a substantial number of areas where questions may arise.81 The answers to these questions do not appear to be so obvious that the relative sparseness of the case law is explainable on the basis that the application of linkage is generally clear. RUPA has exacerbated some of the uncertainties associated with linkage. The discussion in this section focuses on selected issues related to dissociation and dissolution under RUPA because the dissolution context has generated a significant percentage of the traditional linkage case law; however, there are additional areas in which RUPA has raised significant new linkage questions.82

76. Id. 77. RJ Assocs., 1999 WL 550350, at *10. Since the partnership agreement did not modify or preempt the fiduciary duties owed by limited partners, and the pleadings alleged a breach of fiduciary duty through the limited partner’s control of the general partner, the court refused to dismiss the fiduciary duty claim. Id. Because the claim rested on a diversion of revenue from the partnership allegedly accomplished through control of the general partner, the court’s analysis may be viewed more narrowly than it appears when recited in the abstract. 78. In re Vidal, 234 B.R. 114, 117 n.3 (Bankr. D.N.M. 1999) (“While the statute governing general partners is broad and looks to the UPA, the statute governing limited partners is specific and self-contained. With regard to the limited partners, there is no reason to look to the UPA since ULPA provides for them.”). 79. Cent. Allied Profit Sharing Trust v. Bailey, 759 P.2d 849, 850-51 (Colo. Ct. App. 1988) (holding provision has no application to limited partnerships because limited partner’s interest fundamentally differs from general partner’s). 80. See Porter v. Barnhouse, 354 N.W.2d 227, 333 (Iowa 1984); Frye v. Manacare Ltd., 431 So. 2d 181, 183 (Fla. Dist. Ct. App. 1983) (discussed in text at notes 64-66). 81. See Ribstein 95, supra note 1, at 190-200. 82. One significant linkage issue highlighted by the drafters of the limited liability partnership provisions (which were adopted by NCCUSL and added to RUPA in 1996) is whether a limited partnership may become a limited liability partnership pursuant to the linkage provisions. See RUPA § 101 cmt., 6 Pt. I U.L.A. 63 (2001) (suggesting RUPA limited liability partnership provisions constitute “case not provided for” in RULPA, such MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

2004] LINKAGE AND DELINKAGE 903

There are a number of linkage issues in the area of withdrawal and dissociation of a partner. RULPA contains a somewhat lengthy list of “events of withdrawal” of a general partner;83 RUPA contains a list of events upon which a partner is “dissociated” from the partnership.84 There is substantial overlap in these provisions, but RUPA includes some events of dissociation that are not included as events of withdrawal of a general partner in RULPA.85 Whether RUPA events of dissociation not included as events of withdrawal in RULPA are applicable to general partners in a limited partnership is a matter of some significance because RUPA provides for judicial expulsion of a partner on specified grounds.86 The question is whether the RUPA judicial expulsion provision supplements the RULPA withdrawal provisions. The answer to that question depends upon whether the RULPA provisions addressing withdrawal of a general partner should be viewed as fully occupying this subject area or as leaving room for additional provisions from RUPA.87 In view of the somewhat detailed treatment of withdrawal of a general partner in RULPA, a court could reasonably conclude that RULPA leaves no room for linkage with RUPA in this regard.88 As with many linkage issues, however, the outcome cannot be

that limited partnership should be able to qualify as limited liability partnership under RUPA provisions, and setting forth suggested form of amendment to RULPA to clarify issues raised by application of RUPA limited liability partnership provisions to limited partnerships). Other areas in which significant linkage issues are raised include limitations on the freedom to contract (RUPA § 103(b)), partner fiduciary duties (RUPA § 404), the requirement that a partnership creditor exhaust partnership assets before pursuing the assets of a partner (RUPA § 307), the filing of statements (RUPA §§ 105, 303, 704, 805), and mergers and conversions (RUPA §§ 901-908). 83. RULPA § 402, 6A U.L.A. 358-59 (2003). 84. RUPA § 601, 6 Pt. I U.L.A. 163 (2001). 85. Compare id., with RULPA § 402, 6A U.L.A. 358-59 (2003). 86. RUPA § 601, 6 Pt. I U.L.A. 163 (2001). In this regard, Section 601 provides as follows: A partner is dissociated from a partnership upon the occurrence of any of the following events: . . . (5) on application by the partnership or another partner, the partner’s expulsion by judicial determination because: (i) the partner engaged in wrongful conduct that adversely and materially affected the partnership business; (ii) the partner willfully or persistently committed a material breach of the partnership agreement or of a duty owed to the partnership or the other partners under Section 404; or (iii) the partner engaged in conduct relating to the partnership business which makes it not reasonably practicable to carry on the business in partnership with the partner; . . . Id. Furthermore, RUPA provides that the partners cannot by agreement waive or vary the right of a court to expel a partner in the events listed in Section 601(5). RUPA § 103(b)(7), 6 Pt. I U.L.A. 74 (2001). 87. That is, whether the RULPA provisions “otherwise provide” for purposes of RULPA Section 403 and whether they “provide for” the case under Section 1105. See RULPA §§ 403, 1105, 6A U.L.A. 365 & 547 (2003). 88. While RULPA contains detailed provisions defining an “event of withdrawal” of a general partner, it merely provides that a limited partner “may withdraw from a limited partnership at the time or upon the happening of events specified in writing in the partnership agreement.” RULPA § 603, 6A U.L.A. 428 (2003). If the partnership agreement does not specify when a limited partner may withdraw or provide a definite time for dissolution and winding up, RULPA provides that a limited partner may withdraw upon not less than six MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

904 SUFFOLK UNIVERSITY LAW REVIEW [Vol. XXXVII:891 predicted with any certainty. Even if the RUPA events of dissociation have no application to limited partnerships, certain provisions related to dissociation may apply to the withdrawal of a general partner under RULPA. For example, the RUPA provision that a dissociation does not discharge a dissociated partner from liability for partnership obligations incurred prior to dissociation surely applies to a withdrawn general partner of a limited partnership.89 Furthermore, it seems probable that a withdrawn general partner of a limited partnership has the post-withdrawal power to bind and post-withdrawal liability provided in RUPA Sections 702 and 703.90 Under these provisions, a dissociated partner has lingering power to bind the partnership, and lingering exposure to liabilities incurred after dissociation, in transactions in which a third party believes the dissociated partner is still a partner and does not have notice of the dissociation.91 Other dissociation-related provisions of RUPA that might be months’ prior notice to each general partner. Id. Withdrawal of a limited partner is not otherwise described or defined under RULPA. While application of the RUPA events of dissociation to limited partners might seem implausible, courts have in the past found that a limited partner is a “partner” for purposes of various provisions of the UPA that arguably should not extend to limited partners. See supra text accompanying notes 72-80. 89. See RUPA § 703(a), 6 Pt. I U.L.A. 183 (2001). 90. RUPA §§ 702-703, 6 Pt. I U.L.A. 180-81, 183 (2001). 91. RUPA §§ 702-703, 6 Pt. I U.L.A. 180-81, 183 (2001). RUPA Section 702 provides: (a) For two years after a partner dissociates without resulting in a dissolution and winding up of the partnership business, the partnership, including a surviving partnership under [Article] 9, is bound by an act of the dissociated partner which would have bound the partnership under Section 301 before dissociation only if at the time of entering into the transaction the other party: (1) reasonably believed that the dissociated partner was then a partner; (2) did not have notice of the partner’s dissociation; and (3) is not deemed to have had knowledge under Section 303(e) or notice under Section 704(c). (b) A dissociated partner is liable to the partnership for any damage caused to the partnership arising from an obligation incurred by the dissociated partner after dissociation for which the partnership is liable under subsection (a). RUPA § 702, 6 Pt. I U.L.A. 180-81 (2001). RUPA Section 703 provides: (a) A partner’s dissociation does not of itself discharge the partner’s liability for a partnership obligation incurred before dissociation. A dissociated partner is not liable for a partnership obligation incurred after dissociation, except as otherwise provided in subsection (b). (b) A partner who dissociates without resulting in a dissolution and winding up of the partnership business is liable as a partner to the other party in a transaction entered into by the partnership, or a surviving partnership under [Article] 9, within two years after the partner’s dissociation, only if the partner is liable for the obligation under Section 306 and at the time of entering into the transaction the other party: (1) reasonably believed that the dissociated partner was then a partner; (2) did not have notice of the partner’s dissociation; and (3) is not deemed to have had knowledge under Section 303(e) or notice under Section 704(c). (c) By agreement with the partnership creditor and the partners continuing the business, a dissociated partner may be released from liability for a partnership obligation. (d) A dissociated partner is released from liability for a partnership obligation if a partnership creditor, with notice of the partner’s dissociation but without the partner’s consent, agrees to a material alteration in the nature or time of payment of a partnership obligation. RUPA § 703, 6 Pt. I U.L.A. 183 (2001). MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

2004] LINKAGE AND DELINKAGE 905 linked to RULPA to some extent include Section 602, which addresses the power to dissociate and consequences of wrongful dissociation, and Section 603, which addresses the effect of dissociation on certain rights and duties of the dissociated partner, including the partner’s duty of loyalty.92 RULPA specifies the following nonjudicial and judicial events of dissolution: (1) the time specified in the certificate of limited partnership; (2) an event specified in writing in the partnership agreement; (3) written consent of all partners; (4) an event of withdrawal of a general partner unless (i) the business is carried on by one or more remaining general partners and a written partnership agreement permits continuation, or (ii) within 90 days after the withdrawal, all partners agree in writing to continue the business of the limited partnership and appoint one or more general partners if necessary or desired; or (5) entry of a decree of judicial dissolution because it is not reasonably practicable to carry on the business in conformity with the partnership agreement.93 While this somewhat detailed coverage might well lead a court to conclude that it should not look to RUPA to furnish any other causes of dissolution, it is possible that a court would supplement the RULPA provisions with additional causes of dissolution under RUPA. For example, it would not be surprising if a court found that an event making it illegal to continue the business of a limited partnership is an event of dissolution requiring winding up as provided in RUPA.94 It then becomes more difficult to argue that other causes of dissolution under RUPA should not supplement the RULPA provisions. Other causes of dissolution under RUPA include judicial dissolution on application by a partner when the economic purpose of the partnership is likely to be unreasonably frustrated or when another partner has engaged in conduct relating to the partnership business that makes it not reasonably practicable to carry on the business in partnership with that partner.95

92. RUPA §§ 602-603, 6 Pt. I U.L.A. 169, 172 (2001). 93. RULPA §§ 801-802, 6A U.L.A. 462, 469 (2003). 94. See RUPA § 801(4), 6 Pt. I ULA 189 (2001). Section 801(4) provides that a partnership is dissolved, and its business must be wound up and terminated, upon “an event that makes it unlawful for all or substantially all of the business of the partnership to be continued, but a cure of illegality within 90 days after notice to the partnership of the event is effective retroactively to the date of the event for purposes of this section.” Id. The UPA contains a similar provision minus the cure proviso. UPA § 31(5), 6 Pt. II 370 (2001). 95. RUPA § 801(5)(i)-(ii), 6 Pt. I U.L.A. 189 (2001). Arguably, these grounds are subsumed in the RULPA provision for judicial dissolution so that a court may not need to link to RUPA to decree dissolution if one of these grounds is established. See RULPA § 802, 6A U.L.A. 469 (2003). Section 801 of RUPA also provides for judicial dissolution by a transferee of a partnership interest under certain circumstances. RUPA § 801(6), 6 Pt. I U.L.A. 189-90 (2001). Application of this provision to a limited partnership would certainly call attention to linkage issues. The provision states that a partnership is dissolved and must be wound up: (6) on application by a transferee of a partner’s transferable interest, a judicial determination that it is equitable to wind up the partnership business: (i) after the expiration of the term or completion of the undertaking, if the partnership was for a definite term or particular undertaking at the time of the transfer or entry of the charging order that gave rise to the transfer; or MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

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V. THE DECISION TO DELINK RE-RULPA AND RESULTING EXPANSION OF THE STATUTE The linkage question was the first major issue considered and decided by the Re-RULPA drafting committee.96 The Prefatory Note sets forth the rationale of the drafting committee to forgo linkage and draft Re-RULPA as a stand-alone act.97 The Prefatory Note points out that the traditional linkage of limited partnership law to the UPA has not been completely satisfactory,98 but clearly the drafting committee’s concerns focused on the complications presented by RUPA.99 The drafting committee did not feel it made any sense to recommend retaining the UPA as the base and link for a revised or new limited partnership act in view of NCCUSL’s recommendation that the UPA be repealed.100 The drafting committee was thus left to choose between linkage to RUPA or de- linking and a stand-alone act.101 The drafting committee identified several significant advantages to a stand- alone act that convinced the committee that a stand-alone act would be likely to promote efficiency, clarity, and coherence in the law of limited partnerships.102 Furthermore, no matter how exhaustive the committee’s analysis might be in considering the application and appropriateness of every provision of RUPA from the standpoint of limited partnerships,103 there would be no assurance that courts and practitioners would reach the same conclusions.104 Linkage would

(ii) at any time, if the partnership was a partnership at will at the time of the transfer or entry of the charging order that gave rise to the transfer. Id. While this provision is non-waivable under RUPA § 103(b)(8), 6 Pt. I U.L.A. 74 (2001), its application can be avoided by a partnership agreement that specifies a lengthy term. 96. Re-RULPA, Prefatory Note, 6A U.L.A. 3 (2003). 97. Id. 98. Id. (citing several cases to illustrate consequences of linkage with UPA are not always clear and stating “in some instances the ‘not inconsistent’ rules of the UPA can be inappropriate for the fundamentally different relations involved in a limited partnership”). 99. Id. (noting “promulgation of RUPA unsettled matters”). 100. Re-RULPA, Prefatory Note, 6A U.L.A. 3 (2003). 101. Id. 102. Id. Specifically, the committee concluded that a stand-alone statute would: • be more convenient, providing a single, self-contained source of statutory authority for issues pertaining to limited partnerships; • eliminate confusion as to which issues were solely subject to the limited partnership act and which required reference (i.e., linkage) to the general partnership act; and • rationalize future case law, by ending the automatic link between the cases concerning partners in a general partnership and issues pertaining to general partners in a limited partnership. Id. 103. Id. The committee concluded that drafting a limited partnership statute linked to RUPA would have “required the [committee] to (1) consider each provision of RUPA and determine whether the provision addressed a matter provided for in RULPA; (2) for each RUPA provision which addressed a matter not provided for in RULPA, determine whether the provision stated an appropriate rule for limited partnerships; and (3) for each matter addressed both by RUPA and RULPA, determine whether RUPA or RULPA stated the better rule for limited partnerships.” Id. 104. Re-RULPA, Prefatory Note, 6A U.L.A. 3 (2003). MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

2004] LINKAGE AND DELINKAGE 907 inevitably produce ambiguity in some situations.105 Additionally, there would be no assurance that the development of the case law on RUPA, which would occur primarily in the context of general partnerships, would suit limited partnerships.106 Thus, the drafting committee decided to draft and recommend a stand-alone act. One need only turn the pages of Re-RULPA to note one obvious difference between Re-RULPA and its predecessor RULPA. Re-RULPA is much lengthier than RULPA. The increased length is, of course, largely the result of the stand-alone approach. If every area in which Re-RULPA addresses a matter not addressed in RULPA is a gap in RULPA, then RULPA is apparently statutory Swiss cheese. Included as an appendix to this article is a chart indicating new areas of coverage in Re-RULPA. It is probably not fair to characterize every one of these areas as a “gap” in RULPA, as a new provision need not necessarily be viewed as a “gap” in the sense that something essential is missing from RULPA. For example, a number of new provisions could not have been supplied through linkage to general partnership law because RUPA has no provision to furnish in the area. In this sense, Re-RULPA reflects some “growth,” or “bulging,” that goes beyond mere “gap-filling.” In any event, the chart provides a sense of the expanded scope and coverage of Re-RULPA relative to RULPA, however characterized.107 The chart does not include provisions that simply address a matter differently from RULPA, even though some of these provisions may contain significantly more detail than their RULPA counterparts; to that extent, the chart does not indicate all the areas of “growth” or “bulging” in Re-RULPA.108 An attempt has been made, however, to include in the chart those Re-RULPA provisions reflecting the inclusion of significant RUPA concepts that were only applicable under RULPA, if at all, by virtue of the gap-filler mechanism. Admittedly, these distinctions do not lend themselves to exactitude.

105. Id. 106. Id. (“Even if the Committee recommended linkage, RUPA was destined to be interpreted primarily in the context of general partnerships. Those interpretations might not make sense for limited partnership law, because the modern limited partnership involves fundamentally different relations than those involved in ‘the small, often informal, partnership’ that is ‘[t]he primary focus of RUPA.’ RUPA, Prefatory Note.”). 107. In some cases, Re-RULPA resolved a gap-filling question by not including provisions of RUPA that might arguably have applied, e.g., additional causes of dissolution specified in RUPA. Compare RUPA § 801, 6 Pt. I U.L.A. 189 (2001), with Re-RULPA §§ 801, 802, 6A U.L.A. 84-85 (2003). 108. For example, the Re-RULPA provisions regarding limitations on distribution (compare Re-RULPA § 508, 6A U.L.A. 67-68 (2003), with RULPA § 607, 6A U.L.A. 447 (2003)), liability for improper distributions (compare Re-RULPA § 509, 6A U.L.A. 68-69 (2003), with RULPA § 608, 6A U.L.A. 442 (2003)), and nonjudicial dissolution (compare Re-RULPA § 801, 6A U.L.A. 84 (2003), with RULPA § 801, 6A U.L.A. 462 (2003)). MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

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VI. CONCLUSION The promulgation of Re-RULPA as a stand-alone limited partnership act will not immediately eliminate concerns associated with linkage of the law of limited and general partnerships. Linkage promises to be with us for some time as the new stand-alone Re-RULPA has not yet become effective in any state.109 Furthermore, states may retain RULPA temporarily or permanently after passage of Re-RULPA out of concerns regarding transition. In the meantime, linkage of limited partnership law to RUPA is becoming more common as a result of state adoptions of RUPA and repeal of the UPA. It remains to be seen whether the historically awkward fit of the UPA becomes downright uncomfortable under RUPA as predicted by some commentators. The relative infrequency with which linkage issues have arisen in the case law may indicate that the issues do not come to a head all that often. How comprehensively and how suitably the gaps have been plugged in Re-RULPA will only become completely evident with experience under the statute.

APPENDIX

New Re-RULPA Coverage Potential RUPA Source of New (“Gap Filled” or “Bulge”) Gap-Filler Re-RULPA Provision § 102. Definitions (various, § 101 RUPA § 101, ULLCA § including “debtor in bankruptcy,” 101, and new “designated office,” “distribution,” “limited liability limited partnership,” “principal office,” “record,” “required information,” “sign,” “transfer,” “transferable interest,” “transferee”) § 103. Knowledge and Notice §§ 102, 303(e), RUPA §§ 102 (significant 704(c), 805(c) variation/addition: negates imputation of limited partner’s knowledge and notice), 704(c), 805(c), and new § 104. Nature, Purpose, and § 201(a) RUPA § 201(a) and new Duration of Entity § 105. Powers None New

109. The only state that has adopted Re-RULPA is Hawaii, and the statute is not effective until July 1, 2004. See 2003 Haw. Sess. Laws 210 (S.B. 1319). Kentucky, Illinois, Iowa, and Minnesota are the only other jurisdictions in which Re-RULPA has been introduced. Uniform Limited Partnership Act (2001) Fact Sheet, at http://www.nccusl.org/nccusl/uniformact_factsheets/uniformacts-fs-ulpa.asp (last visited Mar. 12, 2004). MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

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§ 106. Governing Law § 106 RUPA § 106 § 107. Supplemental Principles § 104 RUPA § 104 of Law; Rate of Interest § 108. Name (LLP designators) § 1002 RUPA § 1002 and new §110. Effect of Partnership; § 103 RUPA § 103 (varied in Nonwaivable Provisions certain respects) and new § 115. Change of Designated None ULLCA § 109 Office or Agent for Service of Process § 116. Resignation of Agent for None ULLCA § 110 Service of Process § 117. Service of Process None ULLCA § 111 § 118. Consent and Proxies of None ULLCA § 404(d), (e) Partners § 201. Formation of Limited § 1001 New; ULLCA § 203(c) Partnership; Certificate of Limited Partnership (LLP designation in certificate; inconsistencies between certificate and agreement) § 207. Correcting Filed Records None ULLCA § 207 § 209. Certificate of Existence or None ULLCA § 208 Authorization § 210. Annual Report for None ULLCA § 211 Secretary of State § 302. No Right or Power as None (or § 301) New Limited Partner to Bind Limited Partnership § 304. Right of Limited Partner § 403(b) RUPA § 403(b) and Former Limited Partner to Information (former partner’s information rights) § 305. Limited Duties of Limited § 404 RUPA § 404(d), (e) and Partners new § 402. General Partner Agent of § 301 RUPA § 301 Limited Partnership § 403. Limited Partnership § 305 RUPA § 305 Liable for General Partner’s Actionable Conduct § 404. General Partner’s § 306 RUPA § 306 Liability MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

910 SUFFOLK UNIVERSITY LAW REVIEW [Vol. XXXVII:891

§ 405. Actions By and Against § 307 RUPA §307 Partnership and Partners § 406. Management Rights of § 401 RUPA § 401, ULLCA § General Partner 404 § 407. Right of General Partner § 403 RUPA § 403(c) and Former General Partner to Information § 408. General Standards of § 404 RUPA § 404 General Partner’s Conduct § 601. Dissociation of Limited § 601 RUPA § 601 (minus Partner provisions inappropriate to limited partners) § 602. Effect of Dissociation as § 603(b) RUPA § 603(b) (variation) Limited Partner and new § 603. Dissociation as General § 601 RUPA § 601 Partner (additional events such as expulsion) § 604. Person’s Power to § 602 RUPA § 602 Dissociate as General Partner; Wrongful Dissociation (provisions regarding wrongful dissociation) § 605. Effect of Dissociation as §§ 603(b), 704(a) RUPA §§ 603(b), 704(a) General Partner and new § 606. Power to Bind and § 702 RUPA § 702 Liability to Limited Partnership Before Dissolution of Partnership of Person Dissociated as General Partner § 607. Liability to Other Persons § 703 RUPA § 703 of Person Dissociated as General Partner § 702. Transfer of Partner’s § 503 RUPA § 503 Transferable Interest (transferee’s right to an account, notice to partnership of transfer, effect of notice of transfer restriction) § 703. Rights of Creditor of § 504 RUPA § 504 Partner or Transferee (application to transferee’s interest, foreclosure, redemption, exclusivity) MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

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§ 803. Winding Up (winding up §§ 802 & 803 RUPA §§ 802, 803 and activities authorized, procedure new for limited partners’ appointee to wind up, grounds for judicial winding up) § 804. Power of General Partner § 804 RUPA § 804 and Person Dissociated as General Partner to Bind Partnership After Dissolution § 805. Liability After § 806 RUPA § 806 Dissolution of General Partner § 806. Known Claims Against None ULLCA § 807 Dissolved Limited Partnership § 807. Other Claims Against None ULLCA § 808 Dissolved Limited Partnerships § 808. Liability of General None New Partner and Person Dissociated as General Partner When Claim Against Limited Partnership Barred § 809-811. Administrative None ULLCA §§ 809-812 Dissolution, Reinstatement, Appeal From Denial of Reinstatement § 812. Disposition of Assets; § 807 RUPA § 807 When Contributions Required (provisions re contribution to pay debts) § 903. Activities Not None ULLCA § 1003 Constituting Transacting Business § 906. Revocation of Certificate None ULLCA § 1006 of Authority § 1001. Direct Action by Partner § 405(b) RUPA § 405(b) § 1101. [Conversion and § 901 New Merger] Definitions § 1102-1104. Conversion §§ 902 & 903 New Provisions § 1105. Effect of Conversion § 904 RUPA § 904 and new § 1106-1109. Merger Provisions §§ 905 & 906 RUPA §§ 905, 906 and new MILLERMACROFINAL.DOC 5/27/2004 12:56 PM

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§ 1110. Restrictions on Approval None New of Conversions and Mergers and on Relinquishing LLLP Status § 1111. Liability of General §§ 703 & 906(c) RUPA §§ 703, 906(c) and Partner After Conversion or new Merger § 1112. Power of General §§ 702 & 906(e) RUPA §§ 702, 906(e) and Partners and Persons Dissociated new as General Partners to Bind Organization After Conversion or Merger § 1113. Article Not Exclusive § 908 RUPA § 908 § 1203. Relation to Electronic None New Signatures in Global and National Commerce Act