North Carolina Business Litigation Report

Piedmont Venture Partners, L.P. v. Deloitte & Touche, L.L.P., 2007 NCBC 6 (N.C. Super. Mar. 5, 2007)(Diaz)

This was round two in this derivative action, in which the Court had previously held that the involvency of the general partners of a North Carolina partnership and a Delaware partnership did not excuse the need for a plaintiff to make a demand before filing a derivative action. The former derivative plaintiff then took steps to become the "liquidator" of the partnerships, and undertook a renewed pursuit of the lawsuit.

The defendants challenged whether the self-styled liquidator had been properly elected, and also challenged his position that he had no responsibility for the winding up of the affairs of the partnerships other than prosecuting the claims in litigation.

The Court rejected the challenge to the validity of the liquidator's election. To the extent that it was founded on insufficient notice of the meeting at which the election had occurred, no limited partner had objected to the notice, and those objections were therefore waived under both North Carolina and Delaware law. Nor was there any deficiency in the voting due to a limited partners' purchase of additional shares prior to the meeting at which the election had been held.

The Court held, however, that the liquidator could not "pick and choose" his responsibilities, but that he instead had responsibility for the full and complete winding up of the partnerships' affairs. Given the liquidator's unwillingness to undertake these responsibilities, the Court exercised its inherent power to appoint a receiver for the partnerships. The powers of the receiver was plenary with regard to the North Carolina partnership, but limited to the assets of the Delaware partnership physically within the State of North Carolina.

Full Opinion

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Mack Sperling
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