Albright v. Vining-Sparks Securities, Inc.

2019 NCBC 80

CURT ALBRIGHT, Plaintiff, v. VINING-SPARKS SECURITIES, INC., and VINING-SPARKS & ASSOCIATES, L.P., Defendants.

No. 18 CVS 18223

Superior Court of North Carolina, Mecklenburg

December 31, 2019

Robinson Bradshaw & Hinson, PA, by Benjamin C. DeCelle and R. Steven DeGeorge, for Plaintiff.

Johnston, Allison & Hord, P.A., by Patrick E. Kelly and Michael J. Hoefling, for Defendants.

ORDER AND OPINION ON DEFENDANTS' 12(b) AND 12(c) MOTIONS

James L. Gale Senior Business Court Judge.

I. INTRODUCTION

1. THIS MATTER is before the Court on Defendants' Motion to Dismiss Claims I and II of Plaintiff's First Amended Complaint (the "Motion to Dismiss"), and Defendants' Motion for Judgment on the Pleadings as to Claim III of Plaintiff's First Amended Complaint (the "Motion for Judgment on the Pleadings") (collectively, the "Motions"). For the reasons stated below, the Motions are DENIED.

2. Plaintiff Curt Albright ("Albright" or "Plaintiff") filed this suit in his capacity as a limited partner of Vining-Sparks & Associates, LP ("Vining-Sparks, LP"), asserting his rights to examine books and records under Vining-Sparks, LP's Limited Partnership Agreement (the "LPA") ("Claim I") and pursuant to a statutory right provided by Tenn. Code Ann. § 61-2-304 ("Section 61-2-304") under the Tennessee Limited Partnership Act ("TLPA") ("Claim II"), and requesting a declaration that the express terms of the LPA provided for the automatic dissolution and winding up of Vining-Sparks, LP on December 31, 2010 because a 2004 effort to extend its life indefinitely was ineffective ("Claim III").

3. Defendants filed the Motion to Dismiss Claims I and II on alternative grounds. First, Defendants contend that this Court has no subject matter jurisdiction over either claim because Section 61-2-304(f) dictates that only courts in Shelby County, Tennessee have jurisdiction over any claim for inspection of Vining-Sparks, LP's records as a Tennessee limited partnership. Alternatively, if the Court determines it has subject matter jurisdiction, Defendants contend that the Court should dismiss the claims because venue is improper where the parties consensually agreed to an exclusive Tennessee forum by incorporating Section 61-2-304(f) into the LPA.

4. Assuming the Court determines it has subject matter jurisdiction, Defendants move for judgment on the pleadings with respect to Claim III based on their contention that Defendants have now provided Albright copies of the signatures of all partners necessary to prove that the amendment Albright's claim challenges was validly enacted. Albright counters first that the signatures are outside the pleadings and cannot be considered, and second, even if considered, they do not conclusively establish that the amendment is enforceable.

II. FACTUAL BACKGROUND

5. A Court does not make findings of facts on a 12(c) motion. See Ragsdale v. Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494, 499 (1974) ("All well pleaded factual allegations in the nonmoving party's pleadings are taken as true and all contravening assertions in the movant's pleadings are taken as false."). While it has authority to make such findings when considering a motion based on North Carolina Rules of Civil Procedure ("Rule(s)") 12(b)(1) and 12(b)(3), it is only required to do so when requested by the parties, which is not the case here. See N.C. G.S. § 1A-1, Rule 52(a)(2). Accordingly, the Court summarizes the factual contentions only to provide context for its rulings.

A. The Parties

6. Albright is a limited partner of Vining-Sparks, LP. (First Am. Compl. ¶ 1, ECF No. 14.) Vining-Sparks, LP is a Tennessee limited partnership created to hold an interest in Vining-Sparks IBG, LP ("VSIBG"), another Tennessee limited partnership that is not a party in this lawsuit. (First Am. Compl. ¶ 2.) Albright was employed by VSIBG from May 1991 until he retired in August 2017. (First Am. Compl. ¶ 3.) Albright acquired approximately twenty ownership units in Vining-Sparks, LP throughout his career with VSIBG. (First Am. Compl. ¶ 8.)

7. Defendant Vining-Sparks Securities, Inc. ("Vining-Sparks, Inc.") is a Delaware corporation and the general partner of Vining-Sparks, LP. (First Am. Compl. ¶ 5.)

B. Albright's Demand for Records Review

8. When approaching retirement, Albright contacted Martin Shea ("Shea"), VSIBG's executive vice-president and general counsel, to inquire about selling his Vining-Sparks, LP units, and was advised that that he would not be able to sell them at that time. (First Am. Compl. ¶ 12.)

9. In May 2018, after discovering that Shea had helped other former employees sell similar units, Albright requested certain information and records to discern whether he was being treated differently than other limited partners. (First Am. Compl. ¶¶ 13-14.)

10. Albright filed this lawsuit following several unanswered record requests, (see First Am. Compl. ¶ 14), asserting that he is entitled to an inspection of Vining-Sparks, LP's records on two grounds, one contractual and one statutory.

11. The LPA provides all limited partners of Vining-Sparks, LP a right to inspect books and records at any reasonable time:

True and complete records and books of account of the business of the Partnership, in which shall be entered fully and accurately all Partnership transactions, shall be kept at the Principal Place of Business. Such books, together with a certified copy of the Certificate of Limited Partnership, and this Agreement, shall be open to inspection by any then inspecting Partner or his representatives at any reasonable time during business hours.

(Third Am. & Restated Agreement Ltd. P'ship § 9.2(a) ("LPA"), ECF No. 32.)

12. The TLPA provides:

(b) Each limited partner has the right, subject to such reasonable standards (including standards governing what information and documents are to be furnished, at what time and location and at whose expense) as may be set forth in the partnership agreement or otherwise established by the general partners, to obtain from the general partners, from time to time, upon reasonable demand for any purpose reasonably related to the limited partner's interest as a limited partner:

(1) True and full information regarding the status of the business and financial condition of the limited partnership;

(2) Promptly after becoming available, a copy of the limited partnership's federal, state and local income tax returns for each year;

(3) A current list of the name and last known business, residence or mailing address of each partner;

(4) A copy of any written partnership agreement and certificate of limited partnership and all amendments thereto, together with executed copies of any written powers of attorney pursuant to which the partnership agreement and any certificate and all amendments thereto have been executed;

(5) True and full information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each partner and which each partner has agreed to contribute in the future, and the date on which each became a partner; and

(6) Other information regarding the affairs of the limited partnership as is just and reasonable.

Tenn. Code Ann. § 61-2-304(b).

13. An action based on the statutory inspection right under the TLPA is subject to a provision which provides that "[a]ny action to enforce any right arising under [Section 61-2-304] shall be brought in a court of record." Id. at § 61-2-304(f). "Court of record" is defined as "a court of equity jurisdiction in the county where the partnership maintains its registered office, or if it maintains no registered office in any county, then in a court of equity jurisdiction in Davidson County." Id. at § 61-2-101(4).

14. After Albright filed his Complaint, Vining-Sparks, Inc. provided some but not all the documentation that Albright requested, including all iterations of the LPA, which has been amended on multiple occasions. (First Am. Compl. ¶ 15.)

15. With respect to the "Term of Partnership," the first three iterations of the LPA state that it should "continue until December 31, 2010, unless sooner terminated by operation of law or as otherwise provided herein."^[1] (First Am. Compl. ¶ 16.)

16. On or about September 30, 2004, Defendants sought to approve an amendment which would provide that the "Term of Partnership" of Vining-Sparks, LP would continue indefinitely. (First Am. Compl. ¶ 20.) Albright alleges "[u]pon information and belief, the purported amendment to the term of Vining-Sparks LP . . . was made without the required 'consent of all Partners.'" (First Am. Compl. ¶ 21.)

17. Defendants have now provided Albright with certain signatures, which Defendants contend represent the signatures necessary to effectuate the amendment providing for indefinite duration. Defendants contend and Plaintiff denies that the Court can consider this documentary evidence in connection with the Motion for Judgment on the Pleadings.

III. PROCEDURAL BACKGROUND

18. On September 18, 2018, Albright filed his Complaint against only Vining-Sparks, Inc. for breach of contract and violation of Section 61-2-304. (Compl., ECF No. 3.)

19. On October 22, 2018, Vining-Sparks, Inc. moved to dismiss all claims for lack of subject matter jurisdiction (the "First Motion to Dismiss"). (Defs.' Mot. Dismiss for Lack Subject Matter Jurisdiction, ECF No. 6.)

20. On November 26, 2018, after briefing but before oral argument on the First Motion to Dismiss, Albright filed the First Amended Complaint to add a third claim for declaratory judgment and Vining-Sparks, LP as a defendant. Albright filed his First Amended Complaint before Defendants responded to Albright's request that "Defendants provide evidence of the required consents[.]"...