Schuss v. Penfield Partners

Summary

4 day trial.

CVN previously recorded a hearing on plaintiff's motion for partial summary judgment. The Court denied the summary judgment motion, and suggested that the parties proceed to trial, because fact issues around the parties' course of dealings -- especially how the segregated assets were handled prior to distribution -- would inform the interpretation of an ambiguous contract.

Plaintiffs were limited partners in a hedge fund who withdrew from membership in the limited partnership and expected to receive a distribution equal to their liquidating share at the time they withdrew. Upon withdrawal, Plaintiffs requested that their distributions be in kind and ratable. Defendants made distributions that were in kind but not ratable and, due to a decline in value of the designated securities by the time of distribution, had a value significantly below that of the limited partners' capital accounts.

In a prior proceeding, the Court concluded that the withdrawing limited partners conceivably could prove they were entitled to assets whose aggregated value equaled their share of the fund at the time of retirement, as opposed to merely segregating in-kind assets equal to the value of the liquidating share of the withdrawing partners, which would still subject the retiring partners to the risk of changes in value prior to distribution.