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Energy Investors Fund v. Metric Constructors3/3/2000
Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, ___ N.C. App. ___, 516 S.E.2d 399 (1999), affirming an order entered 10 February 1998 by Jenkins, J., in Superior Court, Cumberland County. Heard in the Supreme Court 17 November 1999.
Plaintiff Energy Investors Fund, L.P. (EIF), is a limited partner in BCH Energy Limited Partnership (BCH), a limited partnership organized under the laws of the State of Delaware. BCH is the owner/developer of a waste-to-energy project in North Carolina. EIF's complaint alleges that during 1992 and 1993, BCH solicited bids from various sources to plan, construct and operate a facility (Project) in Cumberland and Bladen counties that would receive waste, incinerate it, and thereby generate steam and electricity. EIF alleges that defendants made oral and written representations to BCH that they had the staff, resources, experience and expertise to design and manage the Project in accordance with BCH's specifications. These alleged representations were made after the formation of BCH, but before EIF had invested funds in the Project. EIF claims that it reasonably and justifiably relied on these representations in investing $16,076,655 in the development of the Project, and that defendants knew or should have known of such reliance. EIF further contends that defendants' representations were false and inaccurate, resulting in the Project's failure and loss of EIF's investment, because: (1) defendants did not, in fact, possess the abilities, capabilities and experience they professed to have, and (2) they designed and constructed the facility in a negligent fashion. As a result of the Project's failure, EIF has asserted claims against defendants for negligence, negligent misrepresentation, and breach of warranty.
The trial court dismissed all claims pursuant to N.C.G.S. § 1A-1, Rule 12(b)(6) (failure to state a claim upon which relief can be granted), Rule 12(b)(7) (failure to join a necessary party), Rule 17 (failure to join a real party in interest), and Rule 19 (failure to join those united in interest as plaintiffs or defendants). In doing so, the trial court concluded that plaintiff "lack standing to assert claims against Defendants for negligence, negligent misrepresentation and breach of warranty," and that " laintiff has failed to state a claim upon which relief may be granted." EIF appealed, and the Court of Appeals affirmed.
EIF, as a limited partner of BCH, seeks to bring individual causes of action against the defendants to recover for the loss of its equity investment. We note this issue is one of first impression in North Carolina. Other jurisdictions which have considered this question have looked to the law of corporations for guidance and have analogized the role of a limited partner to that of a shareholder of a corporation. In 1953, the New York Court of Appeals held that " imited partnerships were unknown to the common law and, like corporations, are `creature of statute,' Lanier v. Bowdoin, 282 N.Y. 32, 38, 24 N.E.2d 732, 735 [(1939)]. Statutes permitting limited partnerships are intended to encourage investment in business enterprise by affording to a limited partner a position analogous to that of a corporate shareholder." Ruzicka v. Rager, 305 N.Y. 191, 197-98, 111 N.E.2d 878, 881 (1953).
In Klebanow v. N.Y. Produce Exch., 344 F.2d 294, 297 (2d Cir. 1965), the Second Circuit of the United States Court of Appeals declared:
n the main, a limited partner is more like a shareholder, often expecting a share of the profits, subordinated to general creditors, having some control over direction of the enterprise by his veto on the admission of new partners, an
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