Gotham Partners, L.P. v. Hallwood Realty Partners, L.P.

Hallwood Realty Partners' general partner (defendant), a subsidiary of HGI (defendant), engaged in a series of transactions without considering whether the terms matched what an independent third party would offer, ultimately increasing HGI's ownership stake from roughly 5% to nearly 30% and giving HGI effective control of the partnership, in violation of the partnership agreement's requirement that affiliate transactions be on arm's-length terms. Gotham (plaintiff), another limited partner, sued for breach of fiduciary duty; the trial court found a breach and awarded damages but declined to rescind the transactions or factor in a control premium, and Gotham appealed the remedy.