Kahn v. Icahn

Amanda and Kimberly Kahn (plaintiffs) held limited-partnership interests in American Real Estate Partners, L.P. (AREP), a Delaware real estate partnership. They brought a derivative suit against AREP's general partner, its sole shareholder and CEO Carl Icahn, an Icahn-affiliated corporation called Bayswater, and other directors (defendants), claiming Icahn breached fiduciary duties and usurped corporate opportunities by keeping profits within his own affiliated entities rather than AREP. Critically, the AREP partnership agreement expressly allowed the general partner to compete directly or indirectly with AREP, which departed from the fiduciary duties partners would owe by default. The defendants moved to dismiss, arguing the agreement's own terms authorized exactly the conduct the Kahns complained about.