KE Property Management Inc. v. 275 Madison Management Corp.

275 Madison Associates, a Delaware limited partnership, had KE Property (plaintiff) as a general partner, KJ Capital (KE's affiliate) as a limited partner, and 275 Madison Management (defendant) as managing general partner. After 275 Madison's president misappropriated $2 million in partnership funds, KJ — holding the required 25 percent of units — removed 275 Madison as managing general partner under a partnership agreement clause allowing removal for fraud or willful misconduct, and 275 Madison responded by filing bankruptcy on the partnership's behalf. KE sued for a declaration that the removal was effective and to enjoin 275 Madison from continuing to act as managing general partner, moving for summary judgment; 275 Madison argued KJ, as its remover, owed it a fiduciary duty and acted in bad faith.