Walter v. Holiday Inns, Inc.
United States Court of Appeals for the Third Circuit
985 F.2d 1232 (1993)
Holiday Inns (defendant), which had day-to-day operational control of a hotel-casino partnership with Walter and other investors (plaintiffs), told the plaintiffs during a period of poor financial projections that they needed to contribute more capital, and the plaintiffs subsequently sold their interests to Holiday over two transactions; the casino later became highly profitable, and the plaintiffs sued for breach of fiduciary duty, arguing Holiday should have disclosed an internal 35-year financial projection (the Boxer Report) forecasting long-term profits. The plaintiffs stipulated they were sophisticated investors with unrestricted access to the partnership's books throughout; the district court granted judgment as a matter of law for Holiday, and Walter appealed.
Whether a partner breaches the fiduciary duty of disclosure of material facts by failing to disclose facts that would not have been expected to induce action or forbearance by the other partners.