This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1994).


Everest Investors, LLC, a California
Limited Liability Company, et al.,


Investment Associates, II, et al.,

Filed September 10, 1996
Huspeni, Judge

Hennepin County District Court
File No. 9514907

Gordon G. Busdicker, John Edward Connelly, Faegre & Benson, LLP, 2200 Norwest Center, 90 S. Seventh St., Minneapolis, MN 55402 (for Appellants)

Alan L. Kildow, Larkin, Hoffman, Daly & Lindgren, Ltd., 1500 Norwest Financial Center, 7900 Xerxes Ave. S., Bloomington, MN 55431 (for Respondents)

Considered and decided by Huspeni, Presiding Judge, Randall, Judge, and Amundson, Judge.


Appellants, the assignees and attorneys-in-fact of former limited partners in a group of limited partnerships, brought this action against respondents, the general partners, to compel respondents to permit inspection and copying of partnership books and records. The district court granted respondents' motion to dismiss appellants' complaint for failure to state a claim upon which relief can be granted, holding that appellants lacked standing to bring their action. Because we conclude that neither appellants' status as assignees nor their status as attorneys-in-fact confers the rights of limited partners, we affirm.

Three Minnesota limited partnerships, Griffin Real Estate Fund II, Griffin Real Estate Fund IV, and Griffin Real Estate Fund V, were formed between 1981 and 1985 for the purpose of acquiring and managing income-producing real estate. Respondents Investment Associates, Griffin Associates IV, Griffin Equity Partners, and Guardian Investment Corporation are their general partners.
All three partnership agreements provide that limited partners have the right to receive a list of names and addresses of other limited partners from the general partner and that limited partners and their legal counsel have the right to inspect and copy partnership books and records. The partnership agreements also provide that "no transfer or assignment shall be effective until written notice thereof is received by the General Partner"; the Griffin II agreement adds "and the General Partner has, in its absolute discretion, consented in writing to the transfer or assignment." All three agreements further provide that no assignee has the right to become a substitute limited partner unless the general partner consents to the admission of the assignee and that the general partner has absolute discretion to grant or withhold consent. If consent is withheld, the assignee does not become a limited partner and is entitled only to an economic share in the partnership.
Between May 1995 and August 1995, appellants Everest Investors, LLC, and Everest Properties, Inc., both California corporations, became attorneys-in-fact and assignees of limited partners. Respondents, the general partners, did not consent to the assignments. When appellants in their capacity as assignees and attorneys-in-fact for the assignor limited partners requested permission to copy and inspect the books and records, respondents refused. They argued that appellants were not substitute limited partners but only assignees and therefore did not have the right to copy and inspect.
Appellants brought this action alleging that respondents wrongfully refused to permit appellants to inspect and copy and that in doing so respondents breached the partnership agreement and violated the Minnesota Partnership Act. Appellants also sought injunctive relief and were awarded a temporary injunction on the ground that their status as attorneys-in-fact was sufficient to permit them to assert the rights of limited partners.
After the issuing of the temporary injunction, appellants moved for clarification, for sanctions, and for a contempt hearing on respondents' alleged failure to comply with the injunction; respondents moved for partial stay and reconsideration of the order, and dismissal of appellants' complaint. The motion to dismiss was granted, and the injunction vacated, on the grounds that appellants lacked standing as assignees to compel the production of partnership books and records for inspection and that appellants' powers as attorneys-in-fact were insufficient as a matter of law because limited partners who have assigned their partnership interest no longer have authority to grant a power of attorney.

Respondents moved to dismiss for failure to state a claim upon which relief can be granted pursuant to Minn. R. Civ. P. 12.02(e). In reviewing cases dismissed for failure to state a claim upon which relief can be granted, this court asks only whether the complaint sets forth a legally sufficient claim for relief. Elzie v. Commissioner of Pub. Safety , 298 N.W.2d 29, 32 (Minn. 1980).
It is undisputed that both the partnership agreement and Minn. Stat. § 322A.28 (1994) confer on limited partners the right to inspect and copy partnership records; the statute also confers the right to obtain from general partners "true and full information regarding the state of the business and financial condition of the limited partnership." Minn. Stat. § Minn. Stat. §subd. 5 (1994), provides that a principal authorizes an attorney-in-fact:
(1) to * * * exercise any right, power, privilege, or option which the principal has, or claims to have, under any partnership agreement whether the principal is a general or limited partner * * *;

(2) to exercise in person or by proxy or to enforce by action * * * any right, power, privilege, or option which the principal has as the holder of any bond, share, or other instrument of similar character and to defend, submit to arbitration, settle or compromise any action or other legal proceeding to which the principal is a party because of a bond, share, or other instrument of similar character.

If appellants were, as they claim to be, attorneys-in-fact of current limited partners, they would have an indisputable right to bring an action compelling the production of the partnership records for their inspection.
However, appellants are the attorneys-in-fact of former limited partners, pursuant to Minn. Stat. § 322A.56 (1994), which provides:
Except as provided in the partnership agreement, a partner ceases to be a partner upon assignment of all the partner's partnership interest.

Appellants argue that one partnership agreement does provide an exception: the Griffin II agreement states that assignment is not effective until the general partner consents to it in writing, and the general partner has not consented. 1 However, the provision also states:
All transfers or assignments of interests in the Partnership occurring during any month shall be deemed effective ( i.e. the transferee shall become a Limited Partner of record) on the first day of the month following the month in which the transfer or assignment occurs.

This sentence clarifies the significance of the general partner's consent and the meaning of "effective": it is the assignee's right to enter the partnership, not the assignor's right to transfer the partnership interest, that is contingent on the general partner's consent. 2

Appellants also argue that even if the assignor partners have ceased to be partners, they have retained their right to inspect and copy the partnership records and are able to confer that right on appellants by appointing them as attorneys-in-fact. They cite no authority to support either the view that former limited partners retain their rights after assigning their partnership interest or the view that a power of attorney confers partnership rights that the principal no longer has. 3

Nor are we persuaded by appellants' argument that because assignor limited partners retain some liabilities after assigning their interests, they also retain their rights. While it is true that anyone who executes a certificate of limited partnership knowing that it contains false statements remains liable to one who suffers damage as a result, Minn. Stat. § 322A.17 (1994), and that all partners, even those deceased or disabled, remain liable for contributions promised to the partnership, Minn. Stat. § 322A.39 (1994), 4 there is no comparable statute providing that assignor limited partners retain their rights.
Moreover, a provision under which assignor limited partners retained their rights would run directly contrary to Minn. Stat. §(1994), which provides that assignees may become limited partners only if either the partnership agreement confers on the assignor the power to transfer partnership status or all other partners consent. In both cases, the crucial factor is the right of partners to choose those to whom they will extend partnership rights. Conferring the rights of limited partners on those who no longer have an interest in the partnership while denying the rights to those who have acquired an interest would be absurd.
Finally, appellants argue that respondents should not be entitled to withhold document inspection both from the original limited partners and from themselves. However, respondents did not withhold document inspection rights from the limited partners, or their attorneys-in-fact, as long as they were limited partners. As general partners, respondents clearly have the right to choose those to whom they will extend partnership status.
Respondents have chosen not to extend partnership status to appellants. Neither appellants' status as assignees nor their status as attorneys-in-fact can supersede respondents' choice: appellants do not have the rights of limited partners. We affirm the dismissal. Because we hold that appellants lack standing to enjoin respondents from denying permission to inspect and copy partnership records, we also uphold the vacation of the injunction. 5


1 Because this language is not in the Griffin IV and Griffin V agreements, which require only that the general partner receive notice of an assignment for the assignment to be effective, the assignors of interests in the Griffin IV and Griffin V partnerships have indisputably ceased to be limited partners.

2 This interpretation is also consistent with the language of the Griffin IV and Griffin V agreements, making assignment effective on notice to the general partner but conditioning the acceptance of assignees as substitute limited partners on the general partner's consent.

3 Appellants cite Fletcher v. Southern Colonization Co. , 148 Minn. 143, 147, 181 N.W. 205, 207 (1921), for the proposition that a power of attorney may not be revoked if it is given for valuable consideration or security. Fletcher is readily distinguishable: it holds that jurisdiction is not acquired by service on an agent who has previously resigned. Id. at 149-50, 181 N.W. at 208. Fletcher does not support the proposition that a limited partner may extend his rights beyond the duration of his partnership by appointing an attorney-in-fact to exercise them.

4 These are the only two circumstances in which assignor limited partners remain liable. Minn. Stat. § 322A.58(c) (1994).

5 We do not find it necessary to reach respondents' Minn. R. Civ. P. 17 issue.