Md. appellate court rules circuit court lacked jurisdiction over

Daily Record, The (Baltimore), Mar 9, 2005 by Ann Parks

A lawsuit by a Washington, D.C., real estate company against a Delaware limited partnership and its corporate general partner, stemming from a project in California, has come to a halt in Maryland's Court of Special Appeals.

The intermediate appellate court last week vacated a million- dollar judgment against Mission West LP and its corporate general partner, Mission West Properties Inc., concluding that the circuit court lacked personal jurisdiction over the Delaware limited partnership.

Mission West Properties, a real estate investment trust and Maryland corporation with its principal place of business in California, had faced liability only because of its status as the corporate general partner of Mission West LP.

Plaintiff/appellee Republic Properties Corp., a D.C. real estate investment, management, and development company, had argued that the court could assert jurisdiction over Mission West LP by virtue of the fact that Mission West Properties, originally incorporated in California, had been reincorporated in Maryland in 1999 and had been served with process here.

Under Maryland's personal jurisdiction statute, C.J. Section 6- 102, a court may exercise personal jurisdiction as to any cause of action over a person domiciled in, served with process in, organized under the laws of, or maintaining a principal place of business in the state.

But the Court of Special Appeals recognized Maryland's use of the entity theory of partnerships, which views individual partners as existing separately from each other.

Appellees cannot invoke the domicile basis for general jurisdiction - because, regardless of MWINC's domicile, MWLP is domiciled either in Delaware or California, but certainly not in Maryland, Judge Arrie W. Davis wrote for the court.

Nor did the appellate court accept the contention that the Baltimore City Circuit Court could assert jurisdiction over Mission West LP because of the in-state service on Mission West Properties.

MWLP is an entity distinct from its constituent partners, and - MWLP has never conducted any activity of any kind in Maryland, either directly or through MWINC, despite the service of process of MWLP's general partner in Maryland, Davis wrote.

Nothing in the record showed that Mission West LP or Mission West Properties ever transacted any business in Maryland, the court noted.

Republic Properties and Mission West WLP were themselves partners in an entity known as the Hellyer Avenue Limited Partnership, formed to construct two office and light industrial buildings in San Jose, Calif., for a communications company named Stellex Microwave Systems Inc. Hellyer was to lease the premises to Stellex.

Under the Hellyer limited partnership agreement, the membership of all partners except Mission West LP was conditioned on Stellex's payment of all its obligations under the lease.

When Stellex allegedly defaulted on payments to a California construction company named Berg & Berg - which owned the San Jose property and was also connected to Mission West Properties - Mission West LP purportedly expelled the other partners and stopped paying them distributions.

Republic and other Hellyer partners sued Mission West LP and Mission West Properties in Baltimore City Circuit Court to recover distributions they were allegedly owed, alleging a breach of the partnership agreement. The circuit court denied the defendants' motion to dismiss for lack of jurisdiction.

The court then found that Mission West LP and Mission West Properties had breached the agreement and entered judgment against them for $1,010,976, including $77,427.46 for Republic and awards to three other Hellyer partners: $68,587.29 to Steven Grigg; $841,146.24 to Mentmore Partners LLC; and $23,815.02 to David L. Peter.

Case:

Mission West Properties, LP v. Republic Properties Corp, et. al, CSA No. 524, Sept. Term 2004. Opinion by Davis, J. Filed March 1, 2005.

Issue:

Could the Baltimore City Circuit Court assert personal jurisdiction over a Delaware limited partnership, Mission West LP, who had its principal place of business in California, where 1) its corporate general partner, Mission West Properties Inc. was a Maryland corporation with its principal place of business in California and 2) the general partner was served with process in Maryland?

Holding:

No, vacated. 1) Under Maryland law, a partnership is an entity distinct from its partners; therefore the LP is domiciled in either Delaware or California; 2) service upon the general partner does not vest the court with jurisdiction over the LP since neither the LP nor its GP ever conducted business in Maryland.

Counsel:

Robert R. Moore, San Francisco, Ca. for appellant; Edward J. Tolchin, Fairfax, Va. for appellee.