00-2731 NOLAN V. VIRGINIA

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State: Florida

Court: Florida Third District Court

Docket No: 00-2731 NOLAN V. VIRGINIA

Case Date: 12/26/2002

Preview:NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DISPOSED OF.

IN THE DISTRICT COURT OF APPEAL OF FLORIDA THIRD DISTRICT JULY TERM, A.D. 2002

JAMES NOLAN, Appellant, vs. VIRGINIA INVESTMENT FUND LIMITED PARTNERSHIP and JAMES RIVER CAPITAL CORP., Appellees.

** ** ** ** LOWER TRIBUNAL NO. 99-13757 CASE NO. 3D00-2731

**

Opinion filed December 26, 2002. An appeal from the Circuit Court for Dade County, Michael A. Genden, Judge. Hall, David and Joseph and Christopher M. David and Michael L. Cotzen, for appellant. Sullivan & Rivero; Sidley & Austin and Thomas K. Cauley, Jr., for appellees.

Before SCHWARTZ, C.J., and JORGENSON and COPE, JJ.

COPE, J. Appellant James Nolan appeals the dismissal of his claims against a limited partnership in which he invested. We affirm.

Appellee Virginia Investment Fund Limited Partnership (the "Fund") is a Delaware private commodity pool organized as a limited partnership. Appellee James River Capital Corporation In 1996

is the general partner of the limited partnership.

Nolan obtained a copy of a Private Placement Memorandum pursuant to which the Fund offered limited partnership interest to

investors.

After reviewing the Memorandum Nolan decided to In connection

purchase a $250,000 limited partnership interest.

with his investment, Nolan represented that he had reviewed the Private Placement Memorandum, that he was an experienced

investor and that he had a net worth in excess of $1 million. The Private Placement Memorandum states, "THE INTERESTS ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK." (emphasis in original). the limited partnership (R. 245)

The Memorandum explains elsewhere that interests "ARE SUITABLE ONLY FOR (R.

INVESTORS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT." 255) (emphasis in original).

The Memorandum reviewed by Nolan contains a page entitled "Conflicts of Interest" which states, among other things: The General Partner and its principals have a conflict of interest between retaining Trading Advisors which will generate a high level of brokerage commissions (to the benefit of the General Partner) or which have marketing agreements or other ongoing business dealings with the General Partner, and retaining Trading Advisors which will achieve the best results for the Partnership. All of the current 2

Trading Advisors have ongoing business relationships (including in certain cases marketing agreements) with the General Partner, and the General Partner anticipates that most Trading Advisors which it selects in the future will also have such relationships. . . . . The General Partner and its principals have a conflict of interest between investing Partnership assets in other commodity pools operated by the General Partner and investing such assets in the best interests of the Partnership, because on the General Partner's own pools it will receive administrative charges, brokerage commissions, interest income and other benefits in respect of such investments. The General Partner operates commodity pools other than the Partnership and may have financial and other incentives to favor certain of such pools over the Partnership. (R. 252) (emphasis added). Eventually Nolan suffered a significant loss on his

investment and filed this action against both the Fund and its general partner. Nolan's Second Amended Complaint alleged

claims of (1) breach of fiduciary duty for failure to maintain promised diversity in the commodity pool; (2) breach of

fiduciary duty by virtue of a conflict of interest; and (3) negligence by changing of the mix of trading advisors utilized by the pool. The trial court granted the defendant's motion to dismiss the Second Amended Complaint finding that the Memorandum's

disclosures negated Nolan's claims. 3

On appeal Nolan first argues that this court should not enforce the choice of law provision contained in the

Subscription Agreement he signed when he purchased his limited partnership interest. The Agreement provides that Delaware law

governs the parties' relationship. We affirm on this issue. There is no indication that it was The parties' contractual choice

ever raised in the trial court. of law will be enforced.

Under the Delaware Revised Uniform Limited Partnership Act ("DRULPA"): "To the extent that, at law or in equity, a partner or other person has duties (including fiduciary duties) and liabilities relating thereto to a limited partnership or to another partner . . . (2) the partner's or other person's duties and liabilities may be expanded or restricted by provisions in the partnership agreement." 6Del. Ch.

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