"Delaware's limited partnership jurisprudence begins with the basic premise that, unless limited by the partnership agreement, the general partner has the fiduciary duty to manage the partnership in its interest and in the interests of the limited partners."^[170] Delaware law presumes general partners owe these fiduciary duties unless they are explicitly and unambiguously disclaimed.^[171] And Delaware

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courts presume general partners act on an informed basis and in the honest belief that they acted in the best interest of the partnership and the limited partners.^[172]

A partnership is fundamentally a creature of agency: the limited partners appoint the general partner as their agent only for the purpose they all set for the partnership.^[174] That appointment is also the source of the general partner's fiduciary

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duties: a general partner owes fiduciary duties to the partnership and the limited partners because it is their agent.^[175] Because a limited partner links arms with a general partner for a specific purpose, the general partner only has the authority to act as the limited partner's agent in pursuit of that purpose, and so only owes the limited partner fiduciary duties to act in pursuit of that purpose. A limited partnership's purpose circumscribes the authority, and therefore the duties, of its general partner.

[...]

The partnership's purpose limits the general partner's authority and therefore circumscribes its fiduciary duties. "An agent has a duty to take action only within the scope of the agent's actual authority."^[193] Because a general partner only has the authority to act in furtherance of the partnership's purpose, it cannot owe a duty

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inconsistent with that purpose.^[194] Where a partnership agreement sets forth a specific purpose for the partnership, and grants the general partner powers in furtherance of that purpose, the general partner has no authority to take an act contrary to that purpose, and so failure to take that act cannot be a breach of fiduciary duty.^[195]

This Court has held that because a partnership's purpose limits a general partner's fiduciary duties, a failure to take an ultra vires act cannot be a breach of fiduciary duty. In Cincinnati Bell Cellular Systems Co. v. Ameritech Mobile Phone Services of Cincinnati, Inc, plaintiff and limited partner Cincinnati Bell Cellular Systems sued defendant and general partner Ameritech Mobile Phone Services of Cincinnati alleging the general partner committed gross negligence and breached its fiduciary duties by failing to sell the partnership.^[196] The limited partner argued,

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among other things: (1) the purpose of the partnership was to "generate economic returns"; (2) the general partner owed a duty to sell the partnership to fulfill the partnership's purpose; and (3) the general partner breached that purported duty by failing to sell and not fulfilling the purported purpose.^[197]

In addition to being circumscribed by the partnership's purpose, a general partner's fiduciary duties may be expressly modified by the limited partnership agreement. DRULPA Section 17-1101(d) permits parties to "expand[] or restrict[] or eliminate[]" a general partner's fiduciary duties "by provisions in the partnership agreement."^[238] The exercise of determining the nature and scope of a general partner's fiduciary duties is a contractual exercise, requiring the Court to consider

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"the reasonable shared expectations of the parties at the time they contracted."^[239] Where a limited partnership agreement does not clearly and unequivocally eliminate or limit fiduciary duties, the general partner owes default fiduciary duties.^[240] "[A]greements' drafters must [expand, restrict, or eliminate fiduciary duties] clearly, and should not be incentivized to obfuscate or surprise investors by ambiguously stripping away the protections investors would ordinarily receive."^[241] An expanded or restricted "'contractual fiduciary duty' is a fiduciary duty (1) the scope of which is established by contract; or (2) compliance with which is measured by a contractual standard."^[242]

It is well settled that, unless limited by the limited partnership agreement, the general partner of a Delaware limited partnership ⁸ and the directors of a corporate General Partner who control the partnership ⁹, like the directors of a Delaware corporation, have the fiduciary duty to manage the partnership in the partnership's interests and the interests of the limited partners. As this Court said in Boxer v. Husky Oil Co., "the fiduciary duty of fair dealing by a general partner to a limited partner is no less than that owed by a director to a shareholder. The form of the enterprise does not diminish the duty of fair dealing by those in control of the investments." ¹⁰ As a result, Delaware law requires the general partners of limited partnerships to exercise due care and to act in the best interest of the partnership and the limited partners. ¹¹ On the other hand, the business judgement rule generally protects the actions of general [*11]  partners, ¹² [*12]  affording them a presumption that they acted on an informed basis and in the honest belief that they acted in the best interest of the partnership and the limited partners. ¹³

When the provisions of the Uniform Partnership Act and the Uniform Limited Partnership Act are read together, it is clear that the general partner in a limited partnership owes a fiduciary duty to the limited partners. See Homestake Mining Co. v. Mid-Continent Exploration Co., 10th Cir., 282 F.2d 787 (1960); Gundelach v. Gollehon, Colo. App.,  [**6]  42 Colo. App. 437, 598 P.2d 521 (1979); Bassan v. Investment Exchange Corp., 83 Wash. 2d 922, 524 P.2d 233 (1974). It is also clear that a partner owes a fiduciary duty to the other partners at common law. Newburger, Loeb & Co., Inc. v. Gross, 2nd Cir., 563 F.2d 1057 (1977); Meinhard v. Salmon, N.Y. Ct. App., 249 N.Y. 458, 164 N.E. 545 (1928). See generally CRANE AND BROMBERG, Law of Partnership § 68 (1968); NOTE, Fiduciary Duties of Partners, 48 Iowa L. Rev. 902 (1963).

The duty of the general partner in a limited partnership to exercise the utmost good faith, fairness, and loyalty is, therefore, required both by statute and common law. This fiduciary duty of partners is often compared to that of corporate directors:

"Furthermore, the fiduciary duty of fair dealing by a general partner to a limited partner is no less than that owed by a corporate director to a shareholder. The form of the enterprise does not diminish the duty of fair dealing by those in control of the investments." Miller v. Schweickart, S.D.N.Y., 405 F. Supp. 366 (1975)

Before Goodman made the First Investment and became a limited partner in the Fund, securities laws and the common law of fraud regulated solicitation of investments in the Fund. After Goodman made the First Investment and became a limited partner, the Fund's limited partnership agreement imposed new requirements. Because the agreement did not disclaim the fiduciary duty of loyalty,¹⁵ the general partner assumed contractual and fiduciary duties.¹⁶ As a fiduciary, and absent contractual modification, a general partner's duties to limited partners and the partnership parallel those exercised by directors of Delaware corporations.¹⁷

[234 A.3d 1168]

Directors of Delaware corporations owe duties of care and loyalty to the corporation and its stockholders.¹⁸ These duties "do[ ] not operate intermittently" but are "the constant compass by which all director actions for the corporation and interactions with its shareholders must be guided."¹⁹ Relevant to this action, a director's fiduciary duties of care and loyalty apply when directors communicate with stockholders. A director's specific disclosure obligations are defined by the context in which the director communicates, as are the remedies available when a director fails to meet his obligations.²⁰ One context is a communication associated with a request for stockholder action.²¹ Stockholder action has included approving corporate transactions (mergers, sale of assets, or charter amendments) and making investment decisions (purchasing and tendering stock or making an appraisal election).²² When directors request discretionary stockholder action, they must disclose fully and fairly all material facts within their control bearing on the request.²³ This application of the fiduciary duties of care and loyalty is referred to as the "fiduciary duty of disclosure." Directors breach their fiduciary duty of disclosure when the "alleged omission or misrepresentation is material."²⁴

Delaware's limited partnership jurisprudence begins with the basic premise that, unless limited by the partnership agreement, the general partner has the fiduciary duty to manage the partnership in its interest and in the interests of the limited partners.⁴ That qualified statement necessarily marries common law fiduciary duties to contract theory when it comes to considering actions undertaken in the limited partnership context. Thus, I think it a correct statement of law that principles of contract preempt fiduciary principles where the parties to a limited partnership have made their intentions to do so plain.

A. Count IV: Breach Of Fiduciary Duty

Count IV of the complaint contends that the General Partner and its controllers breached their fiduciary duties when engaging in the conduct challenged in the complaint. The language of the Partnership Agreement clearly eliminated fiduciary duties. As a result, Count IV fails to state a viable claim.

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The Delaware Limited Partnership Act gives "maximum effect to the principle of freedom of contract and to the enforceability of partnership agreements." 6 Del. C. § 17-1101(c). This freedom is "often exercised in the MLP context" by "eliminating any fiduciary duties a partner owes to others in the partnership structure." Dieckman v. Regency GP LP, 155 A.3d 358, 366 (Del. 2017) (citing 6 Del. C. § 17-1101(d)). By doing so, the drafters of a limited partnership agreement replace fiduciary duties with contractual obligations. Id. If fiduciary duties have been validly eliminated, "the limited partners cannot rely on traditional fiduciary principles to regulate the general partner's conduct." Brinckerhoff v. Enbridge Energy Co., 159 A.3d 242, 252 (Del. 2017).

The drafters of the Partnership Agreement chose to eliminate all common law duties, including fiduciary duties, that the General Partner and its affiliates might otherwise have owed to the Partnership and its limited partners. Section 7.9(e) of the Partnership Agreement states:

Except as expressly set forth in this Agreement, neither the General Partner nor any other Indemnitee shall have any duties or liabilities, including fiduciary duties, to the Partnership or any Limited Partner or Assignee and the provisions of this Agreement, to the extent that they restrict, eliminate or otherwise modify the duties and liabilities, including fiduciary duties, of the General Partner or any other Indemnitee otherwise existing at law or in equity, are agreed by the Partners to replace such other duties and liabilities of the General Partner or such other Indemnitee.

Agr. § 7.9(e). The Partnership Agreement defines the term "Indemnitee" to include the General Partner and "any Person who is or was an Affiliate of the General Partner . . . ." Id. § 1.1 at 12. The Partnership Agreement defines the term "Affiliate" as "with respect to any Person, any other Person that directly or indirectly through one or more intermediaries

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controls, is controlled by or is under common control with, the Person in question." Id. § 1.1 at 3. Consequently, GPGP, Holdings, and Loews are Indemnitees for purposes of the Partnership Agreement.

The language of Section 7.9(e) eliminated all "duties or liabilities, including fiduciary duties" owed by the General Partner and its affiliates to the Partnership and its limited partners. Section 7.9(e) left in place only those duties and liabilities "expressly set forth in [the Partnership] Agreement." Thus, the only duties and liabilities that the General Partner, GPGP, Holdings, and Loews owed to the Partnership and its limited partners were contractual obligations found in the Partnership Agreement.

Because the Partnership Agreement eliminated fiduciary duties and replaced those duties with contractual obligations, the plaintiffs have not stated a claim for breach of fiduciary duty. See Allen v. El Paso Pipeline GP Co., 90 A.3d 1097, 1100-01 (Del. Ch. 2014) (interpreting identical provision). Count IV is therefore dismissed.

Undoubtedly, a corporate general partner and the directors of that general partner owe a fiduciary duty of loyalty to a limited partnership and its limited partners.¹⁴ Nevertheless, the corporate general partner and its directors are entitled to the protections afforded corporate directors, including a presumption that their actions are protected from judicial oversight by the business judgment rule. "[T]he business judgment rule generally protects the actions of general partners, affording them a presumption that they acted on an informed basis and in the honest belief that they acted in the best interests of the partnership and the limited partners."¹⁵ Zoren has the burden of rebutting this presumption and must, as a threshold matter, plead sufficient facts showing that Salomon or the General Partner appeared on both sides of the transaction or derived a personal benefit from a transaction in the sense of self-dealing.¹⁶