Alkek & Williams, Ltd. v. Tuckerbrook Alternative Investments, L.P.

Case: 10-20395 Document: 00511419977 Page: 1 Date Filed: 03/22/2011

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
March 22, 2011

No. 10-20395 Lyle W. Cayce
Clerk

ALKEK & WILLIAMS, LIMITED; ALBERT AND MARGARET ALKEK
FOUNDATION,

Plaintiffs - Appellants
v.

TUCKERBROOK ALTERNATIVE INVESTMENTS, L.P.;
TUCKERBROOK/SB GLOBAL SPECIAL SITUATIONS GP, L.L.C.;
TUCKERBROOK/SB GLOBAL SPECIAL SITUATIONS FUND, L.P.,

Defendants - Appellees

Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:08-CV-3501

Before KING, DAVIS, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
Plaintiffs–Appellants brought this breach of contract suit seeking to
recover their capital accounts in Tuckerbrook/SB Global Special Situations
Fund, L.P. as of May 31, 2008, the effective date of their alleged withdrawal
from the partnership, together with fees and expenses allegedly wrongfully
charged. The district court granted summary judgment in favor of

*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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No. 10-20395

Defendants–Appellees, reasoning that the event entitling Appellants to
withdraw from the partnership as of May 31, 2008 had not occurred. We
AFFIRM.
I. FACTUAL & PROCEDURAL BACKGROUND
This case is a dispute over the provisions of the Limited Partnership
Agreement (the “Agreement”) that governs Tuckerbrook/SB Global Special
Situations Fund, L.P. (“GSS”), a Delaware limited partnership and investment
fund specializing in distressed assets. Under the Agreement, the management
of GSS is vested exclusively in Tuckerbrook/SB Global Special Situations Fund
GP, L.L.C. (“GSS GP”), the general partner of GSS. Tuckerbrook Alternative
Investments, L.P. (“Tuckerbrook”) is a managing member of GSS GP with a fifty
percent ownership interest and serves as the investment manager and
management company of GSS GP.1
Tuckerbrook hired Sumanta Banerjee to launch GSS and serve as its
portfolio manager. As portfolio manager, Banerjee was responsible for the
investment and management of GSS’s capital. Banerjee was also a managing
member with fifty percent ownership of GSS GP. GSS GP had no management
agreement assigning management responsibilities between Banerjee and
Tuckerbrook.
Plaintiffs–Appellants Alkek & Williams, Ltd. and the Albert and Margaret
Alkek Foundation (collectively, “Alkek”) are both limited partners in GSS and
made capital contributions to GSS. One of the other limited partners in GSS
was Tuckerbrook/SB Global Distressed Fund I, L.P. (“GDF”), a fund in which
Tuckerbrook and Banerjee were also managing members. Under § 5.03 of the
Agreement, Alkek and the other limited partners had a right to withdraw from
GSS if

1
This opinion refers to Defendants–Appellees Tuckerbrook, GSS, and GSS GP
collectively as “Defendants.”

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Sumanta Banerjee dies, becomes incompetent or disabled (i.e.,
unable by reason of disease, illness or injury, to perform his
functions as the managing member of the General Partner for 90
consecutive days), or ceases to be directly or indirectly involved in
the activities of the General Partner.
On March 25, 2008, Tuckerbrook sent a letter to Alkek and the other
limited partners in GSS notifying them that Banerjee had been terminated from
his position as GSS’s portfolio manager, but would continue to be a managing
member of GSS GP. One month later, Alkek notified GSS that it was
withdrawing from the partnership, stating that “Banerjee’s lack of involvement
in activities of [GSS GP]” had triggered its withdrawal rights under § 5.03 of the
Agreement. The other limited partners, including GDF, also filed withdrawal
notices under § 5.03. Defendants did not immediately act on these withdrawal
notices, and Tuckerbrook ultimately declared GSS to be in dissolution in
January 2009.2
Shortly before Tuckerbrook declared GSS to be in dissolution, Alkek filed
the instant lawsuit in federal district court on the basis of diversity jurisdiction.
Alkek claimed that Defendants had breached the Agreement by failing to return
Alkek’s capital accounts in GSS after Alkek sent in its withdrawal notice and by
charging Alkek management fees after its withdrawal from GSS became
effective. Alkek also sought a declaratory judgment from the district court
stating that it was entitled to withdraw from GSS effective May 31, 2008 (one
month after it had tendered its withdrawal notice) and sought an accounting of
the value of Alkek’s capital accounts on that date.
Defendants filed a motion for summary judgment, arguing that Banerjee’s
removal from the position of portfolio manager did not trigger Alkek’s

2
Shortly after Banerjee was fired, Tuckerbrook sued Banerjee in the District of
Massachusetts to enforce a non-compete agreement in his employment contract. In September
2008, after months of fractious litigation, Banerjee and Tuckerbrook reached a settlement,
under which Banerjee relinquished his fifty percent interest in GSS GP.

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No. 10-20395

withdrawal rights under § 5.03. The district court denied this motion without
prejudice to allow for additional discovery into whether Banerjee was involved
in the activities of GSS GP after he was terminated from his position as portfolio
manager of GSS. After discovery, Defendants filed a second motion for summary
judgment on the same basis as the first. In response, Alkek argued there was
a genuine dispute over whether Banerjee had remained involved in GSS GP for
purposes of § 5.03 of the Agreement. Alkek also argued that, under the doctrine
of quasi-estoppel, Defendants could not dispute whether Banerjee’s termination
triggered § 5.03 because Tuckerbrook itself submitted a § 5.03 withdrawal notice
in its capacity as a managing member of GDF after Banerjee was fired.
Relatedly, Alkek argued that Defendants could not dispute the validity of the
withdrawal notice because they did not explicitly reject Alkek’s notice when it
was tendered in April 2008.
In a thorough, well-reasoned memorandum opinion and order, the district
court granted summary judgment in favor of Defendants. The district court
noted that, although Banerjee’s termination “demonstrably deflated” his
managing authority over GSS GP, Banerjee remained active in the management
of GSS GP. The district court rejected Alkek’s quasi-estoppel argument, stating
that Tuckerbrook did not benefit from submitting GDF’s withdrawal notice and
Alkek was not harmed by the notice. The district court also concluded that
Tuckerbrook’s failure explicitly to reject the limited partners’ withdrawal notices
when they were submitted did not create a genuine dispute over the validity of
the withdrawals. Alkek appealed the district court’s grant of summary
judgment in Defendants’ favor.
II. LEGAL STANDARDS
This court “review[s] the grant of summary judgment de novo, viewing the
evidence in the light most favorable to the nonmoving party.” Cerda v. 2004-
EQR1 L.L.C., 612 F.3d 781, 786 (5th Cir. 2010). Summary judgment is proper

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“if the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” F ED. R. C IV. P. 56(a).
III. GOVERNING LAW
In this diversity action, we apply Texas choice-of-law principles to
determine which law governs. See Klaxon Co. v. Stentor Electric Mfg. Co., 313
U.S. 487, 496 (1941). Under those principles, Delaware substantive law governs
this contract dispute because the Agreement has an undisputedly valid choice
of law provision selecting Delaware law to govern the Agreement. See Monsanto
Co. v. Boustany, 73 S.W.3d 225, 229 (Tex. 2002).
IV. ANALYSIS
A. The Agreement’s Withdrawal Provision
Under Delaware law, “[w]hen the contract is clear and unambiguous,
[courts] will give effect to the plain-meaning of the contract’s terms and
provisions.” Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159–60 (Del. 2010).
As noted above, § 5.03 of the Agreement gave the limited partners the right to
withdraw from GSS if Banerjee “ceases to be directly or indirectly involved in the
activities of [GSS GP].” The district court defined the term “involved” in this
phrase to mean “to engage as a participant.” This definition was proposed by
Defendants and accepted by Alkek. Accordingly, summary judgment was
inappropriate if there was a genuine dispute over whether Banerjee had ceased
to directly or indirectly “engage as a participant” in the activities of GSS GP.
1. Banerjee’s Involvement
The district court thoroughly documented Banerjee’s participation in GSS
GP immediately after his termination—and in the months that followed—and
concluded that Banerjee “remained both directly and indirectly involved in the
management of GSS GP.” The record fully supports this conclusion. In its letter
advising the limited partners of Banerjee’s termination, Tuckerbrook noted that
he would continue to be a managing member of GSS GP. Within days of his

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termination, Banerjee corresponded with the limited partners in GSS, counsel
for GSS, GSS’s administrator, and GSS’s bank, stating that GSS GP could not
act without his approval because he retained authority as a managing member
and fifty percent owner of GSS GP. Shortly after this flurry of communication,
GSS’s administrator, Michael J. Liccar & Co., CPAs (“Liccar”), took the position
that it could not make disbursements to Tuckerbrook or take other actions
without Banerjee’s approval.
Alkek argues that Tuckerbrook had successfully frozen Banerjee out of
GSS GP by removing him from the position of portfolio manager, denying
Banerjee access to GSS GP’s books, reports and statements, unilaterally
communicating with the limited partners, and attempting to execute separate
investment management agreements with the limited partners and GSS GP that
formalized Tuckerbrook’s previous duties as investment manager. As the events
of the months following Banerjee’s termination demonstrate, however, these
efforts to exclude Banerjee from participation were nugatory. Banerjee obtained
a court order to resume access to GSS GP’s books and records. Tuckerbrook was
unable to collect management fees from Liccar without Banerjee’s approval.
Liccar required Banerjee’s approval prior to releasing financial statements on
behalf of GSS GP. Despite Tuckerbrook’s directions to do so, Liccar refused to
write off one of GSS’s investments without Banerjee’s approval. Banerjee also
advised the limited partners on the proposed redemption of investments. All of
this evidence competently demonstrates that, as the district court put it, “even
to the extent that Tuckerbrook might not have wanted Banerjee to maintain any
authority regarding GSS, Banerjee did in fact exert his influence.” Thus, there
is no genuine dispute over whether Banerjee remained directly and indirectly
involved in the activities of GSS GP.

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2. The Agreement’s Ambiguity
Alkek also argues that the district court erred in granting summary
judgment because § 5.03 is ambiguous.3 “[A] contract is ambiguous only when
the provisions in controversy are reasonably or fairly susceptible of different
interpretations or may have two or more different meanings”. Rhone–Poulenc
Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).
Alkek argues that summary judgment was inappropriate because the relevant
portion of § 5.03 could reasonably be read as allowing the limited partners to
withdraw if Banerjee ceases to be either (1) directly involved in the activities of
GSS GP as portfolio manager of GSS, or (2) indirectly involved in the activities
of GSS GP as a managing member of GSS GP.
This interpretation is unnecessarily narrow. The language at issue in this
appeal focuses Banerjee’s involvement vel non; it does not hinge on his title as
portfolio manager of GSS. If Banerjee’s removal from the position of portfolio
manager was to be sufficient to trigger the limited partners’ withdrawal rights,
such a term would have been stated in the Agreement. See id. (“Courts will not
torture contractual terms to impart ambiguity where ordinary meaning leaves
no room for uncertainty.”).
Furthermore, Alkek’s proposed reading incorrectly suggests that the
portfolio manager is the only party that exerts direct control over the activities
of GSS GP. Under the Agreement, both the portfolio manager and GSS GP (and
therefore the managing members of GSS GP) exert authority over the activities
of GSS GP. The Agreement vests the portfolio manager with the responsibility

3
Defendants argue that Alkek waived this argument because Alkek raised it in its
response to Defendants’ first motion for summary judgment but failed to raise it again in
response to Defendants’ second motion for summary judgment. Because we dispose of Alkek’s
issue on the merits, we need not decide this issue.

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of allocating the amount of time GSS GP will spend on certain matters, but it
does not diminish the enumerated powers of GSS GP. These enumerated powers
include, among other things, providing investment strategies to the limited
partners, making reports to the limited partners, collecting fees, and closing
accounts, all of which are activities Banerjee participated in after his
termination as portfolio manager.
Alkek has a further argument (which appeared only periodically in the
district court) about the phrase “ceases to be directly or indirectly involved” in
the activities of GSS GP that can only be described as strained. It is enough to
say that the words “direct” and “indirect” are obviously intended to clarify that
the word “involved” has a broad scope. Alkek’s reading of § 5.03 is unreasonable
and does not create the type of contract ambiguity that requires reversal of the
district court’s order granting summary judgment.
B. Quasi-estoppel
Alkek next argues that Tuckerbrook may not challenge whether § 5.03 of
the Agreement has been triggered because Tuckerbrook submitted a withdrawal
notice on behalf of GDF and did not the reject the limited partners’ withdrawal
notices when they were filed. Citing Personnel Decisions, Inc. v. Bus. Planning
Sys., Inc., No. 3213-VCS, 2008 WL 1932404 (Del Ch. May 5, 2008), among other
cases, Alkek argues that the Delaware doctrine of quasi-estoppel precludes a
party from taking a position in a lawsuit that is inconsistent with a prior
position taken by that party and that resulted in either a benefit to that party
or a disadvantage to the opposing party.4 The district court assumed, without
deciding, that Tuckerbrook had taken inconsistent positions and concluded that

4
The parties agree that the doctrine of quasi-estoppel involves a benefit to the party
asserting the inconsistent position and a disadvantage to the opponent. The sole dispute over
the doctrine is whether one or both elements must be proven to invoke the doctrine
successfully. We need not resolve this dispute because Alkek has failed to prove either a
detriment to itself or a benefit to Tuckerbrook.

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Alkek had not proven either a benefit to Tuckerbrook or a detriment to Alkek.
Although Alkek claims Tuckerbrook benefitted from filing a withdrawal
notice on GDF’s behalf because it earned fees from managing GDF and risked
being sued by GDF if it did not file the withdrawal notice, we agree with the
district court. There is no evidence in the record to suggest that Tuckerbrook’s
management fees were contingent upon filing GDF’s withdrawal notice, and,
because the withdrawal notices were never honored, there is no evidence from
which to conclude that Tuckerbrook would have been sued if it had not filed the
withdrawal notice.
Alkek also argues that Tuckerbrook harmfully induced Alkek to rely on
the validity of Alkek’s withdrawal notice. As the district court correctly
observed, however, Alkek could not have assumed its withdrawal notice was
valid based on GDF’s submission of a withdrawal notice because Alkek was not
aware that GDF had submitted a withdrawal notice until after commencing the
instant lawsuit. Alkek has not pointed to any other harm GDF’s withdrawal
notice could have caused. Nor did Tuckerbrook’s failure explicitly to deny
Alkek’s withdrawal notice in its capacity as managing member of GSS GP
damage Alkek. None of Tuckerbrook’s communications to the limited partners
stated that the withdrawal notices were valid. Assuming Alkek was entitled to
rely on the validity of its withdrawal notice, Alkek has not elaborated on how
such reliance was to its detriment. Therefore, the district court correctly
concluded that Defendants could not be estopped from challenging the validity
of Alkek’s withdrawal notice.
V. CONCLUSION
For the foregoing reasons, the judgment of the district court is
AFFIRMED.

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