Constructive Trusts Circumvent Limitations Period Under 10 Del. C. Section 8113
This is an action for breach of fiduciary duties, commingling of assets and a failure to account involving two Delaware limited partnerships. Defendants brought an unsuccessful motion to dismiss. The court however granted their summary judgment motion for claims predating June 18, 1998 but denied judgment as to all other claims.
Plaintiff, a 33% limited partner, brought this action against the administrator of a deceased limited partner. Plaintiff sought: (1) an accounting of the two entities; (2) damages revealed by the accounting; and (3) an award of attorney fees. Defendants moved to dismiss all the claims because they were allegedly barred by 10 Del. C. §8113, having exceeded the six-month period following the deceased partner's demise. The court denied the motions and allowed the all claims to proceed, granting a limited summary judgment on certain time-barred claims.
In denying a motion to dismiss for claims being time-barred, the court accepted the plaintiff's argument that a constructive trust was created. Drawing all inferences in the dismissal motion in plaintiff's favor, the court denied the motion because Section 8113 only applied to actions against the property of the estate. Here, the property was not vested in the estate because a constructive trust existed.
Authored by:
Raj Srivatsan
302-888 6831
rsrivatsan@morrisjames.com
