Friday, November 29, 2013

Bernstein v. Nemeyer case brief

Bernstein v. Nemeyer case brief summary
570 A.2d 164 (1990)

Plaintiff limited partners filed suit against defendant general partners for breach of contract, willful misconduct, and violation of the Connecticut Unfair Trade Practices Act, specificallyConn. Gen. Stat. § 42-110b. The Superior Court in the judicial district of Fairfield, Connecticut, entered judgment for the general partners on those claims and for the limited partners on the general partners' counterclaim. The limited partners appealed.

The general partners and a group of investors formed a partnership to purchase and renovate apartment complexes, then solicited the limited partners to join the partnership. The general partners gave a negative cash flow guaranty to the partnership, under which it lent the partnership $ 3,000,000. Eventually the general partners discontinued mortgage payments, the properties were foreclosed on, and the general and limited partners lost their entire investments. The limited partners claimed that they had a right to rescission and restitution for the general partners' breach of the guaranty. The general partners claimed that their breach was not material and that their losses precluded unjust enrichment.


  • The court held that the trial court's finding that the guaranty was an incidental term of the contract was clearly erroneous. 
  • However, the limited partners did not prove a right to restitution of their investment. 
  • The limited partners could not place the other party in the same situation as prior to the execution of the contract, a condition for restitution, and did not prove that the general partners were unjustly enriched.

The court affirmed the entry of judgment for the general partners on the limited partners' claims.

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