Alloy v. WILLIS FAMILY TRUST

²⁵⁸ ADKINS, J. After the smoke cleared in this courtroom battle between commercial real estate partners, general partners Martin K. Alloy and Fred Farshey, 1 appellants and cross-appellees, owed limited partner The Wills Family Trust, appellee and cross-appellant, one dollar in nominal damages, for breaching their fiduciary duties by secretly acquiring and leasing competing warehouse properties. Neither side is happy with that result. On appeal, Alloy and Farshey raise a single issue: I. Did the trial court err in denying judgment in favor of Alloy and Farshey on the grounds that the conduct complained of is explicitly authorized in the Partnership Agreement and there was no evidence of actual damage to the Trust? In its cross-appeal, the Trust presents five issues: II.

Did the trial court err in refusing to permit the Trust to seek relief in connection with appellants’ efforts to “freeze” them out of the Partnership through oppressive conduct?

III

Did the trial court err in excluding evidence that the Trust suffered actual damages arising from appellants’ breach of fiduciary duties, including striking the expert testimony of William C. Harvey and Thomas Porter?

IV

Did the circuit court err in forcing the Trust to separately litigate certain breach of fiduciary duty claims against appellants, by striking the Trust’s third amended complaint, and denying leave to voluntarily dismiss the case? V. Did the circuit court err in granting appellants’ motion for summary judgment against the Trust’s request for dissolution of the partnership? ²⁵⁹ VI. Did the circuit court err in granting appellants’ motion for summary judgment against the Trust’s request for reformation of the partnership? We find no error in the trial court’s ruling that there was sufficient evidence to send the breach of fiduciary duty claim to the jury on the Trust’s “secret competition” theory.

We conclude, however, that the Trust’s alternative breach of fiduciary duty theory arising from an alleged “freeze-out” scheme should also have been presented to the jury. To the extent relevant on remand, we briefly address the remaining issues. 2 FACTS AND LEGAL PROCEEDINGS Partnership Properties SMC-United Industrial Limited Partnership (the Partnership) was formed in 1985, under District of Columbia law, for the purpose of purchasing, holding, and leasing commercial warehouses in the vicinity of 33rd and V Streets, N.E., Washington, D.C. By its terms, the Partnership is to continue for fifty years, until December 31, 2035, and is governed by D.C. law. None of the original partners owned any other warehouses in the V Street area when the Partnership was formed. Most of the Partnership properties were acquired upon formation of the Partnership.

The Partnership portfolio also included three properties purchased between 1986 and 1990, with the unanimous consent of partners, in accordance with the Partnership Agreement, as amended. 3 The total of Partnership ²⁶⁰ properties exceeds one million square feet. The Trust estimates the value of these properties at more than $50 million. Partnership Interests From its inception, the Partnership has had two distinct groups of partners—the SMC Group, led by Alloy and Farshey, and the Wills Group, led by P. Reed Wills, II. These allegiances are reflected in the Partnership’s two classes of general partners (Class I—SMC Group, Class II—Wills Group) and three classes of limited partners (Class A—SMC Group; Classes B and C—Wills Group).

Among its constituent members, each group collectively owns 50% of the Partnership, with 3% of each Group share allocated to the general partners for that Group, and the remaining 47% allocated to the limited partners for that Group. Within the SMC Group, the 3% Class I general partner interest is divided evenly among Alloy, Farshey, and SMC Second L.P. The 47% Class A limited partnership interest is allocated 29% to Alloy, 16 percent to Farshey, and 2% to SMC Second L.P. Within the Wills Group, Reed Wills held the 3% Class II general partner interest, as well as a 4% interest as a Class B limited partner. The Trust holds a 38% interest as a Class B limited partner. Reed Wills’s longtime employee, Robert Raymond, held a 5% interest as the sole Class C limited partner. 4 In 1991, Reed Wills went into bankruptcy.

In February 1993, both his general and limited partnership assets were transferred to a committee of his creditors. As a result, both the management control rights associated with Wills’s 3% general partnership interest, and the cash flow rights associat ²⁶¹ ed with Wills’s 4% limited partnership interest, were held by the creditors’ committee. The committee sought to raise money to pay off Wills’s debts, by offering Wills’s partnership interests for sale to both the Trust and the SMC Group partners. The Trust did not exercise its right of first refusal under the Partnership Agreement.

To avoid dealing with strangers to their business, Alloy and Farshey formed SMC-V Street Limited Partnership, which purchased Wills’s partnership interests from the bankruptcy estate in July 1994, for $860,000. 5 Consequently, SMC-V Street stepped into Wills’s shoes as the 3% Class II general partner and the 4% Class B limited partner. Thus, as initially allocated and subsequently transferred, Partnership interests were as follows: SMC Group Wills Group General Class I General Partners (3%): Class II General Partner (3%): Partners Martin K. Alloy 1% P. Reed Wills, II 3% (managing general partner) (managing general partner) (purchased by SM C-V Street Ltd. Partnership in July 199b) Fred Farshey 1% (managing general partner) SMC Second Ltd. Partnership 1% Limited Class A Limited Partners (47%): Partners Class B Limited Partners (42%): Martin K. Alloy 29% P. Reed Wills, 114% (purchased by SM C-V Street Ltd. Partnership in July 199b) Fred Farshey 16% SMC Second Ltd. Partnership 2% The Wills Family Trust 38% Class C Limited Partner (5%): Robert Raymond 5% Total Interest 50% SMC Group 50% Wills Group ²⁶² Cash Flow Distributions And Allocations Of Taxable Income Under the terms of their Partnership Agreement, the Trust, as a limited partner, would have no voice in managing the Partnership’s business. The Agreement provides that the “business and affairs of the Partnership shall be controlled by the General Partners.” “No limited Partner (in its capacity as a Limited Partner) shall (i) have the right or authority to act for or bind the Partnership [or] (ii) take part in the conduct or control of the Partnership’s business.” Thus, the Trust agreed to be bound by the business decisions of the Wills Group’s Class II general partner, who was initially Reed Wills but later SMC-V Street L.P. Critical to understanding the events surrounding this litigation, is one of the two cash flow allocation provisions in the Agreement. Most commonly, limited partners have the right to receive a pro rata share of any cash distributions made to partners, along with a pro rata share of any Partnership income for purposes of income tax liability, in proportion to the limited partner’s equity interest in the partnership.

If that had been the case here, the Trust would have been entitled to a share of any distributions as follows: • The Class B taxable income share would equal 42% of total distributions, because that is the total equity interest of the two Class B limited partners (Reed Wills’s 4% + the Trust’s 38%). • With its 38% equity interest, the Trust holds 90% of the total Class B equity. With his 4% equity interest, Reed Wills held 10% of the total Class B equity. • If distributions to partners were allocated pro rata in the amount of each Class B partner’s equity share, the Trust would receive 90% of the Class B distributions, or 37.8% of the total distributions paid to all partners (ie., 90% of the 42% share going to Class B partners). Conversely, Wills’s Class B limited partnership interest of 4% would receive 10% of the total Class B distribution, or 4.2% of the total distributions made to all partners. ²⁶³ But that is not what happened, because, although Reed Wills preserved these pro rata allocations for taxable income, he modified them for distributions of Capital Cash Flow, and “flipped” them for distributions of Operating Cash Flow. In doing so, Wills limited the Trust’s economic rights to receive income from ongoing Partnership operations, while maintaining pro rata the Trust’s responsibilities to pay income taxes.

Once Reed Wills lost his partnership interests in bankruptcy, the cumulative effect of these provisions has been to leave the Trust with a negative cash flow created by taxable income allocations that exceed Partnership distributions. Ultimately, this situation has given the Trust a strong financial incentive to force the sale of Partnership properties and/or dissolution of the Partnership. A detailed examination of these tailored allocations, and their consequences for the partners, follows. Under the terms of the Partnership Agreement, Capital Cash Flow distributions are made from net proceeds of sales or refinancing of one-third or more of the property owned by the Partnership. 6 With respect to these distributions, the Partnership Agreement alters the usual pro rata allocation formula described above, by directing that the share allocable to Class B limited partners 7 be distributed (a) first, in the ²⁶⁴ sum of “$90,000[ ] per annum, on a cumulative basis,” to Reed Wills’s Class B limited partnership interest, and only then (b) the remainder divided pro rata between the Trust and Reed Wills’s Class B limited partnership interest, according to their 90% and 10% shares of the Class B interests, respectively.

Once Alloy and Farshey’s SMC-V Street Limited Partnership acquired Reed Wills’s Class B partnership interest, of course, the right to any such $90,000 annual payment from Capital Cash Flow distributions was no longer held on account of an entity controlled by Reed Wills or any of the Trust beneficiaries. Operating Cash Flow distributions reflect net profits generated by the Partnership through its properties and operations. 8 With respect to these distributions to the Class B partners, 9 the Partnership Agreement effectively turns the typical allocation formula on its head. Wills accomplished this by directing that the Partnership Agreement provide that “the ²⁶⁵ share of Operating Cash Flow distributable to the Class B Limited Partners” be allocated at the rate of “ninety percent (90%) to P. Reed Wills and ten percent (10%) to the Wills Family Trust.” The result is that the Trust has a 38% equity interest in the Partnership, with attendant income tax liability in that same percentage, but it only receives 4.2% of net profits generated by the Partnership properties and paid out as Operating Cash Flow distributions. In contrast, Alloy and Farshey’s SMC-V Street Limited Partnership receives 37.8% of all the Operating Cash Flow distributions, but has attendant income tax liability of only 4% of the taxable income generated by the Partnership.

Individually and through their SMC Second Limited Partnership, Alloy and Farshey also receive another 50% of the Operating Cash Flow distributions, with attendant income tax expenses in the same percentage. Collectively, therefore, the interests controlled by Alloy and Farshey receive a total of 87.8% of any Operating Cash Flow distributions generated by the Partnership properties, but pay only 54% of the income taxes that are passed through to the partners. In contrast to this positive balance, the Trust receives only 4.2% of such distributions, but pays 38% of the income taxes. The cumulative result is that the Alloy/Farshey interests have a +33.8% differential between its income from Operating Cash Flow and its expenses for taxes, whereas the Trust has a-33.8% differential between its income from Operating Cash Flow and its tax expenses.

These allocations reflect Reed Wills’s estate and tax planning priorities at the time the Partnership was formed. According to Sheldon Liptz, Wills’ friend and accountant, whom Wills appointed as Trustee, Wills intended “to keep as much of the current income as possible for himself, and yet have the appreciation in the property pass to the next generation.” For that reason, Wills structured the Trust’s interest in the Partnership to be primarily a deferred, long term equity interest in Partnership assets (ie., properties), rather than a significant source of income. Consistent with this intent, ²⁶⁶ Reed Wills restricted the Trust’s share of income from Operating Cash Flow, and directed that these distributions would be payable to Reed Wills’s wife Joanne Wills, for as long as her husband is alive, rather than to the Trust. At the time Wills designed the Trust’s partnership interest, then, he intended that, during his lifetime, the 42% share of Operating Cash Flow distributed to Class B partners would end up in either his account or his wife’s account.

On the flip side of that coin, he planned that he would be individually liable for only 10% of the income taxes allocated to the Class B partners (translating to just 4.2% of all Partnership-generated tax expenses), whereas the Trust would pay the lion’s share of 90% of those taxes (translating to 37.8% of all taxable income generated by the Partnership). Thus, Trust beneficiaries, including Wills’s children, could not expect that income from Partnership operations or sales of Partnership Property would pass through the Trust to them until after Wills’s death or the Partnership terminated. Moreover, such payments would never be substantial, given the 4.2% limitation on the Trust’s share of Operating Cash Flow distributions. Problems with Reed Wills’s plans became evident in 1991, after he and his wife filed for bankruptcy protection, which in turn resulted in Alloy and Farshey (through their SM C-V Street L.P.) purchasing Wills’s interest as a 4% Class B limited partner.

After that, neither Reed Wills nor the Trust could look to the Partnership for a substantial amount of income from Partnership operations. The 37.8% and 3% shares of Operating Cash Flow distributions that Reed Wills planned to put into his individual pocket as a limited and general partner, respectively, were paid instead to an Alloy/Farshey partnership. The disparity between cash distributions and income tax liability has been dramatic. Since its inception, the Partnership has prospered, generating both substantial Operating Cash Flow distributions and substantial income tax liabilities, due to its commercial warehouse leasing operations.

Against ²⁶⁷ a total of $275,000 in capital contributions from all partners over the life of the Partnership, there have been 22 Operating Cash Flow distributions over a 20 year period, totaling $6,243,166.66, which Alloy and Farshey contend represents a 2200% return on capital investment. With the small percentage of distributions paid out to the Trust, the Trust is naturally in need of funds over and above its Operating Cash Flow distributions to pay its share of income taxes generated by the Partnership. 10 The dynamics of the Trust’s minimal share of operating income, lack of management voice, substantial tax liabilities, and illiquid share of capital equity, effectively place the Trust at the financial mercy of Alloy, Farshey, and the other entities affiliated with the SMC Group. Not surprisingly, a rift developed. We turn next to that story line.

The Trust’s Complaints Farshey, and to a lesser extent Alloy, worked in the day-today management of the Partnership and its properties. In the early years of the Partnership, from 1986-1990, when Reed Wills still held his Class B limited partnership interest, Farshey and Alloy informed the Wills Group partners when warehouse properties in the V Street neighborhood became available. The Partnership Agreement requires the unanimous approval of all partners for acquisitions of additional property. As set forth above, the Partnership added three properties to its portfolio in this manner.

See supra note 2. According to the Trust, once Wills filed bankruptcy, Alloy and Farshey stopped notifying the Trust about other V Street properties that came onto the market, no longer invited the Trust to attend Partnership meetings, and failed to inform the ²⁶⁸ Trust of what occurred in those meetings. Instead, Alloy and Farshey secretly acquired three commercial warehouse properties for themselves. These non-Partnership properties allegedly competed with the Partnership warehouses, given that, as Farshey testified, “properties in the neighborhood all compete with each other.” Moreover, Farshey and Alloy hired their own company, Stanley Martin Commercial, Inc. (SMC), to provide exclusive leasing and management services to the non-Partnership properties, even though at the same time and unbeknownst to the Trust, SMC was providing the same services for the competing Partnership properties.

As a result, SMC collected leasing and property management fees from both Partnership and non-Partnership properties. Moreover, payments for property management services to the Partnership were not offset in any way. The Trust contends that this violated its right under the Partnership Agreement to receive a portion of any management fees paid by the Partnership for services rendered to the Partnership Properties. In anticipation of the Partnership’s property management contract with SMC, an entity controlled by Alloy and Farshey, section VIII(H) of the Partnership Agreement Partnership provides that such a “Related Party” agreement “must be fully disclosed to all of the General Partners[.]” Moreover, “[a]ny fee paid to the Managing General Partners or Related Party for property management services shall be paid two-thirds (%) to the Managing General Partners (or such Related Party) and one-third to the Wills Group.” According to the Trust, Farshey and Alloy treated the Partnership and non-Partnership properties as a single “assemblage,” totaling 1.7 million square feet of commercial warehouse space within SMC’s “inventory” for prospective tenants.

Farshey acted as the contact leasing agent for both sets of properties. In that conflicted capacity, he had knowledge of financial and leasing information for these competing properties. ²⁶⁹ Over the life of the Partnership, distributions from Operating Cash Flow totaled more than $6 million to all partners. Payments were made according to the respective shares directed in the Partnership Agreement. After making regular distributions for the period 1988 through 1997, however, the Partnership made no distributions to the Trust or any other partner from 1998 through 2003.

Distributions resumed in the second quarter of 2004, after this litigation began. During this same period, the Trust allocated substantial taxable income to the Trust. Because the Trust’s share of taxable income is 37.8% of all Partnership income, but its share of distributions from Operating Cash Flow is only 4.2%, the Trust’s share of taxes significantly exceeds its share of distributions. Although the Trust does not pay taxes directly, its beneficiaries are charged with their respective shares of the taxable income allocated to the Trust.

In early 2002, the Trust beneficiaries, led by Reed Wills’s son Trey Wills and Trustee Liptz, retained Daniel Clemente to serve “as a consultant to review ... their investment in” the Partnership. His assignment was “to enhance the value of the [TJrust’s investment in SMC United Industrial Limited Partnership.” After reviewing Partnership records, Clemente met with Farshey in April 2002. By that time, Clemente had concluded that a “change [in] the status quo” was in order. “If necessary[,]” he wanted to “break up the [P]artnership.” He told Farshey that “if the partnership was dissolved that the partners would own the property as tenants in common instead of as partners and that would give us some control over our own value within the partnership.” In August 2003, Clemente was appointed a Trustee of the Trust. According to Clemente, the following month at a political fundraiser, Alloy confronted Clemente about a “million dollar offer that he had made to Mr. Liptz, that we would never get more than a million dollars for the ... 38 percent interest^]” Alloy also complained about the considerable ²⁷⁰ “trouble Mr. Willis[’s] bankruptcy had caused to he and Mr. Farshey[.]” In June 2004, the Trust filed suit in the Circuit Court for Montgomery County against Alloy, Farshey, SMC Second, SMC-V Street, and SMC.

After partially successful motions to dismiss, the Trust filed a seven count Second Amended Complaint in April 2005. At issue in this appeal are claims for breach of fiduciary duty, including the duty of loyalty and the duty of care, against Farshey, Alloy, and SMC-V Street. 11 Count Two against Alloy and Farshey is based on allegations that they breached their fiduciary duties by: • “secretly acquiring the Adjacent Properties and having [them] compete with the Partnership Properties for the same class of tenants seeking to lease industrial or commercial space in the same area”; • “acquiring the Adjacent Properties and thereby preventing themselves from considering uses or a sale of the Partnership Properties in a manner that is not linked to the existence of and plans for the Adjacent Properties”; • “creating an untenable conflict of interest whereby their interest in the Partnership Properties is inextricably tied to their desire to exploit their financial investment in the acquisition of the Adjacent Properties”; ²⁷¹ • “secretly engaging the same related leasing and property management company owned by them—defendant Stanley Martin Commercial—to act as the sole and exclusive leasing and management agent for both the Partnership Properties and the Adjacent Properties’ • “causing and/or failing to take the necessary steps to prevent a tenant of the Partnership Properties—Washington Wholesale Liquors—from leaving Partnership Properties on one or more occasions in favor of new space within the Adjacent Properties”; • “actively interfering with efforts by third parties to make an offer to purchase the Partnership Properties despite the clear interest of the Trust in having a commercially reasonable offer be presented to and properly considered by the Partnership under section IX(c) of the Agreement”; • “preventing and actively refusing to provide any tangible benefit to the Trust for years, despite economic conditions that clearly could have permitted Alloy and Farshey to ensure that such a benefit was enjoyed by the Trust”; • “failing to timely inform the Trust regarding the Partnership Properties and by failing to include them in meetings of the Partners”; • “failing to advise the Trust of its rights under section VIII(h) of the Agreement to receive a portion of the management fees paid to Stanley Martin Commercial and Stanley Martin Companies”; • “making tax allocations to the partners that fail to reflect the substantial economic effect of the Partnership’s distribution of income to its partners”; • “offering no more than $1 million for the Trust’s 38-percent ownership interest in the Partnership despite the fact that the Partnership Properties are worth at least $50 million”; • “attempting to ‘freeze out’ the Trust from the benefits of its ownership of thirty-eight percent of the Partnership”; ²⁷² • “refusing to provide the Trust with financial information and documentation relating to the Partnership despite the request for such information and materials by the Trust”; and • “failing to ensure that the Partnership was paying compensation at ‘reasonable and competitive rates’ with respect to the property management services provided by their related company, Stanley Martin Commercial.” The Trust sought damages for “the amount that the Trust should have received in distributions and management fees, and the amount it should obtain in distribution of proceeds from the sale of the Partnership Properties.” With respect to SMC-V Street, who stepped into Reed Wills’s shoes as managing general partner of the Wills Group, the Trust alleged in Count Three that it breached its fiduciary duties “[a]s the sole general partner of the Wills Group” by: • “failing to review the Agreement to identify and attempt to protect the rights and interests of the Wills Group and the Trust under the Agreement, including the right of the Wills Group and the Trust under section VIII(h) of the Agreement to receive a portion of the fees paid by the Partnership to Stanley Martin Commercial for property management services”; • “failing to take any actions to ensure that the Trust receives any tangible benefit from its 38-percent ownership interest in the Partnership”; and • “actively interfering, through acts of its principals Alloy and Farshey, with efforts by third parties to prepare and make an offer for the Partnership Properties that would be in the best interests of the Trust.” The Trust requested compensation for “the amount the Trust should have received in management fees from July 1994 to the present, and the amount the Trust would obtain from a distribution of proceeds from the sale of the Partnership Properties.” On October 28, 2005, three months before trial, the Trust filed a Third Amended Complaint. In addition to the claims ²⁷³ outlined above, the Trust further asserted that Alloy and Farshey refused to consider two offers to purchase the Partnership Properties, 12 and retaliated against the Trust after the Second Amended Complaint was filed, by demanding nearly $500,000 in payment for allegedly breaching the terms under which Alloy and Farshey purchased Reed Wills’s partnership interests. The circuit court granted a defense motion to strike the Third Amended Complaint.

At the hearing on that motion, the court concluded that it would unduly prejudice the defendants by creating a need to reopen discovery on the new issues and to continue the trial date. Thereafter, the Trust unsuccessfully moved to dismiss voluntarily the Second Amended Complaint so that it could be re-filed and tried along with the new issues raised in the stricken Third Amended Complaint. Counterclaims And Defenses The defendants counterclaimed for reformation of the Partnership Agreement provision concerning allocation of management fees paid to a Related Party like SMC. Alleging scrivener’s error, they pointed out that the Trust did not provide any of the property management services for which such compensation was paid.

The Defendants also moved unsuccessfully for a separate trial, seeking to adjudicate their reformation counterclaim before trial on the Trust’s claims. Alloy and Farshey substantively disputed the Trust’s allegations that they breached their fiduciary duty by secretly acquiring non-Partnership properties and secretly competing with Partnership properties. As a threshold matter, they pointed out that the Partnership Agreement specifies that the ²⁷⁴ business of the Partnership is limited to acquisition and operation of certain warehouse properties that were identified at the inception of the Partnership. Moreover, they pointed to a provision of the Partnership Agreement that they believe authorizes their acquisitions of non-Partnership properties.

Furthermore, Alloy and Farshey disputed the Trust’s contention that there was financial damage from their activities. When challenged to cite a specific instance in which the Trust was monetarily damaged, the Trust alleged that Farshey twice placed a former Partnership tenant, Washington Wholesale Liquors, into non-Partnership warehouses at 2800 V Street and 3001 V Street, and that they offered non-Partnership property, rather than Partnership property, to the Federal Bureau of Investigation. We set forth Alloy and Farshey’s defense to these allegations in more detail below. Alloy And Farshey’s Account Of Their Acquisition And Management Of Competing Properties 2800 V Street, N.E., known as the “Sears Distribution Center,” is a multi-warehouse property consisting of Units A, B, C, D and E. According to Alloy and Farshey, Farshey tried repeatedly to convince the other SMC partners to purchase this property for the Partnership.

But Alloy and Wills, and then subsequently Wills’s creditors’ committee, responded that they were not interested in the acquisition. As a result, Farshey formed 2800 V Street Limited Partnership to purchase the property, and invested $1 million in cash, which he raised in part from his own family. Alloy, in order to accommodate Farshey, acquired an indirect 12.5% minority interest in 2800 V Street LP. 2800 V Street LP later purchased a second warehouse at 2900 V Street. Alloy also objected to the Partnership purchasing this property on the ground that the price was too high, he wanted to maintain liquidity, he did not want to sign for a loan as general partner, and he would not invest any more money in the Partnership for acquisitions. ²⁷⁵ A third property in the V Street vicinity was acquired in 2002 by SMC Learning Centers Limited Partnership, in which Alloy and Farshey are general partners. 13 The owner of a vacant warehouse at 3001 V Street, N.E. told Farshey that he wished to sell.

Once again, Alloy did not want the Partnership to purchase this property. In addition to his ongoing liquidity concern, Alloy did not want to invest in a property that would require so much work. Farshey purchased all but 5% of Alloy’s interest in SMC Learning Centers LP, which in turn did a tax free exchange of a day care property for the warehouse property. 14 The Trust contended that in three instances, Alloy and Farshey’s breach of their fiduciary duties caused tenants to lease space in one of these non-Partnership properties rather than in one of the Partnership properties. The three allegedly diverted leases in question are: (1) a 120,000 sq. ft. lease to Washington Wholesale Liquors (WWL) by 2800 V Street LP, (2) a 36,000 sq. ft. lease to the FBI by 2800 V Street LP, and (3) a 42,000 sq. ft. lease to WWL by SM C Learning Centers LP.

In response, Alloy and Farshey disputed that it was in their best financial interests to steer these tenants away from Partnership properties. Alloy pointed out that his interest in the Partnership is much greater and generates more cash flow than his minority interest in either 2800 V Street LP or SMC Learning Centers LP. Whereas he receives more than 50% of Operating Cash Flow distributions made by the Partnership, he only receives 12-13% of such distributions from 2800 V Street LP. Moreover, he sold his 5% interest in SMC Learning Centers LP in 2003.

Thus, his share of every distributed dollar from the Partnership is more than 50 cents, but his share of every distributed dollar from 2800 V Street LP is ²⁷⁶ approximately 12.5 cents, and from SMC Learning Center LP is now nothing. With respect to Farshey, the defense contended that Alloy’s participation in the day-to-day management of the Partnership prevented Farshey from diverting tenants for his own gain. The close business partnership these two have enjoyed over 20 years includes daily telephone discussions and weekly meetings. Farshey allegedly advised Alloy of every contact with a prospective tenant and every lease signed for non-Partnership properties.

In addition, Farshey allegedly solicited Alloy’s approval of the fairness of any proposed transaction. Moreover, with respect to the individual leases, Alloy and Farshey presented evidence to refute the Trust’s claim that these tenants would have leased Partnership properties “but for” Farshey’s “double dealing” for non-Partnership properties: • In 1997, Washington Wholesale Liquors (WWL) moved out of Partnership warehouse space and into much larger space at 2800 V Street. Testimony and correspondence from Joseph Gallagher, president of WWL, confirmed that none of the Partnership properties available at that time could accommodate the company’s space needs. • In 1998, the FBI leased 36,000 sq. ft. at 2800 V Street, although the Partnership’s 3515 V Street was vacant. The Partnership property was not suitable space because the FBI needed room to construct a ramp that would allow a truck to be driven into the warehouse and the mezzanine office space at 3515 V Street prevented the Partnership from building an extra high loading dock opening for oversized trucks. • In 2005, WWL leased 42,000 sq. ft. at 3001 V Street, at a time when 50,000 sq. ft. was available at 3030V Street, one of the Partnership properties.

Alloy and Farshey offered correspondence and testimony from Gallagher to show that WWL’s needs could not be met by the Partnership property because it had only one loading dock, rather than the five docks at 3001 V Street. ²⁷⁷ Exclusion Of Expert Testimony Trial began on January 23, 2006. The next morning, the court granted defense motions to exclude the Trust’s proffered expert testimony on damages. The Trust planned to call William Harvey, a real estate appraiser, to give his opinion that the market value of the Partnership Property exceeds $50 million, and Thomas Porter, an accounting and valuation expert, to opine that the amount the Trust should be compensated for its 38% interest, based on that value, is $11,282,433. Porter also intended to testify that (a) the Trust suffered $4.2 million in damages when the defendants failed to sell the Partnership Properties in 1993, by refusing an offer that was $5 million above appraised value at that time; and (b) that the Trust also suffered approximately $23,000 in damages when prospective tenants for Partnership properties leased space in Alloy and Farshey’s competing non-Partnership properties.

The defense moved in limine to preclude Harvey from giving his opinion of value, on the ground that such testimony would not be relevant to the damages available for the specific breaches of fiduciary duty alleged by the Trust. The court agreed, and granted the motion. In addition, Alloy and Farshey moved to preclude Porter from opining about the Trust’s share of lost rent that could have been collected from tenants who leased space in non-Partnership properties rather than Partnership properties. The defense argued that the Trust did not present any evidence that the alleged breach of fiduciary duties caused harm in that tenants leased competing properties rather than Partnership Properties.

The court preliminarily denied the motion, subject to the Trust later establishing a triable issue as to whether the available Partnership properties could have suited the space needs of these “lost” tenants. At the close of the Trust’s case, the court held that the Trust failed to offer sufficient evidence of such causation to warrant compensatory damages, and struck Porter’s lost rental income testimony. ²⁷⁸ Judgment On Other Claims After the close of all evidence, the trial court also granted the defense motion for judgment on the Trust’s claim for compensation based on its share of property management fees paid to SMC. Thus, the jury was not presented with the property management fee claim as the basis for the Trust’s breach of fiduciary duty cause of action. As a result, judgment was entered in favor of the defendants on Count One for breach of contract, Count Six for money had and received, and Count Seven for unjust enrichment.

The trial court also granted defense motions for judgment on remaining claims in the Second Amended Complaint, including most of the breach of fiduciary duty claims. The sole surviving theory of liability for breach of fiduciary duty was that Alloy and Farshey wrongfully acquired, managed and leased the non-Partnership properties without advising the Trust of such activities. But even that theory was severely limited on the ground that the Trust presented no evidence of actual damages. Thus, the Trust was permitted to ask the jury only for nominal damages for the presumed injury to the relationship between the partners.

The jury found Alloy and Farshey liable for breach of fiduciary duty and awarded one dollar in nominal damages. The trial court denied a defense motion for judgment notwithstanding the verdict. These timely appeals followed. DISCUSSION I. Alloy/Farshey Appeal: Presentation Of The Trust’s Breach Of Fiduciary Duty Claim To The Jury Alloy and Farshy ask us to vacate the judgment in favor of the Trust on their breach of fiduciary duty claim, for two reasons.

First, they argue, the Partnership Agreement precludes such a claim because it explicitly authorizes partners to acquire other properties. Second, as a matter of law, the Trust could not establish breach of fiduciary duty without ²⁷⁹ evidence that the conduct complained of caused economic damages. After reviewing the terms of the Partnership Agreement and the duties owed by partners to each other and the Partnership, we consider and reject both arguments. Fiduciary Duties Under District of Columbia partnership law, which applies to the Partnership, the duties of each partner to each other and to the partnership are established by statute, but may be adjusted by the terms of a partnership agreement.

See D.C.Code § 33-103.03(a). In pertinent part, D.C.Code section 33-104.04 15 provides: (a) The only fiduciary duties a partner owes to the partnership and the other partners are the duty of loyalty and the duty of care set forth in subsections (b) and (c) of this section. (b) A partner’s duty of loyalty to the partnership and the other partners is limited to the following: (1) To account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct ... of the partnership business or derived from a use by the partner of partnership property, including the appropriation of a partnership opportunity; (2) To refrain from dealing with the partnership in the conduct ... of the partnership business as or on behalf of a party having an interest adverse to the partnership; and (3) To refrain from competing with the partnership in the conduct of the partnership business before the dissolution of the partnership.... ²⁸⁰ (d) A partner shall discharge the duties to the partnership and the other partners under this chapter or under the partnership agreement and exercise any rights consistently with the obligation of good faith and fair dealing. (e) A partner does not violate a duty or obligation under this chapter or under the partnership agreement merely because the partner’s conduct furthers the partner’s own interest.

(Emphasis added.) D.C.Code section 33-101.03, governing partnership agreements, incorporates a view of partnership duties that has been described as “contractarian.” See generally Larry E. Rib-stein, Fiduciary Duty Contracts in Unincorporated Firms, 54 Wash. & Lee L.Rev. 537, 541 (1997)(noted partnership treatise author, as a “contractarian” who regards a partner’s fiduciary duties as “simply a species of contract” that can be waived in a partnership agreement, refutes arguments by “anticontractarians” against enforcing waivers of the duty of loyalty). It provides, in pertinent part: (a) Except as otherwise provided in subsection (b) of this section, relations among the partners and between the partners and the partnership are governed by the partnership agreement. To the extent the partnership agreement does not otherwise provide, this chapter governs relations among the partners and between the partners and the partnership. (b) The partnership agreement may not: ...

(3) Eliminate the duty of loyalty under § 33-104.04(b) or § 33-106.03(b)(3), but: (A) The partnership agreement may identify specific types or categories of activities that do not violate the duty of loyalty, if not manifestly unreasonable; or (B) All of the partners or a number or percentage specified in the partnership agreement may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty; ... [or] ²⁸¹ (5) Eliminate the obligation of good faith and fair dealing under § 33-104.04(d), but the partnership agreement may prescribe the standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonablet.] D.C.Code § 33-101.03 (emphasis added). Moreover, “[s]ince general partners in a limited partnership typically have the exclusive power and authority to control and manage the partnership, they owe the limited partners an even greater fiduciary duty than is imposed on general partners in the typical general partnership.” J. William Callison & Maureen A. Sullivan, Partnership Law and Practice: General and Limited Partnerships § 22:7 (Westlaw database updated through Sept. 2007). Thus, with certain limits including the nonwaivable requirement of fulfilling the duty of loyalty in good faith, “partners are free to set the specific rules of their partnership according to their objectives and desires.” Singer v. Scher, 761 F.Supp. 145, 146 (D.D.C.1991). Consequently, even some “common law and statutory standards concerning relationships between parties can be overridden by an agreement reached by the parties themselves.” Day v. Sidley & Austin, 394 F.Supp. 986, 992 (D.D.C.1975), aff;d, 548 F.2d 1018 (D.C.Cir.1976), cert. denied, 431 U.S. 908 , 97 S.Ct. 1706 , 52 L.Ed.2d 394 (1977).

In this case, the Partnership Agreement identifies the limited partnership as a business venture relating to an aggregated 22 acres comprised of real properties located “along the north and south sides of V Street, N.E. at 33rd Street, N.E. Washington, D.C., upon which are located one-story masonry and brick warehouse buildings,” as “more particularly described in” an exhibit incorporated into the Agreement, listing specific property addresses. The Partnership Agreement refers collectively to these parcels as “the Property” and states that “[t]he business and purpose of the Partnership is to own, develop, improve, operate and maintain the Property as an investment for the production of income and profit.” ²⁸² A. Scope Of Fiduciary Duties Under The Partnership Agreement Alloy and Farshey moved for judgment on the Trust’s breach of fiduciary claim, arguing inter alia that the terms of the Partnership Agreement effectively waive any objection the Trust might have to their acquisition and leasing of competing warehouse properties. Invoking the statutory authorization given to partners to “identify specific types or categories of activities that do not violate the duty of loyalty,” see D.C.Code § 38-101.03(b)(3)(A), Alloy and Farshey contend that the following provision in the Partnership Agreement authorizes them to acquire, develop, and lease competing warehouse properties in the V Street market, without permission from the Trust: The Partnership shall be a limited partnership only for the purposes specified in Article II hereof, and this Agreement shall not be deemed to create a partnership among the Partners with respect to any activities whatsoever other than the activities within the business purposes of the Partnership as specified in Article II hereof. Any of the Partners may engage in and possess any interest in other business or real estate ventures of any nature and description, independently or with others, including but not limited to, the ownership, financing, leasing, operating, managing and developing of real property; and neither the Partnership nor the other Partners shall have any rights in and to such independent ventures of the income or profits derived therefrom.

(Emphasis added.) The trial court denied the defense motion, reasoning as follows: [T]he big issue[] is this section in the partnership agreement that allows them to basically buy a piece of property, manage a piece of property, lease a piece of property anywhere, any place and it is indeed a very broad and general provision. ²⁸³ But there is testimony, testimony even from Mr. Alloy in this case, that is consistent with the D.C. Partnership Act, where he testified and the actions of the partnership were, initially up until the time of Reed Wills bankruptcy, that any time a piece of property came up for sale that was going to be in conflict, it was offered to the partnership, and the partners were all made aware of the fact that it was available and it was up; that after Reed Wills indicated that he was not interested in 2800 V Street, which was right around the time that he was going bankrupt, that is apparently when Martin Alloy and Fred Farshey stopped advising the limited partnership of their efforts to buy certain properties---- And Mr. Alloy ... testified that he felt a moral and ethical obligation to advise everybody what [was] going on up until the point where they bought Reed Wills’ share out. It seems to me that under the general standards of the partner’s conduct, the past conduct of the business and common sense, that is that, I’ll use the example of [counsel for the Trust] ..., and that is if you’re in the restaurant business and your partner is getting ready to buy a restaurant across the street, you ought to tell him. Maybe he’s not interested in buying in with you, maybe he can’t afford to, but he ought to have the opportunity to say look, you know, this is going to be in direct conflict with what we do, it’s going to, it may cause us harm and it may put you in a direct conflict situation, so how are we going to deal with that. These other properties purchased by Mr. Alloy and Mr. Farshey, the limited partners were not advised of any of that, so I think the evidence is sufficient to go to the jury on that issue.

(Emphasis added.) ²⁸⁴ because the conduct complained of—Alloy and Farshey’s acquisition, management and leasing of nearby warehouse properties through 2800 V Street LP and SMC Learning Center—was expressly permitted by terms of the Partnership Agreement and therefore cannot constitute grounds for a breach of fiduciary duty claim. ²⁸³ Alloy and Farshey do not dispute that the evidence cited by the trial court in support of its ruling exists. Rather, they renew their argument, asserting that the trial court erred as a matter of law in sending the Trust’s breach of fiduciary duty claim to the jury ²⁸⁴ In support of their interpretation of the Partnership Agreement, Alloy and Farshey argue that “[t]he facts in this case are very similar to” Dremco, Inc. v. South Chapel Hill Gardens, Inc., 274 Ill.App.3d 534 , 211 Ill.Dec. 39 , 654 N.E.2d 501 , appeal denied, 164 Ill.2d 561 , 214 Ill.Dec. 318 , 660 N.E.2d 1267 (1995). That case involved a joint venture (which the court treated as a partnership) between Hartz Construction Co. and Dremco, to acquire and develop a 33 acre parcel, and later another 40 acres nearby. After the venturers disagreed on a development plan, they divided their jointly held properties and initiated the process of ending the joint venture.

During that winding up period, Hartz purchased a 13.8 acre parcel located immediately north of the 40 acre parcel previously acquired by the joint venturers. Dremco claimed that Hartz breached its fiduciary duty by usurping its opportunity to acquire the 13.8 acres. The motion court granted summary judgment in favor of Hartz, ruling as a matter of law that the unambiguous terms of the Joint Venture Agreement precluded the claim. See id. at 39, 654 N.E.2d at 504 .

Affirming, the Appellate Court of Illinois held that “[t]he corporate [sic] opportunity doctrine is inapplicable here, given the singular purpose of this enterprise” and the “dispositive” contractual language. Id. at 39, 654 N.E.2d at 505-06 . The joint venture agreement “limited the scope and purpose of the enterprise to the purchase and development” of the two specified properties, and “memorialized ... the partners’ right to independently pursue other opportunities[,]” id. at 39, 654 N.E.2d at 505 , in the following language: “[Njothing herein contained shall be construed to constitute any Joint Venturer the agent of any other Joint Venturer or ²⁸⁵ to limit in any manner any Joint Venturer in carrying on of its own respective business or activities.” ... “Any Joint Venturer may engage in and/or possess any interest in other business and real estate ventures of any nature or description, independently or with others, including, but not limited to, the ownership, management, operating, financing, leasing, syndication, brokerage, and development of real property; and neither the Joint Venture nor any Joint Venturer, by reason of this Agreement or by reason of holding an interest in this Joint Venture, shall have any right or interest in or to any such independent venture of the income or profits derived therefrom.” Id. at 39, 654 N.E.2d at 505 (emphasis added in Dremco). The Dremco Court reasoned that the 13.8 acre tract “was not within the joint venture’s line of business[,]” because “Dremco and Hartz were not bound to each other except with respect to the specifically identified joint venture property.” Id. at 39, 654 N.E.2d at 505 .

The amendment of the joint venture agreement to add the 40 acre tract to the original venture “did not change the limited scope of the business, but merely expanded it from one property to two.” Id. at 39, 654 N.E.2d at 505 . Alloy and Farshey also rely on a second case that they contend features “language virtually identical to the language at issue here.” In Cowin v. Ross, 64 A.D.2d 552 , 406 N.Y.S.2d 841 (1978), aff'd, 46 N.Y.2d 977 , 415 N.Y.S.2d 991 , 389 N.E.2d 472 (1979), a limited partner declined an invitation by general partners to acquire and develop property immediately adjacent to the first partnership’s complex. The limited partner sued, alleging a violation of the partnership opportunity doctrine. The court granted summary judgment in favor of the general partners, construing the following language in the partnership agreement as dispositive evidence that they “acted within their contractual rights in forming” the second partnership.

See id. at 841. “... Any partner may engage independently or with others in other business ventures of every nature and description ²⁸⁶ including, without limitation, the ownership, operation, management, syndication and development of real estate and neither the Partnership nor any Partners shall have any rights by reason of this Agreement in and to such independent ventures or the income or profits derived therefrom.” Id. Arguing that the language in their Partnership Agreement is substantively identical to the provisions construed in Dremco and Cowin , Alloy and Farshey contend that the Trust’s breach of fiduciary duty claim is precluded for the reasons articulated in those decisions. The Trust counters that (1) there is nothing in the Partnership Agreement that explicitly or implicitly waives the duty of loyalty to the extent of authorizing the undisclosed transactions at issue here; and (2) even if there were, such a provision would be unreasonable as a matter of law, and therefore unenforceable pursuant to D.C.Code § 33-101.03(b)(3).

In support, the Trust argues that “there is a strong presumption against waiver of the duty of loyalty,” and “no evidence that the Partners intended to waive the duty of loyalty to permit secret acquisition, leasing and management of competing properties.” Most importantly, the Trust argues, there is no language in the Partnership Agreement that “specifically identifies] ‘acquisition, leasing and management’ of competing warehouse properties located next door to the warehouse properties owned by the Partnership as a type of category that general partners may engage in without disclosure to and consent from the other partners.” To the contrary, the Trust points out that, before W ills’s interest was transferred in bankruptcy proceedings, Alloy and Farshey routinely brought opportunities to acquire neighboring commercial properties to the attention of all partners. In the Trust’s view, this was sufficient evidence to create a jury question on the question of whether the Partnership Agreement gave Alloy and Farshey “carte blanche” to secretly compete. To resolve this assignment of error, we need not decide whether a partnership agreement must contain explicit authorization to acquire, manage, or lease competing “next door” ²⁸⁷ property in order to effectively waive the duty of loyalty, or whether such a waiver provision would be “manifestly unreasonable” within the meaning of section 33-101.03(b)(3). For purposes of this appeal, we shall assume without deciding that (1) language explicitly authorizing partners to compete with the partnership business is not required to waive the duty not to compete, 16 (2) the waiver in this Partnership Agreement is specific enough to unambiguously identify the purchase and offer of competing commercial warehouses in the same V Street neighborhood as “specific types or categories of activities that do not violate the duty of loyalty,” and (3) such a waiver of the duty of loyalty is “not manifestly unreasonable.” Even with these assumptions, we hold that the trial court correctly declined to rule as a matter of law that the Partnership Agreement authorizes Alloy and Farshey’s secret acquisition and promotion of competing warehouse properties.

Here, the trial court explicitly rested its decision to send the breach of fiduciary duty claim to the jury on a determination that there was a disputed factual issue regarding Alloy and Farshey’s nondisclosures, i.e., whether they were required to notify the Trust when competing properties became available, as well as when they offered and leased such competing properties for their own account. As we read it, this ruling properly recognizes that, in the circumstances of this case, the jury reasonably could conclude that Alloy and Farshey had a fiduciary duty of disclosure arising from their unwaivable obligation to “exercise any rights” they may have had to compete with the Partnership in the V Street market “consistently with the obligation of good faith and fair dealing.” See D.C.Code § 33-104.04(d). In denying the defense motion for judgment, the trial court reasoned that, notwithstanding the limited business purpose of the Partnership and the contract language cited by Alloy and Farshey, the partners may have been obligated to disclose all Partnership opportunities and ²⁸⁸ management conflicts of interest to the Trust. We find no error in that ruling.

A partners’ fiduciary duty has three overlapping elements: “(1) the duty of loyalty; (2) the duty of good faith and fair dealing; and (3) the duty of full disclosure.” Callison & M. Sullivan, Partnership Law and Practice, swpra, § 12:1. Under prevailing partnership law, which is followed in the District of Columbia, “[t]he duty of loyalty includes a duty to disclose all material facts concerning the partnership business, together with all facts connected with transactions involving partnership interests[J” Id., § 12.5. See, e.g., Latta v. Kilbourn, 150 U.S. 524, 541 , 14 S.Ct. 201, 207 , 37 L.Ed. 1169 (1893)(“one partner cannot, directly or indirectly, ... take any profit clandestinely for himself’); Spector v. Konover, 57 Conn.App. 121 , 747 A.2d 39, 44 (2000)(“defendants breached their fiduciary duty by not making a free and frank disclosure of all the relevant information”). Similarly, the duty of good faith and fair dealing may give rise to a disclosure obligation.

See, e.g., Revised Uniform Partnership Act (RUPA) § 404 cmt. 4 (recognizing, in reference to uniform provision identical to D.C.Code § 33-104.04, that “[i]n some situations, the obligation of good faith includes a disclosure component”); cf., e.g., Riss & Co. v. Feldman, 79 A.2d 566, 571 (D.C.1951)(managing partner breached fiduciary duty to make good faith disclosure of plan to transfer partnership assets to corporation in which he held an interest). Thus, “ ‘[t]he fiduciary nature of the partnership relation requires at all times the highest degree of good faith, and precludes any secret profit, benefit or advantage of any kind.’ ” Marmac Investment Co. v. Wolpe, 759 A.2d 620, 626 (D.C.2000) (citation omitted). Cf. Helms v. Duckworth, 249 F.2d 482, 486-87 (D.C.Cir.l957)(fiduciary duties of stockholders in close corporation are similar to those of partners, and include “a fiduciary duty to deal fairly, honestly, and openly with their fellow stockholders and to make disclosure of all essential information”).

In this case, even if we were to assume that the Trust waived certain competition aspects of the duty of loyalty, ²⁸⁹ including the prohibitions against acquiring competing properties and simultaneously working for a competing entity in the same commercial warehousing market, it did not thereby waive its right to be notified of such Partnership opportunities and conflicts. The language cited by Alloy and Farshey as a waiver of the duty not to compete with the Partnership does not purport to curtail such disclosure obligations. If we read the quoted provision as a permissible identification of “specific types or categories of activities that do not violate the duty of loyalty,” see D.C.Code § 33-101.03(b)(3)(A), as Alloy and Farshey suggest, nevertheless there is no language that “prescribes the standards by which the performance of the [unwaivable] obligation [of good faith and fair dealing] is to be measured[.]” See D.C.Code § 33—101.03(b)(5). Thus, nothing in the Partnership Agreement itself relieves Alloy and Farshey of their obligation to disclose Partnership opportunities and competing transactions in the good faith exercise of their fiduciary duty of loyalty.

In Marmac Investment Co., Inc. v. Wolpe, 759 A.2d 620 (D.C.2000), the District of Columbia Court of Appeals recognized that a breach of fiduciary duty claim may be premised on a managing general partner’s failure to disclose that he earned fees stemming from transactions involving partnership properties. In that case, however, Wolpe, the managing general partner, did not breach his fiduciary duty by taking fees as an independent consultant on a complicated transaction resulting in the sale of partnership property. See id. at 626-27 . In this case, we must determine whether, on the evidentiary record before us, a reasonable juror could conclude that, through their course of dealing, the partners agreed that prompt disclosure of Partnership opportunities and conflicts would be the measure of each partner’s loyalty and good faith in transactions that competed with the Partnership.

That theory of liability was advanced by the Trust, and apparently accepted by the jury. We find sufficient evidence in the record to support a breach of fiduciary duty judgment ²⁹⁰ on the basis of Alloy and Farshey’s failure to disclose their acquisitions and brokering of properties that competed with the Partnership. Martin Alloy testified that neither he nor Farshey owned any other properties in the V Street area when the Partnership was formed. He conceded that the Partnership Agreement itself is “silent as to” whether he could acquire property on V Street.

Thus, Alloy admitted, his belief that he could do so was premised on his view that such freedom to compete was “implicit” from the provisions authorizing partners to engage in other real estate ventures. Shortly after the Partnership was formed, however, opportunities to purchase nearby warehouse properties arose and were presented to Alloy, who managed the existing Partnership properties. Over its first five years, the Partnership elected to purchase some of those properties, e.g., the Douglas Distribution Center at 3515 V Street in 1986, a Shell station property at 2100 South Dakota Avenue in 1989, and another warehouse at 3535 V Street in 1990. Thus, the record shows that from the inception of the Partnership in 1985 until Reed Wills’s interest was sold by the bankruptcy trustee to Alloy and Farshey’s new SMC-V Street Ltd. Partnership in 1994, Alloy disclosed Partnership opportunities.

When asked why he told the Wills Group partners about the availability of these nearby warehouse properties, Alloy testified that he considered such disclosures to be mandatory. [Counsel for the Trust]: When the opportunity to acquire the Douglas Distributing Warehouse, the first one, No. 28 on the map, you believed that you had a moral and ethical obligation to disclose that opportunity to your fellow partners. Isn’t that true? [Alloy]: That is true. Q: And you believed you had a moral and ethical obligation to disclose that because the property was immediately adjacent to the partnership properties. Isn’t that true?

A: It’s adjacent to 27. ²⁹¹ Q: So, you testified before about Article 1 of the partnership agreement and the language that you believe gives you carte blanche to do whatever you want. But you’ve also testified now that because this property was adjacent to a partnership property, you had a moral and an ethical obligation to disclose it to your limited partners. Isn’t that correct? A: That is correct.

Q: You also had a moral and ethical obligation to disclose the opportunity to buy 3535 V Street, No. 29. Isn’t that true? A: Yes. Q: And in December 1991, Fred Farshey presented to the entire partnership the opportunity to buy 2800 V Street.

Is that correct? A: The, it’s correct. The date I’m not exactly sure of but yes I will agree to it. Alloy further testified that, after Reed Wills’s Partnership interests were transferred to entities controlled by Alloy and Farshey, he understood that he had a responsibility, as the Wills Group general partner member, “to protect the interests of [his] fellow members of the Wills Group.” Despite that duty, Alloy admitted that he did not review the Partnership Agreement “to know what rights existed for members of the Wills Group[.]” Nor did he disclose the opportunities to purchase the properties that he and Farshey acquired thereafter.

Fred Farshey confirmed that both he and Alloy considered it their duty to