GEORGE HASEOTES, individually, and derivatively in his capacity as a General Partner and a Limited Partner of the V.S. HASEOTES & SONS LIMITED PARTNERSHIP, Plaintiff,
V.S. HASEOTES & SONS LIMITED PARTNERSHIP; and LILY H. BENTAS, individually and in her capacity as Managing General Partner of V.S. HASEOTES & SONS LIMITED PARTNERSHIP, Defendants.
Providence County Superior Court
Plaintiff: Michael A. Kelly, Esq.; Matthew J. McGowan, Esq.;
Randall L. Souza, Esq.
Defendant: Richard G. Fallago, Esq.; Melissa L. Curley, Esq.;
Michael S. Marino, Esq.
SILVERSTEIN, J. (RET.)
the Court for decision following a nonjury trial is this
matter brought by George Haseotes (Haseotes or Plaintiff),
individually and derivatively as a General Partner and a
Limited Partner of the hereinafter referred to Limited
Partnership, against V.S. Haseotes and Sons Limited
Partnership (the Partnership) and Lily H. Bentas (Bentas or
Defendant), individually and in her capacity as Managing
General Partner of the Partnership. Haseotes seeks this
Court's Order effecting the removal of Bentas as Managing
General Partner, supervision of the winding up of the
business affairs of the Partnership, and other remedies in
equity as well as money damages to compensate for
Bentas's alleged mismanagement of the Partnership. By
order of the Court the question of money damages, if any, for
Plaintiff individually and derivatively is to be the subject
of subsequent litigation. This Court exercises jurisdiction
pursuant to G.L. 1956 § 8-2-13 and Super. R. Civ. P.
matter arises from a dispute between general partners of the
Partnership, an entity formed in 1976 under the laws of Rhode
Island by the descendants of the founding family of
Cumberland Farms, Inc. The original purpose of the
Partnership was to farm agricultural property owned by the
Partnership. The Partnership, however, ceased its farming
activities approximately twenty years ago at which time the
Partnership's purpose shifted principally to liquidating
its real estate holdings. The Partnership's assets
primarily consist of hundreds of acres of undeveloped land in
eastern Massachusetts, comprised, at the time of trial, of
approximately 87 parcels worth an estimated $45 million. At
all times relevant to this action, the Second Amended and
Restated Agreement of Limited Partnership (the Partnership
Agreement), together with a Delegation of Authority
Agreement, governed the Partnership.
Partnership was originally made up of four general partners
and seven limited partners, all of whom are siblings. General
partners included Plaintiff, Defendant, Demetrios B.
Haseotes, and Byron Haseotes, each holding a 1.00% interest
in the Partnership as general partners. The original limited
partners consisted of each of the General Partners other than
Bentas, each holding a 24.00% interest as limited partners,
along with Bentas, Hytho H. Pantazelos, Anastasia H. Marty,
and Jo Ann Tambakis, holding interests of 5.25%, 6.25%,
6.25%, and 6.25% as limited partners, respectively. Two of
the partners are now deceased: Byron Haseotes having died in
2009 and Demetrios B. Haseotes in 2017.
Partnership is not a stranger to this Court having been
before it in a receivership proceeding from 2004 through
2012. During the receivership, the Partnership
sold twenty-five properties and had a total of $13, 899,
449.93 in gross receipts. However, the expenses totaled $13,
470, 412.16, leaving the Partnership with $400, 000 at the
close of the receivership. One liability that contributed to
Partnership costs was a promissory note (the Note) executed
in 2002 in favor of the Bay Colony Partners (Bay Colony), a
former Massachusetts partnership, in consideration of the
conveyance of certain real estate to the partnership. The
outstanding balance on the Note, including interest, was
approximately $7 million at the time of trial. The four
original partners of Bay Colony are the same four individuals
as the general partners of the Partnership, each holding a
25% interest in Bay Colony. Although none of the partners as
partners of the Partnership received cash distributions from
the Partnership directly between 2004 and the date of trial,
the Partnership made a distribution of $600, 000 to Bay
Colony in 2016, $300, 000 of which was distributed to
Plaintiff. Further, by Consent Order dated April 27, 2018, an
additional $2, 000, 000 was ordered to be paid to Bay Colony,
of which $1, 000, 000 was to be distributed to Plaintiff.
2010, the general partners sought to end the receivership to
reduce costs and appointed Defendant to the role of Managing
General Partner, as set forth in the Delegation of Authority
Agreement, executed by all general partners. The receivership
was terminated on November 2, 2012, pursuant to a Consent
Order Regarding Petition to Dismiss Proceeding and a
Conditional Dismissal Order.
thereafter assumed the role of Managing General Partner of
the Partnership, responsible for the management of all
Partnership affairs, with the exception of the power to
determine the selling price of Partnership real property,
which requires a majority vote of general
partners. However, Defendant testified that she
"didn't devote a lot of time to the
Partnership," due to the fact that she "went back
to being the interim CEO of Cumberland Farms for
approximately a year" after the receivership ended.
Defendant delegated the responsibility for sales and
management of Partnership property to John Peck (Peck), a
cousin of the general partners who served as "property
manager" of the Partnership. Defendant testified that
"there wasn't really a lot to do except for the
sales and things of that nature that [she] got involved with
and if there was money in the accounts and so forth."
Defendant further testified that Peck was the only person
practically trying to sell the Partnership properties on
behalf of the Partnership, and that she did not know whether
it would cost more to list the properties with a real estate
brokerage than the $10, 000 per month the Partnership paid to
Peck to sell the properties.
of Partnership property were limited in the years following
the receivership, and Partnership expenses subsumed most of
the sale proceeds. These sales essentially occurred through
word-of-mouth efforts on the part of Peck. In 2013, the
Partnership sold seven properties and had a total of $1, 385,
000 million in gross sales, but had a negative net income of
$1, 072, 931.66. In 2014, the Partnership sold six properties
and had a total of $1, 996, 000 in gross sales, but had a net
income of only $388, 734.26. In 2015, the Partnership sold
five properties and had a total of $2, 430, 000 in gross
sales, but had a net income of $1, 066, 973.58. In 2016, the
Partnership sold seven properties and had a total of $4, 257,
500 in gross sales, but had a net income of only $2, 829,
431.70. At the time of trial, the Partnership property
constituted approximately 87 parcels of land with an
estimated value of $45 million.
began to express his discontent with the lack of Partnership
property sales after the receivership ended, first verbally,
then through written communications to Defendant. On May 14,
2013, Plaintiff sent a letter to Defendant and the other
general partners requesting a discussion to formulate a plan
to divest Partnership property. However, none of the general
partners responded. Plaintiff continued to express concerns
regarding the mismanagement of the Partnership in the years
that followed. On April 13, 2016, after several unsuccessful
attempts to schedule a Partnership meeting, Plaintiff
requested a list of the Partnership properties that were
currently for sale, but he did not receive a response.
April 18, 2016, Plaintiff sought further information from
Defendant and expressed concern with respect to
Defendant's "lack of diligence in seeking to sell
the VS Haseotes properties, many of which [had] been for sale
for decades." Plaintiff also expressed his
dissatisfaction regarding the dumping of processed sewage (or
"sludge") onto Partnership property. This material
was produced by a company called EarthSource, Inc.
(EarthSource), and was periodically dumped upon Partnership
property between 2008 and 2015. Peck received $1000 per month
from EarthSource in consideration for the agreement-for which
there was no written contract and was instead governed by a
"handshake"-although the Partnership itself
received no compensation. In May 2016, Plaintiff made
multiple unsuccessful attempts to gain access to records
regarding Partnership real property, financial information,
and the sludge being dumped upon the land.
2016, Plaintiff filed a sealed Complaint, seeking, inter
alia, access to Partnership records. On October 26,
2016, this Court ordered that certain documents that
Defendant had previously withheld be made available to the
Plaintiff. On December 23, 2016, Plaintiff filed a Third
Amended Complaint. Plaintiff alleged that Defendant breached
her statutory and fiduciary duties as Managing General
Partner, and sought her removal from that position, along
with other monetary and equitable remedies. This Court held a
non-jury trial on February 20, 2017, from May 15, 2017
through May 25, 2017 and following the grant of a motion to
reopen from February 22 through February 26, 2018.
justice in a nonjury trial acts as the trier of both fact and
law. Hood v. Hawkins, 478 A.2d 181, 185 (R.I. 1984).
This role involves the consideration of evidence, the
determination of the credibility of the witnesses, and the
eventual drawing of proper inferences, all of which need not
be done in the light most favorable to the plaintiff.
Id. at 184-85. Indeed, "[t]he task of
determining the credibility of witnesses is peculiarly the
function of the trial justice when sitting without a
jury." Parella v. Montalbano, 899 A.2d 1226,
1239 (R.I. 2006). '"It is also the province of the
trial justice to draw inferences from the testimony of
witnesses."' Id. (quoting Walton v.
Baird, 433 A.2d 963, 964 (R.I. 1981)). These
"findings of fact by a trial justice sitting without a
jury are entitled to great weight and will not be disturbed
on appeal absent a record showing that the trial justice
overlooked or misconceived material evidence or was otherwise
clearly wrong." Donnelly v. Cowsill, 716 A.2d
742, 747 (R.I. 1998) (citing Thomas v. Ross, 477
A.2d 950, 953 (R.I. 1984)).
Rhode Island Superior Court has broad powers, and exclusive
original jurisdiction, over matters in equity. Roch v.
Garrahy, 419 A.2d 827, 830 (R.I. 1980); § 8-2-13;
see also Ret. Bd. of Emps.' Ret. Sys. of
City of Providence v. Corrente, 111 A.3d 301, 306 (R.I.
"[i]f an action is brought in the [S]uperior [C]ourt
which represents an attempt in good faith to invoke 
jurisdiction [in equity], the [S]uperior [C]ourt shall have
jurisdiction of all other actions arising out of the same
transaction or occurrence, provided the other actions are
joined . . . and the [C]ourt may retain jurisdiction over the
other actions even though the initial action fails for want
of equity jurisdiction." Sec. 8-2-13.
removal of a general partner from a limited partnership is a
remedy in equity. See, e.g., Miltland Raleigh-Durham v.
Myers, 807 F.Supp. 1025, 1059-60 (S.D.N.Y. 1992).
brings this action seeking, inter alia, remedies for
economic injuries suffered individually and by the
Partnership resulting from Bentas' alleged mismanagement
in her role as Managing General Partner. Sec. 8-2-13. The
Third Amended Complaint includes four counts: (1) violation
of G.L. 1956 § 7-13-21 (against the Partnership and
Bentas); (2) breach of fiduciary duty (against Bentas in her
capacity as Managing General Partner of the Partnership); (3)
a derivative claim pursuant to the Rhode Island Uniform
Limited Partnership Act (against Bentas); and, (4) a petition
for dissolution of the Partnership under the Rhode Island
Uniform Limited Partnership Act. As relief, Haseotes requests
that this Court declare the Partnership dissolved as of
2009; order the immediate winding up of the
Partnership's affairs; relieve Bentas of her powers as
Managing General Partner or remove her as Managing General
Partner; appoint a competent, regional broker to formulate a
plan for and to comprehensively market, list, and sell all
remaining Partnership properties; order that any properties
unsold within six months of the appointment of the broker be
sold at auction; and, award damages and attorney's fees
to Haseotes. With regard to Haseotes' request for
damages, this Court shall hold an additional trial; all other
relief Haseotes seeks is addressed herein.
of § 7-13-21
contends that Bentas wrongfully denied him access to records
of the Partnership in violation of § 7-13-21, entitled
"Information." Specifically, Haseotes asserts that
Bentas failed to respond to numerous written and verbal
communications by or on behalf of Haseotes requesting access
to Partnership records. Haseotes argues that when Bentas did
respond, Bentas's requirement that Haseotes pay for the
Partnership's attorney to supervise Haseotes'
inspection of the records additionally amounted to ...