Legal Question in Business Law in California

To Whom It May Concern,

I hold a minority percent (7.142857%) of an almond farm with a single family dwelling on it in San Joaquin county. The dwelling is rented and the almonds are producing.

Originally a Power of Attorney was granted by all seven minority holders such as myself to the four holders having 12.5% percentage owner interest each to facilitate management of the farm and rental property.

These four then signed an Agreement Among Attorneys in Fact with defined the duties and obligations of each. One of the parties who was tasked with dealings with the farm manager and oversight of the rental has served papers removing herself from the position due to conflicts over repayment and other disagreements.

I requested to know what the new management structure was after her departure. I was told by the three remaining persons that I have no right to know as I have signed the Power of Attorney to them. The Power of Attorney I signed granted management to four persons, not three. I revoked my Power of Attorney in hopes that I would now have access to the management information.

Two of the remaining three have �stepped in� to perform the duties of the person who removed herself. They refuse to say they are now the person in charge of these acts. They claim they are not legally responsible for these tasks as it is not defined in the Agreement but do, in fact, perform them.

I am still told by two of the three that I have no right to information as my share is too small to affect decision making. Before when the one person had expenses relating to the farm or the rental she needed receipts provided to the two mentioned above and majority approval to act. The two who are in control of the checkbook and are now in charge of expenditures. There is no oversight and as the other minority holders have not revoked the POA they claim to have the backing and approval to do what ever they wish.

1.) Do I have a right to the e-mails sent between majority holders and minutes from phone conversations regarding the property and dwelling? (Most communication is by e-mail or phone as we all live in different areas.)

2.) As the POA was granted to four persons and now only three remain, is the Agreement Among Attorneys in Fact still valid?

3.) As the POA was granted to four persons and now only three remain, is the Power of Attorney still valid?

4.) If either the Agreement Among Attorneys in Fact or the POA is rendered invalid does a new managing structure need to be defined in writing? (We are a money making partnership with a farm and a rental property between us.)

It would seem I am not protected my corporate law regarding minority shareholders as we are a partnership/TIC.

Thank you so much for any advice or links to relevant sites you may provide.

Sincerely,

Julene Deupree


Asked on 1/18/11, 10:46 am

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Yes, the arrangement does seem to be a general partnership. The arrangements involving powers of attorney do not alter the general character of the business as a partnership, and it is probably governed by California's Uniform Partnership Act of 1994, also known as the Revised Uniform Partnership Act or RUPA. This law is part of the Corporations Code, set forth as its sections 16100 through 16962.

Corporations Code section 16403(b) covers access to books and records. It reads: "A partnership shall provide partners and their agents and attorneys access to its books and records. It shall provide former partners and their agents and attorneys access to books and redcords pertaining to the period during which they were partners. The right of access provides the opportunity to inspect and copy books and records during ordinary business hours. A partnership may impose a reasonable charge, covering the costs of labor and material, for copies of documents furnished.

There are other provisions covering openness, disclosure, fiduciary responsibility, reporting, and the like. There are no provisions limiting the rights of partners with small fractional interests.

So, as to your specific questions, I would think the answers are:

1. Probably, at least to the extent partnership business is the subject.

2 and 3. Do not confuse the POA you gave with the agreement between the four. Whether the latter is still valid depends, I believe, upon its own terms. Whether the POA you granted is still valid depends upon whether you revoked it or not. As far as I know, a principal may always modify or revoke a power of attorney, but must do so by a method permitted by law. For applicable law, see the Probate Code, sections 4150 to 4153,

4. At this point, I would have to ask if there is an overall partnership agreement between you. If so, its terms would govern the management of the business in the absence of the POA-based power structure. If not, general partnership law would control (CC section 16401(f) and (j), primarily) and each partner would have an equal vote regardless of ownership percentage, decisions affecting the ordinary course of events would be decided by majority vote, and matters not in the ordinary course of business would require a unanimous vote. However, the POA-oriented management structure is probably still in effect unless and until a decision requiring a unanimous vote comes up. Then I would think your having revoked your POA would render the three unable to muster a truly unanimous vote without your independent consent.

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Answered on 1/23/11, 12:24 pm


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