Two branches of a family tried to remove the general partner. They ended up paying the capital call.

What happened

The Bredemann family owns and operates car dealerships and related real estate around Chicago. In 1999 they formed B-Team Remedies Limited Partnership. Its limited partners are eleven trusts benefiting four family members. A fifth, Tom Bredemann, is the general partner and runs it.

The trustees for two of the branches sued Tom and the partnership, individually and derivatively. They asked the court to expel Tom as general partner, and alleged breach of fiduciary duty and breach of the limited partnership agreement.

The partnership counterclaimed. In April 2020 it had issued a capital call, and the limited partners had not funded it. That, the partnership said, was itself a breach of the agreement.

The circuit court granted summary judgment for the defense on every one of the plaintiffs' claims, and for the partnership on its capital call counterclaim. It initially ordered the partnership judicially dissolved, then vacated that order. It then directed the limited partners to pay what they owed under the call. The First District affirmed the whole thing.

The capital call is the lesson

Most of the attention in a family business fight goes to the dramatic relief: removing the person in charge, dissolving the entity, proving disloyalty. The quieter half of this case is the part that cost money.

A capital call is an obligation in the partnership agreement. Disagreeing with the general partner, even having a genuine dispute about how he is running the business, does not suspend it. The limited partners here withheld their contributions while their claims were pending, and when the claims failed they owed the contributions anyway, now as a judgment.

If you believe a capital call is improper, the response is to fund it under protest and litigate, or to obtain a court order relieving you of it before the deadline passes. Simply refusing converts a dispute you might win into a breach you will lose.

Removing the person in charge is very hard

Judicial expulsion of a general partner is an extraordinary remedy, and this case shows how far short ordinary grievances fall. The plaintiffs did not merely fail at trial. They lost on summary judgment, meaning the court concluded there was no genuine dispute of material fact worth trying.

That is the practical reality for a minority owner unhappy with management. Disagreement about strategy is not breach of fiduciary duty. A decision you would have made differently is not self-dealing. The claims that succeed are the ones with a transaction behind them: money moving to the controlling owner or an entity he owns, an opportunity taken for himself, records withheld when properly demanded.

The vacated dissolution order is worth noticing too. The trial court ordered dissolution and then thought better of it. Courts are reluctant to end a functioning business because its owners are unhappy with one another, and a family enterprise spanning eleven trusts and multiple dealerships is a great deal to unwind.

What this suggests about family businesses held in trust

Structures like this one are built for estate planning: interests in trust, one family member operating, the rest passive. They work well until a branch of the family wants something different from what the operator wants, and by then the governance was designed by an estate planner rather than for resolving disputes.

The questions worth answering while everyone is still cooperating are simple to state. What can the general partner do without consent, and what requires a vote? What triggers a capital call, and what happens to a partner who does not fund it? Is there any exit at all for a limited partner who wants out, and if so, at what price?

Where those answers are absent, the only options left are the ones these plaintiffs tried, and they are expensive.