General Holdings, Inc. v. Eight Penn Partners, L.P.

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2025 ME 20
Docket: BCD-24-172
Argued: November 14, 2024
Decided: February 25, 2025

Panel: STANFILL, C.J., and MEAD, CONNORS, LAWRENCE, and DOUGLAS, JJ.

GENERAL HOLDINGS, INC. et al.

v.

EIGHT PENN PARTNERS, L.P. et al.

MEAD, J.

[¶1] Eight Penn Partners, L.P. appeals from a judgment entered in the

Business and Consumer Docket (Duddy, J.) granting General Holdings, Inc. and

Preservation Holdings, LLC relief by declaring invalid a purported transfer of

the limited partnership interests in four limited partnerships from U.S.A.

Metropolitan Tax Credit Fund II, L.P. (Metropolitan) and U.S.A. Institutional Tax

Credit Fund, IV, L.P. (U.S.A. Institutional) to Eight Penn. We affirm the

judgment.

I. BACKGROUND

A. Facts

[¶2] “The court found the following facts by a preponderance of the

evidence, and these facts are supported by the trial record.” Lincoln v. Burbank,
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2016 ME 138, ¶ 7, 147 A.3d 1165. In the 1990s, Pamela Gleichman, a real estate

developer, established four affordable housing developments in Pennsylvania

as limited partnerships, using nearly identical partnership agreements for each

one.

[¶3] The four limited partnerships had an identical partnership

structure: two general partners and one limited partner. Gleichman herself and

an entity called Gleichman & Co., Inc., which Gleichman wholly owned at the

time, served as the two general partners. Metropolitan held a limited

partnership interest in three of the housing developments, and U.S.A.

Institutional held an interest in the fourth. Both Metropolitan and U.S.A.

Institutional were controlled by Richman Asset Management.

[¶4] Around 2010, Gleichman and her husband, Karl Norberg, took out a

loan to finance a different development, pledging as collateral all of the

outstanding shares of Gleichman & Co. Later, Gleichman and Norberg defaulted

on the loan, and the shares of Gleichman & Co. were put up for sale at a

foreclosure auction. Just before the foreclosure auction, Gleichman & Co. was

renamed General Holdings, Inc. Rosa Scarcelli, Gleichman’s daughter, had

worked with her mother since the early 1990s, but their relationship soured in

the 2000s. Scarcelli purchased all of General Holdings’ outstanding shares
3

through her company, Preservation Holdings, at the foreclosure auction in

March 2014. Richman, on behalf of Metropolitan and U.S.A. Institutional, never

objected to the change of control of General Holdings, nor did anything suggest

that General Holdings’ status as a general partner had changed.

[¶5] In February 2018, a representative of Richman wrote to Gleichman,

expressing a desire to sell Metropolitan’s and U.S.A. Institutional’s

limited-partner interests in the four affordable housing partnerships back to

Gleichman. Later that year, Richman executed a transfer of Metropolitan’s and

U.S.A. Institutional’s interests in the four affordable housing development

partnerships to Eight Penn Partners, L.P. (a limited partnership comprised of

Gleichman, Norberg, Gleichman’s two sons, and a business associate) for

approximately $10,000. Gleichman, as one of the general partners in each of

the four affordable housing partnerships, consented to the transfer. General

Holdings, as the other general partner, was not asked about, nor did it consent

to, the transfer of the interests to Eight Penn. Correspondence between

Richman representatives and Rosa Scarcelli’s business associates indicates that

Richman was aware that Gleichman no longer controlled General Holdings and

that Preservation Holdings was the controlling shareholder when Richman

transferred its interests to Eight Penn.
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B. Procedure

[¶6] On May 6, 2020, General Holdings and Preservation Holdings filed a

complaint in the Superior Court against Eight Penn, Metropolitan, and U.S.A.

Institutional. The action was later transferred to the Business and Consumer

Docket. Count I sought a declaratory judgment, asking the court to declare that

Preservation Holdings was the sole shareholder of General Holdings; that

Gleichman had no interest in General Holdings; that Metropolitan and U.S.A.

Institutional had not and could not transfer their limited partnership interests

in the four affordable housing partnerships without General Holdings’ prior

consent; and that Eight Penn had acquired no interest as a limited partner in

the four affordable housing partnerships. Count II sought injunctive relief,

asking the court to rescind the transfer by Metropolitan and U.S.A. Institutional

of their limited partnership interests in the four affordable housing

partnerships to Eight Penn.

[¶7] In December 2021, Eight Penn filed a motion for summary judgment

requesting judgment in its favor on General Holdings’ and Preservation

Holdings’ claims. In April 2022, the court denied the motion, finding the

language of section 6.01 of the partnership agreements to be ambiguous as to

whether General Holdings remained a general partner with management rights
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after Preservation Holdings acquired the shares of General Holdings at a

foreclosure auction.1 The court left the issue of ambiguity for resolution at trial

in order to hear extrinsic evidence to shed light on the intent of section 6.01.

[¶8] The court held a two-day trial on February 14 and 15, 2024. The

court’s judgment made findings of facts and drew conclusions of law in holding

for the plaintiffs on Count I. The court, considering section 6.01 in context with

the evidence produced at trial, interpreted the provision to mean that General

Holdings was a general partner with management rights. The court declared

(1) that Preservation Holdings is the sole shareholder of General Holdings;

(2) that Pamela Gleichman has no interest in General Holdings; (3) that General

Holdings is a general partner of the four affordable housing partnerships and

has not been removed or dissociated as a general partner; (4) that Metropolitan

and U.S.A. Institutional did not transfer their interests to Eight Penn and could

not do so without General Holdings’ prior consent; (5) that General Holdings

has never consented to the transfer of Metropolitan’s and U.S.A. Institutional’s

interests to Eight Penn; and (6) that Eight Penn acquired no interest as a limited

partner in any of the four affordable housing partnerships. The court did not

1 Section 6.01 of the partnership agreements discusses the transfer of interests in a general
partner. The text and analysis of section 6.01 appear in the discussion section. See infra ¶¶ 12-14.
6

grant the plaintiffs injunctive relief (Count II) because the plaintiffs represented

to the court in post-trial briefing that injunctive relief was unnecessary and that

the declaratory judgment alone would be sufficient for the parties to implement

the judgment. Eight Penn did not seek further findings pursuant to M.R.

Civ. P. 52(b) and timely appealed. See M.R. App. P. 2B(c)(1).

II. DISCUSSION

A. The purported transfer of the limited partnership interests to Eight
Penn was invalid.

[¶9] We interpret partnership agreements according to the principles of

contract law. See 31 M.R.S. § 1310(1) (2024) (“It is the policy of this chapter to

give maximum effect to the principle of freedom of contract and to the

enforceability of partnership agreements.”); Cumberland Cnty. Power & Light

Co. v. Gordon, 136 Me. 213, 218, 7 A.2d 619, 622 (1939) (“A partnership is

usually defined to be a voluntary contract between two or more competent

persons to place their money, effects, labor, and skill, or some or all of them, in

lawful commerce or business with the understanding that there shall be a

community of profits thereof between them.”). Generally,

[w]e construe contracts in accordance with the intention of the
parties, which is to be ascertained from an examination of the
whole instrument. All parts and clauses must be considered
together that it may be seen if and how one clause is explained,
modified, limited or controlled by the others. Ultimately, we seek
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to give effect to the plain meaning of the words used in the contract
and avoid rendering any part meaningless.

Dow v. Billing, 2020 ME 10, ¶ 14, 224 A.3d 244 (citation and quotation marks

omitted).

[¶10] In reviewing the trial court’s interpretation of a contract, “the

proper standard of review depends on whether the contract language at issue

is ambiguous, which we determine de novo.” 55 Oak St. LLC v. RDR Enters., Inc.,

2022 ME 28, ¶ 15, 275 A.3d 316. “Contract language is ambiguous when it is

reasonably susceptible of different interpretations.” Am. Prot. Ins. Co. v. Acadia

Ins. Co., 2003 ME 6, ¶ 11, 814 A.2d 989 (quotation marks omitted). “If a contract

is ambiguous, this Court reviews the interpretation of the contract for clear

error by the fact finder. If a contract is unambiguous, this Court reviews its

language de novo.” 55 Oak St., 2022 ME 28, ¶ 15, 275 A.3d 316 (citation

omitted). Here, we conclude, as did the trial court, that the language at issue in

the partnership agreements is ambiguous.

[¶11] Section 9.02(a) of the four affordable housing partnership

agreements provides that “[u]nder no circumstances will any offer, sale,

transfer, assignment, hypothecation or pledge of any Limited Partner Interest

be permitted unless the General Partners shall have Consented, which Consent

may not unreasonably be withheld.” Therefore, a valid transfer of the limited
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partner interests to Eight Penn required the consent of both Gleichman and

General Holdings as the two general partners.

[¶12] Article VI of the four affordable housing partnership agreements

concerns “Changes in Partners.” Section 6.01 provides:

(a) A General Partner may withdraw from the Partnership or sell,
transfer or assign his or its Interest as General Partner (or a
controlling interest in the General Partner) only with the prior
Consent of the Investment Partnership, and of the Agency and/or
the Lender, if required, and only after being given written approval
by the necessary parties as provided in Section 6.02 of the General
Partner(s) to be substituted for him or it or to receive all or part of
his or its Interest as General Partner.

[¶13] Eight Penn argues that section 6.01 required the limited partner2

to have consented to the change of control of the General Holdings’ general

partnership interest from Gleichman to Preservation Holdings in order for

General Holdings to retain its management prerogatives. Eight Penn reasons

that because Metropolitan and U.S.A. Institutional never explicitly gave their

consent to the change of control of General Holdings, General Holdings was not

entitled to participate in the management of the partnerships and General

Holdings’ consent was not required for Metropolitan and U.S.A. Institutional to

transfer their interests to a third party. Conversely, General Holdings contends

2 Article II of the four affordable housing partnership agreements defined “Investment
Partnership” as the limited partner, either Metropolitan or U.S.A. Institutional.
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that the plain language of the provision indicates that it was intended to apply

only to voluntary transfers, and therefore, an involuntary sale at a foreclosure

auction would not require the limited partner’s consent. Because this language

is reasonably susceptible of multiple interpretations, section 6.01 is ambiguous

as to whether it was intended to apply to both voluntary and involuntary

transfers.3

[¶14] After construing section 6.01 in context with evidence admitted

during the trial, the court found that the section applied only to voluntary

transfers. The court concluded that section 6.01 did not apply here because the

transfer of the controlling interest in General Holdings from Gleichman to

Preservation Holdings was the result of a foreclosure auction. Applying section

9.02(a), the court determined that because General Holdings remained a

general partner with management rights, its consent was required for a valid

3 The current version of the Maine Uniform Limited Partnership Act provides that a purchaser at

a foreclosure sale is not entitled to participate in the management of the limited partnership. See
31 M.R.S. §§ 1382(1), 1383(2) (2024). This provision of the act reflects the principle in partnership
law that partnerships should be based on mutual consent. See A. Willmann & Assocs. v. Penseiro,
158 Me. 1, 4-6, 176 A.2d 739, 741 (1962) (“[N]o one had the right to make him become a partner or
joint adventurer with a stranger with whom he did not care to be associated.”). However, the Act
does not apply retroactively to limited partnerships formed before July 1, 2007, and therefore it has
no effect on the four affordable housing limited partnerships, which were formed in 1995 and 1996.
31 M.R.S. § 1453 (2024). Our case law prior to the enactment of the Act did not directly address
whether a transferee of a controlling interest in a general partner was entitled to participate in the
management of the limited partnership.
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transfer of the limited-partner interests to Eight Penn. The court held that

because General Holdings never consented, the transfer was invalid.

[¶15] Because the agreements are ambiguous, we review the trial court’s

findings and interpretation for clear error. 55 Oak St., 2022 ME 28, ¶ 15, 275

A.3d 316. “A finding of fact is clearly erroneous when (1) no competent

evidence supporting the finding exists in the record; (2) the fact-finder clearly

misapprehended the meaning of the evidence; or (3) the force and effect of the

evidence, taken as a whole, rationally persuades us to a certainty that the

finding is so against the great preponderance of the believable evidence that it

does not represent the truth and right of the case.” Carter v. Voncannon, 2024

ME 65, ¶ 20, 327 A.3d 9 (quotation marks and alteration omitted). Eight Penn

did not seek further findings pursuant to M.R. Civ. P. 52(b). Accordingly, “we

assume the trial court made all findings necessary to support its judgment, if

those findings are supported by the record.” Young v. Lagasse, 2016 ME 96,

¶ 13, 143 A.3d 131. The court’s finding that section 6.01 does not apply to

transfers caused by a foreclosure auction is supported by the evidence.

Furthermore, nothing indicates that the court misapprehended the meaning of

the evidence, nor are we persuaded to a certainty that the findings are so

against the preponderance of the believable evidence that it does not represent
11

the truth and right of the case. Therefore, the court did not err in declaring that

General Holdings remained a general partner with management rights and that

the transfer to Eight Penn was invalid.4

The entry is:

Judgment affirmed.

John S. Campbell, Esq. (orally), Campbell & Associates, P.A., Portland, for
appellant Eight Penn Partners, L.P.

James D. Poliquin, Esq. (orally), Norman, Hanson & DeTroy, LLC, Portland, for
appellees General Holdings, Inc. and Preservation Holdings, LLC

Business and Consumer Docket docket number CV-2020-28
FOR CLERK REFERENCE ONLY

4 Eight Penn’s arguments concerning whether the trial court abused its discretion in not finding
unclean hands and in issuing an incomplete declaratory judgment are unpersuasive. There is support
in the record for the determination that the conduct of both parties was problematic and that
therefore the balance of the equities does not support Eight Penn’s equitable defense of unclean
hands. See Hamm v. Hamm, 584 A.2d 59, 61-62 (Me. 1990). Moreover, we have held that M.R.
Civ. P. 59(e) is the proper vehicle for curing an ambiguous or incomplete declaratory judgment, and
Eight Penn did not file a Rule 59(e) motion in this case. See, e.g., Hoche v. Hoche, 560 A.2d 1086, 1088
(Me. 1989); Medeika v. Watts, 2008 ME 163, ¶ 7, 957 A.2d 980.