Limited Partnership. James Carpenter contracted with Austin Estates, LP, to buy property in Texas. Carpenter asked Sandra McBeth to invest in the deal. He admitted that a dispute had arisen with the city of Austin over water for the property, but he assured her that it would not be a signifi cant obstacle. McBeth agreed to invest $800,000 to hold open the option to buy the property. She became a limited partner in StoneLake Ranch, LP.

Carpenter acted as the fi rm’s general partner. Despite his statements to McBeth, the purchase was delayed due to the water dispute. Unable to complete the purchase timely, Carpenter paid the $800,000 to Austin Estates without notifying McBeth.

Later, Carpenter and others—excluding McBeth—bought the property and sold it at a profi t. McBeth fi led a suit in a Texas state court against Carpenter. What is the nature of the fi duciary duty that a general partner owes a limited partner? Did Carpenter breach that duty in this case? Explain. [McBeth v.

Carpenter, 565 F.3d 171 (5th Cir. 2009)]