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Cincinnati Smsa Limited Partnership v. Cincinnati Bell Cellular Systems Co.4/30/1998
Court Below: Court of Chancery of the State of Delaware in and for New Castle County
C.A. No. 15388
Submitted: February 10, 1998
Upon appeal from the Court of Chancery. Affirmed.
We review the decision by the Court of Chancery to dismiss plaintiff's claim under Court of Chancery Rule 12(b)(6). At issue on appeal is whether the implied covenant of good faith and fair dealing provides a basis for implying terms in a limited partnership agreement. We affirm the decision of the Court of Chancery that, given the unambiguous terms set forth in the agreement, no additional obligations may be inferred under any set of facts that could be proven to support plaintiff's complaint.
Facts
The memorandum opinion of the Court of Chancery sets forth the essential facts of this case. After careful review, we have independently determined that the recitation of those facts by the Court of Chancery is amply supported. We will recount here only a brief factual summary to frame our approach in affirming the judgment of the Court of Chancery.
Cincinnati SMSA Limited Partnership is a Delaware Limited Partnership ("the Limited Partnership") formed in 1982 for the purpose of providing "Cellular Service" to Cincinnati, Columbus and Dayton, Ohio. Cincinnati Bell Cellular Systems Company ("Cincinnati Bell") is a limited partner.
When it was formed, the Limited Partnership was,one of a number of partnerships around the country comprised of AT&T;affiliates and other regional telephone companies. In response to the advent of cellular telecommunication service, the Federal Communications Commission ("FCC") divided the United States into separate market regions for licensing purposes. Urban market regions are called Standard Metropolitan Statistical Areas ("SMSAs"). Within each SMSA, the FCC authorizes the grant of two cellular service licenses-one to a wireline telephone company (the "B side license") and the other to any entity other than a telephone company (the "A side license").
Through their cellular service affiliates, the wireline telephone companies for Cincinnati, Columbus and Dayton agreed to pursue the B side license for all three areas as one entity-the Limited Partnership. At the center of the parties' dispute in this case are three provisions contained in the Limited Partnership Agreement ("the Agreement").
Section 10.4 of the Agreement contains a noncompete provision, which reads as follows:
hould any Limited Partner or an Affiliate thereof desire to provide Cellular Service in areas within the [Limited Partnership's] SMSAs, but not through the Partnership, then such Limited Partner ... shall withdraw from the Partnership . . . .In no event shall any such Limited Partner or its Affiliate thereof directly or indirectly own, operate, or engage in any business rendering Cellular Service in the [Limited Partnership's] SMSAs within five years after the withdrawal of such Limited Partner . . . from the Partnership . . . .
Under Section 2.4 of the Agreement, "Cellular Service" is defined as:
Any and all service authorized by the FCC under Part 22 of its cellular rules as promulgated under the Cellular Radio Decisions and provided pursuant to the terms of this Agreement.
Aside from Cellular Service, the Agreement allows partners to pursue independent interests under the following provision in Section 7.4:
Ownership or Conduct of Other Businesses. Subject to the provisions of [Section 10.4], the Partners may engage in or possess an interest in other business ventures of every kind and description. Neither the Partnership nor a
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