In The Matter Of The Dissolution Of Midnight Star Enterprises, L.P

724 N.W.2d 334 (2006)

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Nature of the Case

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Facts

Midnight Star Enterprises, L.P. (Midnight Star) is a limited partnership, which operates a gaming, on-sale liquor and restaurant business in Deadwood, South Dakota. The owners of Midnight Star consist of: P as the general partner, owning 22 partnership units; Kevin Costner (Costner), owning 71.50 partnership units; and Francis and Carla Caneva (Canevas), owning 3.25 partnership units each. Costner is the sole owner of MSEL and essentially owns 93.5 partnership units. The Canevas managed the operations getting salaries and bonuses for their employment. P became concerned about the management and tried to reach a friendly disassociation with the Canevas. Once the Canevas declined, P decided to dissolve Midnight Star. An accountant, Paul Thorstenson, valued Midnight at $3,100,000 based on the hypothetical-transaction valuation method. The Canevas solicited a $6,200,000 offer from a casino owner, Ken Kellar. The circuit court found Kellar's offer of 6.2 million to be the fair market value of Midnight Star. The circuit court ordered the majority owners to buy the business for $ 6.2 million within 10 days, or the court would order the business to be sold on the open market. P appealed in that the Partnership Agreement did not require Midnight to be sold and only required a sale if P was to distribute Midnight’s assets in kind. The agreement also stated that fair market value would be the price paid in a hypothetical transaction.