Earlier this month, the Texas Business Court issued its first ruling in Primexx Energy Opportunity Fund, LP v. Primexx Energy Corporation, addressing the modification of fiduciary duties in limited partnerships. See Cause No. 24-BC01B-0010 Primexx Energy Opportunity Fund, LP, et al v. Primexx Energy Corporation, et al. (First Division).
Two limited partners sued the controlling partner after a forced sale of the partnership, claiming breaches of fiduciary duties due to an unreasonably low sale price and inadequate due diligence.
The court analyzed the fiduciary duties under the Texas Business Organizations Code (TBOC) and an exculpatory clause that sought to limit those duties. It concluded that while partners cannot completely eliminate fiduciary responsibilities, they can define certain permissible conduct. The court ruled that the defendants' actions did not breach their contractual obligations.
Compared to Delaware law, Texas law imposes stricter limitations on eliminating fiduciary duties, allowing modifications only if they are reasonable. In Delaware, fiduciary duties can be eliminated by contract, except for the covenant of good faith and fair dealing.
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