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In a landmark decision, the Texas Business Court has issued its inaugural major ruling in Primexx Energy Opportunity Fund, LP v. Primexx Energy Corporation¹ that resound- ingly affirms the enforceability of contractual modifications to fiduciary duties and drag-along rights under Texas law. This pivotal decision not only reinforces Texas’s unwavering commitment to the principle of contractual freedom but also meticulously delineates the statutory boundaries governing partnership governance. The Primexx ruling serves as a clear signal to businesses and investors: in Texas, freely negotiated agreements will be honored and swiftly upheld by the courts.

Factual Background: A High-Stakes Drag-Along Dispute in the Permian Basin

The case arose from a challenge brought by minority limited partners in Primexx Energy Partners, Ltd. (“PEP”) against a drag-along sale masterminded by BPP HoldCo LLC (“HoldCo”), an entity affiliated with Blackstone.² The partnership agreement, known as the Third Amended and Restated Partnership Agreement (TAPA), granted HoldCo significant authority to compel a sale of PEP after July 12, 2018, provided the transaction met the standard of being “arm’s-length.”³ The dissenting minority partners alleged breaches of both fiduciary and contractual duties, raising concerns about the adequacy of due diligence, the fairness of the sale price, and the propriety of the proceeds allocation.⁴

Key Holdings: Upholding Contractual Freedom Within Statutory Guardrails

The Business Court’s ruling delivered a decisive victory for contractual autonomy, subject only to clearly defined statutory limitations:

1. Contractual Limitation of Fiduciary Duties Affirmed. The court explicitly upheld the TAPA provisions that disclaimed fiduciary duties “to the fullest extent permitted by law.”⁵ This affirmation relied directly on the Texas Business Organizations Code (TBOC), which explicitly permits partnerships to modify the duties of loyalty and care, with the crucial exception of the non-waivable obligation of good faith.⁶ Notably, the TAPA in this case had thoughtfully substituted the common law fiduciary duties with a statutorily compliant duty of “good faith and fair dealing.”⁷
2. Drag-Along Rights Strictly Enforced According to Contractual Terms. The court found that HoldCo’s execution of its drag-along rights was in full compliance with TBOC § 152.204(b)(2), which allows partners to act in their “sole interest” if the partnership agreement explicitly provides for such discretion.⁸ The court decisively rejected the plaintiffs’ arguments centered on the fairness of the transaction, empha- sizing that the parties involved were sophisticated entities who had freely negotiated the terms of the TAPA.⁹
3. A Narrow Exception for Explicit Contractual Noncompliance. The court, however, denied summary judgment for claims specifically alleging misallocation of proceeds between PEP and an affiliated “sidecar” entity¹⁰ and for claims asserting that distributions violated the TAPA’s precise waterfall provision.¹¹ This crucial distinction highlights that while the court will defer to contractual grants of discretion, it will rigorously enforce the explicit terms of the agreement.¹²

Statutory and Precedential Foundation: Anchoring Contractual Freedom

The Primexx ruling is firmly grounded in established Texas statutory law and judicial precedent:

• Texas Business Organizations Code § 152.002(b): This statute explicitly permits the modification of the duties of loyalty and care within a partnership agreement but unequivocally prohibits the complete elimination of the obligation of good faith.¹³
• Texas Business Organizations Code § 152.204: This provision allows partners to act in their “sole interest” if the partnership agreement explicitly permits such action, provided that they consistently adhere to the fundamental standards of good faith.¹⁴
• Key Precedent: National Plan Administrators, Inc. v. National Health Insurance Co.: The Business Court drew a direct analogy to the Texas Supreme Court’s decision in National Plan Administrators, which upheld contractual limitations on fiduciary duties in a context where sophisticated parties had engaged in arm’s-length negotiations.¹⁵

Profound Implications for Corporate Governance in Texas

The Primexx ruling carries significant implications for the landscape of corporate governance in Texas:

1. Enhanced Certainty for Private Equity and M&A Transactions: The decision provides a clear validation of Texas as a jurisdiction where meticulously drafted drag- along provisions and fiduciary disclaimers will be robustly enforced by the courts.¹⁶ This certainty is particularly crucial for private equity firms and parties involved in mergers and acquisitions.
2. Clear Boundaries for Minority Investor Protections: While Texas courts will not second-guess the strategic business decisions regarding pricing or sale processes when contractual discretion is granted, the ruling emphatically underscores that express contractual terms, such as those governing waterfall distributions, will remain fully
   enforceable.¹⁷ This provides a tangible layer of protection for minority investors who negotiate specific contractual safeguards.
3. Demonstrated Judicial Efficiency in Complex Business Disputes: The Texas Business Court’s swift resolution of this complex case in under six months from filing to decision serves as a powerful testament to its intended capacity to handle sophisti- cated business disputes with remarkable efficiency.¹⁸ This efficiency offers a significant advantage for businesses seeking timely resolution of critical legal matters.

Conclusion: A Decisive Stance on Contractual Freedom

The Primexx ruling unequivocally reaffirms Texas’s deep-seated commitment to the princi- ples of contractual freedom, while simultaneously adhering to the essential statutory require- ments designed to ensure fair dealing. As Judge Whitehill astutely emphasized, “This is the deal the parties made, and the deal the court is going to enforce to the full extent Texas law permits.”¹⁹

For practitioners and businesses operating in or considering Texas, the key takeaway is abundantly clear: partnership agreements must be drafted with meticulous precision, as Texas courts stand ready to enforce their terms. However, it is equally critical to remain keenly aware of the TBOC’s non-waivable requirement of good faith, which serves as an irre- ducible baseline for all partnership conduct. The Primexx decision provides invaluable clarity and reinforces Texas’s position as a predictable and business-friendly legal environment.

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¹Primexx Energy Opportunity Fund, LP v. Primexx Energy Corp., No. 24-BC01B-0010, slip op. at 1 (Tex. Bus. Ct. Mar. 10, 2025) [hereinafter Primexx].
²Primexx, slip op. at 2–3.
³Third Amended and Restated Partnership Agreement § 6.7(a), cited in Primexx, slip op. at 28.
⁴Primexx, slip op. at 4–5.
⁵Third Amended and Restated Partnership Agreement § 5.9(c)(ii), cited in Primexx, slip op. at 10, 42.
⁶Tex. Bus. Orgs. Code Ann. § 152.002(b)(2)–(4) (West 2023); id. § 152.204(b)(1).
⁷Primexx, slip op. at 42.
⁸Primexx, slip op. at 43; Tex. Bus. Orgs. Code Ann. § 152.204(c).
⁹Primexx, slip op. at 54.
¹⁰Primexx, slip op. at 61.
¹¹Id. at 60.
¹²Id. at 61.
¹³Tex. Bus. Orgs. Code Ann. § 152.002(b).
¹⁴Id. § 152.204(c).
¹⁵National Plan Adm’rs, Inc. v. National Health Ins. Co., 235 S.W.3d 695, 703 (Tex. 2007).
¹⁶Primexx, slip op. at 54.
¹⁷Id. at 60–61.
¹⁸Case filed Sept. 2024; decided Mar. 2025.
¹⁹Primexx, slip op. at 54.