In Primexx Energy Opportunity Fund, LP v. Primexx Energy Corporation, one of the first merits opinions from the newly created Texas Business Court, Judge Bill Whitehill addressed a recurring flashpoint in private equity and closely held deals: how far sophisticated parties can go in a limited partnership agreement to tailor (and limit) the duty of loyalty, the duty of care, and the related obligation to act in good faith.[1]
The court found that Texas law gives wide latitude to expand or limit conduct standards, yet the statutory duties of loyalty and care and related performance obligations cannot be eliminated.[2] When the parties’ agreement establishes an alternative baseline process (e.g., an arm’s-length sale requirement) and allocates decision-making authority (including via drag-along rights), courts will generally enforce that allocation as written rather than retroactively importing procedural protections the parties did not negotiate.[3]
Background
The dispute arose from a private-equity-backed investment in Primexx Energy Partners, Ltd. (a limited partnership).[4] Two minority limited partners challenged a forced exit event sale after the controlling limited partner invoked drag-along rights to require minority holders to sell on the terms selected by the controlling limited partner to Callon Petroleum in 2021.[5]
The plaintiffs alleged that the controlling limited partner and the managing general partner accepted too low a price, failed to conduct adequate diligence or consider alternatives, and failed to provide timely notice.[6]
Legal Framework
The opinion is anchored in Subchapter E of the Texas Business Organizations Code (the “TBOC”) governing general partnerships, as incorporated into the limited partnership setting.[7] The court treated three points as foundational. First, the TBOC recognizes statutory duties of loyalty and care and an obligation to discharge duties and exercise rights in good faith and in a manner the actor reasonably believes to be in the partnership’s best interest.[8] Second, Texas’s freedom-of-contract principles allow partners to “expand or limit” conduct standards in a partnership agreement, but the statutory duties of loyalty and care (and related performance obligations) cannot be eliminated.[9] Third, when sophisticated parties adopt express contractual standards and allocate decision authority, Texas courts generally enforce those standards rather than add protections by implication.[10]
A recurring theme is the court’s insistence on precision. The duty of good faith is treated as a standard for performing duties and exercising rights rather than an independent fiduciary duty with limitless, common-law content.[11]
Key Holdings
The court granted summary judgment on most claims attacking the decision to sell and the pre-sale process, but it did not end the case.
Drag-along rights were enforced as written. The court rejected efforts to impose additional diligence, “fair price,” or enhanced process requirements beyond the parties’ written agreement.[12] It also refused to read an advance-notice requirement into the drag-along provision where the agreement was silent, especially given that the partnership agreement used “notice” repeatedly elsewhere, demonstrating the parties knew how to draft notice protections when they wanted them.[13]
Arm’s-length sale as an alternative minimum process for care. On the duty of care, the court explained that the TBOC adopts a business-judgment-rule-like standard (care requires acting without negligence in conducting the partnership’s business).[14] The parties’ contract selected an arm’s-length sale standard, and the court treated that standard as an alternative minimum process that satisfied the statutory duty of care for the sale to Callon Petroleum.[15]
The live issues: proceeds allocation and distribution. While the court found the defendants conclusively met their modified duties as to the decision to sell and the sale process,[16] it denied summary judgment on claims focused on the money flow after the deal closed, including whether sale proceeds were properly allocated and distributed under the partnership agreement’s waterfall, and whether value was unfairly allocated between the partnership and a related “sidecar” business sold in the same transaction.[17] Those issues survived because they implicated whether the defendants met even the narrowed good-faith obligation in connection with allocation and distribution.[18]
Practical Takeaways
The Primexx case is best read as an enforceability roadmap. The court did not hold that “anything goes” in partnership agreements; it held that sophisticated parties will be held to their bargains so long as the agreement stays above the statutory floor.
Drafting checklist:
- If minority holders expect advance notice before a drag-along is invoked, state it expressly (timing, method, required content, and consequences of noncompliance).
- Define the decision standard for a drag-along sale (arm’s-length, fairness opinion, minimum price formulas, process requirements, or board-approval mechanics). If you want a “fair price” standard, say so.
- Treat proceeds allocation and the waterfall as high-risk litigation zones: draft allocation mechanics, definitions, and dispute-resolution provisions with the same care as the drag-along itself.
- If the transaction involves multiple assets (e.g., a “sidecar” business), address allocation methodology up front (valuation, appraisal rights, or agreed allocation process).
- Align any duty-limitation and exculpation language with the TBOC floor (and preserve “Agreed Duties” or equivalent) so the contract is enforceable and predictable.
Litigation implications:
- Sale-process challenges may fail early where the agreement grants broad discretion and does not include process protections; proceeds-allocation and distribution claims may be the more durable theories.
- Expect courts to separate rhetoric about “fiduciary duties” from both the statutory text and contract text. Pleading and proof should track the specific duty, the contractual modification, and the alleged breach of the remaining obligation (often good faith).
Odds and Ends
In Esteban Quintero v. Urban Infraconstruction LLC, a recent milestone for the Texas Business Court, the court’s first jury trial ended not with a jury finding but with a directed verdict.[19] After the plaintiff rested its breach-of-contract case, Judge Andrea Bouressa granted the defense’s motion and dismissed the jury on the second day of trial, an unusually abrupt finish that underscores both the court’s emphasis on tight evidentiary showings and the reality that early practice in the venue will be procedurally dynamic. More broadly, the Texas Business Courts are still in the “common-law of the institution” phase, but published opinions are rapidly shaping threshold jurisdiction/amount-in-controversy questions, removal mechanics, and case-management norms across the divisions, while practitioners watch for increasing doctrinal coherence as more merits decisions and appellate guidance (including from the Fifteenth Court of Appeals) accumulate.
Conclusion
The Primexx case provides an early signal that the new Texas Business Court will approach intra-entity disputes with a statute-first, contract-enforcement methodology, particularly where sophisticated parties negotiated a limited partnership agreement that allocates control and calibrates duties for a forced-exit scenario.
[1] See Primexx Energy Opportunity Fund, LP v. Primexx Energy Corp., 709 S.W.3d 619 (Tex. Bus. Ct. 2025).
[2] Id. at 643.
[3] See id. at 648, 655.
[4] Id. at 628.
[5] Id. at 629–34.
[6] Id. at 628.
[7] See id. at 637 (citing Tex. Bus. Orgs. Code Ann. §§ 152.204(a), 153.003(a)–(b), 153.152(a)(1)–(2), 153.153(1)–(2)).
[8] Id. at 638
[9] Id. at 648 (citing Tex. Bus. Orgs. Code Ann. §§ 152.002(a); Royston, Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d 494, 504 (Tex. 2015)).
[10] Id. (citing Sundown Energy LP v. HJSA No. 3, Ltd. P’ship, 622 S.W.3d 884, 889 (Tex. 2021)).
[11] See id. at 643–45 (discussing good faith and fair dealing).
[12] Id. at 654.
[13] Id.
[14] Id. at 652 (citing Tex. Bus. Orgs. Code Ann. § 152.206).
[15] Id. at 652.
[16] Id. at 655.
[17] Id. at 658.
[18] Id. at 655.
[19] See generally, Esteban Quintero v. Urban Infraconstruction LLC, No. 25-BC01A-0022 (Tex. Bus. Ct. Jan. 26, 2026).
