Texas Business Court Upholds Exculpation Clause—Limits Fiduciary Duty Exposure

Issued: May 28, 2025
Court: Texas Business Court, 1st Division
Case: Primexx Energy Opportunity Fund, LP v. Primexx Energy Corp., Cause No. 24-BC01B-0010
Authoring Judge: Hon. Bill Whitehill

1. Key Takeaways

• Exculpation clauses work—even for non-signatories: The Business Court enforced an exculpation clause protecting non-partner affiliates from liability for aiding and abetting fiduciary breaches.
• The Texas Business Organizations Code doesn’t bar liability waivers for non-partners: The court held that statutory limits on fiduciary duty waivers (TBOC § 152.002) don’t apply to non-partners like directors or affiliated entities.
• “Notwithstanding” language controls: A “notwithstanding” clause in § 13.9 overrode the agreement’s general disclaimer of third-party beneficiary rights.

2. The Ruling

In its May 22, 2025, memorandum opinion, the Business Court of Texas dismissed all claims against Christopher Doyle (PEC’s CEO) and certain Blackstone-affiliated entities. The Court held that § 13.9 of the Third Amended Partnership Agreement (“TAPA”) unambiguously barred liability claims for these parties.

Despite not being parties to the agreement, Doyle and the Blackstone defendants qualified as “Partner Affiliates” and were shielded by the plain language of the exculpation clause. Importantly, the court found that § 13.9 operated “[n]otwithstanding anything that may be expressed or implied in this Agreement,” overriding TAPA § 13.2’s broad disclaimer of third-party beneficiary rights.

3. Texas Business Organizations Code § 152.002 Doesn’t Bar Enforcement

The Texas Business Organizations Code § 152.002 precludes partnership agreement from completely eliminating fiduciary duties of loyalty, care, and good faith, but does permit crafting of reasonable performance standards. Plaintiffs argued that enforcing § 13.9 would contravene Texas law prohibiting the waiver of core partnership duties. The Court rejected this argument on two grounds:

1. Doyle was not a partner, so the statutory protections were inapplicable to him; and
2. The clause waived liability—not duties. The Court relied expressly on Professor Elizabeth Miller’s analysis from her 2023 article in the State Bar of Texas Advanced Business Law Course, stating:

“TAPA § 13.9 is a liability waiver and does not waive any partner’s duties toward other partners.”

4. Practical Implications

This opinion is a reminder to drafters and litigators alike:

• Exculpation provisions are enforceable if properly constructed.
• Affiliated parties may be protected—even if they didn’t sign the agreement.
• Explicit “notwithstanding” language matters—and will be honored.

Entities engaging in private equity, energy transactions, or any multi-entity joint ventures should closely review their exculpation language to ensure it reflects the desired scope—and includes affiliates where appropriate.