In the final quarter of 2025, the Texas Business Court closed its first calendar year of operation with a full slate of notable opinions. The Business Court continued to release opinions clarifying its jurisdiction, including on removal requirements and recent changes enacted by House Bill 40. However, as forecast in the previous edition of the Texas Business Court Quarterly Update, a larger portion of the opinions this quarter covered substantive issues, including contract interpretation and damages calculations. With this shift away from purely procedural opinions, it will be more important than ever for businesses operating in Texas and beyond to stay apprised of the Business Court’s developing jurisprudence.
Vinson & Elkins, and its team of dedicated and experienced Texas litigators, are committed to keeping our clients up-to-date on the way these decisions may shape the legal landscape and affect client operations and decision making. This Texas Business Court Quarterly Update series aims to deliver timely and valuable content to help our clients stay informed of emerging precedent from the Business Court.
I. Jurisdiction
A. Personal Jurisdiction
JT Capital LLC v. Blom Capital LLC, et al. v. Sapan Talati, et al., 25-BC01B-0019, Business Court 1st Division (October 29, 2025)
JT Capital LLC (“JT Capital”) sued Blom Capital LLC and other entities and individuals (“Defendants”) asserting claims arising from a proposed joint venture to acquire and manage a property located in Texas. Certain Defendants then filed counterclaims/third-party claims against JT Capital and its officer Sapan Talati (“Talati”). Talati filed a special appearance, arguing that the Court lacked personal jurisdiction over him because he did not commit any tortious acts while in Texas.
The Court ultimately concluded that it did not have personal jurisdiction over Talati, either as a matter of general or specific jurisdiction. As to general jurisdiction, the Court held that neither the pleadings nor evidence demonstrated general jurisdiction over Talati because Talati’s ownership of certain properties in Texas was not enough to render him “essentially at home” in Texas. Moreover, Talati’s corporate affiliations with Texas entities did not show that he purposefully availed himself of the forum, and the fiduciary shield doctrine—a defense to general jurisdiction for officers acting in their corporate capacity—would prevent such affiliations from establishing personal jurisdiction over Talati individually in any case.
As to specific jurisdiction, the Court held that no specific jurisdiction existed because the claims against Talati did not arise from or relate to his alleged and evidenced conduct in Texas. For example, Talati’s actions as agent of JT Capital—including by directing investment or litigation—only supported that JT Capital, not Talati individually, had availed itself of Texas. Further, the Court concluded that the allegations and evidence regarding misrepresentations made by Talati, even if directed to a Texas resident, were insufficient to show that Talati initiated the communication with the Texas resident or any purposeful availment based on the misrepresentations’ potential and attenuated affect on Texas property. Because Talati himself never owned the relevant Texas property, the Court also rejected arguments that his other alleged connections to the property—i.e., as personal guarantor for its acquisition, indirect personal benefit from its acquisition, etc.—were enough to subject him to the Court’s jurisdiction.
Finally, the Court rejected the argument that JT Capital was an alter ego entity of Talati because it adduced no evidence that Talati ignored JT Capital’s corporate formalities or exerted the “abnormal” level of control required to make such a finding.
B. Subject Matter Jurisdiction
Cadence McShane Construction Company LLC v. Ryan BB-Blockhouse Creek, LLC, 25-BC03B-0002, Business Court 3rd Division (November 3, 2025)
Cadence McShane Construction Company LLC (“CMC”), the general contractor on a 347-unit apartment complex in Leander, Texas (the “Project”), sued Ryan BB-Block House Creek, LLC (“Ryan”), the landowner, for breach of contract and other causes of action. Ryan counterclaimed, alleging mismanagement of the Project and construction defects. In response, CMC filed third-party claims against 18 subcontractors that performed work on the Project pursuant to subcontractor agreements. CMC’s subcontractor agreements ranged in amounts of consideration, with only one subcontract exceeding $5 million.
Ryan filed a plea to the jurisdiction challenging the Business Court’s jurisdiction over the third-party claims. Ryan argued (1) the Court lacked original jurisdiction because each third-party claim did not independently lie within the amount in controversy parameters of the Court and CMC could not “aggregate” “separate, independent, and distinct claims” against multiple subcontractors to comply with those requirements; (2) the court’s supplemental jurisdiction did not extend to claims that would require the joinder of third parties; and (3) in the alternative, the subcontractor claims were not ripe.
The Court denied the plea, concluding that the third-party claims fell within the definition of “an action arising out of a qualified transaction” under Section 25A.004(d)(1) of the Texas Government Code. In making that determination, the Court expressly refused to hold that every individual claim in a lawsuit must independently arise out of a qualified transaction to satisfy Section 25A.004(d)(1). Instead, the Court emphasized that the word “action” refers to the lawsuit as a whole (not to discrete claims or causes of action asserted within a lawsuit), and the phrase “arising out of” should be interpreted broadly. Accordingly, the question for the Court was whether “the lawsuit (action) including all properly joined counterclaims and third party claims” “originate[d] from,” “flow[ed] from,” or “result[ed] from” a qualified transaction. The Court concluded that it did.
There was no dispute that the prime contract between CMC and Ryan, which governed the Project, was a “qualified transaction.” The subcontractor agreements, upon which the third-party claims were based, not only covered work to be performed on the Project, but also referenced the prime contract and required compliance with it. The Court therefore characterized the case as “one construction project carried out through a network of related contracts.”
Accordingly, the Court found no need to assess the amount-in-controversy of the third-party claims individually.
Although the Court did not reach the supplemental jurisdiction argument, the Court rejected Ryan’s ripeness challenge because the third-party claims were predicated on Ryan’s own allegations of construction defects, which were already a central, ripe issue in the litigation.
Owl Assetco I, LLC v. EOG Resources, Inc. 25-BC11A-0052, Business Court 11th Division (December 5, 2025)
Owl Assetco I, LLC (“Owl”), a service company providing water related service to oil and gas producers sued EOG Resources, Inc. (“EOG”) for breach of contract, alleging EOG did not ensure the water met the contract’s specifications. The case was initially removed to the Business Court by EOG and was later remanded after Owl successfully argued the case did not meet the minimum amount in controversy requirement. In particular, Owl claimed $8.2 million in damages and, at the time, the amount in controversy threshold was $10 million.
After remand back to the district court, the Texas Legislature passed House Bill 40 (“HB 40”) which lowered the amount in controversy requirement to $5 million. Two days after HB 40’s effective date, EOG again removed, claiming the Business Court now had jurisdiction because of the statutory change. In response, Owl filed a motion to remand for lack of subject matter jurisdiction, claiming removal was still improper because a change in law was not a discovery of new facts and EOG had not discovered any new case-related facts within 30 days of HB 40’s effective date.
The Court denied Owl’s motion for remand, explaining that HB 40’s reduction of the amount in controversy threshold to $5 million was a “fact” that was sufficient to establish the Business Court’s jurisdiction over the case. Because the Business Court did not previously have jurisdiction, the 30-day window for EOG to remove did not begin until the Court did have jurisdiction, i.e., when HB 40 went into effect.
Sun Metals Group, LLC, v. Shuangcheng Yu et al.,25-BC01A-0050, Business Court 1st Division (December 5, 2025)
Sun Metals Group, LLC (“Sun Metals”) filed a motion to remand Defendants’ suit back to the Dallas County district court, arguing that Sun Metals’ asserted damages did not meet the $5 million amount in controversy threshold and that Defendants’ removal of the suit was untimely. Although the Court found the $5 million threshold had been met after aggregating both Sun Metals’ claims and Defendants’ counterclaims, the Court held that Defendants’ removal had been filed outside of the 30-day window from the date they discovered, or should have discovered, Business Court jurisdiction. The Court, therefore, ordered that the suit be remanded.
Defendants filed their notice of removal on October 28, 2025 and argued that this date was within the 30-day window because the first time the $5 million threshold had been met was on October 27, 2025—i.e., the date Defendants filed a Fourth Amended Answer and Third Amended Counterclaim containing a counterclaim for damages in the amount of $710,000, which aggregated with Sun Metals’ claims in their September 8, 2025 Second Amended Petition to exceed $5 million. After examining the record, the Court held that the $5 million threshold had already been reached as of September 8, 2025 because Defendants’ August 13, 2025 Second Amended Answer and Counterclaims already alleged amounts sufficient to exceed that threshold after aggregation with Sun Metals’ claims. Accordingly, removal on October 28, 2025 fell outside the 30-day window, and the Court remanded the suit.
Michael D. Crain et. al., v. William “Will” Northern and Tyler Goldthwaite, 25-BC08A-0014, Business Court 8th Division (December 17, 2025)
In an action properly removed from district court to Business Court, Michael D. Crain, individually and on behalf of certain business entities, (“Plaintiffs”) sued Will Northern (“Northern”)and Tyler Goldthwaite (“Goldthwaite”) for claims arising out of alleged legal malpractice, breach of fiduciary duty, fraud, negligent misrepresentation, misappropriation of confidential information, quantum meruit, and conspiracy. Plaintiffs alleged that Goldthwaite held himself out as Plaintiffs’ counsel and betrayed his fiduciary relationship by assisting competing entities. In doing so, Plaintiffs alleged that Mr. Goldthwaite used confidential information obtained during representation and failed to disclose he was working with entities adverse to Plaintiffs. Goldthwaite filed a motion to dismiss under Texas Rule of Civil Procedure 91a asking the Court to find no attorney-client relationship existed between him and Plaintiffs and claiming the attorney-client relationship that did exist was between him and Northern, not with Plaintiffs.
The Court first acknowledged that Section 25A.004(h)(3) of the Texas Government Code specifically forecloses Business Court jurisdiction over legal malpractice claims and dismissed that claim against Goldthwaite. The Court then concluded that Plaintiffs’ remaining claims against Goldthwaite were merely repackaged versions of the legal malpractice claim that the Court was required to dismiss under Texas’s anti-fracturing rule. The anti-fracturing rule prohibits the splintering of a single legal malpractice suit into multiple causes of action. Addressing each of the remaining claims against Goldthwaite in turn, the Court held that “the gravamen of the claims is [Plaintiffs’] dissatisfaction with the quality of Goldthwaite’s professional services” and that all of the claims should therefore be dismissed on the same basis as Plaintiffs’ legal malpractice claim. Thus, the Court dismissed all claims against Goldthwaite holding that a court lacking jurisdiction over a claim is completely without power to do anything other than dismiss it.
Delfino Ornelas, III, et. al. v. Erasmo Herrera, 25-BC04B-0001, Business Court 4th Division (December 18, 2025)
Delfino Ornelas III, individually and on behalf of certain entities, (“Plaintiffs”) brought claims against Erasmo Herrera (“Herrera”) arising from alleged misconduct related to the management and operation of the Plaintiff entities. Plaintiffs originally sued five defendants and pled an amount in controversy exceeding $5 million under Section 25A.004(b) of the Texas Government Code. Plaintiffs settled with all defendants except for Herrera, but continued to allege that the amount in controversy exceeded the threshold of $5 million. After briefing and a hearing on certain “early legal issues,” the Court decided (1) the settlements with the other defendants did not divest the Court of jurisdiction, and (2) it could not yet rule on whether Herrera owed fiduciary duties to the Plaintiff entities because the parties had not yet presented evidence on Herrera’s relationship with the Plaintiff entities.
First, the Court held that it retained jurisdiction because under Section 25A.004(i), the amount in controversy is defined as “the total amount of all joined parties’ claims” and because jurisdiction is determined at the time the lawsuit is filed. Therefore, because the amount in controversy threshold had been initially met at the onset of the case, the partial settlement did not divest the Court of jurisdiction.
Second, the Court held that whether the defendants owed a fiduciary duty to the plaintiffs was premature because the parties had not yet presented evidence on the existence of Herrera’s agency or employment relationship with the Plaintiff entities.
II. Substantive Issues
A. Contract Interpretation
Isaac Arnold, Jr., et al. v. Blue Ridge Landfill TX, LP, 24-BC11A-0024, Business Court 11th Division (October 7, 2025)
A group of individuals and entities contractually entitled to royalty payments arising from certain revenues generated by disposal of waste on a landfill in Fort Bend County (“Plaintiffs”) sued Blue Ridge Landfill TX, LP (“Blue Ridge”)—the owner of the landfill—for breach of contract and declaratory judgment, alleging underpayment of the royalty. The royalty agreement provided Plaintiffs with a 5% royalty on “revenues actually received by Purchaser for final disposal of solid waste in the sanitary landfill operated on the Property.” The parties agreed that the “Property” encompassed a specifically defined tract of land in Fort Bend County. Decades after the execution of the royalty agreement, the landfill expanded beyond the Property to an adjacent tract of land. Plaintiffs claimed that their royalty should be calculated based on waste disposed of on both the Property and the adjacent tract. Blue Ridge moved for summary judgment on both claims, arguing that Plaintiffs were only entitled to royalties from waste disposed of on the Property alone.
The Court denied Blue Ridge’s motion for summary judgment. Interpreting the plain language of the royalty agreement, the Court determined that waste disposed of on the adjacent tract—while not disposed of on the Property—was nonetheless disposed of “in the sanitary landfill operated on the Property.” In particular, it noted that the landfill was licensed under one permit and that operations for the landfill as a whole were performed on the original Property, regardless of where the waste was ultimately deposited. For example, waste that was ultimately deposited on the adjacent tract still entered the landfill through the Property and was initially processed in facilities on the Property.
Marathon Oil Co. v. Mercuria Energy America, LLC, 25-BC11A-0013, Business Court 11th Division (October 14, 2025)
This suit arises from a force majeure declaration by Marathon Oil Co. (“Marathon”) in the wake of Winter Storm Uri pursuant to Marathon’s natural-gas purchase and sale agreement (the “Agreement”) with Mercuria Energy America, LLC (“Mercuria”). The Agreement incorporated the base contract published by the North American Energy Standards Board (“NAESB”). Both parties moved for partial summary judgment, and the Court granted in part and denied in part both motions. The Court’s opinion addresses whether Marathon, as seller, was required to (1) purchase gas on the spot market to cover any production shortfall; or (2) buy back its delivery obligation.
The Court found that Marathon was required to do neither. First, the Court concluded that Marathon was not required to purchase gas on the spot market to cover shortfalls caused by a force majeure scenario under the Agreement. The Agreement included a Special Provision 5, modifying the NAESB base contract’s force majeure clause to state: “the party claiming [force majeure] shall have no obligation to seek alternative Gas supplies in order to satisfy any obligation hereunder.” Agreeing with prior caselaw holding that “Seller’s Gas supply” in another subsection of the force majeure clause referred to the gas Marathan had available to satisfy its delivery obligations (i.e., not including spot market gas), the Court interpreted “alternative Gas supplies” in Special Provision 5 to mean gas other than the “Seller’s Gas supply” (i.e., including sport market gas). Because Special Provision 5 exempted Marathon from seeking “alternative Gas supplies,” the Agreement could not have required Marathon to purchase gas on the spot market.
Second, the Court concluded that Marathon was not required to buy back its delivery obligation in a force majeure scenario. Mercuria argued that a buyback was required for Marathon to meet its obligation under the force majeure clause to “make reasonable efforts [1] to avoid the adverse impacts of a Force Majeure and [2] to resolve the event or occurrence once it has occurred in order to resume performance.” The Court found that a buyback would not avoid the adverse impacts of Winter Storm Uri because it would only shift the financial consequence; neither would it help Marathon resume performance because a buyback would have meant no performance occurred at all. The Court also concluded that such a buyback duty would run counter to the purpose of a force majeure clause because it would shift liability back onto the nonperforming party in a force majeure scenario.
Marathon Oil Co. v. Mercuria Energy America, LLC, 25-BC11A-0013, Business Court 11th Division (October 28, 2025)
Pursuant to the pretrial conference procedure under Texas Rule of Civil Procedure 166(g), the Court considered argument on issues related to a liquidated damages clause included in the Agreement. The liquidated damages clause applied to breaches of Marathon’s delivery obligations and provided Mercuria with the sole remedy of a payment equaling the deficit in contracted-for quantity delivered multiplied by the difference between the contract price and the “Spot Price.” Marathon argued that this remedy provision was unenforceable as applied because the “unbridgeable discrepancy” between the Spot Price damages under the provision and Mercuria’s actual damages rendered it an unenforceable penalty.
The Court held (1) fact issues precluded the Court from determining whether the liquidated-damages clause in the Agreement is an unenforceable penalty; and (2) under the circumstances of this case, Marathon’s cost-basis theory was not the correct measure of Mercuria’s actual damages.
First, the Court explained that it could not determine whether an unbridgeable discrepancy existed because neither party had conclusively proven either the Spot Price or Mercuria’s actual damages. As to the Spot Price, the Court found that neither party had offered evidence on certain key factual issues necessary to calculate a Spot Price, including geographical location, number of published prices, or the range of published prices for consideration. As to Mercuria’s actual damages, the Court determined that neither party had properly established the amount of actual damages. Further, although the Court agreed with Mercuria that a market price standard was more apt to measure actual damages, the Court concluded that Mercuria had not conclusively proven its actual damages because several issues remained outstanding—e.g., showing that its model conformed to the Uniform Commercial Code standards or that its variables for calculating spot price were correct. The Court also noted that a market price measure of damages is not the same as lost profit damages and held that a market price measure would not, as Marathon contended, be barred by Section 13’s bar against consequential damages.
Second, the Court rejected Marathon’s cost basis theory, which accounted for the price Mercuria had paid for the already-stored gas it used to replace the gas that Marathon had not delivered following Winter Storm Uri. Because Mercuria had paid a price lower than the contract price for the stored gas, the actual damages under Marathon’s theory would have been zero. The Court rejected Marathon’s theory after concluding that actual damages should be determined at the time of the breach, and Mercuria’s stored gas had been purchased well before the breach occurred.
Fiberwave, Inc. v. AT&T Enterprises, LLC v. Spearhead Networks Tech, Inc., et al., 25-BC01A-0013, Business Court 1st Division (October 29, 2025)
Fiberwave, Inc. (“Fiberwave”) sued AT&T Enterprises, LLC (“AT&T”), asserting (among others) claims for tortious interference with contract, defamation, and business disparagement related to certain conduct—including issuance of a press release, communication via email, and publication on a website—following termination of the parties’ 2022 Alliance Program Agreement (the “Agreement”). AT&T filed a motion for partial summary judgment contending that Fiberwave’s tort claims were barred by the limitation of liability provision in the Agreement. The Court granted the motion in part and denied it in part.
The Court first rejected AT&T’s argument that Section 18.6 of the limitation of liability provision barred Fiberwave’s tort claims because Section 18.6 precludes claims “arising from” the termination of the Agreement. The Court explained that Section 18.6 only barred damages arising from the termination of the Agreement and that the term “arising from” in the provision should be read more narrowly than a “but-for causal standard” given the use of the broader term “related to” in another part of the limitation of liability provision. Accordingly, the Court held that Fiberwave’s tort claims were not barred by Section 18.6 because Fiberwave sought damages stemming from AT&T’s post-termination conduct, not the termination itself.
The Court then concluded that Section 18.2’s bar on incidental, consequential, and indirect damages foreclosed Fiberwave’s business disparagement claim. Because both tortious interference and defamation claims allow for recovery of general damages, the Court held that Section 18.2 did not bar those claims. However, because special damages are a necessary element of a business disparagement claim, that claim was barred by Section 18.2.
City Choice Group, LLC v. TMC Grand Blvd Land Company, LLC and BCEGI Grand Blvd Manager, LLC, 24-BC11A-0002, Business Court 11th Division (November 8, 2025)
City Choice Group, LLC (“City Choice”) sued TMC Grand Blvd Land Company, LLC (“TMC”) and BCEGI Grand Blvd Manager, LLC over a Purchase and Sale Agreement under which TMC would to sell City Choice 20.38 acres of land in the Houston Medical Center for $22.5 million (the “PSA”). The PSA gave City Choice the unilateral right to terminate the agreement for “any or no specific reason” during the pendency of a designated “Inspection Period.” If exercised, City Choice would receive a refund of its earnest money deposit, less $100,000 designated as “Independent Consideration” payable to TMC. If City Choice did not terminate within the Inspection Period, the parties were obligated to close.
During the Inspection Period, City Choice sent TMC an email that TMC construed as a termination notice. TMC thereafter refused to close. City Choice, however, continued to perform under the PSA and filed this action seeking specific performance. TMC moved for partial summary judgment, requesting a declaration that City Choice had terminated the PSA and therefore had no right to purchase the property. In response, City Choice urged the Court to construe the PSA as an option contract—requiring “strict compliance” with notice provisions—and argued that any purported termination was ineffective because it did not strictly comply with the PSA’s notice requirements.
The Court ruled in favor of TMC, concluding that City Choice had failed to establish that the PSA was an option contract and, even if it were, that invoking the termination right constituted the exercise of any option under the PSA. Accordingly, the Court rejected City Choice’s request to apply the “strict compliance” standard governing option contract notice provisions. Instead, the Court applied the “substantial compliance” standard and found that standard satisfied because City Choice’s termination notice not only “was effective and conformed with the conduct between the parties in communications regarding the PSA,” but it “did not severely impair the purpose underlying [the PSA’s notice conditions] and caused no prejudice.” The Court further held that, regardless of substantial compliance, City Choice was estopped from obtaining specific performance of a contract it purported to terminate.
Shortly after City Choice commenced this lawsuit, TMC filed a third-party petition against City Select Title, LLC (“City Select”), the escrow agent, asserting a claim for money had and received to obtain the Independent Consideration owed to TMC following the termination of the PSA. After securing partial summary judgment against City Choice, TMC moved for summary judgment against City Select for the immediate release of the Independent Consideration. The Court denied the motion, explaining that seizing a debt before final judgment requires compliance with the statutory requirements for a writ of attachment and those requirements had not been met here.
B. Declaratory Judgment Claims
CRS Mechanical, Inc., et. al. v. Norfolk Cold Storage, LLC, f/k/a TVG Capital Holdings, LLC, and Jon Tryggestad, 25-BC08B-0001, Business Court 8th Division (November 14, 2025)
CRS Mechanical, Inc., CRS Mechanical of Nebraska, Inc., and Chris Allensworth (collectively, the “Plaintiffs”) sued Norfolk Cold Storage, LLC (f/k/a TVG Capital Holdings, LLC) and Jon Tryggestad (collectively, the “Defendants”) over an alleged partnership to renovate and operate a cold-storage facility in Norfolk, Nebraska. Plaintiffs alleged the parties had agreed that Defendants would buy the facility at a foreclosure sale, Plaintiffs would perform renovations that Defendants would fund, and Plaintiff Allensworth would receive an ownership interest. In exchange, Plaintiffs refrained from bidding at the foreclosure sale and from enforcing two preexisting mechanic’s liens on the property. After acquiring the facility, Defendants allegedly ceased performance and excluded Plaintiffs from all ownership and operations. In response, Plaintiffs asserted claims for breach of fiduciary duty, knowing participation, and common‑law fraud. Defendants denied all wrongdoing and counterclaimed, asserting three declaratory judgment claims and requesting attorneys’ fees in connection with those claims. Plaintiffs filed a motion for summary judgment on the declaratory judgment counterclaims.
The Court granted Plaintiffs’ motion, explaining that, under Texas law, a declaratory judgment counterclaim is permissible only if it “has greater ramification than the issues already before the court”—i.e., “it seeks affirmative relief” by alleging that the defendant has a cause of action, independent of the plaintiff’s claim, on which the defendant could recover benefits, compensation, or relief. Thus, the Declaratory Judgements Act does not permit a defendant to obtain attorney’s fees “when the requested declarations add nothing of substance beyond the issues raised in the plaintiff’s suit,” nor does it allow a defendant to merely mirror or repackage defenses to a plaintiff’s claims.
The Court found that each of Defendants’ requested declarations were impermissible because they duplicated issues already subsumed within Plaintiffs’ claims—namely, whether a contract existed and whether Plaintiffs’ liens were valid—and thus sought no affirmative relief. The Court also held that it lacked subject‑matter jurisdiction over two of the requested declarations because the “essence” of those declarations was the removal of encumbrances from title to Nebraska property. Texas courts cannot adjudicate title to real property located outside Texas.
C. Veil Piercing
Lensabl, Inc. v. RBH SPE ONE, LLC, et. al., 25-BC08B-0013, Business Court 8th Division (November 5, 2025)
Lensabl, Inc. (“Lensabl”) sued RBH SPE ONE, LLC (“RBH SPE”), Robert Byrnes Holdings LLC (“RBH Holdings” and, with RBH SPE, the “Purchasing Parties”), Robert Byrnes, Jr. (“Mr. Byrnes”), several Byrnes family members (with Mr. Byrnes, the “Byrnes Defendants”), and others, after RBH SPE (as purchaser) and RBH Holdings (as guarantor) entered into an agreement with Lensabl to purchase a 49% interest in Lensabl for $28,990,000, with an option to purchase a majority stake within one year (the “Agreement”). The Agreement, which contemplated several closings, required RBH SPE to be adequately funded at each closing and made clear the transaction was not conditioned on obtaining financing. RBH Holdings guaranteed RBH SPE’s obligations and represented that it possessed the financial capacity to pay and perform. Lensabl alleged that Mr. Byrnes and his agent made representations during negotiations that the Purchasing Parties, which were controlled by Mr. Byrnes, were adequately capitalized. After RBH SPE and RBH Holdings failed to provide payment, Lensabl terminated the Agreement and brought several causes of action. The Byrnes Defendants moved to dismiss under Texas Rule of Civil Procedure 91a, seeking dismissal of Lensabl’s veil-piercing theory of liability against the Byrnes Defendants, a breach-of-contract claim against Mr. Byrnes, and a fraud claim against Mr. Byrnes.
As a threshold matter, the Court concluded that Texas law governed the fraud and veil-piercing claims. Although the Agreement contained a Delaware choice-of-law provision, the clause was narrow and only applied to a breach-of-contract claim based directly on the Agreement itself and asserted against its signatories, RBH SPE and RBH Holdings. The provision, therefore, did not did not apply to the challenged claims, which were brought only against the Byrnes Defendants.
With respect to the fraud claim against Mr. Byrnes, the Court applied Texas’s “most significant relationship” test—which governs choice of law for tort claims—and concluded that Texas law controlled because the Purchasing Parties are Texas entities, the individual defendants largely resided in Texas, and the representations giving rise to the claims asserted occurred in Texas. By contrast, Delaware had no meaningful connection beyond Lensabl’s place of incorporation.
The Motion to Dismiss was granted in part and denied in part. The Court concluded that the common-law fraud claim had been adequately pled. The Court, however, dismissed both the veil- piercing theory and the breach-of-contract claim. With respect to the veil-piercing theory, the Court first observed that “it is not entirely settled whether Texas even permits veil piercing for LLCs.” Assuming the doctrine applied, the Court found that the petition pled a “Delaware-style veil-piercing theory” resting on conclusory allegations of undercapitalization and the failure to observe corporate formalities, which was “legally insufficient” under Texas law. Section 21.223 of the Texas Business Organizations Code expressly prohibits veil piercing on the basis of the failure to observe any corporate formality, and no other allegations satisfied Texas’s stringent standard requirement to plead actual fraud primarily for direct personal benefit.
As for the breach-of-contract claim against Mr. Byrnes individually, the Court dismissed the claim after concluding that Lensabl had not sufficiently pled the existence of a contract between Lensabl and Mr. Byrnes personally.
D. Miscellaneous
Sandra E. Hensarling v. J. George Carmichael, CDC/VIC Partners, LLC et. al., 25-BC04B-0014, Business Court 4th Division (December 18, 2025)
Sandra E. Hensarling (“Plaintiff”) sued J. George Carmichael (“Carmichael”), her fellow owner of Northglen, Ltd. (“Northglen”), and certain other entities (collectively, “Defendants”), asking the Court to wind up the Northglen partnership because Carmichael’s conduct made carrying on partnership business not reasonably practicable. The Court held (1) it had proper subject matter jurisdiction over the action; and (2) Plaintiff’s petition did not lack basis in law or fact, precluding dismissal under Rule 91a.
First, the Court concluded that the action satisfied the $5 million amount in controversy threshold—despite Plaintiff seeking no monetary relief—because her petition requested dissolution of the entire Northglen partnership, which she alleged had a fair market value above $10 million.
Second, the Court determined that Plaintiff’s claims did not lack a basis in law given the early stage of the suit and the Court’s liberal construction Plaintiff’s allegations at that stage. Defendants argued that Plaintiff’s allegations, even taken as true, did not entitle her to the relief of winding up a partnership under Section 11.314 of the Texas Business Organizations Code, which allows winding up if it is unreasonably practicable to carry on partnership business in conformity with the entity’s governing documents or due to an owner’s conduct. Construing Plaintiff’s allegations liberally and accepting all reasonable inferences in her favor, the Court disagreed and held that Plaintiff’s allegations of Carmichael’s misconduct—including major partnership expenditures in contravention of the Partnership Agreement; the issuing of a large, high-interest loan to Northglen; the erroneous valuation of Northglen during negotiations of a potential buyout; the reasonable impracticability of carrying on business under current circumstances; and the blocking of her access to certain partnership information—taken together, were sufficient to support her claims under Rule 91a.
Preston Hollow Capital, LLC & PHCC LLC v. Truist Bank Formerly Known As Branch Bank & Trust, 24-BC01B-0030, Business Court 1st Division (December 19, 2025)
Preston Hollow Capital and PHCC LLC (together, the “Plaintiffs”) sued Truist Bank (“Defendant”) for breach of fiduciary duty, breach of trust, and breach of contract over its role as trustee in a bond financing project after Defendant resigned as trustee and claimed it lacked the capacity to oversee the defaulted bonds and loans. The project was financed through bonds issued by a third party, and Defendant served as a trustee under both Bond Indenture and Master Indenture Agreements (the “Bond Documents”). Plaintiffs purchased $21 million in senior bonds and acted as majority bondholder. The project owner allegedly defaulted, and Plaintiffs accused Defendant of various failures in its capacity as trustee, including approving the property owner’s revenue deposit obligations under the Bond Documents.
The Parties submitted three legal issues for decision under Texas Rule of Civil Procedure 166(g):
- Whether the Trust Code bars a trustee from enforcing a punitive damages waiver.
- If not, whether such a waiver can be applied to claims based on a related contract in the same financing.
- Whether a trustee owes fiduciary duties to its beneficiaries once the trustee resigns and is replaced.
First, the Court held that the Trust Code did not bar enforcement of a punitive damages waiver. In response to Plaintiffs’ request for punitive damages, Defendant argued that the Master Indenture Agreement’s waiver of punitive damages precluded such damages. Plaintiffs argued that Section 114.007 of the Trust Code bars enforcement of such waivers. After analyzing both the Master Indenture Agreement’s punitive damages waiver and the application sections of the Trust Code, the Court held that nothing in the Trust Code evinced the Texas Legislature’s intent to make punitive damages nonwaivable, especially where (like here) such a waiver is plainly laid out in an agreement between sophisticated parties.
Second, the Court determined that the punitive damages waiver applied to claims across both Bond Documents, notwithstanding that it was only found in the Master Indenture Agreement. In particular, the Court explained that separate contracts executed at the same time, for the same purpose, and in the same transaction are considered one instrument and construed together. The Court held that the Bond Documents satisfied those conditions.
Third, the Court held that resignation does not relieve a former trustee of liability for any claims that may have accrued before the trustee’s resignation and replacement. The Court further held that while Defendant’s contractual and fiduciary duties generally ended upon its resignation, Defendant retained the common law duty to not use or disclose the principal’s confidential information. As of the date of the decision, discovery remained ongoing to determine whether Defendant used Plaintiff’s confidential information in violation of its continuing duty.
Slant Operating, LLC and Slant WTX Holdings II, LLC v. Octane Energy Operating, LLC, 24-BC08A-0002, Business Court 8th Division (December 22, 2025)
Slant Operating, LLC (“Slant Operating”) and Slant WTX Holdings II, LLC (“Slant Holdings” and, with Slant Operating, the “Plaintiffs”) sued Octane Energy Operating, LLC (“Octane”) for breach of a Letter Agreement (the “Agreement”),claiming damages resulting from lost revenue. Under the Agreement, Slant Operating and Slant Holdings agreed to waive objections against drilling permit applications before the Texas Railroad Commission and to exchange certain well data. Slant Operating alleged it performed by waiving objections to Octane’s Green Gables Wells but that Octane breached by refusing to waive objections for Slant Operating’s Gardendale Wells. According to Plaintiffs, Slant Holdings was a third-party beneficiary to the Agreement. The parties filed several jurisdictional and substantive motions for the Court’s consideration.
First, the Court granted Plaintiffs’ motion to establish jurisdiction to the extent it had already affirmed jurisdiction over the action—i.e., that the Agreement was a qualified transaction—but denied the motion to the extent other jurisdictional findings were required. In particular, the Court concluded that partial disposition of the suit would not divest it of subject matter jurisdiction once established.
Second, the Court granted Octane’s plea to the jurisdiction and concluded that neither Plaintiffs’ pleadings nor any applicable legal authority indicated that Slant Holdings was a third-party beneficiary to the Agreement. In particular, the Court determined that Plaintiffs had not pled the parties’ mutual intent to include Slant Holdings as a third-party beneficiary, either in their pleadings or as a matter of certain administrative rules governing drilling applications. Accordingly, the Court agreed that Plaintiffs lacked standing to bring a breach-of-contract claim by or on behalf of Slant Holdings.
Lastly, the Court denied Plaintiffs’ motion for partial summary judgment and held that Slant Holdings was also not a third-party creditor beneficiary, a related but distinct concept from a standard third-party beneficiary. The Court explained that third-party creditor beneficiary status existed where there is clear intent for performance of a contract to satisfy a duty to the beneficiary, and concluded that neither Slant Holdings’ status as a mineral asset owner nor its financial unity and affiliation with Slant Operating indicated such intent or automatically conferred such third-party creditor beneficiary status.
Slant Operating, LLC and Slant WTX Holdings II, LLC v. Octane Energy Operating, LLC, 24-BC08A-0002, Business Court 8th Division (December 22, 2025) (Liability)
Slant Operating and Octane filed competing motions for summary judgment on the question of liability under the Agreement. Slant Operating argued that the Agreement was a valid contract that Octane had breached by refusing to waive objections for Slant Operating’s Gardendale Wells, despite Slant Operating properly waiving objections to Octane’s Green Gables Wells. Octane’s motion argued (i) certain parts of the Agreement were indefinite and therefore unenforceable “agreements to agree” and (ii) Slant Operating was required, but failed, to exhaust administrative remedies prior to suit. The Court granted Slant Operating’s motion and denied Octane’s motion, concluding that Octane was liable for breach of the Agreement.
As to Slant Operating’s motion, the Court found that Slant Operating had conclusively established liability by demonstrating that the Agreement was a valid and enforceable contract, that Slant Operating had performed its contractual obligation under the Agreement, and that Octane had breached the plain language of the Agreement. After considering the Agreement’s plain language and the signature of Octane’s representative on the Agreement, the Court rejected Octane’s argument that it had never agreed to provide Slant Operating with future waivers in exchanges for the Green Gables waiver. The Court additionally rejected Octane’s argument that Slant Operating’s construction of the Agreement was unreasonable, oppressive, or would lead to absurd results because the Agreement would require Octane to provide infinite future waivers. The Court explained that one party’s regret from entering into an inequitable deal was no reason to disturb the Agreement and that Octane had at least reciprocally contracted to receive production data on all of Slant Operating’s future wells for which it requests waivers.
The Court also rejected Octane’s argument that the Agreement was an unenforceable “agreement to agree.” The Court explained that agreements to enter future contracts are enforceable if they contain all of the future contract’s essential terms, and the Court concluded that the Agreement’s future waiver provision was sufficiently definite because it laid out each party’s obligation and included no language indicating a plan to further negotiate its terms. The Court further concluded that the lack of a duration term did not render the provision unenforceable because courts can infer a reasonable duration where such term is absent. The Court noted that even if certain terms of the future waiver provision were indefinite, Slant Operating’s partial performance of the Agreement by providing the Green Gables waiver essentially cured any uncertainty.
Lastly, the Court rejected Octane’s argument that Slant Operating was required to exhaust its administrative remedies, explaining that exhaustion is required only where a state agency has exclusive jurisdiction over a dispute. In this case, the Texas Legislature had not conferred exclusive jurisdiction on the relevant agency here, the Texas Railroad Commission, to adjudicate breach-of-contract disputes.
Slant Operating, LLC and Slant WTX Holdings II, LLC v. Octane Energy Operating, LLC, 24-BC08A-0002, Business Court 8th Division (December 22, 2025) (Damages)
Octane moved for traditional and no-evidence summary judgment on Slant Operating’s damages claims. Slant Operating sought damages for (1) lost revenue from six Gardendale Wells, (2) lost revenue from 35 future wells, and (3) redesign costs for the Gardendale Wells. In particular, Octane argued that Slate Operating was not entitled to lost revenue because it did not own leasehold or mineral interests and that there was no evidence of the redesign costs for the Gardendale Wells. The Court granted Octane summary judgment on the lost revenue damages for the six Gardendale Wells and 35 future wells but denied summary judgment on damages associated with redesign costs.
As to the lost revenue, the Court concluded that summary judgment was proper because Slant Operating conceded that it did not own leasehold or mineral interests, including for the Gardendale Wells. Such interests were held by Slant Holdings. Accordingly, Slant Operating was not entitled to recover damages for lost revenue associated with the production of minerals it did not own.
However, the Court found that summary judgment was not appropriate on the redesign costs because Slant Operating had provided evidence that it had incurred costs associated with exploring options to redesign the Gardendale Wells drilling plan, including invoices for expert services on how to proceed with drilling. The Court noted that such costs were expectancy damages that Slant Operating incurred to redress Octane’s breach of the Agreement but that Slant Operating had not provided any evidence of reliance damages—i.e., out-of-pocket expenses incurred as a result of Slant Operating relying on Octane’s promise to perform.
