The Business Court has rejected the attempt by a minority equity holder in a limited partnership to block a sale of the entity to a third-party.
Energy Founders Fund, LP v. Phillip Daskevich and Cris Curnutt Daskevich (2026 Tex. Bus. 18; April 10, 2026) arose from a dispute over the interpretation of a company agreement. EFF (a subsidiary of Houston-based Hart Energy) had a company agreement, signed by both parties, that vested management authority in a three-member board of directors. The board consisted of a Class A Director (Donavan), a Class B, Director (Daskevich), and a Management Director (Tauber). The agreement defined “Board Approval” s “the affirmative approval of a simple majority of the Directors on the Board.” EFF and its affiliated Class A members held a majority ownership interest, whereas the Daskeviches, through Class B units, held a substantial minority stake. Under the agreement, a member could only transfer member units with board approval. The agreement further included a “drag-along” provision that permitted “Controlling Sales” to require other members to sell their units on the same terms.
In 2024 EFF sought to sell its units to a new entity, GW Allen. It characterized the transaction as a “Controlling Sale,” which, if approved triggered drag-along rights requiring all other members to sell their units as well, effecting a 100% transfer of the company. The board approved the sale, with Daskevich dissenting. He refused to sell his units. EFF filed suit. Both parties moved for partial summary judgment.
In an opinion by Judge Stagner, the court granted EFF’s motion and denied Daskevich’s. Daskevich argued that the agreement required a “material agreement” involving company actions other than transfers be approved by both the Class A and Class B directors. Under his theory, his vote against approving the sale of the company thus defeated it. EFF argued that the agreement’s provision requiring a majority of directors to approve any transfer of units by a member controlled. The court agreed with EFF. The simple majority requirement to approve transfers, the court stated, “is the only rule the parties wrote for transfers….Nor does it distinguish between routine transfers and large or transformative ones, or carve out special approval rights to particular directors.” In other words, that provision applied to “Controlling Sales” that trigger the “drag along” requirement.
Further strengthening its position, the court pointed out that the company agreement also contained a right of first offer provision that enabled members to match a proposed a sale before units could be transferred to a third party. And “unless the bona fide third party offer exceed[ed] the amount of any offers submitted by members,” the drag-along requirement would not apply. In this case, EFF agreed to sell its member units for $4.5 million and gave notice to other members of their right of first offer. Daskevich acknowledged the notice but made no offer. The court determined that the company agreement unambiguously provided that transfers required board approval by a simple majority, and that the board’s approval of the sale in question was valid. It thus granted EFF’s motion for partial summary judgment and denied Daskevich’s motion.
This is the second defeat for Daskevich, who, as we reported yesterday, lost his motion to compel Gage Western to pay his defense costs. Still before the court is whether the transaction at issue qualifies as a “Controlling Sale” to a non”Affiliate.”
