Court Reversed A Finding Of Breach Of Fiduciary Duty (And $470,000,000 Judgment) Because No Partnership Ever Existed Due To The Failure Of Conditions Precedent

In Enterprise Prods. Partners, L.P. v. Energy Transfer Partners, L.P., the jury found Enterprise Products Partners, L.P. (“Enterprise”) was in a general partnership with Energy Transfer Partners, L.P. (“ETP”) regarding a pipeline project and that Enterprise breached its duty of loyalty as a partner to ETP. No. 05-14-01383-CV, 2017 Tex. App. LEXIS 6658 (Tex. App.—Dallas July 18, 2017, no pet. history). The trial court’s judgment awarded ETP actual damages of $319,375,000 and disgorgement of $150,000,000. Enterprise argued on appeal that the trial court erred by denying Enterprise’s motions for directed verdict and JNOV because the parties’ written agreements contained unperformed conditions precedent that as a matter of law precluded the forming of the disputed partnership, and without a partnership, Enterprise owed no fiduciary duties to ETP.

The court of appeals agreed that the parties’ agreement had certain unperformed conditions precedent before any partnership was created: “In this case, the Letter Agreement barred the formation of a partnership ‘unless and until [1] the Parties have received their respective board approvals and [2] definitive agreements . . . have been . . . executed and delivered by both of the Parties.’ These conditions precedent were not performed. Unless they were waived, no partnership was formed, and ETP cannot recover on its claims for breach of joint enterprise and breach of fiduciary duty.” Id. The court then analyzed whether the Enterprise waived the conditions precedent. ETP did not submit a jury question on waiver, and so under Texas Rule of Civil Procedure 279, such a claim was waived unless it was proved as a matter of law. The court reviewed the evidence and held that there was at least a fact question on waiver. The court concluded “that ETP waived its waiver theory by failing to obtain a jury finding on the waiver theory. Because the conditions precedent were not performed and ETP did not conclusively prove the parties waived the conditions precedent, there was no partnership between Enterprise and ETP. We therefore conclude the trial court erred by denying Enterprise’s motions for directed verdict and JNOV.” The court reversed the considerable judgment and rendered for defendant Enterprise.