3.08 Removal and withdrawal of General Partner. The General Partner may be removed by the Partners, but only for good cause, at a special meeting of the Partners called for such purpose by the vote-holders of one hundred percent (100%) of the Class B Units.
Driveway contends that the unanimous voting requirement of section 3.08 fits within the "[e]xcept as herein otherwise expressly provided" exception to the amendment provision. Turbo contends that nothing in section 3.08 expressly restricts amendment of the unanimous voting requirement by a simple majority in interest.
Neither party has cited any Texas authority directly addressing the proper construction of a contract that allows amendment by majority vote but that requires unanimity for certain actions. Likewise, we have found no Texas authority directly on point. Consequently, we must apply the rules of contract construction to the LP agreement "to ascertain the true intentions of the parties as expressed in the instrument." Valence Operating Co., 164 S.W.3d at 662.
Applying the common rules of grammar to section 9.06, the limiting clause "[e]xcept as herein otherwise expressly provided" applies to the actions of amending, supplementing, or restating the terms of the LP agreement. Stated another way, section 9.06 provides that the LP agreement may be amended, supplemented, or restated by a majority in interest of the limited partners unless the LP agreement otherwise expressly provides a different requirement for amendment, supplementation, or restatement of the LP agreement. The LP agreement does, in fact, expressly provide different requirements for amending the voting rights of the limited partners in distributable cash, cash flow from a terminating capital transaction or profits and losses for tax purposes, or the allocations of same amongst the limited partners. The LP agreement also provides for certain instances in which the general partner can amend the LP agreement without the consent of the limited partners. However, while section 3.08 of the LP agreement provides that the general partner can be removed by the unanimous vote of the Class B limited partners, nothing in that provision or in the LP agreement as a whole expressly provides a different requirement for amendment of section 3.08. Based on the express language of the LP agreement, we believe that it was the intention of the parties to the LP agreement to allow amendment of section 3.08 by the written consent of a majority in interest of the limited partners. See id.
Driveway contends that section 3.08′s express provision requiring the unanimous vote of the Class B limited partners to remove the general partner falls within section 9.06′s exception. However, application of such a construction to the LP agreement would nullify the amendment portion of section 9.06. Were we to apply Driveway’s construction of the restriction on the general amendment provision, the limited partners would be unable to amend any provision of the LP agreement because each provision has been "expressly provided." In other words, nothing in the LP agreement could be amended because such an amendment would alter what the LP agreement has expressly provided. Consequently, Driveway’s construction would render the amendment portion of section 9.06 meaningless. See J.M. Davidson, Inc., 128 S.W.3d at 229.
Considering our construction of the LP agreement, the summary judgment evidence presented in this case shows that there is no genuine issue of material fact and that Turbo was entitled to judgment as a matter of law. See Tex.R.Civ.P. 166a(c). The summary judgment evidence establishes that a majority in interest of the limited partners (55.68%) gave written consent to amend section 3.08 to allow for removal of the general partner by the vote or written consent of a majority in interest of the Class A limited partners. Under the terms of the LP agreement, this written consent of a majority in interest of limited partners was effective to amend section 3.08. As such, we affirm the trial court’s declaration that "[t]he limited partners’ amendments to the [LP] Agreement through their August 3, 2010 Action by Written Consent were authorized under the terms of the [LP] Agreement." The evidence also establishes that a majority in interest of the limited partners (61.25%) voted to remove Driveway and substitute Turbo as general partner. As such, we affirm the trial court’s declaration that "[t]he limited partners’ removal and replacement of Driveway . . . with Turbo . . . as general partner of [the limited partnership] through their November 21, 2010 Action by Written Consent was authorized under the terms of the [LP] Agreement." We overrule Driveway’s first and second issues.
Issue 3: Ambiguity
By its third issue, Driveway contends, in the alternative, that the amendment provision of the LP agreement is vague and ambiguous and, therefore, not appropriate for summary judgment.
"A contract is ambiguous when its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation." Dynegy Midstream Servs., L.P. v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009) (quoting Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996)). Whether a contract is ambiguous is a question of law for the court. Id. A contract is not ambiguous simply because the parties disagree as to its meaning. Id. An unambiguous contract is construed by the court as a matter of law. Id.
As discussed above, the salient provisions of the LP agreement are reasonably susceptible to only one interpretation: that, "[e]xcept as herein otherwise expressly provided, " the LP agreement could be amended by the written consent of a majority in interest of the limited partners. That Driveway would ascribe a different meaning to the plain language used in the LP agreement does not make the LP agreement ambiguous. See id. We overrule Driveway’s third issue.
Issue 4: Plea to the Jurisdiction
By its fourth issue, Driveway contends that the trial court erred in denying Driveway’s plea to the jurisdiction. By its plea, Driveway contended that Turbo has no standing to seek declaration of rights under the LP agreement because Turbo was not a party to the LP agreement. However, in its brief, Driveway essentially concedes that, if Turbo is determined to be the general partner of the limited partnership, it has standing to bring this suit. As addressed above, the LP agreement was properly amended, Driveway was properly removed from being general partner, and Turbo was properly substituted under the amended section 3.08 of the LP agreement. Consequently, Turbo is the rightful general partner of the limited partnership.
However, because standing is a necessary component of subject matter jurisdiction, see Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993), and subject matter jurisdiction cannot be conferred upon a court by consent, see Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 76 (Tex. 2000), we cannot simply accept Driveway’s concession and must determine whether Turbo has standing to bring the present suit. In making this determination, we apply a de novo standard of review. Antonov v. Walters, 168 S.W.3d 901, 904 (Tex.App.—Fort Worth 2005, pet. denied) (citing Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998)).
A plaintiff must have standing to bring a lawsuit. Id. (citing Coastal Liquids Transp., L.P. v. Harris Cnty. Appraisal Dist. 46 S.W.3d 880, 884 (Tex. 2001)). The general test for standing is whether a controversy exists between the parties that will be actually determined by the judicial declaration sought. Tex. Ass’n of Bus., 852 S.W.2d at 446. A person interested under a written contract may bring an action for declaratory judgment to have determined any question of construction or validity arising under the contract and to obtain a declaration of rights, status, or other legal relations thereunder. See Tex. Civ. Prac. & Rem. Code Ann. § 37.004(a) (West 2008).
When Turbo filed its petition seeking declaratory relief, a controversy existed regarding whether it or Driveway was the limited partnership’s general partner. As indicated in the analysis above, resolution of this controversy turned on construction of the LP agreement. Further, the trial court’s declarations that the August 3 amendment and November 21 removal of Driveway and replacement by Turbo as general manager of the limited partnership was authorized under the LP agreement actually determined the rights and status of the parties. As such, we conclude that Turbo has standing to bring the present declaratory judgment action. See Tex. Ass’n of Bus., 852 S.W.2d at 446. We overrule Driveway’s fourth issue.
Issue 5: Attorney’s Fees
By its fifth issue, Driveway contends that the trial court erred in awarding Turbo $20, 000 in attorney’s fees. Driveway’s contention is predicated on its claim that such an award of attorney’s fees was not equitable and just. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 2008).
Under the Declaratory Judgments Act, a trial court may award reasonable and necessary[1] attorney’s fees "as are equitable and just." Id. The decision whether to award attorney’s fees is committed to the sound discretion of the trial court. See Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998). Whether an award of attorney’s fees is equitable and just is a question of law. See id. A trial court’s award of attorney’s fees will not be reversed on appeal absent a clear showing that it abused its discretion. Oake v. Collin Cnty., 692 S.W.2d 454, 455 (Tex. 1985).
Driveway’s argument that the trial court’s award of attorney’s fees was not equitable and just essentially rests on its contention that a majority in interest of the limited partners could not amend the LP agreement to allow removal of Driveway as general partner on less than the unanimous consent of the Class B limited partners. As we have overruled this contention above, we cannot conclude that the trial court’s award of attorney’s fees was a clear abuse of discretion. We overrule Driveway’s fifth issue.
Issue 6: Evidentiary Rulings
By its sixth issue, Driveway contends that the trial court erred in sustaining Turbo’s objections to certain summary judgment evidence. Driveway contends that this evidence is relevant to establish the circumstances surrounding the execution of the LP agreement and, as such, should have been considered by the trial court as evidence of the circumstances surrounding the execution of the LP agreement. See Sun Oil Co. v. Madeley, 626 S.W.2d 726, 731 (Tex. 1981).
A trial court’s determination of an objection to summary judgment evidence is reviewed for abuse of discretion. Paciwest, Inc. v. Warner Alan Props., LLC, 266 S.W.3d 559, 567 (Tex.App.—Fort Worth 2008, pet. denied). A trial court abuses its discretion if it acts without reference to any guiding rules or principles. Cire v. Cummings, 134 S.W.3d 835, 838-39 (Tex. 2004). To obtain reversal, an appellant must show error that was calculated to cause and probably did cause the rendition of an improper judgment. Tex.R.App.P. 44.1(a)(1). Ordinarily, harmful error does not occur in the admission or exclusion of evidence unless the appellant shows the case turns on the complained-of evidence. See Doncaster v. Hernaiz, 161 S.W.3d 594, 601 (Tex.App.—San Antonio 2005, no pet.) (mem. op.).
The trial court sustained Turbo’s objections to Driveway’s summary judgment evidence, specifically investment documents that contained the language of section 3.08 of the LP agreement and deposition testimony establishing that some of the Class A limited partners were attorneys or had attorneys review the LP agreement before signing it. However, as we have discussed above, the LP agreement allowed a majority in interest of the Class A limited partners to amend the LP agreement and nothing in Driveway’s excluded summary judgment evidence would alter this conclusion. Therefore, assuming, without deciding, that the trial court erred in sustaining Turbo’s objections to this evidence, we fail to see how the exclusion of this evidence probably caused the rendition of an improper judgment. We overrule Driveway’s sixth issue.
Conclusion
Having overruled each of Driveway’s issues, we affirm the trial court’s summary judgment.
DISSENTING OPINION
Patrick A. Pirtle Justice
Ultimately, the issue in this case comes down to this, is the specific supermajority requirement of paragraph 3.08 of the limited partnership agreement, providing for removal of the general partner by the unanimous vote of the Class B Limited Partners, an exception to the general simple majority requirement of paragraph 9.06 of that agreement, providing for the amendment of the agreement? The majority says that it is not. I say that it is. Accordingly, I respectfully dissent.
Factual and Procedural Background
While the majority opinion accurately sets forth the factual background of this case, additional facts included herein below are relevant to a complete understanding of the terms of the limited partnership agreement. The original agreement was entered into on August 30, 2007. It consisted of 32 pages of single spaced, detailed partnership provisions; followed by five pages of signatures, and an exhibit, summarizing the partners and their respective capital contributions. There were twenty-two separate Class A limited partners, representing 74 "units" of investment, three Class B limited partners, and one general partner. The agreement defined a "majority in interest" to mean, with respect to any referenced group of partners, a combination of such partners who, in aggregate own more than fifty percent (50%) of the partnership interests owned by that group of partners.
Paragraph 9.06 of the limited partnership agreement provides that "[e]xcept as herein otherwise provided, this Agreement may be amended, supplemented or restated only by a written consent of a Majority in Interest of the Limited Partners." According to the terms of the agreement, prior to the "first payout, " for voting purposes the partnership interests of the partners was ninety percent (90%) for the Class A limited partners, nine percent (9%) for the Class B partners, and one percent (1%) for the general partner.
On August 3, 2010, purportedly acting in accordance with the general amendment provisions of paragraph 9.06, nine of the twenty-two Class A limited partners, representing 49/74 (66.216%) of the "partnership interest" owned by the Class A group of limited partners, joined by none of the Class B group of limited partners, executed an Action By Written Consent of Limited Partners in Lieu of Special Meeting, purporting to amend paragraph 3.08 of the limited partnership agreement.[1] Prior to the purported amendment, paragraph 3.08 of the agreement specifically provided that "[t]he General Partner may be removed by the Partners, but only for good cause, . . . by the vote-holders of one hundred percent (100%) of the Class B Units." Subsequent to the purported amendment, Paragraph 3.08 provided that "[t]he General Partner may be removed, with or without cause, by . . . a Majority in Interest of the Class A Limited Partners . . . ." It is this act of purportedly amending paragraph 3.08 of the limited partnership agreement that is at issue in this case.
Analysis
My analysis begins by acknowledging that neither the Texas General Partnership Law, see Tex. Bus. Org. Code Ann. § 1.008(f) (West 2012), nor the Texas Limited Partnership Law, see Tex. Bus. Org. Code Ann. § 1.008(g) (West 2012), prohibits the removal and substitution of a general partner in a limited partnership, even where the partnership agreement initially does not directly allow such action, provided the partnership agreement does provide a method for amendment and an amendment permitting removal and substitution of a general partner is duly adopted. See Aztec Petroleum Corp. v. MHM Co., 703 S.W.2d 290, 293 (Tex.App.—Dallas 1985, no writ). Because Appellant was not removed in accordance with the terms of the original limited partnership agreement but was, instead, removed in accordance with the terms of the amended agreement, the question is squarely directed to the propriety of that purported amendment.
Appellant posits that the amendment was not duly adopted because the terms of paragraph 9.06 expressly except provisions of the agreement which require something other than a "majority in interest" for voting purposes. Specifically, Appellant contends that because paragraph 3.08 requires the approval of one hundred percent (100%) of the Class B limited partners, that specific provision is not subject to the general amendment provisions of paragraph 9.06 by a simple majority in interest of the Class A limited partners. On the other hand, Appellee contends that because the original agreement did not expressly prohibit an amendment of any provision allowing for the removal of the general partner, the "except as herein otherwise expressly provided" limitation of paragraph 9.06 does not prohibit the purported amendment.
In resolving these two contrary positions, we are guided by the principle that partnership agreements are construed and interpreted in accordance with applicable rules of contract construction. Park Cities Corp. v. Byrd, 534 S.W.2d 668, 672 (Tex. 1976). In construing a written contract, our primary concern is to ascertain the true intentions of the parties as expressed in the instrument. J. M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). Like any other contract, to achieve that objective we must examine and consider the entire writing in an effort to harmonize and give effect to all provisions of the contract so that none will be rendered meaningless. Id. "No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument." Id. "Contract terms are given their plain, ordinary, and generally accepted meanings unless the contract itself shows them to be used in a technical or different sense." Valance Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). In determining the intent of the parties, we also give the language of the agreement its plain grammatical meaning unless it definitely appears that the intention of the parties would otherwise be defeated. Reilly v. Rangers Management, Inc., 727 S.W.2d 527, 529 (Tex. 1987). Furthermore, we may neither rewrite the parties’ agreement nor add to its language. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003).
Several additional rules of construction are pertinent to our inquiry. A court should also construe an agreement from a utilitarian standpoint bearing in mind the particular business activity sought to be served and we need not embrace strained rules of interpretation which would avoid ambiguity at all costs. Reilly, 727 S.W.2d at 530. Courts should also avoid when possible any construction which is unreasonable, inequitable, and oppressive. Id. Furthermore, an agreement should not be construed so as to work a forfeiture unless otherwise compelled to do so by language which can be construed in no other way. Id.
Read in a light most favorable to Appellant, the original partnership agreement evidences the general partner’s intent to protect its interest by authorizing removal only upon the unanimous consent of the Class B limited partners. The unilateral elimination of this protection based upon a simple majority in interest of the Class A limited partners is oppressive towards both the Class B limited partners and the general partner because they completely lose their right to retain and maintain the general partner as originally agreed. Accordingly, a harmonious, reasonable and utilitarian construction of paragraphs 3.08 and 9.06 is that they were intended to be construed together in a manner that would insure that protection rather than operate in a fashion resulting in the forfeiture of that protection.
Here, there is no clear indication that the parties intended a simple majority of the limited partners to be able to amend the agreement to completely abrogate the protections of the supermajority vote required by paragraph 3.08. To the contrary, the clear language of paragraph 3.08 evinces a critical provision specifically agreed to by the parties for the protection of the interests of the Class B limited partners and the general partner.
Appellee relies exclusively on paragraph 9.06 to support its position and, in doing so, it contends that the "except as herein otherwise expressly provided" limitation does not apply because the agreement does not expressly prohibit amendment of paragraph 3.08 by a simple majority in interest of the limited partners. Because this is an appeal from a summary judgment proceeding, to accept Appellee’s position we would have to be able to say that, as a matter of law, the intent of the parties, as expressed by the written agreement, was that the limitation provision of paragraph 9.06 did not apply, and that paragraph 3.08 could be amended by a simple majority in interest vote of the limited partners.
The majority approaches the resolution of this question by "[a]pplying common rules of grammar to section 9.06" to find that the limiting clause found in paragraph 9.06 applies to the act of amendment, rather than the vote necessary to effectuate a change of the express written intent of the parties. In doing so, I believe the majority misapplies common rules of grammar. In properly analyzing paragraph 9.06 through the application of common rules of grammar, the question we must address is whether the parties intended the limiting provision "except as herein otherwise expressly provided" to apply to the act of amendment or the vote necessary to effectuate an amendment. I believe it clear that the parties intended the latter – that the exception apply to vote necessary to change the otherwise clearly expressed intent of the parties First, the language of paragraph 906 and prior case law support this construction By use of the prepositional phrase "by" we can determine that the true intent of the parties was not only to provide that the agreement could be amended, but also to provide that it would be amended by a particular manner and means – in this case, "by the written consent of a Majority in Interest of the Limited Partners " "The use of the prepositional word "by" in [a document] is a tip-off that probably the phrase will be a description of how the [action] was committed" Jefferson v State, 189 S.W.3d 305, 315 (TexCrimApp 2006) (Cochran, J, concurring) (emphasis added); Moss v. State, No. 07-12-00067-CR, slip op. at 6-7, (Tex.App.—Amarillo Aug. 2, 2013, available at http://www.search.txcourts.gov/DocketSrch.aspx?cpa=cpa07. Accordingly, I believe that the proper application of common rules of grammar indicate that the limitation provision of paragraph 9.06 applied to the manner in which an amendment was to be adopted.
To that extent, provisions of the agreement that expressly provide for a vote "otherwise, " i.e., other than by a simple majority, those specific provisions are excepted from the general amendment provisions of paragraph 9.06. To construe paragraph 9.06 otherwise is to work a forfeiture of those protections and to render illusory any provision of the agreement providing for either a supermajority or the approval of a particular class of voters. A construction that allows paragraph 3.08 to be amended by a simple majority in interest of the limited partners ignores the requirement that we harmonize and give effect to all provisions of the agreement. Furthermore, I believe it to be an unreasonable interpretation to allow a simple majority of the limited partners, "with or without cause, " the unfettered authority to completely abrogate the protections of the supermajority which were clearly and specifically agreed upon by the parties. Because Appellee’s construction of paragraph 9.06 renders the provisions of paragraph 3.08, as originally drafted, to be illusory and meaningless, I do not believe that construction to be reasonable, necessary or appropriate. Accordingly, I would sustain Appellant’s first issue, pretermit the remaining issues, reverse the judgment of the trial court, render judgment granting Appellant’s motion for summary judgment, and remand the case to the trial court for further proceedings consistent with this opinion.
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