Although Delaware courts have been consistent in affirming the general principle that default fiduciary duties may be contractually modified in the context of Delaware limited partnerships by the limited partnership agreement, In re El Paso Pipeline Partners, L.P. Derivative Litigation, C.A. No. 7141-VCL (Del. Ch. April 20, 2015), serves as a reminder that transactions may still run afoul of the contractual standards set forth in the limited partnership agreement.

The limited partnership agreement required that the committee members evaluating the transaction believe subjectively that the transaction was in the best interests of El Paso.  Unfortunately, the evidence at trial demonstrated that they did not, in fact, believe that the dropdown at issue was in El Paso’s best interests, and that the committee’s process and valuation analysis was flawed.  The Court awarded damages in the amount of $171 million, which represented the difference between what El Paso actually paid for the assets in the challenged transaction, and their fair value.