Bandera Master Fund LP v. Boardwalk Pipeline Partners, LP

• Court: Supreme Court of Delaware
• Decided: December 10, 2025
• Docket: 439, 2024
• Status: Published

Opinion

IN THE SUPREME COURT OF THE STATE OF DELAWARE

BANDERA MASTER FUND LP, § BANDERA VALUE FUND LLC, § BANDERA OFFSHORE VALUE § No. 439, 2024 FUND LTD., LEE-WAY § FINANCIAL SERVICES, INC., § Court Below: Court of Chancery and JAMES R. MCBRIDE, on behalf § of the State of Delaware of themselves and similarly situated § BOARDWALK PIPELINE § C.A. No. 2018-0372 PARTNERS, LP UNITHOLDERS, § § Plaintiffs Below, § Appellants, § § v. § BOARDWALK PIPELINE § PARTNERS, LP, BOARDWALK § PIPELINES HOLDING CORP., § BOARDWALK GP, LP, § BOARDWALK GP, LLC, and § LOEWS CORPORATION, § § Defendants Below, § Appellees. §

Submitted: June 25, 2025 Decided: December 10, 2025

Before SEITZ, Chief Justice; VALIHURA, TRAYNOR, LEGROW and GRIFFITHS, Justices, constituting the Court en banc.

Upon appeal from the Court of Chancery. AFFIRMED IN PART, REVERSED IN PART, and REMANDED.

A. Thompson Bayliss, Esquire (argued), Daniel G. Paterno, Esquire, Eric A. Veres, Esquire, Samuel D. Cordle, Esquire, ABRAMS & BAYLISS, LLP, Wilmington, Delaware attorneys for Plaintiffs Below, Appellants Bandera Master Fund LP, Bandera Value Fund LLC, Bandera Offshore Value Fund Ltd., Lee-Way Financial Services, Inc., and James R. McBride, on behalf of themselves and similarly situated Boardwalk Pipeline Partners, LP Unitholders.

Daniel A. Mason, Esquire, PAUL, WEISS, RIFKIND, WHARTON & GARRISON, LLP, Wilmington, Delaware; William Savitt, Esquire (argued), Sarah K. Eddy, Esquire, Adam M Gogolak, Esquire, Daniel B. Listwa, Esquire, WACHTELL, LIPTON, ROSEN & KATZ, New York, New York; Srinivas M. Raju, Esquire, Blake Rohrbacher, Esquire, Kyle H. Lachmund, Esquire, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Rolin P. Bissell, Esquire, YOUNG, CONAWAY, STARGATT & TAYLOR, LLP, Wilmington, Delaware; Andrew G. Gordon, Esquire, Harris Fischman, Esquire, Robert N. Kravitz, Esquire, Carter E. Greenbaum, Esquire, PAUL, WEISS, RIFKIND, WHARTON & GARRISON, LLP, New York, New York, attorneys for Defendants Below, Appellees Boardwalk Pipeline Partners, LP, Boardwalk Pipelines Holding Corp., Boardwalk GP, LP, Boardwalk GP, LLC, and Loews Corporation.

Christopher B. Chuff, Esquire, TROUTMAN PEPPER LOCKE LLP, Wilmington, Delaware, attorney for amicus curiae the Opinion Bar Group Leaders.

2 TRAYNOR, Justice, for the Majority:

In 2005, Loews Corporation formed Boardwalk Pipeline Partners, LP

(“Boardwalk”) as a publicly traded master limited partnership (“MLP”). Boardwalk

operates natural gas pipelines through three subsidiaries. Loews formed Boardwalk

to take advantage of a new Federal Energy Regulatory Commission (“FERC”)

policy that made MLPs attractive investment vehicles for pipeline-company

investors. But Loews wanted the option of taking Boardwalk private again if FERC

policy changed in a way that would have a material adverse effect on Boardwalk’s

rates. So the Boardwalk limited partnership agreement included a call-right

provision that gave Boardwalk’s general partner the right to acquire the public

limited partners’ interests if certain conditions were met.

In March 2018, FERC took a series of actions, including announcing a

proposed regulatory policy, that could make MLPs less attractive for pipeline

investors. The proposed policy was strenuously opposed by pipeline-industry

participants. Boardwalk made a preliminary assessment that the policy, if adopted,

would have a relatively neutral impact on the rates it charged its customers. Even

so, Loews’ general counsel engaged outside counsel to consider whether it could

render an opinion—one of the conditions precedent to its general partner’s exercise

of the call right—that, by virtue of FERC’s proposed policy change, it would be

3 reasonably likely that Boardwalk would suffer a material adverse effect on the rates

it could charge its customers.

According to the Court of Chancery, it was far from self-evident that FERC’s

new regime, if adopted, would have a material adverse effect on Boardwalk’s rates.

Among other things, a critical input—how FERC would treat accumulated deferred

income taxes or “ADIT”—was missing. And other variables, most notably whether

Boardwalk would be subject to a rate case—that is, the procedure by which a

pipeline’s maximum rates are set—seemed more likely to cut against a conclusion

that Boardwalk’s rates would suffer a material adverse effect. Altogether more

uncertainty surrounded whether the proposed policy would in fact be adopted and

what form it would take.

The court also found that outside counsel set these concerns aside and issued

its opinion nonetheless. And another law firm was enlisted to opine on the opinion’s

acceptability, which it did subject to certain qualifications. These two opinions in

hand, Boardwalk’s general partner announced that it was exercising the call right.

Ten days later, the transaction closed. The day after that, FERC issued an order on

rehearing of the revised policy and a final rule. Consistent with Boardwalk’s

preliminary assessment but contrary to the opinion of counsel, FERC’s March 2018

actions would have no effect on Boardwalk’s recourse rates.

4 Boardwalk unitholders sued the partnership and related entities, alleging that

the general partner’s exercise of the call right required the unitholders to sell their

units to the general partner at what the unitholders claimed was a depressed price.

A five-count amended complaint came later. The first two counts were for breach

of contract against Boardwalk and its general partner, one for exercising the call

right and the other for paying an artificially depressed price for the unitholders’ units.

The third count alleged a breach of the implied covenant of good faith and fair

dealing by Boardwalk and its general partner. The remaining counts—tortious

interference with contractual relations and unjust enrichment—named the general

partner’s sole member and the general partner’s parent entities.

In December 2021, the Court of Chancery issued a post-trial opinion and

entered a partial final judgment—confined to the first breach of contract count—in

favor of the unitholders and against Boardwalk and its general partner. Among other

findings, the court found that the opinion of counsel, which was a condition

precedent to the general partner’s exercise of the call right, had not been rendered in

good faith. This meant that the condition failed and that, consequently, the general

partner breached the partnership agreement when it exercised the call right. The

court severed and stayed the remaining counts.

On appeal, this Court reversed the Court of Chancery’s partial final judgment

after determining that, under the partnership’s governing documents, the general

5 partner was exculpated from monetary liability for breach of contract. We did not

review the court’s finding that the legal opinion had not been rendered in good faith.

Nor did we address whether the general partner’s exercise of the call right breached

the partnership agreement. We remanded the case to the Court of Chancery for

further proceedings and adjudication of the non-exculpated claims.

On remand, the Court of Chancery struggled with the implications of our

decision but ultimately concluded that the remaining counts should be dismissed.

The unitholders appealed. Because we have concluded that the Court of Chancery

misapprehended the scope of our previous decision in a way that affected its analysis

of claims that were neither adjudicated in the trial court’s post-trial decision nor

decided by this Court on appeal, we reverse its judgment and remand for further

proceedings.

I

The facts of this case have been recounted at length in the Court of Chancery’s

post-trial opinion, our 2022 opinion, and the Court of Chancery’s remand opinion.1

We will not repeat them in granular detail here. Instead, we summarize as much of

the factual and procedural background as is necessary to understand the issues now

1 Bandera Master Fund LP v. Boardwalk Pipeline Partners, LP, 2021 WL 5267734 (Del. Ch. Nov. 12, 2021), rev'd and remanded, 288 A.3d 1083 (Del. 2022) [hereinafter Post-Trial Opinion]; Boardwalk Pipeline Partners, LP v. Bandera Master Fund LP, 288 A.3d 1083 (Del. 2022) [hereinafter Boardwalk 2022]; Bandera Master Fund LP v. Boardwalk Pipeline Partners, LP, 2024 WL 4115729 (Del. Ch. Sept. 9, 2024) [hereinafter Remand Opinion].

6 before us and our reason for resolving them as we do. We provide additional color

later as we address the parties’ respective arguments.

A

At the beginning of 2005, Loews owned three natural gas pipelines. These

pipelines ship gas from the shale basins of the Southern United States to end users,

mostly large cities and natural-gas-fired power plants in the South and Midwest.

FERC closely regulates natural gas pipelines in ways that affect their

profitability. In late 2005, FERC began allowing limited partnerships to include in

their rate-making calculations a tax allowance for all their limited partners,

regardless of whether each limited partner paid tax at the corporate level. This

change made the limited partnership a fitting business structure for pipelines. Many

restructured as limited partnerships. In 2005, Loews merged its pipeline assets into

Boardwalk, which it took public. Boardwalk’s corporate structure is as follows.

Boardwalk is a Delaware limited partnership. 2 Boardwalk’s general partner

is Boardwalk GP, LP (the “General Partner”)—also a Delaware limited partnership.

The general partner of the General Partner is Boardwalk GP, LLC (the “GPGP”).

Boardwalk Pipeline Holdings Corp. (the “Sole Member”) is the sole member of

GPGP and is owned by Loews.3 GPGP has a board of directors, consisting of four

2 Post-Trial Opinion, 2021 WL 5267734, at *3. 3 Id. at *9.

7 independent directors and four Loews insiders. Through the Sole Member and its

status as the sole member of the GPGP, Loews controls the General Partner, and

thus Boardwalk. Boardwalk is governed by the Third Amended and Restated

Agreement of Limited Partnership (the “Partnership Agreement”).

Provisions of that agreement rest at the core of this dispute. Loews, when

forming Boardwalk in 2005, was concerned that FERC might reverse course and

undo the tax policy that made the partnership structure attractive to pipelines and

their investors. So Loews included a call-right provision (the “Call Right”) in

Boardwalk’s Partnership Agreement. Under the Call Right, the General Partner

could purchase all the common units of Boardwalk that the General Partner or its

affiliates did not already own. For the General Partner to exercise the Call Right,

however, certain conditions had to be met. Two of those conditions are relevant

here.

First, Section 15.1(b) of the Partnership Agreement required that the General

Partner receive:

an Opinion of Counsel that the Partnership’s status as an association not taxable as a corporation and not otherwise subject to an entity-level tax for federal, state, or local income tax purposes has or will reasonably likely in the future have a material adverse effect on the maximum applicable rate that can be charged to customers” 4 [respectively, the “Opinion” and “Opinion Condition”].

4 App. to Opening Br. at A1305 (Partnership Agreement § 15.1).

8 Second, the Partnership Agreement defined an “Opinion of Counsel” as “a

written opinion of counsel . . . acceptable to the general partner.” (the “Acceptability

Condition”). 5 It did not specify, however, which entity would act through the

General Parter in making the acceptability determination.

B

FERC regulates the interstate transmission and wholesale sale of electricity,

natural gas, and oil. Every price that a pipeline charges a customer for gas shipment,

also known as a “rate,” must be on file with FERC.6 In markets where a pipeline

holds a monopoly over shipment, FERC calculates and sets the maximum rate that

pipelines can charge based on the cost of service that the pipeline incurs. Customers

are free to negotiate a lower rate with a pipeline and often do, particularly in regions

where pipelines compete with one another. Yet customers can always fall back to

paying the FERC-calculated maximum rate. 7 This rate is known as a “recourse

rate.”

The Natural Gas Act requires FERC to set “just and reasonable rates.”8 “[J]ust

and reasonable” is considered in the context of a pipeline’s profitability.9 That is, a

just and reasonable rate is one that allows for a reasonable return on investment.10

5 Id. at A1218 (Partnership Agreement § 1.1). 6 18 C.F.R. § 154.1. 7 Post-Trial Opinion, 2021 WL 5267734, at *4. 8 15 U.S.C. § 717c. 9 Boardwalk 2022, 288 A.3d at 1088. 10 Id.

9 If rates are too high, the pipeline would receive an inappropriately high rate of return.

If, on the other hand, rates are too low, the pipeline would not generate a fair return

for investors. This rate analysis differs for each pipeline, as cost of operations vary.

FERC is required to consider the entire picture, so to speak, when calculating rates.

Determining or changing rates based on a single category of cost—known as “single-

issue ratemaking”—is prohibited.

To change rates, someone, usually a shipper or FERC, must initiate a rate case

alleging excessively high rates. FERC completes a cost-of-service calculation and

then publishes new recourse rates. Pipelines with a lower return on investment are

relatively unlikely to face a rate case as FERC pursues pipelines with higher returns.

Taxes, too, play a role in FERC’s determination of what constitutes a reasonable

rate. An increase in taxes paid by a pipeline likely indicates a higher rate should be

allowed so that the pipeline can maintain a reasonable return on investment, as taxes

make up part of the cost of service determination. A change in FERC tax policy can

significantly affect pipeline profitability.

C

Until 2018, FERC allowed MLP pipelines an income tax allowance for all

limited partners. FERC used this tax allowance when calculating recourse rates.

MLP like Boardwalk are subject to pass-through taxation and non-corporate partners

do not pay corporate-level income tax. Yet the pipelines still received a tax

10 allowance as if all partners did. This tax policy is what drove pipelines to restructure

as limited partnerships in 2005. By receiving an allowance in the ratemaking process

that calculated their taxes as higher than actual taxes paid, pipelines could increase

their FERC-approved rates and deliver increased returns. Boardwalk went public as

a limited partnership to take advantage of this policy.

The Call Right provision was included in Boardwalk’s Partnership Agreement

because FERC policy changes can have material effects on rates, and thus

profitability. In 2016, in United Airlines v. Federal Energy Regulatory Commission,

the United States Court of Appeals for the District of Columbia Circuit held that the

corporate-income-tax allowance for limited partnership pipelines unfairly

discriminated against unitholders of pipelines, as both individual limited partners

and corporate limited partners received the same tax allowance yet were taxed at

different rates. 11 This decision prompted FERC to propose a policy change in 2018.

On March 15, 2018, FERC issued the Revised Policy Statement (the “Policy

Statement”). The Policy Statement announced that MLP pipelines would no longer

be permitted to claim an income tax allowance when calculating their costs of

service. FERC also issued a notice of inquiry (“Notice of Inquiry”), requesting

11 827 F.3d 122, 134 (D.C. Cir. 2016).

11 comment on the agency’s future treatment of “Accumulated Deferred Income Tax”

(“ADIT”) balances.12 Next, we provide a brief description of ADIT balances.

Federal tax law allows pipelines to benefit from accelerated depreciation. But

FERC uses straight-line depreciation when calculating rates. Therefore, when

pipelines employ accelerated depreciation, their taxes are lower than FERC predicts

for ratemaking purposes, resulting in an increase in cash flow for the pipeline. This

unexpected increase is accounted for as “ADIT.” Then, at the end of the accelerated

depreciation period, the pipeline’s taxes exceed FERC’s expectations, and those

taxes reduce the pipeline’s ADIT balance. ADIT becomes, essentially, cost-free

capital.13 At issue in the Notice of Inquiry was how to address these ADIT balances.

Pipelines thought that the ADIT balance should be eliminated. If eliminated,

pipeline assets would increase, and pipelines could then ask FERC to approve

increased rates to match their enlarged asset bases. Shippers would argue the

opposite. As of the issuance of the Notice of Inquiry, no one knew how FERC would

treat ADIT. Accompanying the March 2018 Policy Statement was a Notice of Public

Rulemaking (“NOPR”), which specified a method for pipelines to use when

12 We refer to the March 15, 2018 FERC Revised Policy Statement and Notice of Inquiry collectively as the “2018 FERC Actions.” 13 Post-Trial Opinion, 2021 WL 5267734, at *6.

12 calculating the impact of these new rules on their margins and submitting that

information to FERC.14

D

The 2018 FERC announcement sent shock waves through the oil and gas

industry. Investors worried about pipeline profitability. Many companies, including

Boardwalk, rushed to analyze the impact of the changes and reassure investors. To

calculate the impact of the changes on Boardwalk, Boardwalk’s Vice President of

Rates and Tariffs Ben Johnson consulted a recently performed analysis of

Boardwalk’s revenues. He concluded that the rates of Gulf Crossing and Gulf South,

two of Boardwalk’s three pipelines, were “relatively protected” from the changes.15

The Gulf pipelines charged mostly negotiated rates, meaning that a change in the

FERC-calculated recourse rates would have little impact on profitability. Johnson

estimated that Texas Gas, Boardwalk’s third pipeline, would be largely protected

from challenges to its rates. It served a competitive market; most of its rates, too,

were negotiated or discount rates, and FERC, due to resource constraints, was

unlikely to file a rate case against Texas Gas in the next few years. Johnson also

14 At the same time, FERC issued a decision against SFPP L.P., the pipeline defendant in the United Airlines case. FERC held that SFPP could not receive an income tax allowance and would have to alter its rates accordingly. See SFPP, L.P. v. FERC, 967 F.3d 788, 792 (D.C. Cir. 2020). 15 App. to Answering Br. at B148.

13 noted that FERC’s treatment of ADIT was a key factor in determining the impact of

the regulations, and neither he nor anyone else could say what FERC would do with

ADIT balances.

Armed with this information, Boardwalk began drafting a press release to

provide investors with Boardwalk’s understanding of the impact of the regulatory

developments. During drafting, Boardwalk executives believed that Boardwalk’s

pipelines would not suffer rate changes and that the elimination of the income tax

allowance would not result in a material impact on Boardwalk’s rates. Boardwalk

executives simultaneously fielded inquiries from Loews leadership and a GPGP

Board director on the impact of the regulations.

In response, Boardwalk’s Chief Financial Officer Jamie Buskill emphasized

(1) the importance of negotiated and discount rates to Boardwalk’s revenues, (2) the

presence of a rate moratorium on Gulf South, and (3) that only 20% of Texas Gas

revenues came from recourse rates. An internal Loews analysis on the impact of the

regulations indicated that the uncertain ADIT treatment issue had the potential to be

the “a-bomb outcome.”16 Even so, immediately following the FERC announcement,

two Boardwalk executives, both of whom had an interest in succeeding Stan Horton

as CEO of Boardwalk, separately emailed Loews and suggested exercising the Call

Right.

16 App. to Opening Br. at A186.

14 E

As noted earlier, exercising the Call Right was contingent upon receipt of an

opinion of counsel, acceptable to the general partner, that the FERC actions were

reasonably likely to have a material adverse effect on Boardwalk’s maximum

applicable rates. Marc Alpert, Loews’ general counsel, contacted Mike

Rosenwasser, then a partner at the law firm of Baker Botts, to see if Rosenwasser

could give the necessary opinion. Rosenwasser was a leading MLP attorney, who,

while practicing at Vinson & Elkins in 2005, had drafted the Call Right provision.

Rosenwasser assembled an opinion committee from his Baker Botts partners and

began the Call Right analysis.

At the end of March 2018, as Rosenwasser’s analysis proceeded, Loews

injected itself into Boardwalk’s effort to draft the press release. Loews knew that its

ability to exercise the Call Right depended on whether Boardwalk’s tax status would

have a “material adverse effect on the maximum applicable rate that can be charged

to customers.”17 As initially drafted, the press release stated that the FERC actions

were unlikely to have an adverse impact on Boardwalk’s rates; Loews changed it to

instead address the likely impact on Boardwalk’s revenues. Loews also removed

language indicating that the FERC decision would have minimal impact on

Boardwalk’s rates. At publication, the headline of the press release read:

17 Id. at A1305 (Partnership Agreement § 15.1(b)) (emphasis added).

15 “Boardwalk Does Not Expect FERC’s Proposed Policy Revisions To Have A

Material Impact On Revenues.”18

Alpert, still concerned that publication of the press release could affect the

Call Right exercise, arranged a call with Rosenwasser and other Baker Botts

attorneys. He asked about the press release and whether the FERC actions were, in

the Court of Chancery’s words, “sufficiently concrete to enable Baker Botts to issue

the Opinion?”19 The following day, Baker Botts advised Loews that, because the

release focused on revenues and not rates, it did not present problems for the Call

Right analysis. On the opinion question, though, Greg Wagner, a Baker Botts

partner whose practice focused on FERC matters, explained that the FERC actions

were not final and in any event likely would not affect Boardwalk’s rates. When

Alpert, concerned by Wagner’s comments, called Rosenwasser moments later,

Rosenwasser said, “we’re already there[,]” indicating he believed that Baker Botts

would still be able to deliver the opinion.20

F

To conclude that the Call Right had been triggered, Rosenwasser developed

an analytical framework that the Court of Chancery likened to a “syllogism.” 21 The

18 Post-Trial Opinion, 2021 WL 5267734, at *19 (citing Joint Trial Exhibits at 615 [hereinafter JX]) (emphasis added). 19 Id. at *20. 20 Id. at *21. 21 Remand Opinion, 2024 WL 4115729, at *6 (citing JX 639 at 1).

16 premises of the syllogism were that a pipeline’s rates are based on cost of service

and that the income tax allowance is part of the cost-of-service calculation. From

these premises, Rosenwasser concluded that the elimination of the income tax

allowance would result in a lower cost of service and thus have a material adverse

effect on Boardwalk’s maximum applicable rates.

Wagner recorded the following notes as Rosenwasser explained his syllogism:

1 – A pipeline charges COS [cost-of-service] rates

2 – Cos includes ITA [income tax allowance]

[No] ITA -> material effect

No examination of FERC actions/shipper actions COS/over/under-recovery

Just saying [no] ITA = lower COS

= MAE on max applicable rates 22

As the Court of Chancery noted, embedded in the syllogism was “the view

that the Call Right was not concerned with the economic impact [of the FERC

actions] on Boardwalk; it was only concerned with the abstract concept of

‘maximum applicable rates.’”23 And as will be discussed in more detail later, the

syllogism elided various factors other than the elimination of the income tax

22 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 19 at B476 (JX 639). 23 Post-Trial Opinion, 2021 WL 5267734, at *21 (citing JX 679).

17 allowance (for example, rate-case risk and ADIT) that would affect Boardwalk’s

rates. It embraced, moreover, the dubious notion that a change in the cost-of-service

variable, without consideration of other variables, would necessarily result in a

material adverse effect on rates.

In an effort ostensibly designed to predict the effect of the March 2018 FERC

Actions on Boardwalk’s rates, Johnson, who had provided the preliminary analysis

indicating that Boardwalk’s rates would be “relatively protected,” provided financial

data in support of the emerging Baker Botts opinion.24 Johnson performed both a

“Form 501-G Analysis”25 and a “Rate Model Analysis,” two methods of providing

concrete financial data analyzing the theoretical impact of the changes on

Boardwalk’s cost of service.26 In the Form 501-G analysis, Johnson addressed each

pipeline’s cost of service at each FERC-specified tax rate— 35%, 21%, or no tax

allowance at all. Johnson addressed ADIT using the “Reverse South Georgia”

method, which assumed that the pipelines would be required to return the ADIT

balance to ratepayers over a pipeline’s lifetime. Although this was one plausible

method that FERC could use to address ADIT, pipelines and shippers were lobbying

24 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 11 at A3623 (JX 572) (Johnson emails). 25 The March 2018 FERC Actions included instructions for pipelines to complete a Form 501-G filing. Therein, pipelines would submit calculations projecting the impact that the Actions would have on their operations. Intake of the 501-G Forms would allow FERC to better understand how the 2018 Actions would affect pipelines. 26 Post-Trial Opinion, 2021 WL 5267734, at *24 (citing JX 727 at 4).

18 FERC in opposing directions, and what FERC would do with ADIT was unknown.

Johnson’s 501-G analysis did not complete a revenue calculation, which would have

shown that both Gulf pipelines were under-recovering cost of service and so were

unlikely to see a rate case filed against them.

The Rate Model Analysis was like the 501-G analysis. For the 501-G

calculations, Johnson used the FERC-provided return on equity (“ROE”) of 10.55%.

For the Rate Model, Johnson used an ROE of 12%, in the Vice Chancellor’s words,

“not an unreasonable” selection that Johnson found in an industry-specific report.27

The variation in ROEs suggests that Boardwalk “did not think that the March 15

FERC Actions necessarily would be implemented as proposed.” 28

Baker Botts brought in their own FERC expert, Barry Sullivan, to analyze

Johnson’s work for Boardwalk. Sullivan first described the Rate Model Analysis as

“not a recourse rate calculation,” because the Rate Model showed that removing the

income tax allowance reduced cost of service and thus reduced rates. 29 It was not,

however, conducted in the holistic way that FERC conducts ratemaking.30

The Rate Model Analysis also did not address the likelihood of a rate case.

While Johnson’s calculations were based on the Reverse South Georgia ADIT

27 Id. 28 Id. 29 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 11 at A5559 (JX 1735) (Sullivan Dep.). 30 Post-Trial Opinion, 2021 WL 5267734, at *24 (citations omitted).

19 assumption, Baker Botts attorneys grew uncomfortable with the lingering

uncertainty surrounding how ADIT would be treated. Wagner, Baker Botts’ FERC-

focused partner, “regularly wrestl[ed] with the uncertainty generated by how FERC

would treat ADIT.”31 Wagner also noted the distinction between the cost-of-service

calculations that Johnson had completed and an actual rate analysis—the same

distinction noted by longtime FERC employee Sullivan.

Sullivan understood that Johnson’s analysis calculated the change in cost of

service if FERC eliminated the income tax allowance.32 Sullivan, when asked by

Wagner, continued to specify the difference between the cost-of-service calculations

completed by Boardwalk and the rate analysis that Baker Botts was conducting.

Sullivan explained that the analysis Johnson conducted, calculating the “indicative

rate,” was “meaningless” for several reasons.33

Sullivan explained that a rate calculation must include every variable, and that

changing only the income tax allowance does not provide an accurate picture of

future rates, as FERC would necessarily consider the entire picture when calculating

rates. The Texas Gas and Gulf South pipelines had submitted to FERC several

hundred pages of calculations supporting their latest recourse rate determinations.

Johnson’s Rate Model Analysis took just five pages per pipeline and did not consider

31 Id. at *32 (citations omitted). 32 Id. at *25. 33 Id. at *65 (quoting Sullivan Dep. at 101).

20 several factors that Boardwalk’s pipelines incorporated into their actual rate

analyses. Johnson projected a cost-of-service reduction but could not necessarily

predict a rate reduction. Lastly, for FERC-approved rates to change, a rate case

would have to be initiated and won. Johnson’s analysis did not address the

likelihood of a rate case being brought, much less the likelihood of FERC or the

shipper winning the case. On a call with Loews, Sullivan concluded that the

likelihood of a rate case against Texas Crossing was low. The likelihood of a rate

case being brought against the Gulf pipelines was so remote as not to bear

mentioning.

G

In the second week of April 2018, Alpert, upon Rosenwasser’s

recommendation, hired Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”).

Skadden was to both advise on whether the general partner should deem the Baker

Botts opinion acceptable—the second condition necessary for exercise—and to

“shadow Baker Botts’ work.”34 Skadden corporate partner Richard Grossman led

the effort, while litigator Jennifer Voss advised on matters of Delaware law. The

firm’s initial inquiry focused on identifying which entity at the General Partner level

should make the acceptability determination. Baker Botts, meanwhile, struggled

34 App. to Opening Br. at A326.

21 with the “material adverse effect” component of the opinion and sought Skadden’s

help.

Skadden, as a matter of firm policy, does not render opinions on whether an

event constitutes a material adverse effect. In response to Baker Botts’ inquiry

regarding the material-adverse-effect issue, Skadden attorneys were unsure that a

10-15% change in maximum applicable rates would constitute a material adverse

effect. Skadden thought that a more fact-intensive inquiry was needed, beyond

Rosenwasser’s abstract syllogism, to determine whether Delaware’s material

adverse effect standard had been met. When Grossman refused to support the

desired material-adverse-effect conclusion, Alpert grew angry. Boardwalk executive

Tom Watson emailed Alpert about Skadden’s refusal to wade in to the fray, stating

that, “If people think the language says that the relevant test is what is the real world

effect, then we have an issue. I think it’s crystal clear that we’re talking hypothetical

future max FERC rates[,]”35 meaning that the material adverse effect bar could only

be met under the hypothetical rates of Rosenwasser’s syllogism, not by the “real

world effect” of FERC’s actions.36

Grossman asked Mike Naeve, a Skadden partner and former FERC

commissioner, to speak with Baker Botts about the material-adverse-effect issue.

35 Id. at A396. 36 Id. at A354.

22 When he did, Naeve immediately noted the importance of analyzing the likelihood

of a rate case being brought. Without a rate case, recourse rates would not change,

making the likelihood that such a case would materialize crucial in determining the

effect any regulatory change would have on rates. Naeve also raised the importance

of negotiated rates, discount rates, and rate moratoria in the material-adverse-effect

analysis. All three affect the likelihood of a rate case being brought. Baker Botts,

however, concluded that because pipelines are “long-lived assets” and the Call Right

provision specified “material adverse rate effects in the future[,]” the firm need not

consider discounted rates or rate moratoria expected to expire in the next few years.37

Despite the issues identified by both Baker Botts and Skadden’s resident

FERC practitioners, Loews wanted a draft opinion by the end of April. Rosenwasser

decided not to consider the real-world factors identified above, describing them as

“speculation” about rates. 38 Of note is how draft versions of the opinion addressed

the rate-case-likelihood issue in different ways.

The April 4 draft assumed that the pipelines would file rate cases, resulting in

the pipelines charging the newly reduced recourse rates, thus generating a material

adverse effect. The April 4 draft did not explain why pipelines would bring rate

cases that would result in lower rates, an action opposed to their interests.

37 Id. at A574. 38 Post-Trial Opinion, 2021 WL 5267734, at *30.

23 Recognizing this inconsistency, in an April 17 draft, Baker Botts removed the April

4 provision and instead assumed the pipelines would charge recourse rates,

effectively declining to address the likelihood of a rate case in the draft opinion.

The Baker Botts partners further “questioned whether Baker Botts should be

giving an opinion under Delaware law about the existence of a material adverse

effect” 39 and wanted to rely on Skadden’s work on the issue. Frustrated by

Skadden’s refusal to provide work product that could be relied upon, Rosenwasser

turned to Richards, Layton & Finger, PA (“Richards Layton”), an established

Delaware law firm with extensive corporate-law experience.

Rosenwasser appeared to be caught between his law partners, who were

hesitant about various essential elements of the opinion, and his client Loews and its

desire to exercise the Call Right. He contacted Richards Layton partner Srinivas

Raju seeking assistance with the material-adverse-effect issue, and told Raju that a

FERC expert predicted decreases of 12.19%, 11.70%, and 15.62% for the “top line

revenue[s]” of Texas Gas, Gulf South, and Gulf Crossing respectively. 40 In reality,

those numbers reflected changes in cost of service as reflected in Johnson’s Rate

Model Analysis. Recall that FERC expert Barry Sullivan did not consider Johnson’s

calculations to be a rate analysis. Rosenwasser then asked Richards Layton whether

39 Id. 40 Id. at *33 (citing JX 975 at 1).

24 an adverse effect exceeding 10% would constitute a material adverse effect under

Delaware law. Raju found little caselaw in favor of or against the position

Rosenwasser advocated and concluded he would have a “hard time saying [12% in

perpetuity is] not material.”41 Richards Layton’s support quelled some of the Baker

Botts partners’ concerns.

H

Loews wanted a commitment from Rosenwasser that Baker Botts would be

able to deliver the opinion by April 20, and on that date, Rosenwasser sent a

preliminary opinion to Alpert. This preliminary opinion was “substantially the

same” as the final opinion delivered on June 29. 42 Baker Botts’ final opinion

mirrored the language of the Call Right, advising that the firm believed the

partnership’s tax status was reasonably likely to have a material adverse effect on

the maximum applicable rate that the pipelines could charge.

As Baker Botts submitted its preliminary opinion to Loews, Boardwalk

published its public comments on the NOPR, stating that:

Until the Commission provides a final decision on the treatment of ADIT, Boardwalk cannot correctly assess the impact of the Revised Policy Statement and ADIT on its pipelines’ costs of service, and any response in the Form No. 501-G will be misleading and inaccurate.43

41 Id. at *34 (quoting JX 1007 at 1). 42 Remand Opinion, 2024 WL 4115729, at *10. 43 Post-Trial Opinion, 2021 WL 5267734, at *37 (quoting JX 1139 at 14).

25 Thus, although Boardwalk disclosed publicly that it could not calculate the impact

of the changes on cost of service without an answer to the outstanding ADIT

question, Baker Botts’ preliminary opinion rested on reasoning that assumed a

calculable change in cost of service. In his notes, Rosenwasser double-starred and

underlined this text from the public comment. Skadden Wilmington litigator Voss

described the section as “relatively unhelpful”44 in an email.

Boardwalk, in the same comment filing, objected to FERC’s instruction that

the pipelines in Form 501-G calculate changes to cost of service based solely on tax

allowance changes, as this, in Boardwalk’s view, was single-issue ratemaking.

Rosenwasser’s syllogism, however, relied upon changes to cost of service based

solely on the loss of the income tax allowance. In the same comments, Boardwalk

pointed out the preliminary nature of the March 2018 FERC Actions. Baker Botts’

preliminary, and later final, opinions treated the changes as binding. Lastly,

Boardwalk’s comments noted that Gulf South’s rate moratorium meant that the

changes could have no impact on that pipeline until the end of the moratorium in

2023, a fact not addressed in the preliminary opinion. The trial court concluded that

“[t]hrough these comments, Boardwalk destroyed the basis for the Baker

Opinion.” 45

44 Id. (citing JX 1207 at 1). 45 Remand Opinion, 2024 WL 4115729, at *13.

26 On April 30, 2018, Boardwalk and Loews filed Form 10-Qs. Each form

disclosed the potential that the general partner would exercise the Call Right.46 Over

time, given the backward-looking pricing formula of the Call Right, Boardwalk’s

share price slowly dropped. With both a preliminary opinion and a commitment

from Skadden on the acceptability conclusion in hand, Loews prepared to exercise

the Call Right.

On May 24, 2018, the initial plaintiffs filed suit. The Call Right’s pricing

formula specified that the price paid by the general partner would reflect a historical

average of the stock’s trading price. Thus, because Loews’ announcement regarding

a potential Call Right exercise had over time driven the share price down, the initial

plaintiffs sought to prevent inclusion of some of those lower prices within the 180-

day price window included in the Call Right provision. At the same time, the general

partner wanted a release from claims relating to call right exercise. Eighteen days

after that lawsuit was filed, the parties agreed on a pricing formula Loews could use

and, on June 22, 2018, the parties filed a stipulation of settlement. That is the same

settlement later objected to by Bandera and rejected by the Court of Chancery.

On June 29, 2018, Baker Botts delivered the final opinion to Loews, an

opinion substantially the same as the preliminary opinion provided two months

46 Later in this opinion, we refer to these disclosures as the “Potential Exercise Disclosures.”

27 earlier. The opinion did not cite any cases or statutes. It began by identifying the

materials Baker Botts had consulted. It then provided its conclusion:

On the basis of the foregoing, and subject to the assumptions, limitations, and qualifications set forth herein, we are of the opinion that the status of the Partnership as an association not taxable as a corporation and not otherwise subject to an entity-level tax for federal, state or local income tax purposes has or will reasonably likely in the future have a material adverse effect on the maximum applicable rate that can be charged to customers by subsidiaries of the Partnership that are regulated interstate natural gas pipelines [the “subsidiaries”]. . . . 47

After the conclusion, the opinion summarized Johnson’s supporting financial

data, stating that his financial data included calculation of “the estimated cost of

service” of the subsidiaries.48 This section went on to assume that “each subsidiary

would charge all its customers the maximum applicable rate.” And it concluded that

the data showed that removal of the income tax allowance would result in an over

ten percent reduction in maximum applicable rates. The final opinion explicitly

assumed as part of its reasoning that the Revised Policy would not later be amended

by FERC.

Upon receiving the opinion from Baker Botts, the Loews board recommended

that the Sole Member exercise the Call Right. The Sole Member board met and

Skadden delivered the final version of its ongoing work, a recommendation to the

Sole Member board stating that “it would be within the reasonable judgment of [the

47 App. to Opening Br. at A1521. 48 Post-Trial Opinion, 2021 WL 5267734, at *48.

28 Sole Member] to find” the opinion acceptable.49 The Sole Member board approved

resolutions concluding that the opinion was acceptable and exercising the Call Right.

Ten days later, on July 18, 2018, the transaction closed, with the General Partner

purchasing all outstanding units at a price of $12.06 per unit, around $1.5 billion in

total.

On July 18, mere hours after the transaction closed, FERC issued an order on

rehearing of the revised policy and a final rule resulting from the agency’s original

notice on public rulemaking. The order on rehearing provided that, although MLPs

would no longer automatically receive an income tax allowance when calculating

costs of service, they would be allowed to argue in favor of a tax allowance when

contesting a rate case. The agency further announced that pipelines could eliminate

their ADIT balances and return none of the ADIT balance to ratepayers. The July

18 announcement saw FERC also modify Form 501-G, such that pass-through

entities that did not receive an income tax allowance in cost-of-service calculations

would be allowed to eliminate their ADIT balances.50 When considered together,

these decisions meant that the FERC Actions would have no ascertainable effect on

Boardwalk’s recourse rates. In fact, when Wagner emailed a summary of the final

49 Id. at *50 (citing JX 1518 at 23). 50 Boardwalk 2022, 288 A.3d at 1090. FERC concluded that to eliminate the income tax allowance but maintain the ADIT balance would be prohibited under the retroactive ratemaking doctrine. FERC is barred from engaging in retroactive ratemaking by D.C. Circuit caselaw.

29 FERC determinations to Rosenwasser, Alpert, and Boardwalk executive McMahon,

he concluded that the changes had the effect of “reducing the pipeline’s exposure to

rate reductions.”51

J

The appellants, who we refer to as “Bandera” or “the plaintiffs,” objected to

the settlement reached between Loews and the initial plaintiffs. The Vice Chancellor

rejected the proposed settlement and allowed Bandera to take over for the initial

plaintiffs. Bandera then filed an amended complaint, alleging that Boardwalk and

the General Partner breached the Partnership Agreement and violated the implied

covenant of good faith and fair dealing when the General Partner exercised the Call

Right. Bandera also alleged tortious interference and unjust enrichment against

GPGP, the Sole Member, and Loews.52

After a four-day trial, the Court of Chancery found that the Baker Botts

opinion was rendered in bad faith and that the GPGP board, and not the Sole

Member, was the appropriate entity to make the acceptability determination. Thus,

according to the court, neither the Opinion Condition nor the Acceptability

Condition had been met. The Vice Chancellor also found that the scienter of Baker

Botts could be imputed to the General Partner, rendering the exculpatory provision

51 Post-Trial Opinion, 2021 WL 5267734, at *50 (citing JX 1578 at 1) (emphasis added). 52 Henceforth, we refer to the defendants collectively as “the Boardwalk defendants.”

30 of the Partnership Agreement inapplicable. The Court of Chancery awarded

$689,827,343.38 in damages, pre- and post-judgment interest on that amount, and

fees.

K

To frame our discussion of the issues now on appeal, we review certain

essential bases of the Court of Chancery’s post-trial decision, its partial judgment

consistent with that decision, our 2022 opinion resolving the appeal from that partial

judgment, and how the Court of Chancery interpreted and applied our opinion on

remand.

(i)

The Court of Chancery’s post-trial decision “perceived that exercising the

Call Right involved three steps.” 53 The first step was “satisfying the Opinion

Condition,” that is, securing “an Opinion of Counsel that the Partnership’s status as

an association not taxable as a corporation and not otherwise subject to an entity-

level tax for federal, state, or local income tax purposes has or will reasonably likely

in the future have a material adverse effect on the maximum applicable rate that can

be charged to customers.”54 Boardwalk purported to satisfy this condition through

53 Remand Opinion, 2024 WL 4115729, at *35. 54 App. to Opening Br. at A1305.

31 the Baker Botts opinion. The second step was “satisfying the Acceptability

Condition,” which required the General Partner to determine that the Opinion of

Counsel was acceptable. 55 Boardwalk contended that the Sole Member’s acceptance

of the Baker Botts opinion based on Skadden’s advice satisfied this condition. The

third step was “making the decision to exercise.” 56

The Court of Chancery concluded that the General Partner—Boardwalk GP,

LP—breached the Partnership Agreement by exercising the Call Right without

satisfying either the Opinion Condition or the Acceptability Condition. Its summary

of these conclusions and their consequences suffice for present purposes:

. . . The Post-Trial Opinion found that the law firm had not rendered the opinion in subjective good faith but rather to reach the outcome Loews wanted. The Post-Trial Opinion therefore held that the General Partner breached the Partnership Agreement by exercising the Call Right without satisfying the Opinion Condition.

The Post-Trial Opinion also held that the General Partner breached the Partnership Agreement by exercising the Call Right without satisfying the Acceptability Condition. The trial court held that the Partnership Agreement was ambiguous regarding which of the two internal decision-makers at the General Partner would make the acceptability determination. Applying the doctrine of contra proferentem, the Post-Trial Opinion resolved the ambiguity in favor of the limited partners. That meant the wrong General Partner decision- maker made the acceptability determination, resulting in a breach of the Partnership Agreement when the General Partner exercised the Call Right without satisfying the Acceptability Condition.

55 Remand Opinion, 2024 WL 4115729, at *35. 56 Id.

32 The plaintiffs had pursued alternative theories of recovery against the General Partner and other defendants. The adjudicated claim sufficed to support an award of damages, and the plaintiffs were only entitled to one recovery, so the Post-Trial Opinion did not reach the plaintiffs’ other theories.57

Consistent with this adjudication, the court entered a “partial Final Judgment

Pursuant to [Court of Chancery] Rule 54(b),”58 entering judgment “in favor of the

plaintiff class and against the General Partner in Count I of the amended complaint.

. . .” 59 The order of partial final judgment recited that the court “ha[d] not resolved

the plaintiffs’ claims for breach of the Call Right exercise price formula (Count II),

breach of the implied covenant of good faith and fair dealing (Count III), tortious

interference with contractual relations (Count IV), or unjust enrichment (Count

V)[.]”60

(ii)

In their appeal of the Court of Chancery’s post-trial opinion and resulting

partial judgment, the Boardwalk defendants raised four arguments. First, they

challenged the court’s finding that Bakers Botts had not rendered its opinion in good

57 Id. at *2. 58 In pertinent part, Court of Chancery Rule 54(b) provides: “When more than 1 claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, the Court may direct the entry of a final judgment upon 1 or more but fewer than all of the claims or parties only upon an express determination that there is not just reason for delay and upon an express direction for the entry of judgment.” See Ct. Ch. R. 54(b). 59 Bandera Master Fund, LP v. Boardwalk Pipeline Partners, LP, Del. Ch. 2018, No. 2018-0372, D.I. 287 (Partial Final Judgment Pursuant to Rule 54(b) and Order Staying Partial Final Judgment). 60 Id.

33 faith. Second, the defendants argued that the court had misinterpreted the

Partnership Agreement when it determined that the Sole Member did not have the

power to determine the acceptability of the Baker Botts opinion. Third, the

defendants contended that the court erred in its construction and application of the

Partnership Agreement’s exculpation provisions. And finally, the defendants argued

that the court erred in assessing damages.

(iii)

Just as the Court of Chancery confined its judgment to Count I of the operative

complaint—one of two breach of contract claims against Boardwalk and the General

Partner—on appeal, we trained our attention on that count. More particularly, we

focused on whether the General Partner was exculpated from monetary liability

under Section 7.8(a) of the Partnership Agreement. That provision provides that

[n]otwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall be liable for monetary damages to the Partnership, the Limited Partners, the Assignees or any other Persons who have acquired interests in the Partnership Securities, for losses sustained or liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter in question, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee's conduct was criminal. 61

61 App. to Opening Br. at A1278.

34 Also relevant to our consideration of this issue was Section 7.10(b) of the Partnership

Agreement, which provides that

[t]he General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the advice or opinion (including an Opinion of Counsel) of such Persons as to matters that the General Partner reasonably believes to be within such Person's professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such advice or opinion. 62

We disagreed with the Court of Chancery’s application of these provisions as

summarized above. We encapsulated our holding in the following statement:

[T]he sole member was the correct entity to determine the acceptability of the opinion of counsel . . . . [T]he sole member, as the ultimate decisionmaker who caused the general partner to exercise the call right, reasonably relied on Skadden’s opinion, and . . . the sole member and the general partner are therefore conclusively presumed to have acted in good faith in exercising the call right. Thus, the general partner and others were exculpated from damages under the Partnership Agreement. We reverse the Court of Chancery’s judgment and remand for further proceedings consistent with this opinion. We do not address any other arguments on appeal. 63

Thus, we did not decide whether the Opinion of Counsel Condition had been

satisfied or, whether, had that condition failed, the General Partner’s exercise of the

Call Right breached the Partnership Agreement. Our exculpation holding as to the

General Partner rendered consideration of these issues unnecessary. This left

62 Id. at A1280. 63 Boardwalk 2022, 288 A.3d at 1088 (emphasis added).

35 standing Counts II through V of the complaint, which the trial court had severed and

stayed. In consequence, we remanded the case to the Court of the Chancery for

adjudication of the remaining counts.

(iv)

On remand, the Court of Chancery “struggle[d]” with the implications of our

exculpation holding and, in particular, how it affected the court’s post-trial finding

that Baker Botts had not rendered its opinion in good faith. 64 Recognizing that we

had “plainly reversed the Post-Trial Opinion’s finding of an Acceptability

Breach . . . and the trial court’s ruling on exculpation[],” 65 the Court of Chancery

opined that “[w]hat happened to the Opinion Breach presents legitimate grounds for

debate.” 66 One view—the one favored by the plaintiffs—treats the Opinion Breach

as a separate breach not covered by our ruling that the Sole Member’s reasonable

reliance on Skadden’s acceptability opinion resulted in the exculpation of the

General Partner. The court labeled this the “Separate Breach View.” The Boardwalk

defendants, on the other hand, urged the court to view our decision differently; it

should be read, the Boardwalk defendants contended, as holding that the General

64 Remand Opinion, 2024 WL 4115729, at *35. 65 Id. at *34. 66 Id.

36 Partner’s exercise of the Call Right was not a breach of the Partnership Agreement.

This was so, according to the defendants, because our ruling that the General Partner

acted in good faith in exercising the Call Right and was therefore exculpated from

damages encompassed both the Opinion Breach and the Acceptability Breach. The

court saw this argument as embracing two separate readings of our opinion—the

“Good Faith View” and the “No Breach View.”

In its remand opinion, the Court of Chancery, though expressing uncertainty

and allowing that “the justices have a clear sense of what the Supreme Court Opinion

intended[],” 67 adopted the “No Breach View” and dismissed the remaining counts.

L

In this appeal, Bandera argues that the Court of Chancery misunderstood our

2022 decision and, as a result, erroneously entered judgment in favor of Loews on

their tortious-interference and unjust-enrichment claims. Bandera also maintains

that the court erred in denying relief on their claim that Boardwalk and the General

Partner breached the implied covenant of good faith and fair dealing. It argues, too,

that while the General Partner may be exculpated from money damages, “equitable

relief remains available” to them. 68 And finally, Bandera challenges the court’s

67 Id. 68 Opening Br. at 36.

37 denial of their claim that the defendants’ disclosures distorted the Call-Right

exercise price.

II

The Court of Chancery’s interpretation of our 2022 opinion and its effect on

the plaintiffs’ breach-of-contract claims presents a question of law; as such, we

review it de novo.69 “This Court will uphold the trial court’s factual findings unless

they are clearly erroneous[.]”70 While a trial court’s determination that a party acted

in good faith is a legal issue subject to de novo review, “the factual findings that

provide the basis for that determination will not be overturned unless they are clearly

erroneous.”71

III

As mentioned above, the Court of Chancery’s post-trial opinion rested on the

premise that the General Partner’s exercise of the Call Right was subject to two

separate conditions: the Opinion Condition and the Acceptability Condition. The

court concluded that neither of those conditions was satisfied and that the failure of

each of these conditions meant that the General Partner breached the Partnership

69 Cede & Co. v. Technicolor, Inc., 884 A.2d 26, 38–39 (Del. 2005). 70 Gatz Props., LLC v. Auriga Cap. Corp., 59 A.3d 1206, 1212 (Del. 2012). 71 DV Realty Advisors LLC v. Policemen’s Annuity & Benefit Fund of Chicago, 75 A.3d 101, 108 (Del. 2013).

38 Agreement by exercising the Call Right. But as explained above, our review of the

court’s post-trial decision was not co-extensive with these findings. Instead, in our

2022 decision, we concluded that “the Sole Member . . . reasonably relied on the

Skadden Opinion to cause the call right exercise. Thus, the General Partner is

presumed to have acted in good faith and is immune from damages.” 72 We did not

address what the Court of Chancery called the Opinion Condition. The Court of

Chancery read our 2022 opinion differently, concluding that it “resolved all aspects

of the breach of contract claim.”73 As we have noted, the court labeled this the “No

Breach View.” And in the absence of a breach, the court was, it thought, constrained

to dismiss the plaintiffs’ tortious interference claim against Loews.

It is true, as the Court of Chancery observed, that we intended our exculpation

ruling to “put the breach of contract claim [i.e., Count I] to rest,”74 at least with

respect to a damages award against the General Partner and Boardwalk. True, also,

that we “believed the breach of contract claim was over,” 75 again, at least as to

damages. But the breach of contract claim was “put to rest” and “over” because we

determined that the only party who, under the Court of Chancery’s partial judgment,

was found liable in damages was exculpated. Simply put, we did not—because it

72 Boardwalk 2022, 288 A.3d at 1119. 73 Remand Opinion, 2024 WL 4115729, at *37. 74 Id. 75 Id.

39 was unnecessary to our determination of the exculpation issue—rule on whether the

Opinion Condition had failed and whether that failure caused the General Partner to

breach the Partnership Agreement.76

A review of our opinion bears this out. In the opinion’s introduction, we

expressly noted that, beyond the exculpation issue, “[w]e do not address any other

arguments on appeal.” 77 In a similar way, we noted that the proper focus for General

Partner liability “was on the Sole Member and the opinion it received from

Skadden.”78 We concluded that “[h]aving reasonably relied on Skadden’s advice,

the General Partner, through its Sole Member, is conclusively presumed to have

acted in good faith and is exculpated from damages.” 79 The Court of Chancery’s

conclusion was erroneous that, by so holding, we had—albeit implicitly—“resolved

all aspects of the breach of contract claim,” including whether the alleged failure of

the Opinion Condition resulted in a breach of the Partnership Agreement.

The law of the case doctrine “prohibits courts from revisiting issues

previously decided, with the intent to promote ‘efficiency, finality, stability and

respect for the judicial system.’” It operates “when a specific legal principle is

applied to an issue presented by facts which remain constant throughout the

76 See PDK Lab’ys v. United States Drug Enf. Admin., 362 F.3d 786, 799 (D.C. Cir. 2004) (Roberts, J., concurring) (citing “the cardinal principle of judicial restraint—if it is not necessary to decide more, it is necessary not to decide more. . . . ”). 77 Boardwalk 2022, 288 A.3d at 1088. 78 Id. at *1123. 79 Id.

40 subsequent course of the same litigation.” But the law of the case doctrine “only

applies to issues the court actually decided.” 80 Among the issues we declined to

address was whether the Court of Chancery “erred as a matter of law and fact when

it found the Baker Botts Opinion was not issued in good faith[.]” 81 Limiting our

decision to whether the General Partner was liable for damages for breaching the

Call Right provisions—an issue sufficient to reverse the Court of Chancery’s partial

judgment—left several questions in the first appeal unanswered. They include:

(1) Did the Court of Chancery apply the wrong standard of review to the Baker Botts opinion when it determined that counsel did not render the opinion in good faith?

(2) Did the Court of Chancery correctly interpret the Partnership Agreement when it concluded that “exercising the Call Right involved three steps: (1) satisfying the Opinion Condition, (2) satisfying the Acceptability Condition, and (3) making the decision to exercise[]”?

(3) Were the factual findings underpinning the Court of Chancery’s determination that the Baker Botts opinion was not rendered in good faith clearly erroneous?

The answers to these questions, which we take up next, support our ultimate

conclusion in this appeal that the General Partner failed to satisfy the Opinion

Condition, which meant that the General Partner breached the Partnership

Agreement when it redeemed the units.

80 State v. Wright, 131 A.3d 310, 321 (Del. 2016) (quoting John B. v. Emkes, 710 F.3d 394, 403 (6th Cir. 2013)). 81 Boardwalk 2022, 288 A.3d at 1088.

41 B

In this appellate round, the plaintiffs argue that the Court of Chancery’s “No

Breach View” misapplied our 2022 opinion, which in turn caused the court to err

further by dismissing their tortious-interference claim. The Boardwalk defendants

counter that there was only one precondition to the exercise of the Call Right—that

the General Partner secure “a written opinion of counsel . . . acceptable to the

General Partner” that Boardwalk’s partnership tax status “has or will reasonably

likely in the future have a material adverse effect on the maximum applicable rate

that can be charged to customers.”82 Put another way, the Boardwalk defendants

reject “the trial court’s original tripartite conception of Section 15.1(b)” 83 with its

three steps: satisfaction of the Opinion Condition; satisfaction of the Acceptability

Condition; and the decision to exercise. On this point, we agree with the plaintiffs

and conclude that the Court of Chancery’s conception of Section 15.1(b) as reflected

in its post-trial decision was correct. Our reasons follow.

We begin our discussion by noting that the Boardwalk defendants’ position

on this issue has evolved during litigation. To be sure, they have not previously—

at least not in this Court—explicitly endorsed the Court of Chancery’s initial three-

82 Answering Br. at 14 (quoting App. to Opening Br. at A1218, A1305 (LPA §§ 1.1, 15.1(b))). 83 Id. at 16.

42 step analysis of the Call Right exercise. Yet their challenge to the court’s post-trial

treatment of the Baker Botts opinion expressly acknowledged that “[t]he opinion had

. . . to be rendered in counsel’s subjective good faith, ‘based on [its] expertise as

applied to the facts of the transaction.’”84 In support, they cited Williams Cos., Inc.

v. Energy Transfer Equity, L.P., a 2016 Court of Chancery decision we later

affirmed. They now take a contrary view—that the opinion need not be rendered in

good faith. 85 As explained below, their change of position exposes the

unreasonableness of their unitary reading of Section 15.1(b).

Bandera argues—and we agree—that the Boardwalk defendants’ current

reading of Section 15.1(b) and the corresponding “No Breach View” adopted by the

Court of Chancery are inconsistent with Williams. 86 In Williams, the issue of

“primary importance”87 was a condition precedent to the consummation of a merger:

an opinion by the acquiror’s counsel that a specific transaction encompassed in the

merger should be treated by the tax authorities as a tax-free exchange. As things

happened, the acquiror’s counsel concluded that it could not issue the opinion, which

84 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund, LP, Del. 2022, No. 1, 2022, D.I. 12; Opening Br.at 29 (quoting Williams Cos. Inc. v. Energy Transfer Equity, L.P., 2016 WL 3576682, at *11 (Del. Ch. June 24, 2016) aff’d, 159 A.3d 264 (Del. 2017)). 85 Oral Argument at 21:40, Bandera Master Fund, LP v. Boardwalk Pipeline Partners, LP, (No. 439, 2024), https://vimeo.com/1096285871?fl=pl&fe=vl. 86 Opening Br. at 22. 87 Williams, 2016 WL 3576682, at *1.

43 would allow the acquiror, who had soured on the merger, to terminate the merger

agreement. The target, however, contended that the acquiror’s counsel’s conclusion

that it could not issue the opinion was “for reasons other than its best legal

judgment—that is, that [counsel] acted in bad faith.”88 To address this contention

the Court of Chancery observed that it was counsel’s “subjective good-faith

determination that is the condition precedent[].” 89 And to meet this good-faith

standard, counsel must, according to the court apply its “independent expertise . . .

to the facts of the transaction.” 90

In its post-trial opinion here, the court repeated the Williams standard but also

relied on this Court’s holding in Gerber v. Enterprise Products Holdings,., LLC that

a general partner violated the implied covenant of good faith and fair dealing by

relying on an opinion “that did not fulfill its basic function.” 91 The court then

bolstered the Williams and Gerber principles by citing various secondary authorities

for what it viewed as “self-evident manifestations of what it means for an opinion

giver to act in subjective good faith.” 92

We agree with the Court of Chancery’s statement of the standard for assessing

whether an opinion of counsel that serves as a condition precedent to a contractual

88 Id. at *11. 89 Id. 90 Id. 91 Post-Trial Opinion, 2021 WL 5267734, at *53 (citing Gerber v. Enter. Prod. Hldgs., LLC, 67 A.3d 400, 422 (Del. 2013)). 92 Id. at *53 n.16.

44 right or obligation is given in good faith. It is consistent, in our view, with customary

opinion practice, in which “the lawyer’s duty is to provide a fair and objective

opinion.” 93 Nor did the Boardwalk defendants argue for a different standard when

they appealed the Court of Chancery’s 2021 partial final judgment. Indeed, as

mentioned above, Boardwalk contended that the court did not faithfully apply

Williams in its post-trial decision. But it did not contest—indeed, it explicitly

acknowledged—that Williams applied and that the Baker Botts Opinion “had . . . to

be rendered in counsel’s subjective good-faith, ‘based on [its] independent expertise

as applied to the facts of the transaction.’” 94 The Boardwalk defendants’ current

position—that so long as a critical opinion of counsel is followed by a second

opinion deeming the first one to be “acceptable,” the first opinion need not have

been issued in good faith—is, as we see it, an unacceptable end run around Williams.

In our 2022 opinion, we described the Opinion Condition as a “meaningful

limitation” on the General Partner’s exercise of the Call Right, separate and apart

from the Acceptability Condition. 95 We stand by that statement. And for the

93 RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS, § 95, Comment c AM. L. INSTIT. (2000). We recognize that the excerpts from the Restatement quoted here are taken from a section devoted to evaluations undertaken for a third person and not, as here, the lawyer’s client. We see no legal reason why these principles should not apply with equal force when a lawyer renders an opinion that affects the economic interests of nonclients who have no role in the opinion process. 94 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 12, Corrected Opening Br. at 29. 95 Boardwalk 2022, 288 A.3d at 1116 n.256.

45 Opinion Condition to operate as a “meaningful limitation” affording a measure of

protection for Boardwalk’s limited partners, the Opinion of Counsel must pass

muster standing on its own two feet. That protection would be toothless if an opinion

of counsel delivered in bad faith could trigger the Call Right so long as a second

opinion, like Skadden’s here, opines not on the merits of counsel’s opinion but only

on its acceptability.

Here, the Court of Chancery determined that the Baker Botts opinion could

not stand on its own and that, in consequence, the General Partner’s exercise of the

Call Right breached the Partnership Agreement. This determination is based, in our

view, on a sound interpretation of Section 15.1(b) of the Partnership Agreement. 96

In the 2022 appeal, the Boardwalk defendants’ challenge to the Court of

Chancery’s post-trial determination that the Baker Botts opinion was not rendered

in good faith was three-fold. First, they argued that, by accusing Baker Botts of

“relying on a contrived ‘syllogism’ and ‘counterfactual assumptions,’ and then

‘stretching’ to an MAE,” the court deviated from the plain language of the

96 Bandera has also asserted a claim for breach of the implied covenant of good faith and fair dealing. Specifically, Bandera contends that “to the extent Defendants complied with the literal terms of Section 15.1(b)(ii), the implied covenant precludes them from benefiting from their corruption of the opinion process.” Opening Br. at 34. In light of our agreement with the Court of Chancery that the General Partner’s exercise of the Call Right breached the Partnership Agreement, a review of Bandera’s implied-covenant claim is unnecessary.

46 Partnership Agreement, reviewed the record unfairly, and drew insupportable

inferences in the plaintiffs’ favor.

As to the first of these critiques, as we have said earlier, we are satisfied that

the Court of Chancery identified the correct standard—the Williams standard—by

which to assess the Baker Botts opinion. As to the court’s interpretation of the

record, the inferences it drew from the evidence, and its credibility determinations,

we view the Boardwalk directors’ complaints as questioning the trial court’s factual

findings. We in the majority are not persuaded that its factual findings are clearly

erroneous.

As an initial matter, it bears emphasis that the Court of Chancery’s factual

findings rested, in significant part, on a “key credibility determination”97—whether

Rosenwasser testified credibly. In its Remand Opinion, the court catalogued the

topics on which Rosenwasser failed to testify credibly on both “little things” and

“big things.” 98 It serves no purpose here to recite each instance in which the trial

court questioned Rosenwasser’s veracity. It is enough to say that the instances were

numerous, and that the court’s assessment of Rosenwasser’s credibility was

unmistakably negative. On appeal, this Court does not question such credibility

findings.

97 Remand Opinion, 2024 WL 4115729, at *19. 98 Id.

47 With that in mind, we conclude that the following factual findings are

supported by competent evidence in the trial record.

1. Baker Botts knew that Boardwalk’s executives did not believe that the March 15 FERC actions were final. The trial court observed that, “[w]hile Baker Botts was working on a legal

opinion that treated the NOPR and other March 15 FERC Actions as final,

Boardwalk’s management team filed public comments on the NOPR, consistent with

the fact that it was not final.” 99 Among those comments, of which Rosenwasser was

clearly aware, was the statement that “[u]ntil the Commission provides a final

decision on the treatment of ADIT, Boardwalk cannot correctly assess the impact of

the Revised Policy Statement and ADIT on its pipelines’ costs of service, and any

response in the Form No. 501-G will be misleading and inaccurate.” 100

Additionally, Rosenwasser was keenly aware of other comments by Boardwalk that

either clashed with or were ignored by the Baker Botts opinion. They included that:

the Policy Statement was “not a binding rule;” FERC instructions for the completing

the Form 501-G were improper single-issue ratemaking; and Boardwalk’s “fixed

negotiated rate agreements” would apply without regard to the pipelines’ maximum

applicable rates.101

99 Post-Trial Opinion, 2021 WL 5267734, at *36. 100 Id. at *37 (quoting JX 1130 at 13–15); App. to Opening Br. at A1435 (JX 1138 at 14). 101 Post-Trial Opinion, 2021 WL 5267734, at *38 (citations omitted); App. to Opening Br at A1433–A1437 (JX 1138 at 2-16).

48 2. Boardwalk knew that “it was ‘misleading’ to equate a change in the cost of service stemming from the removal of the income tax allowance with a ‘rate reduction,’ because a cost-of-service change has ‘little bearing’ on whether a rate reduction will occur.”102

This is supported by Boardwalk’s public comments on FERC’s NOPR, which

stated:

Line 33 of Page 1 of the proposed Form No. 501-G is labeled the "Indicated Rate Reduction," and provides the results from completing the Form's first page. This label is misleading and, if not modified, would have the potential to adversely affect Boardwalk. Within 48 hours of the issuance of the NOPR, Boardwalk began receiving calls inquiring about the impact of "Indicated Rate Reduction" set forth on the Form No. 501-G. Yet, Line 33 does not actually represent a promised or indicative rate reduction. It shows only the potential modifications to a pipeline's cost of service due to tax policy changes, and without regard for changes that may occur to a pipeline's billing determinants, discount adjustments, and other issues impacting recourse rates. In essence, Line 33 provides a cost-of-service number in a vacuum that has little bearing on what the ultimate recourse rate reduction, if any, would occur on the subject pipeline. As the Commission recognizes in the NOPR, pipelines are not required to reduce rates based only on a single rate component, such as taxes. The Line 33 label appears to provide for impermissible piecemeal ratemaking.103

Rosenwasser made handwritten notes on a paper copy of these comments,

underlining the statement that “Boardwalk cannot correctly assess the impact of the

102 Post Trial-Opinion, 2021 WL 5267734, at *64 (citing JX 1138 at 30); App. to Opening Br. at A1451 (JX 1138 at 30). 103 App. to Opening Br. at A1451 (JX 1138 at 30) (emphasis added).

49 Revised Policy Statement and ADIT on its pipelines’ cost of service, and any

response in the Form No. 501-G will be misleading and accurate.” 104

3. “Baker Botts . . . considered real world effects [of the proposed policy change] when doing so helped reach the result that its client wanted, but not when doing so might cut in the opposite direction.” 105

This is broadly supported by Rosenwasser’s statement that, “This is a legal

opinion independent of what’s happening in mkt. Not a primarily factual

analysis.”106 More specific instances abound; the final opinion explicitly assumed

that Boardwalk’s subsidiaries would be able to charge recourse rates, when Baker

Botts knew that most Boardwalk’s rates consisted of either discounted or negotiated

rates. At various points in the drafting process, Baker Botts attorneys, including

FERC expect Wagner, struggled with the uncertainty and importance of ADIT,

while Boardwalk and Loews internally acknowledged its significance. Yet no

mention was made of ADIT in the final opinion.

4. “Baker Botts had Boardwalk prepare the Rate Model Analysis[,] . . . [which] was designed to ‘get us where we need to go.’”107

This finding—that the Rate Model Analysis was result-oriented—is supported

by:

104 Post-Trial Opinion, 2021 WL 5267734, at *36 (citing JX 1130 at 14). 105 Id. at *65. 106 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 11, App. to Opening Br. at A3702 (JX 646 at 3). 107 Post-Trial Opinion, 2021 WL 5267734, at *65 (quoting JX 713 at 1); App. to Opening Br. at A438.

50 (1) Johnson’s email submitting his Rate Model Analysis, which advised that the analysis would “get us where we need to go,”108 and

(2) The inconsistency between assumptions made in Johnson’s analysis and Boardwalk’s simultaneous lobbying. The analysis assumed under the Reverse South Georgia method that FERC would amortize ADIT, while Boardwalk knew that the treatment of ADIT was an unsettled issue and lobbied through the Interstate Natural Gas Association of America for the elimination of ADIT balances.109

5. “The Rate Model Analysis departed from ratemaking principles.” 110

This finding is supported by FERC expert Barry Sullivan’s deposition

testimony pointing to the flaws in Johnson’s Rate Model Analysis.111 According to

Sullivan, the Rate Model was “not a recourse rate calculation” as it subtracted the

income tax allowance from a cost-of-service calculation to arrive at, in Johnson’s

words, an “indicative rate.”112 This theory, that a decrease in tax expenses indicates

a decrease in cost of service, was described by Boardwalk executives in a different

setting as a “train wreck”113 As to Johnson’s overall description of his own work,

108 App. to Opening Br. at A438. 109 Post-Trial Opinion, 2021 WL 5267734, at *46 (citations omitted). 110 Id. 111 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 11 at A5558 (Sullivan Dep.). 112 Id. 113 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 19 at B321 (McMahon emails).

51 i.e., that he had calculated “indicative rates,” Sullivan testified that “an indicative

rate doesn’t mean anything” and that FERC’s ratemaking process considers a

number of important factors beyond solely a change in income tax allowance. 114

6. “Baker Botts had to stretch to render the Opinion[] . . . .[reaching] strained conclusions [that were] signs of motivated reasoning.” 115 This finding is supported by, among other things, Baker Botts’ struggles with

and manipulation of the material-adverse-effect standard. Richards Layton believed

that a 12-13% declines in rates would likely constitute a material adverse effect.

Skadden attorneys believed that 11% was “likely insufficient.” Yet the final opinion

saw Baker Botts claim that “an estimated reduction in excess of ten percent” would

generate a material adverse effect. 116 The Rate Model Analysis predicted an 11.68%

decline in indicative rates for Texas Gas, forcing the Baker Botts opinion to fall

below the numbers provided by Richards Layton. 117 Baker Botts was also unsure of

the meaning of the phrase “reasonably likely to have a material adverse effect.”118

Rosenwasser “decided to ‘call it more likely than not.’” 119

7. “Baker Botts rendered a non-explained opinion on a complex issue of Delaware law [i.e., the material adverse effect” issue] that the two Delaware law firms who were consulted would not formally address.

114 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 11 at A5558 (Sullivan Dep.). 115 Post-Trial Opinion, 2021 WL 5267734, at *67; App. to Opening Br. at A511. 116 App. to Answering Br. at B1013 (JX 1522 at 3) (Baker Botts Opinion). 117 Id. 118 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 19 at B3384 (JX 1807 at 12). 119 Post-Trial Opinion, 2021 WL 5267734, at *67 (quoting JX 1807 at 12).

52 And Baker Botts did so in the face of fatal uncertainty that could have been mitigated simply by waiting.” 120

The opinion took the form of a routine opinion and did not cite cases or legal

authorities to support the various positions it took. Throughout the drafting process,

Baker Botts pushed past the hesitancy expressed by lawyers from both Richards

Layton and Skadden. On July 18, 2018, hours after the transaction closed, FERC

provided final rulings on the income tax allowance and ADIT issues. Limited

partnerships would be allowed to argue in rate case proceedings for an income tax

allowance, and those that did not recover an income tax allowance would be able to

eliminate their ADIT balances entirely. 121 The July 18, 2018 announcements

resolved the outstanding questions, the uncertainty of which undermined the logic

of the Baker Botts opinion. Had Baker Botts waited, as of July 18, 2018, the impact

of the income tax allowance and ADIT policies on Boardwalk could have been

accurately assessed.

8. Baker Botts knew that the March 15 FERC Actions were not reasonably likely to have a material adverse effect on Boardwalk’s recourse rates.122

120 Id. at *68; Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 19 at B559 (JX 771 at 1), B1123 (JX 975 at 1). 121 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 11 at A5391 (JX 1549 at 3–4). 122 Post-Trial Opinion, 2021 WL 5267734, at *58; Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 19 at B1126 (JX 1007 at 1).

53 A Baker Botts partner’s notes taken during the opinion-writing process

support this finding. The notes, which read “no effect–screw min,” could reasonably

be read to mean “no effect–screw minority[,]” likely reflecting the partner’s

understanding that the March 2018 Actions would have little effect on Boardwalk’s

rates, but that the Baker Botts opinion would still allow for Call Right exercise.

Loews executives came to a similar conclusion during the drafting process, stating,

“If people think the language says that the relevant test is what is the real-world

effect, then we have an issue. I think it’s crystal clear that we’re talking hypothetical

future max FERC rates.”123

9. “The timing of the Opinion points in the same direction. Given the non-final nature of the Revised Policy, the avalanche of comments that FERC received, the direct linkage between the Revised Policy and the ADIT NOI that Boardwalk itself identified, and the uncertainty regarding the treatment of ADIT, Baker Botts could not have believed in good faith that it could render the Opinion before FERC provided further guidance. There were too many known unknowns. And an opportunity for clarity of these unknowns was on the horizon: FERC was likely to provide more guidance at its meeting on July 19, 2018. Baker Botts needed to wait.”124

The Notice on Proposed Rulemaking was a proposed rule. The NOPR

requested comments from industry participants, in anticipation of further changes

that FERC might make to the proposed rule. 125 The importance of the ADIT issue

123 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 19 at B1035 (JX 798). 124 Post-Trial Opinion, 2021 WL 5267734, at *69. 125 Id. at *13; Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 19 at B347 (JX 580).

54 as the “a-bomb outcome” for Boardwalk, and the high level of uncertainty regarding

the ultimate disposition of that issue (“[T]he effect on ADIT is unknown &

unknowable”), 126 support a finding that Baker Botts knew ADIT was a crucial

unknown throughout the drafting process. The court’s finding that Baker Botts

should have waited is supported further by an e-mail Naeve, the Skadden partner

and former FERC Commissioner, sent to a colleague on the day Baker Botts

delivered its preliminary opinion. In that e-mail, Naeve discussed the uncertainty

surrounding how FERC would respond to industry comments and observed that “[i]f

I were Baker Botts I would prefer to wait until FERC acts on the comments.” 127

10.“Rosenwasser had an additional, personal incentive to push the limits. He drafted the Call Right, and he understandably wanted that provision to accomplish what his client thought it should do. And Loews was a forceful client.”128

Baker Botts’ engagement letter noted that Rosenwasser had drafted the Call

Right provision in 2005, but Baker Botts concluded that his 2005 work was not

“substantially related” to the exercise of the Call Right, at least from a conflicts-of-

interest perspective. 129 Delaware precedent and applicable treatises hold that legal

matters arising from a document are substantially related to that document. 130

126 Boardwalk Pipeline Partners, L.P., v. Bandera Master Fund LP, Del. 2022, Del. 2022, No. 1, 2022, D.I. 19 at B3387 (JX 1807 at 3-4), B464 (JX 601 at 2). 127 App. to Opening Br. at A1385 (JX 1076). 128 Id.; see also id. at A403. 129 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, Del. 2022, No. 1, 2022, D.I. 19 at B1057 (JX 906 at 2). 130 Post-Trial Opinion, 2021 WL 5267734, at *69 n.25.

55 This is not an exhaustive treatment of the factual findings the trial court relied

upon in reaching its conclusion that the Baker Botts opinion was a product of “a

contrived effort to generate the client’s desired result”131 and not a subjective good-

faith determination of the issue at hand. Nor do we think that each factual finding

the trial court made was dictated by the evidence. Often, there can be two

permissible views of evidence. But when that is the case, “the factfinder’s choice

between them cannot be clearly erroneous.” 132 It suffices here that these findings,

none of which we see as clearly erroneous, are sufficient to support the Court of

Chancery’s factual determinations and therefore its legal conclusion.

We turn next to the Court of Chancery’s dismissal of Bandera’s tortious-

interference-with-contractual-relations claim against Loews. Because the court

adopted the “No Breach View” of our 2022 opinion and, under that view, exercising

the Call Right did not breach the Partnership Agreement, the court entered judgment

for Loews on the tortious-interference claim. As explained earlier, we disagree with

the Court of Chancery’s “No Breach View” of our 2022 opinion. We also concluded

that the court applied the correct legal standard in its post-trial determination that,

because the Opinion Condition was not satisfied, the General Partner’s exercise of

131 Id. at *71. 132 Bank of N.Y. Mellon v. Liberty Media Corp., 29 A.3d 225, 236 (Del. 2011).

56 the Call Right breached the Partnership Agreement and that the factual findings

underpinning that determination were not clearly erroneous. Because these holdings

undermine the reasoning upon which the Court of Chancery entered judgment for

Loews on Bandera’s tortious-interference claim, we reverse that judgment.

Recognizing, however, that its reading of our 2022 opinion may have

“misse[d] the mark (and in hopes of avoiding another remand),” 133 the Court of

Chancery analyzed the claim under the two alternative views—the “Good Faith

View” and the “Separate Breach View.” The court concluded that “[u]nder the No

Breach View, Loews prevails. Under the Good Faith View, the question is closer,

but Loews again prevails. Under the Separate Breach View, the plaintiffs

prevail.”134

We appreciate the Court of Chancery’s analysis of the tortious-interference

claim under the two alternative views of our 2022 opinion. Likewise, we appreciate

the court’s desire to avoid another remand. But our remit in this appeal is to review

the judgment on appeal and not the judgment the trial court might have entered under

alternative analyses—a hypothetical judgment that has not been appealed. We

believe that to pass upon those portions of the trial court’s analysis that explicitly

did not form the basis for the judgment it entered is unwise and unfair to the parties,

133 Remand Opinion, 2024 WL 4115729, at *37. 134 Id. at *38.

57 whose focus in briefing and at oral argument in this Court has been on the judgment

as entered. A remand, however unwelcome the trial court might find it, is thus

required for the court to consider anew Bandera’s tortious-interference count and

defenses to recovery under that theory.

The plaintiffs argue next that, despite our decision in 2022 that the General

Partner is exculpated from damages under Count I of the complaint, all equitable

remedies against the General Partner remain available, including rescission,

imposition of a constructive trust, and disgorgement. They also press the claim that,

although the Partnership Agreement’s exculpatory provisions might protect the

General Partner, the other defendants have not shown that they qualify for

exculpation.

We are unpersuaded by the plaintiffs’ argument that the court can yet assess

rescissory damages or other monetary payments against the General Partner under

equitable theories. We reiterate that Section 7.8(a) of the Partnership Agreement

exculpates the General Partner “for monetary damages.” The exculpatory provision

does not limit its reach to damages as a legal remedy. Nor did the plaintiffs draw a

distinction between legal and equitable remedies in the operative complaint. Instead,

they sought “all available damages, including rescissory damages, unjust

58 enrichment, and disgorgement, for Defendants’ breaches of contract[.]” 135 Their

effort now to impose financial liability on the General Partner, unsupported by any

precedent, runs contrary to our 2022 decision that the General Partner was

exculpated from monetary damages for breach of contract. 136

We agree with the plaintiffs, however, that our 2022 decision did not address

whether defendants other than the General Partner were exculpated. And because

of its adoption of the No Breach View of our decision and its consequent dismissal

of the remaining counts, neither did the Court of Chancery on remand. It may, to

the extent necessary, do so now.

E

Finally, Bandera contends, separate from their claims arising from the

Defendants’ exercise of the Call Right, that the Defendants distorted the Call Right

exercise price by using the Potential Exercise Disclosures to game the Call Right’s

pricing mechanism in the Partnership Agreement. This claim, which appears under

Counts II and V of the operative complaint, alleges that the Boardwalk defendants

were unjustly enriched when they purchased the limited partners’ common units at

an artificially depressed price.

135 App. to Answering Br. at B531. 136 See Arnold v. Soc’y for Sav. Bancorp, Inc., 678 A.2d 533, 541 (Del. 1996) (denying plaintiff’s request for a remand for determination whether there were any “‘equitable remedies’ that do not constitute ‘monetary damages’” and reading an earlier decision in the case that directors were free from personal liability under 8 Del. C. § 102 (b)(7) to apply “whether monetary damages arise out of legal or equitable theories”).

59 The Partnership Agreement provided that the Call Right’s exercise price

would be determined using a 180-day look-back formula. Specifically, the Call

Right exercise price was to be calculated as “the average of the daily Closing Prices

per Limited Partner Interest of such class for the 180 consecutive Trading Days

immediately prior to [three days before notice is mailed that GP or one of GP’s

affiliates elects to exercise the Call Right].” 137 On April 30, 2018, Loews issued an

SEC form 10-Q disclosing that it was “analyzing the FERC’s recent actions and

seriously considering the purchase right under the partnership agreement in

connection therewith.” 138 Similarly, Boardwalk’s 10-Q, issued in tandem with the

Loews filing, informed holders of limited partnership interests that “our general

partner has a call right that may become exercisable because of recent FERC

action”139 and that Loews, through the Sole Member, had informed Boardwalk that

it was “seriously considering its purchase right.”140

Although Boardwalk’s trading price initially jumped on the news of a possible

take-private transaction, as the consequences of the 180-day look-back formula for

calculating the Call Right exercise price became apparent to public investors,

Boardwalk’s unit price declined steadily. As Boardwalk’s unit price fell, so too did

137 App. to Opening Br. at A1305 (Partnership Agreement § 15.1(b)). 138 Id. at A1461 (Loews April 30, 2018 10-Q). 139 Id. at A1493 (Boardwalk April 30, 2018 10-Q). 140 Id.

60 the exercise price as calculated under the Partnership Agreement’s backward-

looking formula. Loews knew that this would be the case and that the longer it

waited to exercise the Call Right after disclosing it was considering doing so, the

lower the exercise price would be.

Making the Potential Exercise Disclosures in this manner, according to

Bandera, violated the Partnership Agreement in two ways. First, plaintiffs allege

that the Potential Exercise disclosures violated Section 7.9(a) of the Partnership

Agreement which concerns the resolution of conflicts of interest between the

General Partner and its affiliates, and the Partnership. To be permissible and avoid

breach of the Partnership Agreement, the resolution of a conflict must be “fair and

reasonable to the Partnership, taking into account the totality of the relationships

between the parties involved.”141 The outcome here was not “fair and reasonable[,]”

Bandera argues, because the Potential Exercise disclosures were “misleading and

impacted the exercise price in Defendants’ favor at the limited partners’ expense.”142

In Bandera’s view, although they concede that some form of disclosure was required

under federal securities law, the disclosures as drafted omitted material information

such as

141 App. to Opening Br. at A1278 (Partnership Agreement § 7.9(a)). The plaintiffs do not argue that any of the other permissible methods for resolution of a conflict under § 7.9(a) apply in this case. 142 Opening Br. at 45.

61 - language indicating that FERC’s cost-of-service ratemaking principles might result in a net increase in Boardwalk’s rates, depending on how the March 15 FERC Actions were ultimately resolved;

- information confirming that Loews had retained counsel to examine these issues and had obtained commitments regarding the issuance and acceptability of the opinion;

- key details concerning the favorable implications of the NOPR, as well as the importance of rate case risk in assessing the likelihood of any adverse rate impact; and

- the fact that requests for rehearing raised substantial uncertainty regarding whether and how FERC might apply the Revised Policy to Boardwalk’s subsidiaries in the future. 143

These omissions from each entity’s 10-Q filings and contemporaneous earnings

calls, according to Bandera, “left investors in the dark on Loews’ intentions” and set

in motion a “fear feedback loop” that depressed the price of Boardwalk’s limited

partner interests. 144

The Court of Chancery summarily rejected this argument. It first concluded

that the additional information that the plaintiffs cite was not material. And taking

for granted the fact that the Potential Exercise Disclosures presented a conflict of

interest, the court concluded that the General Partner’s resolution of the conflict—

issuing the disclosures—was fair and reasonable to the partnership because the

disclosures were required under federal securities law. In the court’s words, “[b]y

143 Id. at 42. 144 Id. at 42–43.

62 providing the disclosures required by law, the General Partner fulfilled that

obligation.”145

We agree with the Court of Chancery’s conclusion. Assuming that the

decision to issue the Potential Exercise Disclosures presented a conflict of interest

for the General Partner, our only task is to determine whether the General Partner’s

resolution of the conflict was fair and reasonable to the partnership. Because the

plaintiffs concede that some form of Potential Exercise Disclosure was required by

federal securities law, their claim rests solely on the content of those disclosures.

We cannot see how any of the omissions that the plaintiffs cite were material such

that the exercise price would have meaningfully changed had they been disclosed in

Loews’ and Boardwalk’s 10-Q filings.

For one, much of the information that Bandera claims should have been

disclosed was disclosed or was otherwise already public, including that (i)

Boardwalk did “not expect [FERC’s Revised Policy Statement, NOI and NOPR] to

have a material impact on our revenues in the near term”; 146 (ii) that the prevalence

of “negotiated or discounted rate agreements” for two of Boardwalk’s three

subsidiaries and a rate “moratorium” for the third mitigated any near-term adverse

145 Id. 146 App. to Answering Br. at B738.

63 impact;147 and (iii) that “[r]equests for rehearing and clarification” had been filed

with FERC. 148

The plaintiffs also contend that the Potential Exercise Disclosures violated the

Partnership Agreement because the formula for calculating the Call Right exercise

price in Section 15.1(b) contemplated ensuring that the price was not skewed by

notice of the Call Right exercise itself. The three-day window that the agreement

establishes between the beginning of the look-back period and notice of the Call

Right exercise was intended to insulate the Call Right exercise price from any market

response to notice of the General Partner’s intent to trigger the Call Right. The

Potential Exercise Disclosures, Bandera alleges, upended this contractual design by

prompting a negative market response to the disclosure that the General Partner was

“strongly considering” exercising its Call Right. Bandera contends that under

Section 16.2 of the Partnership Agreement, which prevents the General Partner and

its affiliates from “tak[ing] or refrain[ing] from taking action as may be necessary or

appropriate to achieve the purposes of”149 the Partnership Agreement, the Potential

Exercise Disclosures should be viewed as an attempt to subvert the calculation

contemplated by Section 15.1(b) by depressing Boardwalk’s unit price, and,

147 Id. 148 Id. at B1048–49. 149 App. to Opening Br. at A1508–09.

64 accordingly, their publication should be considered a breach of the Partnership

Agreement.

This theory of breach, too, fails. As we have discussed, none of the omissions

that the plaintiffs urge us to consider were material. And Section 15.1(b) does not

contemplate disclosure requirements. The calculation methodology mandated by

that provision is intended to insulate the exercise price from the decision to exercise

the Call Right itself. The fact that this contractual scheme exists does not prohibit

Loews or the General Partner from making public disclosures that the Call Right

might be exercised at some point in the future. Lastly, under these facts, there is no

contractual gap in which the implied covenant of good faith and fair dealing can

operate. The provision at issue makes no mention of disclosures, and to read

Sections 15.1(b) and 16.2 as creating a contractual scheme that would prohibit

Boardwalk from making disclosures required by federal law cannot be the meaning

that the parties intended. Because we determine that the Potential Exercise

Disclosures did not breach the Partnership Agreement, the plaintiffs’ claims that the

Potential Exercise Disclosures constituted tortious interference by Loews, the

GPGP, and the Sole Member, must fail.

IV

For the reasons set forth above, we affirm the judgment of the Court of

Chancery in the defendants’ favor on Count II (breach of contract arising from the

65 Potential Exercise Disclosures), Count III (breach of the implied covenant of good

faith and fair dealing), and Count V (unjust enrichment). We reverse the judgment

of the Court of Chancery in the defendants’ favor on Count IV (tortious interference

with contractual relations) and remand for further proceedings consistent with this

opinion. Jurisdiction is not retained.

66 LEGROW, J. dissenting, joined by VALIHURA, J.:

In its 2021 post-trial opinion, the Court of Chancery held that Boardwalk’s

General Partner breached the Partnership Agreement by exercising the Call Right

without satisfying two of the contractual conditions to that right: the Opinion

Condition and the Acceptability Condition.150 On appeal, the defendants challenged

both holdings. In 2022, a majority of this Court held that the General Partner did

not breach the Acceptability Condition and that, having reasonably relied on

Skadden’s advice, the General Partner, through the Sole Member, was exculpated

from damages under the Partnership Agreement (the “2022 Opinion”). 151 In a

concurring opinion authored by Justice Valihura (the “Concurring Opinion”), we

agreed with the majority that the General Partner, acting through the Sole Member,

was the proper decision maker for purposes of the Acceptability Condition, but we

wrote separately to explain our view that the trial court erred in holding that the

Opinion Condition was not met.

As we stated at the time, we viewed the trial court’s holdings on the Opinion

Condition as the “focal point” of the case. Although the majority chose to resolve

the appeal without addressing the Opinion Condition, it was unclear to us how the

150 The facts of this case have been set forth in detail in both of the opinions issued by the trial court and in the majority opinions issued in each appeal. We do not repeat the facts here. We adopt the defined terms used in the foregoing majority opinion. 151 Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund LP, 288 A.3d 1083, 1117, 1123 (Del. 2022) (“Boardwalk 2022”).

67 Call Right could be deemed to have been triggered unless the Opinion Condition

was satisfied. 152 Justice Valihura explained the analytical challenge created by not

addressing the trial court’s holdings regarding the Opinion Condition:

As Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) observed in its opinion, “[a]s a pre-condition to exercising the Call Right, Section 15.1(b)(ii) requires that the General Partner receive an ‘Opinion of Counsel,’ to the effect that the Partnership's status as a pass-through entity for tax purposes has or will reasonably likely in the future have a material adverse effect on the maximum applicable rate that can be charged to customers by the Partnership's subsidiaries[.]” A5102. Skadden opined that Baker’s Opinion conforms to the requisite language in Section 15.1(b). See A5110. However, Skadden did not opine on whether there was an MAE. In fact, Skadden stated expressly that “we have not been asked to undertake, and have not undertaken, any analyses for purposes of rendering the Opinion of Counsel contemplated in Section 15.1(b)(ii) of the LPA (and are not rendering such an opinion)[.]” A5121 (emphasis added). And because the Majority leaves the findings regarding Baker’s Opinion in place, according to my reading of the Majority’s opinion, Baker’s Opinion did not satisfy Section 15.1(b)(ii), and, thus, a necessary precondition to the exercise of the Call Right was not satisfied.153

Now, on appeal from the Court of Chancery’s Remand Opinion resolving the

remaining counts in the plaintiffs’ complaint, our colleagues in the Majority hold

that the trial court correctly concluded in 2021 that the General Partner failed to

satisfy the Opinion Condition and thereby breached the Partnership Agreement by

152 Boardwalk 2022 at 1123–24 & n. 1 (Del. 2022) (Valihura, J., concurring). Having concluded that the Opinion Condition and the Acceptability Condition were met, we did not address exculpation. Id. at 1123. 153 Boardwalk 2022 at 1124, n.1 (Valihura, J., concurring).

68 exercising the Call Right. 154 Having so concluded, the Majority again remands this

case so that the Court of Chancery may address the plaintiffs’ tortious interference

claim against Loews.

We disagree with our colleagues in the Majority and would affirm the Court

of Chancery’s Remand Opinion because, in our view, the Baker Botts opinion

satisfied the Opinion Condition and the General Partner therefore did not breach the

Partnership Agreement by exercising the Call Right once the Acceptability

Condition was met. 155 Justice Valihura explained our position at length in the

Concurring Opinion and we will not repeat that analysis in detail here. Briefly

154 Majority Opinion at 41. 155 To be clear, and as we explained in the Concurring Opinion, we view the Opinion Condition and the Acceptability Condition as separate requirements, both of which had to be satisfied before the General Partner could validly exercise the Call Right. See Boardwalk 2022 at 1124, n.1 (Valihura, J., concurring) (describing the Opinion Condition as a “necessary precondition” to the Call Right). Because both conditions were satisfied in this case, we would enter judgment for the defendants on Count I. Our finding that the defendants did not breach the Partnership Agreement effectively resolves most of the plaintiffs’ remaining claims, as we explain above. In its post-remand opinion, the Court of Chancery endeavored to construe and apply the 2022 Opinion to the plaintiffs’ remaining claims. The court identified three possible interpretations of the majority opinion: the “No Breach View,” the “Good Faith View,” and the “Separate Breach View.” See Bandera Master Fund LP v. Boardwalk Pipeline Partners, LP, 2024 WL 4115729, at *36–38 (Del. Ch. Sept. 9, 2024) (“Remand Opinion”). The trial court’s No Breach View understood the 2022 Opinion as addressing “both bases for breach”—the Opinion Condition and the Acceptability Condition—and resolving all aspects of the breach of contract count in the General Partner’s favor. The court reasoned that the No Breach View was the most plausible reading of the 2022 Opinion, and under that view the defendants prevailed on the plaintiffs’ remaining claims. Remand Opinion at *42, *48–49. In that sense, the result that our dissent would reach aligns with the Court of Chancery’s application of the No Breach View. But to the extent that the No Breach View collapses the Opinion Condition and the Acceptability Condition, we disagree with that interpretation of the Partnership Agreement. As we understand it, our colleagues in the Majority also view the conditions as separate, rejecting a “unitary reading” of Section 15.1(b). See Majority Opinion at 42–46.

69 summarized, we concluded in the Concurring Opinion that the trial court misapplied

Delaware law by reviewing the Baker Botts opinion de novo rather than considering

whether counsel issued the opinion in subjective good faith. Although we

acknowledged that the factual record was “far from perfect” for the defendants, we

held that the trial court improperly substituted its own legal interpretation of the Call

Right for opinion counsel’s interpretation, and that many of the court’s bad-faith

findings derived from its imposition of its construction of Section 15.1(b).

Reviewing those findings with the appropriate deference to Baker Botts’

interpretation of the Partnership Agreement led us to conclude that Baker Botts’

conduct did not rise to the level of bad faith. Accordingly, we took the position that

the Opinion Condition was satisfied.

That conclusion, coupled with the holding in the 2022 Opinion that the

General Partner did not breach the Acceptability Condition, would directly resolve

Count I in the defendants’ favor. Count IV—the tortious interference claim that the

Majority remands to the Court of Chancery—necessarily fails because there is no

underlying breach of contract, an essential element of a tortious interference

claim.156 And we agree with our colleagues in the Majority that the record does not

156 See WaveDivision Holdings, LLC v. Highland Capital Mgmt., L.P., 49 A.3d 1168, 1174 (Del. 2012) (holding that to prevail in a tortious interference with contract claim, a plaintiff must show “(1) there was a contract, (2) about which the particular defendant knew, (3) an intentional act that was a significant factor in causing the breach of contract, (4) the act was without justification, and (5) it caused injury”) (citing Restatement (Second) of Torts § 766) (emphasis added); Allied Capital Corp. v. GC-Sun Holdings, L.P., 910 A.2d 1020, 1036 (Del. Ch. 2006)

70 support the plaintiffs’ breach of contract and unjust enrichment claims relating to the

Potential Exercise Disclosures.157

That leaves only Count III, which alleges that Boardwalk and the General

Partner breached the implied covenant of good faith and fair dealing by exercising

the Call Right.158 The plaintiffs’ implied covenant claim rests on their contention

that the Partnership Agreement “implicitly prevented [the defendants] from

intentionally procuring an illegitimate opinion” of counsel to satisfy the Opinion

Condition.159 We disagree and would enter judgment in favor of the defendants for

two reasons. First, the implied covenant is a limited, gap-filling remedy that only

operates where a contract is silent; it does not apply when a contract “addresses the

conduct at issue.” 160 Section 15.1(b) expressly identifies the conditions under which

the General Partner may exercise the Call Right, leaving no gap for the implied

covenant to fill. Second, as set forth above and in the Concurring Opinion, the Baker

(“To state a tortious interference claim, a plaintiff must properly allege an underlying breach of contract.”). 157 Majority Opinion at 59–65. 158 Our colleagues in the Majority conclude that a review of the implied covenant claim is unnecessary given their conclusion that the General Partner’s exercise of the Call Right breached the Partnership Agreement. Majority Opinion at 46, n.96. Although we agree that the Court of Chancery’s judgment in favor of the defendants on this count should be affirmed, we reach that conclusion for different reasons. 159 Appellants’ Opening Br. at 33. 160 Oxbow Carbon & Materials Holdings, Inc. v. Crestview-Oxbow Acquisition, LLC, 202 A.3d 482, 507 (Del. 2019); Nationwide Emerging Managers, LLC v. Northpointe Holdings, LLC, 112 A.3d 878, 896 (Del. 2015).

71 Botts opinion was not “illegitimate.” For both of those reasons, the plaintiffs’

implied covenant claim fails.

In sum, and for the reasons explained in the Concurring Opinion, we would

have reversed the post-trial opinion because the General Partner validly exercised

the Call Right after both the Opinion Condition and the Acceptability Condition

were satisfied. That conclusion effectively resolves the plaintiffs’ remaining claims.

We therefore would affirm the Court of Chancery’s post-remand order entering

judgment in favor of the defendants on all the plaintiffs’ claims.