A new Texas appellate decision emphasizes that a limited partnership cannot defeat a partner’s statutory inspection rights merely by alleging hostility, collateral litigation, or an unspecified improper motive. In WP Liquidating, Ltd. v. Fenoglio, No. 11-25-00131-CV (Tex. App.—Eastland July 23, 2026), the Eleventh Court of Appeals affirmed summary judgment requiring a limited partnership to permit inspection of its books and records and awarding the requesting partner $120,000 in attorney’s fees.

Anthony Fenoglio, a limited partner of WP Liquidating, Ltd., requested access to the partnership’s records after receiving financial information indicating that another partner had received substantially larger distributions despite Fenoglio’s greater capital investment. Fenoglio stated that he wanted to determine whether the partnership’s assets had been properly managed and whether its revenues and expenses had been properly accounted for and allocated. The partnership refused his requests, questioning his ownership interest, asserting that he intended to use the information in other litigation, and demanding that he first sign a confidentiality agreement restricting his use of the records.

The court held that investigating suspected financial mismanagement is a proper purpose for inspecting partnership records under Section 153.252 of the Texas Business Organizations Code. Once the requesting partner establishes an asserted statutory right, a proper purpose, and the partnership’s refusal, the partnership must identify specific facts and produce evidence showing that the stated purpose is pretextual or that the partner is acting from a corrupt or unlawful motive. General assertions of bad faith, hostility, a disagreeable relationship, or possible use of the information in litigation were not enough. 

The court also rejected the argument that Fenoglio’s refusal to sign the proposed confidentiality agreement was evidence of an improper purpose. The authorities relied upon by the partnership established that a trial court may enter an appropriate protective order for confidential records; they did not establish that a partnership may unilaterally condition a statutory inspection right on the execution of its preferred confidentiality agreement. The court stopped short of conclusively deciding whether the general partner could condition inspection on a confidentiality agreement, but suggested that confidentiality concerns are better presented to a trial court through a request for a protective order than left to the general partner’s discretion. At the same time, the court recognized that a partnership agreement may impose reasonable restrictions on inspection rights.

Notably, the court applied the version of Section 153.552 in effect in 2019 when Fenoglio filed suit. Since then, the Texas Legislature has amended Section 153.552. The current statute provides that, a partner or assignee making a written demand stating a proper purpose may examine records reasonably related and appropriate to that purpose “[u]nless otherwise provided by the governing documents.” The new language may affect future disputes by giving partnership agreements a more significant role in defining the scope and conditions of inspection rights. The current statute also generally excludes emails, text messages, similar electronic communications, and social-media information from partnership records unless the communication effectuates an action by the partnership or the partnership agreement provides otherwise.

Finally, the court affirmed the fee award under Section 153.5521 of the Texas Business Organizations Code, which makes a partnership that improperly refuses inspection liable for the costs and expenses, including attorney’s fees, incurred to enforce the statutory right.

Although Fenoglio involved a limited partnership, its reasoning may also be relevant to books-and-records disputes involving Texas LLCs and corporations. The LLC inspection and enforcement provisions closely parallel those governing limited partnerships. And because relatively few cases address limited-partnership inspection rights, the court itself relied extensively on corporate cases in evaluating proper purpose, improper purpose, and confidentiality concerns. Entity-specific differences remain important, however. Among other things, the corporate statute imposes shareholder-eligibility requirements and now treats certain inspection demands connected with litigation as improper when made to publicly traded corporations and corporations that have opted into specified Texas governance provisions.

Practical Takeaways

1. State a concrete proper purpose in the inspection demand. Fenoglio confirms that investigating possible mismanagement, accounting irregularities, or disproportionate distributions can constitute a proper purpose for inspecting partnership records.
2. An improper-purpose defense requires evidence, not suspicion. Hostility, related litigation, or a strained relationship will ordinarily be insufficient without facts showing harassment, competitive misuse, or another corrupt or unlawful objective.
3. Review the governing documents before making or responding to an inspection demand. Under the current version of Section 153.552, the partnership agreement may play a significant role in defining the scope and conditions of inspection rights. Fenoglio nevertheless cautions against assuming that a general partner may impose new confidentiality or use restrictions after receiving a demand when those restrictions do not appear in the governing documents.
4. Wrongful refusal can be expensive. Section 153.5521 exposes a partnership to the requesting partner’s enforcement costs and attorney’s fees—in Fenoglio, $120,000—on top of an order requiring production of the records.