Texas Business Court Decision – May 19, 2026
No. 25-BC01A-0023 Cobalt Falcon, LLC v. AXS Investments (First Division, Judge Bouressa) 2026 Tex. Bus. 30 25-bc01a-0023-cobalt-falcon-v-axs-investments-2026-tex-bus-30.pdf
Contracts.
Background. In 2022, Cobalt Falcon sold AXS assets related to the management of an Exchange-Traded Fund (ETF) under an agreement requiring monthly payment from AXS “in perpetuity (unless otherwise agreed).” After AXS closed the Fund, it stopped making payments. Cobalt sued, claiming “in perpetuity” required continued payments whether or not the fund was still in existence. This is a memorandum opinion and order construing the parties’ sales agreement under TRCP 166(g).
Held: Applying Delaware law, the court holds that “in perpetuity” is unambiguous and means just what is says: forever or without end.
Under Delaware law, this plain meaning controls unless there is an ambiguity. Deviation from the plain meaning requires two or more reasonable interpretations which would thereby create ambiguity. Cobalt’s interpretation is reasonable and the phrase can only be given effect under Cobalt’s interpretation. Giving the phrase its plain meaning does not render other provisions of the contract meaningless; nor does it lead to an absurd result. As to AXS’s “absurdity” argument, AXS controlled whether the Fund remained open, and giving AXS post-contract power over its own payment obligations would itself produce an absurd result; taking AXS’s position to its logical conclusion would require the court to find that Cobalt agreed to relinquish control over the Fund (and the resulting revenue stream) in exchange for payments that would be made only so long as AXS elected to keep the Fund open and continue payments; reading the agreement to give AXS unilateral, post-contract control over the consideration to be paid presents an absurd outcome, rendering AXS’s interpretation unreasonable. Because there are not two or more reasonable interpretations of the “in perpetuity” language in the sales agreement, there is no ambiguity, and its plain meaning prevails. The court cannot rewrite the agreement and the consideration obligations simply because AXS may have been mistaken as to their duration or otherwise regrets the bargain.
Following Fund closure, the purchase consideration formula provision in the sales agreement yields a fixed monthly payment to Cobalt of $74,062.