Texas Business Court Decision – July 14, 2026

No. 25-BC01A-0023  Cobalt Falcon, LLC v. AXS Investments, LLC (First Division, Judge Bouressa) 2026 Tex. Bus. 43    25-bc01a-0023-cobalt-falcon-v-axs-investments-2026-tex-bus-43.pdf

Breach of Contract and Affirmative Defenses.

Background. Cobalt and AXS entered into a Transaction Agreement, later modified, under which  the court has already concluded that AXS had a continuing obligation to make perpetual monthly payments to Cobalt – see Cobalt Falcon, LLC v. AXS Investments LLC, 2026 Tex. Bus. 30) (issued May 19, 2026).  AXS had stopped making the required minimum payments under Section 2.4 and Schedule 2.4 of the amended Transaction Agreement in December 2024. Now before the court is Cobalt’s traditional summary judgment motion on the question of liability for breach of contract and for no-evidence summary judgment on AXS’s four remaining affirmative defenses (unconscionability, unenforceable penalty, failure to mitigate, and duplicative recovery/limitation of remedies) out of the ten defenses it originally pleaded.

Issues.

1. Whether Cobalt conclusively established the elements of breach of contract (obligation, breach, and resulting damages) under Delaware law sufficient for summary judgment on liability, notwithstanding a dispute over the scope of recoverable damages (Held: YES); and
2. Whether AXS raised a genuine fact issue on any of its four surviving affirmative defenses sufficient to defeat a no-evidence summary judgment motion (Held: NO).

Discussion.

1. On the issue of liability for breach of contract, Cobalt conclusively established a valid contract, AXS’s undisputed cessation of payments, and resulting damages. AXS’s argument that liability was capped at payments due before June 11, 2025 (absent an acceleration clause) went only to the amount of damages, not the existence of liability, so it was proper to grant Cobalt summary judgment on liability.
2. With respect to AXS’s affirmative defenses:
   1.  On unconscionability, applying Delaware’s substantive-unconscionability factors, the court holds AXS offered no evidence of a cost-price disparity, denial of remedies, penalty clauses, or hidden/confusing terms. The perpetual-payment obligation was expressly and plainly stated, and AXS controlled whether the underlying Fund closed.
   2. On the unenforceable penalty question, the defense is inapplicable because Cobalt sought direct contract damages (the unpaid monthly payments), not a pre-fixed liquidated sum, so no liquidated-damages-as-penalty analysis was triggered.
   3. On mitigation, AXS failed to identify any specific remedial action Cobalt could have taken or to quantify mitigable damages, relying instead on indemnification provisions and unrelated depreciation evidence, neither of which is sufficient under Delaware common law.
   4. On the “duplicate recovery/limitation of remedies” defense, AXS itself concedes it is not a proper affirmative defense, and summary judgment can be granted on that basis alone.
3. In sum, the court grants Cobalt summary judgment on liability under the Transaction Agreement and rejects each of the four remaining affirmative defenses AXS raised.