## Facts

- Michael L. Gaus and John C. West formed Smith & West, L.L.P. (Smith & West), and registered it as a limited liability partnership (LLP) under the Texas Revised Partnership Act on March 6, 1995.
- Smith & West did not complete the required statutory renewal, and its LLP registration ended one year later.
- In August 1999, Smith & West entered into a commercial lease with MF Partners I, Ltd. (MF).
- Gaus and West signed personal guaranties of Smith & West’s lease obligations, limited to the first two years of the lease term.
- MF later assigned the lease to Apcar Investment Partners VI, Ltd. (Apcar).
- Apcar alleged Smith & West breached the lease in October 2002 and sued Smith & West, Gaus, and West to recover damages, seeking to hold Gaus and West personally liable.
- Gaus and West moved for summary judgment, arguing (1) the guaranties had expired before the alleged default and (2) Smith & West’s LLP status shielded them from individual liability for partnership debts.
- Apcar moved for partial summary judgment, asserting Smith & West was not a registered LLP when it signed the lease in 1999 because the registration had lapsed years earlier.
- The trial court granted summary judgment for Gaus and West, denied Apcar’s partial summary-judgment motion, and Apcar appealed.

## Issues

1. Whether Gaus and West were entitled to summary judgment based on LLP limited-liability protection when Smith & West’s LLP registration had ended before the lease was executed.
2. Whether the expiration of the two-year personal guaranties, by itself, entitled Gaus and West to summary judgment against Apcar’s claims seeking personal liability on a non-guaranty theory.

## Decision

- The court of appeals reversed the summary judgment in favor of Gaus and West and remanded the case for further proceedings.
- The court held that Smith & West was not a registered LLP when it entered the lease because its LLP registration expired after one year and was not renewed.
- The court concluded the guaranties’ two-year time limit did not, standing alone, defeat Apcar’s separate theory that Gaus and West could be personally liable as partners for a partnership obligation incurred when no LLP registration was in effect.
- Because Gaus and West did not conclusively establish an entitlement to judgment as a matter of law on all bases for potential individual liability, summary judgment was improper.

## Legal Principles

- Under the Texas Revised Partnership Act, an LLP’s registration is time-limited and must be renewed; if renewal does not occur, LLP status ends as a matter of law.
- LLP limited-liability protection applies only to partnership obligations incurred while the partnership is registered as an LLP; obligations incurred after registration ends are not protected by the LLP liability shield.
- A personal guaranty is a separate contractual undertaking that may add liability, but the end of a time-limited guaranty does not automatically eliminate other possible sources of liability, including statutory partner liability when LLP protection is unavailable.
- A party seeking traditional summary judgment must conclusively establish each element of its ground for judgment and negate other viable theories of recovery presented by the pleadings and record.

## Conclusion

The appellate court reversed because Smith & West’s LLP registration had expired years before the 1999 lease was signed, so Gaus and West were not entitled to LLP-based immunity as a matter of law for that lease obligation, and the two-year limit in their personal guaranties did not conclusively defeat Apcar’s alternative claim that they could still be personally liable as partners for an obligation incurred when no LLP registration was in effect.


Apcar Investment Partners VI, Ltd. v. Gaus, 161 S.W.3d 137 (2005)