A breach of fiduciary duty claim says that someone trusted to act for a business, such as a partner, officer, director, manager or agent, used that position for their own benefit at the expense of the company or its owners. These claims matter most in closely held companies, where a few people control the money.
We bring these claims for companies and owners, and we defend insiders accused of disloyalty. Conflicts among owners more broadly are covered on our partnership disputes page.
An insider steers company business to a company they own.
A partner or manager takes a customer or deal that belonged to the company.
Company money pays personal expenses or moves to related parties.
An insider hides facts the company or its owners were entitled to know.
Duties of loyalty and care to the partnership and the other partners.
Duties to the corporation, not generally to individual shareholders.
The duties the company agreement sets, expands or limits. Managers are commonly treated as owing duties to the company.
Loyalty to the company in matters connected with their role.
Under the Texas Business Organizations Code, an LLC's company agreement may expand, restrict or eliminate the fiduciary duties of its members, managers and officers. A limited partnership agreement can eliminate the duties of loyalty and care if it does so expressly. A general partnership agreement can define the partners' duties but can't eliminate them.
Texas law also lets listed corporations, and electing corporations above a set number of shareholders, require a minimum ownership stake before a shareholder files a derivative suit. Most privately held companies are outside those rules, so their governing documents and the general rules on derivative suits still control.
In defending an insider, we start with what duties the documents imposed, whether disinterested owners or directors approved the transaction, and whether the claim was filed in time.
The losses the breach caused.
Giving up the profits made from the breach.
Losing fees or compensation received through the breach, sometimes without proof of actual damages.
Holding property traced to the breach for the benefit of the company or owner.
Available for fraud or malice proved by clear and convincing evidence.
Court orders that stop ongoing misconduct while the case proceeds.
The company agreement, partnership agreement or bylaws often define the duties involved.
We review the books and bank records, often starting with a records request.
The claim may belong to the company, to an owner directly, or to both.
An injunction can stop an ongoing diversion of funds or customers.
Many fiduciary disputes settle through mediation or a buyout, and we prepare each case for trial.
Have a question that isn't answered here? Call us at (817) 631-8842 or send a message.
Ask a QuestionFor LLCs, yes. The Texas Business Organizations Code allows a company agreement to expand, restrict or eliminate the fiduciary duties of members, managers and officers. It also lets a limited partnership's agreement eliminate the partners' duties of loyalty and care if it says so expressly. A general partnership agreement still can't eliminate those duties, though it can set reasonable standards for them.
When an insider injures the company, the claim usually belongs to the company, and an owner brings it as a derivative claim. In corporations and LLCs below a set number of owners, the usual derivative procedures don't apply to claims against insiders, and a court can treat the claim as direct when justice requires.
Usually not automatically. The codified rule covers corporations with voting shares listed on a national securities exchange and corporations whose governing documents elect it, and a similar rule covers LLCs with listed interests. Most privately held companies are outside it unless they opt in.
There is a limited time to sue, which generally runs from when the claim accrues. The clock can start later when the breach was concealed or couldn't reasonably have been discovered, but those exceptions are fact-specific, so owners who suspect a problem should act promptly.
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