The Arguello Law Office, PLLC - Law Firm in Montgomery County TX

Se Habla Español

Business Law · Montgomery County, TX

Breach of Fiduciary Duty Cases in Montgomery County, TX

Q: Is this different from suing for breach of contract?

Yes. A contract claim asks whether someone kept their promises. A fiduciary claim asks whether someone in a position of trust put themselves first. The duties are higher and the analysis focuses on where the benefit went.

Q: Is shareholder oppression still a claim in Texas?

The common-law version largely is not. In Ritchie v. Rupe the Texas Supreme Court declined to recognize a common-law cause of action for shareholder oppression. In Sneed v. Webre the Court confirmed that officers and directors owe fiduciary duties to the corporation and that shareholders can bring derivative claims, and noted the Legislature made those proceedings more accessible for closely held corporations.

Money is moving and nobody will explain where. A partner is doing business on the side. The books stopped arriving. When someone in a position of trust puts themselves first, Texas law gives you a way to respond, and a deadline for doing it.

Let’s Talk

What a Fiduciary Duty Actually Means

A fiduciary is someone required to put another party’s interests ahead of their own. It is the highest duty one person can owe another in business, and it is a much stronger obligation than an ordinary contract.

Officers and directors owe that duty to the corporation. The Texas Supreme Court said so plainly in Sneed v. Webre: officers and directors “owe a fiduciary duty to the corporation.” Partners owe duties to the partnership and to each other. Trustees owe them to beneficiaries. Managing members can owe them within an LLC.

The practical test is not whether someone behaved badly. It is whether they were in a position of trust, and whether they used that position for their own benefit or someone else’s expense.

Four years. That is the deadline. Texas Civil Practice and Remedies Code section 16.004(a)(5) is specific. Suit for breach of fiduciary duty must be brought “not later than four years after the day the cause of action accrues.”

Four years sounds generous until you consider how these cases surface. Most people do not discover the problem the day it happens. They discover it during a buyout, an audit, a divorce, or a death in the family, sometimes years later. By then a meaningful part of the clock may already have run.

Source: Texas Civil Practice and Remedies Code § 16.004(a)(5).

What a Breach Actually Looks Like

These cases rarely announce themselves. They usually start with a pattern that does not add up.

Self-dealing

The company buys from, rents from, or pays a business the insider quietly owns.

Diverted opportunities

A deal that belonged to the company is taken personally instead.

Unexplained transfers

Money leaves the accounts and no one will produce the documentation.

Competing on the side

An officer or partner builds a competing venture using company time, clients, or data.

Books withheld

Requests for financial records are ignored, delayed, or answered incompletely.

Compensation without approval

Salaries, bonuses, or distributions set unilaterally in the insider’s favor.

Trustee misconduct

A trustee invests for their own benefit, or will not account to the beneficiaries.

Misuse of a power of attorney

An agent moves an elderly parent’s assets for their own use.

The last two matter more than people expect around here. Montgomery County has a large retiree population and a great many family trusts. A fiduciary problem often surfaces inside an estate rather than inside a business.

Why This Claim Carries More Weight in Texas Than It Used To

In 2014 the Texas Supreme Court decided Ritchie v. Rupe. It declined to recognize a common-law cause of action for shareholder oppression. The Court was explicit about why. It would “refrain from imposing additional claims or procedures that may upset the Legislature’s careful balance of policies and interests.”

That decision closed a door many minority owners had been walking through. What it did not close was this one.

The following year, in Sneed v. Webre, the Court confirmed that officers and directors owe a fiduciary duty to the corporation. It held that shareholders may pursue derivative claims for a breach. Its words were direct: “if a shareholder derivative plaintiff can establish a breach of duty, the courts will afford a remedy.” The opinion also notes that the Legislature made derivative proceedings more accessible for closely held corporations, by removing demand requirements and other procedural barriers.

For a minority owner in a small Texas company, that combination is the practical takeaway. Breach of fiduciary duty is now one of the main routes available. For a closely held corporation, the procedural hurdles are lower than most owners assume.

Sources: Ritchie v. Rupe, Supreme Court of Texas (2014); Sneed v. Webre, Supreme Court of Texas (2015).

How We Approach a Case

Establish the relationship

Before anything else, we confirm a fiduciary duty actually existed. Not every bad business partner is a fiduciary, and this is where weak cases fall apart.

Fix the timeline

When did the conduct happen, and when could you reasonably have discovered it? The four-year limitations period makes this one of the first questions, not one of the last.

Get the documents

Financials, minutes, bank records, contracts, communications. Texas gives owners and beneficiaries rights to information, and enforcing those rights is often the first real step.

Trace the benefit

These claims turn on where value went. We work through what the company lost and what the insider gained, because both matter to the remedy.

Choose the route

Direct claim or derivative claim. Demand letter, mediation, or filing. The right answer depends on the entity, the facts, and what you actually want at the end.

Resolve it

Many of these matters settle, often through a buyout or an accounting. Some do not. We prepare on the assumption yours might not.

When This Is Not the Right Claim

An honest assessment saves you money, so it is worth being direct about the cases we turn away.

If no fiduciary relationship existed, this is a contract dispute rather than a fiduciary one, and it belongs on a different track. See our page on contract dispute resolution.

If the conduct is old, the four-year deadline may already have passed. It is still worth asking, because when the clock started is a real question and not always the date of the conduct itself.

And if the relationship is salvageable and both sides want a deal rather than a fight, shareholder dispute mediation is usually faster, cheaper, and private.

Local Knowledge That Matters

These cases are filed in the Montgomery County district courts in Conroe. Most civil matters here are referred to mediation before trial. The county also operates its own Dispute Resolution Center. A great many disputes resolve before a jury is ever seated.

Knowing that shapes strategy from day one. A case built only for trial spends money in the wrong places. A case built to be credible at mediation, and ready for trial if mediation fails, tends to end better and cost less.

Business Law Shareholder Dispute Mediation Contract Dispute Resolution Entity Formation Business Tort Representation Estate Planning

About Your Attorney

Andres Arguello

Andres Arguello represents business owners, families, and property owners across Montgomery County and the surrounding area from The Arguello Law Office, PLLC. His practice covers business law, estate planning, real estate, and insurance claim disputes.

Fiduciary cases sit where those areas meet. A dispute that starts as a business problem often turns out to involve a trust, an estate, or a power of attorney. It helps to have one attorney who can see the whole picture.

Business Law Estate Planning Real Estate Insurance Claims Montgomery County, TX

Frequently Asked Questions

How long do I have to file a breach of fiduciary duty claim in Texas?

Four years. Texas Civil Practice and Remedies Code section 16.004(a)(5) requires suit to be brought “not later than four years after the day the cause of action accrues.” When the clock starts is its own question, because many breaches are concealed and are not discovered until much later. If you think something happened several years ago, ask rather than assume.

Who actually owes a fiduciary duty?

Officers and directors owe one to the corporation. Partners owe duties to the partnership and to each other. Trustees owe them to beneficiaries, and an agent under a power of attorney owes them to the person who granted it. Managing members can owe them within an LLC. What matters is the position of trust, not the job title.

Is this different from suing for breach of contract?

Yes, and the difference matters. A contract claim asks whether someone kept their promises. A fiduciary claim asks whether someone in a position of trust put themselves first. The duties are higher, the available remedies can be broader, and the analysis focuses on where the benefit went.

I am a minority owner and I keep hearing shareholder oppression is dead in Texas. Is it?

The common-law version largely is. In Ritchie v. Rupe the Texas Supreme Court declined to recognize a common-law cause of action for shareholder oppression. But in Sneed v. Webre the Court confirmed that officers and directors owe fiduciary duties to the corporation and that shareholders can bring derivative claims, and it noted the Legislature made those proceedings more accessible for closely held corporations. Breach of fiduciary duty is one of the main routes that remains.

Can I get the company’s financial records?

Often yes. Texas gives owners and beneficiaries rights to information, and enforcing those rights is frequently the first real step in a case. A refusal to produce records is not just an obstacle; it is sometimes evidence in itself.

Will this end up in a trial?

Most do not. Montgomery County refers most civil cases to mediation before trial and operates its own Dispute Resolution Center, and many fiduciary matters resolve through a buyout or an accounting. The cases that do go to trial are usually the ones where someone refuses to account for anything at all.

What does a first conversation involve?

Bringing what you have. Formation documents, financials, any written communications, and a plain description of what changed and when. The first job is establishing whether a fiduciary duty existed and where the timeline stands. Call the office to arrange it.

Something Is Not Adding Up. Let’s Look at It.

If you suspect a partner, officer, trustee, or agent has put their interests ahead of yours, the four-year clock is already running. A conversation early is worth more than a strong case filed late.

Contact The Arguello Law Office

Serving Montgomery County, The Woodlands, Conroe, Spring, Magnolia and Tomball.