What Is a Fiduciary Duty in Texas Business Law?
A fiduciary duty requires a person in a position of trust to act in the best interests of the party they serve, not their own personal interest. The two core components are the duty of loyalty and the duty of care. Fiduciaries must avoid self-dealing, disclose material information and act with honesty and diligence.
Who Owes a Fiduciary Duty in Texas?
- Partners to each other and to the partnership
- Corporate officers and directors to the corporation
- LLC managers and managing members, depending on the company agreement
- Agents to their principals, and attorneys to their clients
- In some closely held companies, owners who have placed special trust and confidence in one another
Texas also recognizes informal fiduciary relationships, where one party justifiably places special confidence in another who accepts that trust before the transaction at issue.
Common Breach of Fiduciary Duty Scenarios
- Diverting business opportunities to a competing venture
- Misappropriating partnership or company funds
- Self-dealing and steering contracts to related parties
- Squeezing out minority owners
- Misusing confidential company information
- Concealing material facts from co-owners
These claims often overlap with corporate asset conversion and trade secret disputes.
Remedies for Breach of Fiduciary Duty in Texas
- Actual damages for losses caused by the breach
- Disgorgement of profits the fiduciary gained
- Constructive trust over diverted assets
- Fee forfeiture in appropriate cases
- Exemplary damages for fraud, malice or gross negligence
- Injunctive relief, including asset freezes
Defending Against Breach of Fiduciary Duty Claims
Fiduciary claims are also used as leverage in partner and shareholder fights. If you are accused, we examine whether a fiduciary relationship actually existed, whether the governing documents limited or defined your duties, whether the business judgment rule protects the decision, and whether the claim is barred by limitations. A strong early defense can narrow the case and lead to a faster, more favorable resolution.
How AbsolutLAW Litigates Fiduciary Duty Claims
We identify every fiduciary relationship in your business structure, work with forensic accountants and financial experts to trace funds, and move quickly to preserve evidence. We pursue the strongest combination of claims in state and federal courts in Dallas, Tarrant, Harris and Travis counties and statewide. Read what counts as a breach of fiduciary duty in a Texas partnership, or schedule a free consultation at 214-935-1628.
Breach of Fiduciary Duty: Frequently Asked Questions
What is the statute of limitations for breach of fiduciary duty in Texas?
Generally four years. The discovery rule or fraudulent concealment may delay when the period begins if the breach was hidden or not reasonably discoverable, so prompt review is important.
Do shareholders owe each other fiduciary duties in Texas?
Not automatically. Officers and directors owe duties to the corporation. Co-shareholders may owe each other duties only if a formal or informal relationship of trust exists based on the facts.
What must I prove in a Texas breach of fiduciary duty case?
You must show a fiduciary relationship existed, the defendant breached a duty, and the breach caused injury to you or a benefit to the defendant.
Can I recover punitive damages for breach of fiduciary duty?
Yes, exemplary damages may be available if the breach involved fraud, malice or gross negligence, subject to Texas caps.
Can an LLC operating agreement limit fiduciary duties?
Yes. Texas allows a company agreement to expand or restrict certain duties, though it cannot eliminate the duty of good faith or liability for bad faith, intentional misconduct or knowing violations of law.