When a dispute threatens your Limited Liability Company, experienced legal representation is vital. As a leading LLC litigation attorney in Texas, Thomas P. Finley, Jr. provides strategic counsel and aggressive advocacy for business owners facing lawsuits, contract disputes, or internal member conflicts in both Waco and Dallas.
Protecting Your Texas LLC in Disputes
Texas LLC litigation can involve complex issues, from breach of contract and breach of fiduciary duty to fraud, mismanagement, and disputes among members. With over 38 years of experience, Thomas P. Finley, Jr., delivers direct, practical solutions for LLC members and managers dealing with:
Texas LLC litigation
The Litigation Process for LLCs
From the initial client consultation through discovery, negotiation, and trial, Thomas P. Finley, Jr. guides LLC owners in Waco and Dallas every step of the way. Services include:
Solutions for LLC Disputes In and Out of Court
Not every LLC dispute requires a courtroom battle. Thomas P. Finley works to resolve business conflicts efficiently, prioritizing mediation and negotiated settlements when possible—but he is always prepared to fight for your interests in court if necessary.
Schedule a Texas LLC Litigation Consultation
If your Limited Liability Company is involved in a dispute, don’t risk your investment or business future. Contact the Law Offices of Thomas P. Finley, Jr. in Waco or Dallas to discuss your LLC litigation case with a seasoned Texas business litigation lawyer. Protect your company, your rights, and your bottom line with an advocate who understands LLC law statewide.
Common litigation issues between members of a limited liability company (LLC) in Texas often arise from disputes over the company agreement, which governs the internal affairs of the LLC and the relationships among its members, managers, and the company itself. These disputes may include disagreements over the interpretation or enforcement of provisions in the company agreement, such as voting rights, profit distribution, or management authority. The Texas Business Organizations Code allows company agreements to regulate and manage the affairs of the LLC, provided they are not inconsistent with the law, and these agreements are enforceable against members even if they have not signed them.
Another frequent issue involves disputes over members’ financial obligations, such as capital contributions. Under Texas law, a member’s enforceable promise to make a contribution must be in writing and signed. If a member fails to fulfill this obligation, the LLC may enforce the agreement and seek remedies, including requiring the member to pay the agreed value of the contribution or imposing penalties such as forfeiture of ownership interests.
Access to company records is another area of contention. Members or assignees of membership interests have the right to inspect and copy LLC records for a proper purpose, as outlined in the company agreement or the Texas Business Organizations Code. Disputes may arise if a member believes they are being denied access to records or if the scope of access is contested.
Additionally, disputes may occur regarding the withdrawal or expulsion of members. For example, a withdrawing member is entitled to receive the fair value of their interest within a reasonable time, as determined by the company agreement. Disagreements over the valuation of membership interests or the grounds for expulsion can lead to litigation.
Finally, fiduciary duties and conflicts of interest can also lead to disputes. While Texas courts have generally declined to recognize broad fiduciary duties between LLC members, specific circumstances, such as majority members redeeming minority interests, may give rise to fiduciary obligations. Breaches of these duties, including self-dealing or mismanagement, are common sources of litigation.
Under Texas law, the existence and scope of fiduciary duties among members of a limited liability company (LLC) are not explicitly defined by statute. The Texas Business Organizations Code (TBOC) does not impose fiduciary duties on LLC members as a matter of law. Instead, fiduciary duties may arise from the LLC’s company agreement or under common law principles. Specifically, Section 101.401 of the TBOC allows the company agreement to expand, restrict, or eliminate fiduciary duties and related liabilities among members, managers, and officers of the LLC.
Texas courts have generally held that members of an LLC do not owe fiduciary duties to each other solely by virtue of their membership. However, fiduciary duties may arise in specific circumstances, such as when one member exercises significant control over the LLC or in cases involving managing members. For example, managing members may owe fiduciary duties to non-managing members, but these duties can be modified or eliminated by the company agreement. Courts have also recognized that fiduciary duties may be implied in certain relationships of trust and confidence, but such duties are typically determined on a case-by-case basis.
In the absence of a company agreement addressing fiduciary duties, Texas courts may look to common law principles to determine whether a fiduciary relationship exists. The existence of such a relationship is often treated as a fact question, particularly in cases where there is an imbalance of power or control among members. Additionally, the business judgment rule may protect the decisions of LLC managers or directors, provided their actions are made in good faith and without self-dealing or fraud.
In summary, fiduciary duties among LLC members in Texas are not automatically imposed by law but may arise from the company agreement, specific circumstances, or common law principles. The scope and enforceability of these duties depend on the facts of each case and the terms of the LLC’s governing documents.
Contact Thomas P. Finley, Jr. Attorney at Law to discuss your LLC Litigation questions in Texas.
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