Texas Partnership and Ownership Disputes

By Hank FasthoffJuly 6, 2026

An ownership dispute can interrupt voting, distributions, access to records, customer relationships, and ordinary business operations. The legal response depends on the entity type, the governing documents, the source of the claimed injury, and the relief the law authorizes. A disagreement between equal owners presents a different case from diversion of company assets or enforcement of a written purchase option.

Texas law provides several remedies, but it supplies no general right to force another owner to sell. Contract rights, claims for injury to the company, personal claims, winding up, and receivership each follow different rules. The first review should separate those remedies before the parties commit to a theory or form of relief unsupported by the facts or law.

The Governing Documents Define the First Options

For a limited liability company, Business Organizations Code Section 101.052 provides the company agreement with broad control over relations among members, managers, officers, assignees, and the company. A partnership agreement or shareholder agreement performs a similar function for its entity. The documents can allocate voting authority, identify decisions requiring enhanced approval, govern distributions, restrict transfers, and prescribe a process for an owner departure.

A detailed exit provision identifies its triggering events and the party entitled to invoke it. It also addresses notice, valuation date, valuation standard, payment terms, security, tax treatment, releases, and the treatment of guarantees. Terms such as fair value and fair market value can produce different results, so the agreement should define the selected standard rather than rely on the label.

Texas courts enforce mandatory purchase procedures according to their language. In Crain v. Northern, 2026 Tex. Bus. 4, an owner failed to respond to a mandatory purchase option. The Texas Business Court ordered specific performance of the resulting transaction and awarded attorney fees.

That result depended on the contract. Mediation and arbitration provisions may direct where the dispute proceeds, while a purchase option can create an exit that Texas law otherwise withholds. A vague reference to a future appraisal or later negotiation may generate another dispute instead of resolving the first one.

An LLC Member Has No Default Right to Leave

Texas Business Organizations Code Section 101.107 provides that an LLC member may not withdraw or be expelled. That rule operates as a default because Section 101.052 permits the company agreement to modify many provisions of the LLC statute, subject to the limits in Section 101.054. An owner therefore needs to read the agreement before assuming that resignation ends the membership interest or creates a payment right.

When the company agreement grants a withdrawal right, Section 101.205 entitles the withdrawing member to receive the fair value of the interest within a reasonable time. The statute measures value as of the withdrawal date. Contract language can define the procedure and supply greater precision on the valuation and payment process.

An assignment presents another distinction. Under Section 101.108, an assignment of a membership interest doesn't by itself admit the assignee as a member or grant management rights. A transaction intended to separate an owner from the company should address economic rights, membership status, voting rights, records, guarantees, and any continuing duties in one coordinated set of documents.

Section 11.314 Authorizes Winding Up

Section 11.314 permits an owner to seek winding up and termination of a Texas partnership or LLC. The action must proceed in a district court in the county where the entity has its registered office or principal place of business in Texas. The owner must establish at least one of three statutory grounds.

An economic purpose likely to be unreasonably frustrated satisfies the first ground. Conduct by another owner that makes continued business with that owner not reasonably practicable supplies the second. Under the third, the court examines whether the entity can continue in conformity with its governing documents.

A 50/50 voting deadlock may support the third ground when the agreement requires approval that the owners can no longer obtain. The evidence should connect the disagreement to the agreement and the company's operations. Missed approvals, failed votes, interrupted financing, unpaid obligations, and an inability to appoint managers can show how the entity has ceased to function as designed.

Section 11.314 authorizes winding up and termination. Its text doesn't grant a general power to compel a sale, rewrite management rights, or impose a new ownership structure. Once winding up is underway, Section 11.054 permits a court to supervise the process, appoint a person to conduct it, and issue orders required by the circumstances.

Receivership Serves a Different Purpose

Section 11.404 governs a rehabilitative receivership for a domestic entity. The section isn't limited to corporations. The applicant must establish a listed statutory ground and show that every other available legal and equitable remedy is inadequate.

The listed grounds include insolvency, management deadlock causing or threatening irreparable injury, illegal or fraudulent conduct by a governing person, oppressive conduct, and misapplication or waste of entity property. A separate ground addresses a defined shareholder voting deadlock in a for profit corporation. Section 11.405 addresses a receiver for liquidation when its separate conditions are met.

In Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014), the Supreme Court of Texas rejected a common law cause of action for shareholder oppression. It also held that Section 11.404 didn't authorize the compelled buyout ordered by the trial court. The court reversed the $7.3 million purchase award while leaving other properly pleaded claims for separate analysis.

Ritchie therefore prevents an owner from treating oppression as a general basis for a judicial buyout. It doesn't eliminate contract, fraud, fiduciary, derivative, or other recognized claims. Each theory must support its own elements, injury, standing, and remedy.

The Claimant Must Identify the Injured Party

An ownership interest doesn't convert every injury to the company into a personal claim. Lost company funds, diverted opportunities, damage to company property, and reduced enterprise value usually concern the entity. A direct claim requires an injury the owner suffered independently of the company.

In Bertucci v. Watkins, 709 S.W.3d 534 (Tex. 2025), the Supreme Court rejected individual fiduciary claims based only on ownership in related entities. The court distinguished those claims from derivative claims asserted for the entities. That distinction affects who may sue, who receives any recovery, and which procedural rules apply.

The Texas Business Court applied the same discipline in Stratton v. Hogan, 2026 Tex. Bus. 44. An owner couldn't pursue an individual conversion claim based on property owned by the corporation. In a subsequent opinion in Crain, 2026 Tex. Bus. 11, the purchase provision deemed the assignment effective December 19, 2024. That date ended the former member's standing to assert derivative claims before the court ruled.

Pleading should identify the owner of the property or right, the person who suffered the injury, and the recipient of the requested recovery. That analysis should occur before an exit transaction closes because the transaction itself may change standing. Company records, capitalization documents, tax filings, account statements, and board materials often answer those questions.

Fiduciary Duties Depend on Role and Agreement

Texas imposes different duties across entities and ownership roles. Partners owe statutory duties of loyalty and care under Sections 152.204 through 152.206, subject to the partnership statute's rules on modification. An LLC analysis begins with management structure, the company agreement, and the conduct attributed to each person.

Senate Bill 29 amended Section 101.401 effective May 14, 2025. The amended provision permits an LLC company agreement to expand, restrict, or eliminate duties, including fiduciary duties, and liabilities for breach. A claim involving an LLC manager or member therefore needs the current agreement and any amendments.

Recent decisions reinforce the role specific inquiry. In Enosis Investments v. Jensen, 2026 Tex. Bus. 19, the Texas Business Court held that a nonmanaging member generally owed no fiduciary duty to manager managed LLCs or their other members. The court also declined to pass an entity manager's duty through to its officer and controlling owner without a pleaded basis for disregarding the entity form.

Evidence of diverted funds or an undisclosed transaction may support a claim against the person who owed the relevant duty. Ownership alone supplies no substitute for that analysis. The complaint should connect the governing role, agreement language, challenged conduct, and requested remedy.

Valuation Depends on the Contract and Evidence

Valuation becomes central when the agreement creates a purchase right or the parties negotiate an exit. The first questions concern the standard of value, valuation date, subject interest, and assumptions. Debt, working capital, pending distributions, owner compensation, contingent liabilities, taxes, insurance proceeds, and customer concentration can affect the result.

Discounts require a source and a defined purpose. A minority interest or limited market may affect fair market value, while another contract or statute may use a different standard. A fixed rule applying the same discount to every minority interest has no reliable place in the analysis.

The purchase provision should also address procedure. It can identify the appraiser qualifications, information access, treatment of competing valuations, payment schedule, interest, security, and responsibility for fees. An expert retained before those terms are identified may answer a valuation question the agreement never presented.

Early Action Protects the Company and the Record

Ownership disputes can affect payroll, taxes, insurance, bank authority, customer communications, and data access before a court rules on the merits. Your early review should identify decisions that require immediate authority and conduct that threatens company property. Temporary relief may be available when admissible evidence proves a viable claim, imminent irreparable injury, and the other requirements for an injunction.

The useful record includes every governing document and amendment, capitalization records, written consents, minutes, accounting data, bank records, tax returns, compensation records, and communications about the disputed conduct. Preserving native files and access logs can show who changed an account, approved a transfer, or removed information. A written demand for records, an accounting, or compliance with the agreement may narrow the issues and document the response.

The requested relief should match the proven right. Contract enforcement, damages, derivative recovery, winding up, and receivership address different problems. A disciplined claim preserves the owner's negotiating position without asking the court for a remedy Texas law doesn't authorize.

Ownership disputes become harder when the governing documents are silent where the owners expected an exit. Careful analysis can separate a temporary conflict from a statutory winding up case and preserve the value the parties are fighting over.