Breach of fiduciary duty in Texas: who owes what, to whom.
Fiduciary duty is the law’s highest standard: the obligation to put someone else’s interests ahead of your own. In Texas business life it binds partners, officers, directors, trustees, and agents, and it is the claim doing most of the real work in owner disputes since the courts narrowed everything else. Here is who owes it, what it requires, and why its remedies reach further than contract law ever will.
Who owes fiduciary duties in Texas
The formal list is settled. Partners in a general partnership owe statutory duties of loyalty and care in the partnership’s business. Officers and directors owe their duties to the company they serve, a point with real consequences: the duty runs to the entity, not to any individual shareholder, which is why shareholder-side claims so often proceed derivatively. Trustees owe the strictest duties the law knows. Agents owe them to principals, and attorneys to clients. For LLCs, Texas largely lets the company agreement define the duties managers and members owe, which makes the drafting of that document a fiduciary decision in itself.
Then there is the informal category, and it is where wishful pleading goes to die. Texas recognizes fiduciary duties arising from relationships of special trust and confidence, but the trust must predate and stand apart from the disputed transaction, and ordinary business dealings, however long and cordial, do not qualify. The theory succeeds on real trust and fails on friendship.
What the duty actually requires
Three obligations do the work. Loyalty: the fiduciary acts for the beneficiary’s benefit, not their own, no taking the company’s opportunities, no competing with it, no standing on both sides of a deal. Candor: full disclosure of material facts; in a fiduciary relationship, silence can be the breach. Care: informed, deliberate decision-making, though for corporate decision-makers this is where the business judgment rule shelters honest mistakes, a protection Texas recently codified, as covered in the SB 29 governance analysis.
One structural rule shapes the litigation more than any other: when a fiduciary transacts with their own beneficiary, self-dealing, Texas treats the transaction with suspicion and puts the burden on the fiduciary to show it was fair. That burden shift is why documentation and disinterested process, the habits covered under governance, decide these cases long before a jury does.
One more thing decides them earlier still: what the governing document says. Texas lets an LLC company agreement narrow or eliminate duties that would otherwise exist, and the Texas Business Court has been giving those provisions full effect. Tall v. Vanderhoef, 2025 Tex. Bus. 15, dismissed an individual fiduciary claim on the pleadings because the agreement disclaimed the duty except for fraud, gross negligence and intentional misconduct. Simpson v. Simpson, 2026 Tex. Bus. 52, applied a fiduciary shield provision to a dilution claim between family members. Before assuming a duty exists, read the company agreement. It may have been waived years ago.
The elements, and a clock that runs differently
The claim itself has three working parts: a fiduciary relationship, a breach, and either injury to the plaintiff or benefit to the fiduciary. Note the second half of that third element. Contract law compensates loss; fiduciary law also strips gain, which changes both what gets proven and what gets recovered.
The deadline is four years under Civil Practice and Remedies Code Section 16.004(a)(5), and here Texas draws a line worth knowing: the discovery rule can apply to fiduciary claims, so the clock generally runs from when the breach was or should have been discovered, because a fiduciary’s concealment is often part of the wrong. An ordinary breach of contract claim gets no such grace; its four years run from the breach itself. Two claims arising from the same facts can therefore die on different days, which is a reason to have the facts read early, not eventually.
Where these claims actually arise
In closely held companies, this is the workhorse claim of the post-Ritchie era: majority self-dealing, diverted opportunities, and compensation that outran the market get litigated as fiduciary and derivative claims, the architecture mapped in shareholder disputes in Texas. In partnerships, it is the partner who quietly took the deal for himself. In the executive suite, it is the officer who left with the pipeline, where fiduciary claims travel alongside non-compete and trade-secret claims and the first move is usually a cease and desist letter. And in trusts and estates, the claims run against trustees and executors, specialist territory that moves to the right colleague at Scale LLP when it arrives.
The remedies most plaintiffs underrate
Damages are the floor, not the ceiling. Texas fiduciary law aims at the disloyal gain: disgorgement of profits the fiduciary made from the breach, even where the beneficiary’s own loss is hard to prove; forfeiture of fees and compensation earned during the disloyalty; a constructive trust over assets acquired with what was taken; removal and other equitable relief; and exemplary damages where the conduct was fraudulent or malicious. Defendants should read that list as seriously as plaintiffs do, because it is the reason fiduciary claims settle differently than contract claims of the same size.
One call, either side of the duty
I counsel Texas owners, officers, and partners on both sides of fiduciary questions: structuring decisions so the duty is met and documented, reading the facts when someone believes it wasn’t, and running the demand-and-negotiation sequence that resolves most of these disputes short of a courtroom. Fiduciary litigation and trust-and-estate fights move to the right colleagues at Scale LLP without you starting over. One relationship, one number: (682) 529-7177. Or start with How can I help?
Common questions
A fiduciary duty is the law's highest standard of conduct: the obligation to put another party's interests ahead of your own within a relationship of trust. A breach happens when someone who owes that duty, a partner, an officer or director, a trustee, an agent, acts in their own interest instead: taking the company's opportunity, dealing with themselves on favorable terms, hiding what candor required them to disclose. It differs from breach of contract in kind, not just degree, and it carries remedies contract law does not.
Three things, in substance: a fiduciary relationship existed between the parties; the defendant breached the duty it created; and the breach either injured the plaintiff or benefited the defendant. That last clause matters more than it looks. A fiduciary who profited from disloyalty can be made to give up the profit even where the plaintiff struggles to prove its own loss, which is a claim architecture ordinary contract law does not offer.
Four years, under Civil Practice and Remedies Code Section 16.004(a)(5), and, unlike an ordinary contract claim, the discovery rule can apply: the clock generally runs from when the plaintiff knew or reasonably should have known of the breach, because concealment is often part of the wrong itself. Do not let that comfort you into waiting. The should-have-known standard has teeth, and a plaintiff who ignored red flags for years litigates the limitations question before ever reaching the merits.
Partners in a Texas general partnership do, by statute: duties of loyalty and care in the partnership's business. Officers and directors owe their duties to the company itself. Co-shareholders, standing alone, generally do not owe each other fiduciary duties in Texas, and that surprises people. A majority owner squeezing a minority is usually analyzed through duties owed to the company, derivative claims, and the governing documents rather than a direct owner-to-owner duty, which is the post-Ritchie architecture covered in the shareholder disputes guide.
Yes, but the bar is high and regularly underestimated. Texas recognizes informal fiduciary duties arising from relationships of special trust and confidence, and it polices them strictly: the relationship of trust must exist before and apart from the transaction being challenged, and ordinary arm's-length business dealings do not qualify no matter how long or friendly. Courts see the informal-fiduciary theory pleaded far more often than they accept it.
More than most plaintiffs expect, which is why the claim is potent. Beyond compensatory damages: disgorgement of the fiduciary's profits from the disloyalty; forfeiture of compensation or fees earned during the breach; a constructive trust over property acquired with what was taken; equitable relief including removal; and exemplary damages where the conduct was fraudulent or malicious. The remedy architecture is aimed at the disloyal gain, not just the victim's loss.
The duty is highest where the trust was deepest. So are the consequences.
The words you'll hear
If this goes further, these are the terms that will come up, from us or from the other side. Each one links to a fuller explanation.
- Fiduciary Duty
- The obligation of one party (the fiduciary) to act in the best interests of another (the beneficiary) when entrusted with property, authority, or confidence.
- Constructive Trust
- A constructive trust is not a trust anyone created.
- Derivative Action
- A lawsuit filed by a shareholder, member, or other equity holder on behalf of the entity itself, asserting a claim that belongs to the entity but....
- Business Judgment Rule
- A Texas substantive doctrine protecting corporate officers and directors from liability for decisions made in good faith and within the honest exercise of business judgment.
- Shareholder Oppression
- A historical Texas common-law doctrine recognized from 1988 through 2014 under which a minority shareholder could pursue a direct cause of action for harsh or wrongful....
- Discovery Rule
- The discovery rule defers the start of limitations until the claimant knew or should have known of the injury.
- Statute of Limitations
- A statute that bars a cause of action after a specified period from accrual.