Partnership and shareholder disputes are rarely about the law of fiduciary duty. They are about what happened to the money, and whether the person who moved it was entitled to.
That question is answered in the books and records, not in the pleadings. We start there.
What the other side has to prove
A duty has to exist before it can be breached. Not every business relationship is a fiduciary one. Some are fiduciary as a matter of law — the relationship between a partner and the partnership, or between an officer or director and the company, is ordinarily treated that way. Others are said to arise informally, from a long relationship of trust and confidence that predates the transaction in dispute. The informal version is pleaded far more often than it is proved, and a defendant who attacks the existence of the duty rather than conceding it and arguing about conduct has frequently won the case at the threshold.
The duty has to be owed to the person suing. In a closely held company this is where a great many claims fail. An officer’s duties ordinarily run to the entity, not to each owner individually, which means a claim brought in the owner’s own name may belong to the company instead. Whether a particular claim is direct or derivative determines who can bring it, what has to be done before it is brought, and who collects if it succeeds. It is a question worth resolving at the pleading stage, because the answer can eliminate the claim or reshape the entire case.
Then the conduct. Self-dealing, usurping an opportunity that belonged to the company, competing with the company while still serving it, diverting funds, taking compensation that was never authorized, or using the company’s property for private benefit. In transactions between a fiduciary and the person to whom the duty is owed, the burden of showing fairness commonly falls on the fiduciary rather than on the person complaining. That allocation is one of the most consequential features of this area of law, and it is why these cases often look very different from ordinary commercial disputes once the duty is established.
And then the loss. A breach that cost nothing produces nothing. The damages question in a fiduciary case is more varied than in a contract case: a claimant may seek what it lost, or may seek to strip the fiduciary of what the fiduciary gained, or may ask that a transaction be undone or that compensation be returned. Which of those is available depends on the conduct and on what the claimant can trace. Tracing is an accounting exercise.
Shareholder oppression and the closely held company. Minority owners in a company with no market for their shares are exposed in a way that public shareholders are not. The familiar pattern is a freeze-out: the minority owner is removed from employment, removed from management, cut off from distributions while the majority takes compensation instead, and denied access to records — and then offered a price for the shares that reflects none of the value being extracted. Texas has narrowed the independent remedies available for that conduct over the last decade, which makes it more important, not less, to plead the case in the forms that remain available: breach of the governing agreement, breach of fiduciary duty owed to the entity brought derivatively, accounting, and inspection of books and records. In a closely held company that derivative route is procedurally relaxed — the court can, if justice requires, order the recovery paid directly to the aggrieved owner rather than back into the entity the majority controls — which often makes the claim worth far more than it first appears.
The governing documents usually decide more than the common law does. Partnership agreements, company agreements, shareholder agreements and buy-sell provisions can expand duties, narrow them, or specify what happens on withdrawal, death, deadlock or termination. A valuation formula agreed years ago in a document nobody reread may control an outcome worth far more than the dispute that produced it. The first document we ask for is the one that governs the relationship, in every amended version.
Limitations, and when the clock starts. Fiduciary claims present the clock problem in its sharpest form, because the conduct is often concealed by the person who owed the duty. Doctrines that defer the running of limitations where the injury was inherently undiscoverable, or where the defendant’s own concealment prevented discovery, are frequently the difference between a live claim and a dead one — and they are heavily fact-dependent. If there is any question about timing, it should be examined before suit rather than in response to a motion.
Where these cases are won
In the general ledger. A fiduciary case is an accounting case that has been given a legal name. Distributions that were not distributions, expenses that were personal, loans that were never repaid, related-party transactions run through entities nobody disclosed, compensation that rose as profits fell — none of that is visible in correspondence. It is visible in the books. The civil practice is led by a lawyer who is also a licensed CPA, and in this area that is not a credential, it is the method.
In the records demand, before suit. Owners of Texas entities generally have a right to inspect the company’s books and records for a proper purpose — and for an LLC or partnership the company or partnership agreement can now shape that right, so the governing documents are the first thing we read. Exercising that right before filing frequently produces two useful outcomes: either the records substantiate the claim, or the refusal to produce them becomes the first fact the court learns about the defendant. Either way the case is better framed than one filed on suspicion.
On the direct-versus-derivative question. This is decided early, it is decided as a matter of law, and getting it wrong is expensive in both directions. A claimant who pleads individually what belonged to the company can lose the claim entirely. A defendant who fails to raise it forfeits an argument that might have ended the case before discovery.
On the burden. Where the transaction was between the fiduciary and the beneficiary, the practical question is often not whether the claimant can prove unfairness but whether the fiduciary can prove fairness — of the price, of the process, and of the disclosure. Cases are tried around that allocation. A fiduciary who documented the transaction, disclosed it, and had it approved by someone disinterested is in a materially different position than one who did not, and that difference is established in documents created years before anyone thought about litigation.
On valuation. Where the remedy is a buyout or a share of what was taken, the number is the case. Valuation of a closely held business is contested on method, on date, and on whether discounts for lack of marketability or minority status apply. These are expert questions, they are expensive, and they must be prepared long before the designation deadline — an expert designated late is an expert excluded, and a valuation case without a valuation expert is usually not a case.
On preserving the estate. Where funds are still moving, the first three weeks matter more than the next three years. Temporary injunctive relief, an accounting, a receivership over the entity, or an order freezing specific assets can be available, and the order a court will actually sign is a drafting problem solved in advance. See Injunctions & Temporary Restraining Orders.
Where the money has already left the entity. Distributions to insiders, payments to newly formed companies, property moved to relatives — once assets have gone out of the entity, the case acquires a second half that is not about breach at all, but about whether those transfers can be undone. That work is set out on Fraud & Fraudulent Transfer.
On preservation of error. We litigate with the appellate record in mind from the first hearing, because we are the ones who will argue the appeal. In this area that matters more than most: fiduciary cases produce complex charges, and a charge error that was not preserved correctly is a verdict that cannot be defended or attacked.
What we do
We represent partners, shareholders, members, officers, directors, trustees and beneficiaries — claimants and defendants both — in disputes over breach of fiduciary duty, self-dealing, diversion of assets, usurped business opportunities, partnership dissolution and winding up, shareholder freeze-outs, derivative claims, accountings, receiverships, books-and-records demands, buy-sell disputes and the valuation fights that follow them.
The civil practice is led by Shawn A. Johnson, a civil trial and appellate lawyer, licensed CPA, and former law clerk at the Supreme Court of Texas. We take these cases as lead counsel, and alongside a client’s existing corporate or transactional counsel where the relationship is ongoing and the dispute is not the whole of it.
We try and argue our own cases. The lawyer who takes your first call is the lawyer who stands up.
Representative results
$157 million jury verdict; judgment for more than $55 million to the client
Complex breach of fiduciary duty and unfair competition case, resulting in a judgment for a direct award of derivative damages to the client of more than $55 million.
Laura Elizabeth Yosowitz v. Martin Lee Kay et al., No. 2018-37750, 334th District Court, Harris County, Texas (Feb. 21, 2023).
$7 million arbitration award; take-nothing award on all counterclaims
Direct award to the clients on breach of fiduciary duty claims against company managers and officers after a nine-day arbitration.
Salim v. Cochinwala, AAA Case No. 01-19-0003-9665 (Nov. 22, 2021).
Fiduciary-duty and trade-secret claims resolved; dismissed with prejudice
Claims against a former office manager and her start-up company in a suit seeking injunctive relief.
Maintenance of Way Equipment Services, LLC v. Garcia, No. 24-DCV-321736, 434th District Court, Fort Bend County, Texas (Nov. 26, 2024).
Questions we are asked
My business partner is taking money out of the company. What do I do first?
Preserve the records, and do not confront before you have them. Once a dispute is open, access to the accounting system, the bank portal and the email account frequently disappears. Secure what you can lawfully reach, then make a formal demand to inspect the company’s books. What comes back — or does not — usually shapes the case.
Do I sue my partner, or does the company sue?
Often the company, even though it is the partner who did it. Whether a claim belongs to you individually or to the entity is a legal question decided early, and the answer controls who can bring it, what has to happen before it is brought, and who recovers. It is one of the first things we assess. In a closely held company the derivative route is relaxed, and a court can, if justice requires, order the recovery paid directly to you rather than back into the company — so the distinction is rarely fatal to recovery.
We never had a written partnership agreement. Does that help me or hurt me?
It changes the case rather than deciding it. Without a written agreement the default statutory rules and the common law fill the gap, and duties that a written agreement might have narrowed remain at their default breadth. What is harder without a document is proving what the parties agreed about capital, profit-sharing and withdrawal — which becomes a question of conduct and records.
I was pushed out of a company I own part of. Is that illegal?
It depends on how it was done and what the governing documents say. Texas law gives minority owners in closely held companies less independent protection than many people assume, and the remedies that remain generally run through the entity’s documents, the fiduciary duties owed to the entity, and statutory rights to information. The cases that succeed are usually the ones framed in those terms from the start rather than as a general complaint about unfairness.
Can I get the company’s financial records without filing suit?
Usually yes, in some form. Owners of Texas entities generally have inspection rights exercisable for a proper purpose — though for an LLC or partnership the company agreement can shape that right, so we start with the governing documents. A properly framed written demand is both a practical tool and a useful record, and if it is refused without justification, the refusal itself becomes evidence.
How much of what I am owed can I actually recover?
That depends on what can be traced and what remedy fits the conduct. In some circumstances the measure is what you lost; in others it is what the fiduciary gained, or the return of compensation, or the unwinding of a transaction. We will give you a view on the realistic range early, based on the records rather than on the pleadings.
The other side has already hired a valuation expert. Are we behind?
Not necessarily, but the answer has a deadline. Valuation is contested on method, on the date used, and on whether discounts apply, and those disputes are won by preparation rather than by speed. What cannot be recovered from is missing the designation deadline.
How long do I have?
Less time than most people expect, and the clock may have started before you learned what happened. Fiduciary cases sometimes benefit from doctrines that defer the running of limitations where the conduct was concealed, but those are fact-intensive and are not a substitute for acting. If timing is at all uncertain, ask before it is decided for you.
Results depend on the facts of each matter. Prior results do not guarantee or predict a similar outcome in any future matter.