Search Site
Menu
Limited Liability Company Member Disputes in Texas

Shareholder oppression lawsuits brought by minority shareholders in Texas corporations are nothing new.  In recent years, there have been an increasing number of similar suits filed in a slightly different context: limited liability companies, or “LLCs”.  An LLC, like corporation, is a separate legal entity that can own property and conduct business in Texas.  However, while the rights of shareholders in corporations are largely governed by statute, the rights of shareholders in a limited liability company (who are typically referred to as “members”) are governed by a company agreement.

The variability and flexibility afforded by company agreements is one of the primary reasons why LLCs have gained such popularity over corporations in the past decades, especially among smaller companies.  However, the company agreement is typically written by the person with the largest stake in the new company (or his attorney).  And, as you might expect, it often contains more beneficial terms for the majority owners than those that are provided by statute in traditional corporations.

Inevitably, conflicts have arisen between members of LLCs and the question is: What kind of remedies to minority members of LLCs have?  In Texas, the answer to that question is still evolving.  The standard set forth by the courts so far is that majority members cannot “substantially defeat” a minority member’s “reasonable expectations” so long as those expectations were “central to the minority shareholder’s decision to join the venture.”  The case law that exists suggests that the standard is very fact specific, and depends heavily on the individual factual circumstances of the particular investor.  However, one thing that is clear: Texas courts will not allow majority owners of LLCs to use company agreements to deprive minority owners of their fundamental rights as investors.

Adam Looney

Phone Number: 281-367-1222

Fax Number: 281-210-1361

[email protected]

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Contact a Dedicated Texas Business Lawyer To Schedule a Consultation
Call 281-367-1222 or contact us online to schedule a meeting.

Strong In Action

  • Spring 2019

    The Strong Firm represents borrower in $42.3 million HUD construction loan for multifamily real estate development in Walton County, Florida.

    Read More
  • Spring 2019

    The Strong Firm acts as legal counsel for borrower in $32.1 million HUD construction loan for multifamily real estate development in Conroe, Texas.

    Read More
  • Spring 2019

    The Strong Firm aids borrower in $31.7 million HUD construction loan for multifamily real estate development in Nueces County, Texas.

    Read More
  • Spring 2019

    The Strong Firm represents borrower in the refinancing of a $3.57 million commercial mortgage-backed security for a commercial office facility in Montgomery County, Texas.

    Read More
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  • Peer Rated 2019 Award

Recent Blog Posts

Wait… Lawyers Do That?

Since the founding of the Strong Firm P.C. in 2004, we have prided ourselves on not only providing excellent legal services, but also playing a large role in our community. Every year I have the opportunity to speak to area students from first grade through college grad students on legal-related
Read More
Wait… Lawyers Do That?

Part II – Probate: Identify the Most Efficient Probate Proceeding – Muniment of Title

Texas law provides several options to transfer ownership of a deceased person’s (usually called a “decedent”) property. We previously discussed the difference between a dependent and an independent administration. The dependent and independent administrations are used when the deceased person’s estate exceeds some minimal thresholds for size or complexity, such
Read More
Part II – Probate: Identify the Most Efficient Probate Proceeding – Muniment of Title

But You are My Attorney, not My Dentist…

Preventive maintenance for your entity from a legal perspective   “An ounce of prevention is worth a pound of cure.” 'De Legibus' (c. 1240) by English Jurist Henry De Bracton   Potential Client:       “I have owned a limited liability company for several years. I haven’t had any issues, but someone is interested in investing
Read More
But You are My Attorney, not My Dentist…

Don’t Fall for This Chinese Trademark Scam

Don’t Fall for This Chinese Trademark Scam A trademark is any word, name or symbol used to identify and distinguish goods and services. For business owners, trademarks provide an easy way to build customer loyalty and communicate the quality and source of goods and services. Businesses often spend a great deal
Read More
Don’t Fall for This Chinese Trademark Scam
  • Video Vault


    Watch videos done by our legal team to gain a better understanding of your legal needs. Our lawyers give video insight into areas such as Real Estate, Business Law, Mergers & Acquisitions and much more.

Pay Retainer Online

Use our easy-to-use and secure online payment feature.
We accept all major credit cards.

Pay Your Retainer

Contact us

Quick Contact Form