The Lines That Should Not Be Crossed
In every business relationship, trust is not only a necessity, it is the key to success. In many ways, it’s legally required.
When that trust is violated by someone in a position of power—a partner, an executive, a director, or even an outside advisor—that’s not just mismanagement. It may be a breach of fiduciary duty.
Unfortunately, for many closely held businesses, this isn’t a hypothetical risk. Breaches of fiduciary duty are one of the most common—and costly—causes of litigation we handle at Hopkins Centrich.
This is a necessarily brief look at how ‘fiduciary duty’ works under Texas law; what a breach looks like; and what legal remedies are available when someone abuses the trust that was a key responsibility of their role with the company.
What Is a Fiduciary Duty?
A fiduciary duty is the highest standard of legal obligation. It requires one party to act in the best interest of another—above their own interests—in matters within the scope of the relationship. Typically, in a business setting, the duty extends to partners and shareholders as well as the company itself.
In the business context, fiduciary duties typically arise when one person has power, control, or access to confidential or financial information that affects another.
Common Fiduciary Relationships in Business
- Majority shareholders to minority shareholders in closely held corporations
- Partners in a general partnership or joint venture
- Officers and directors to the corporation and its shareholders
- Managers or managing members in LLCs
- Trustees or administrators managing shared business assets or estates
- In some cases, employees or agents with delegated authority
Not every business relationship creates a fiduciary duty—but once the duty is established, the law expects integrity, loyalty, and transparency. Anything less may be actionable.
The Core Fiduciary Duties
1. Duty of Loyalty The fiduciary must act in good faith, putting the company’s or partner’s interests above their own. Self-dealing, conflicts of interest, and secret benefits violate this duty.
2. Duty of Care The fiduciary must act with diligence, competence, and informed judgment. This is about how decisions are made—not just their outcome.
3. Duty of Candor (Disclosure) Fiduciaries must disclose material information. Silence or concealment can be a breach—especially if it results in financial harm.
4. Duty to Account The fiduciary must account for the use of funds, property, or benefits received by virtue of their position.
Defined remedies and consequences for breaches
These duties apply even if no contract is breached and even if no crime is committed. The standard is higher, and the fallout can be greater.
Real-World Examples of Breach
While every case is fact-specific, these are some of the most common breach patterns we’ve seen at Hopkins Centrich:
- A managing member of an LLC diverts business opportunities to a new entity they control, cutting out the other members.
- A CEO inflates their compensation and bonuses while the company cuts distributions to shareholders.
- One partner accesses confidential client data to start a competing company—and doesn’t tell the others until after launch.
- A director votes to approve a transaction with a company they secretly own.
- Financials are manipulated, delayed, or concealed to justify a lowball buyout offer to minority shareholders.
In each case, the breach isn’t just unethical—it’s a legal claim waiting to be filed.
How Breach of Fiduciary Duty Claims Work
In Texas, a plaintiff alleging breach of fiduciary duty must typically prove:
1. The existence of a fiduciary relationship;
2. That the fiduciary breached one or more duties (loyalty, care, disclosure, etc.);
3. That the breach caused harm to the plaintiff or the business;
4. That the plaintiff is entitled to damages or equitable relief.
These cases often involve more than just financial loss—they involve questions of control, timing, concealment, and strategic advantage.
Remedies for Breach
Hopkins Centrich litigates breach of fiduciary duty cases not just to assign blame—but to get results.
Remedies may include:
- Rescission of tainted transactions
- Buyout or forced sale of the breaching party’s interest
- Monetary damages, including lost profits or unjust enrichment
- Constructive trust over misappropriated assets
- Injunctive relief to stop ongoing misconduct
- In some cases, punitive damages
Because breach of fiduciary duty is considered an equitable claim, Texas courts have broad discretion to fashion remedies based on fairness and deterrence.
When a Breach Is Just the Start
Breach of fiduciary duty claims often intersect with other business torts and causes of action, including:
- Fraud and misrepresentation
- Aiding and abetting breach of fiduciary duty
- Tortious interference with business relationships
- Conversion of business assets
- Usurpation of corporate opportunity
- Minority shareholder oppression
That’s why these cases require a strategy—not just a theory. At Hopkins Centrich, we don’t look at a breach in isolation. We build the full story—and the leverage to match.
How Hopkins Centrich Approaches These Cases
We’ve been involved in fiduciary breach claims arising from:
- Family business fallouts
- Private equity exits
- Tortious interference with business relationships
- Partnership splits
- LLC disputes
- Shareholder deadlocks
- M&A fraud
Some are subtle. Some are all out scorched earth. All require experience, precision, and the ability to read not just contracts, bylaws, and operating agreements, but people.
Our job is to expose the breach, document the damage, and pursue the path that protects your investment—and your position.
Don’t Wait for the Next Board Meeting
If you suspect a fiduciary breach, silence is not neutral. The longer misconduct goes unchecked, the more damage it can do—and the harder it may be to unwind.
Whether you’re:
- A minority shareholder who’s been cut out,
- A partner left in the dark,
- A business owner questioning a co-owner’s decisions—
You need a clear understanding of what’s legal, what’s strategic, and what’s next.
Talk to Hopkins Centrich
We represent business owners, shareholders, and partners across Texas—and we’re the go-to firm for out-of-state lawyers who need trusted local litigation counsel in fiduciary duty matters.
If a fiduciary has crossed the line, we’ll help you hold them accountable.