Dallas-Fort Worth Ownership Disputes Lawyer

From business disputes over the control and direction of a company to allegations of misconduct, self-dealing, breach of governance duties, to improperly withholding distributions or other profit-sharing, it takes an experienced commercial litigation attorney to protect your interests. Wright Commercial Litigation works with individual owners, members, shareholders, investors, and minority stakeholders in business disputes over ownership interests in McKinney, Collin County, Dallas County, Denton County, and beyond throughout Texas.

Principal attorney Jason E. Wright is familiar with the corporate maneuvering some try to use to impose their will on other owners, as well as the checks and balances put in place to prevent abuse through the laws in both Texas and Delaware law. He understands how such ownership disputes can be highly contentious, emotional, and straining for the founders or other principals involved—often dubbed “business divorces” for that reason—to provide calm and rational counseling focused on preserving your investment. He also has experience helping stakeholders in the Dallas-Fort Worth area develop win-win solutions or at least find the most efficient way out of an ownership dispute, but can bring the full power of the law to bear against those no longer capable of acting rationally in a dispute.

Contact the firm to discuss your business ownership dispute and see if you have remedies available that allow it to be done on a contingency or hybrid basis. If not, Wright Commercial Litigation still can typically offer to provide its representation at a reasonable hourly rate or other reasonable arrangement.

Representing Clients in Dallas-Fort Worth and Beyond in Business Ownership Disputes

Wright Commercial Litigation handles business disputes in McKinney, Collin, Dallas, Denton, and Tarrant County, or beyond throughout Texas, between investors in businesses in the context of partnerships (general and limited), private companies, closely-held corporations, and private equity portfolios, including matters encompassing: 

  • Limited liability company disputes
  • General partnership disputes
  • Limited partnership disputes
  • Joint venture disputes
  • Oil and gas ownership disputes
  • Shareholder rights
  • Corporate director or officer misconduct
  • Breach of fiduciary duty
  • Breach of governance documents
  • Misappropriation of business assets, embezzlement, and other self-dealing
  • Disputes over profit-sharing, distribution, and royalties
  • Texas shareholder oppression (or minority oppression)
  • Business dissolution
  • Ownership buy-outs and severances
  • Related confidentiality, non-compete, and non-solicitation matters

Depending on the size and scope of the enterprise involved, just having a firm grasp on all the formation and operating agreements can be a daunting task. The firm’s principal attorney—Jason E. Wright—has substantial experience working with complex business structures to master the ins and outs often overlooked by others geared towards protecting your ownership investment.

Common Types of Business Ownership Disputes in Texas

Business disputes between owners, directors, members, officers, or investors can arise for any number of reasons, from simple disagreement on operations or finances to the entire direction and control of a business, to profoundly serious issues like misconduct, embezzlement, and usurpation of corporate opportunities. The types of legal claims that may result can arise from the breach of an agreement or governing document, as well as other common law and statutory duties such as:

Breach of Fiduciary Duty 

Partners, directors, officers, and many other corporate agents owe a duty to the company (or each other in a partnership) to act in good faith and with due care when managing the affairs of a joint business interest. Some of the fiduciary duties recognized in this context include:

  • Duty of care
  • Duty of loyalty and good faith
  • Duty of honesty and full disclosure
  • Duty to refrain from self-dealing/competition
  • Duty to account for profits

The remedies for a breach of fiduciary duty can be quite powerful since, in essence, it is a breach of trust and confidence. The law allows for actual damages (which may include out-of-pocket loss, lost profits, lost business value, as well as a constructive trust on funds, fee forfeiture or disgorgement, accounting, and receivership), mental anguish an individual owner may suffer, and exemplary damages. A breach of fiduciary can exist in tandem with a breach of the company agreements, which can further give rise to a claim for attorney’s fees and make this a common claim in ownership disputes.

Rights to Information/Books and Records Demand

Whenever a disagreement or division starts to form between owners, partners, or investors in a private business, the first sign something fishy is going on is when information stops flowing as freely as before (with distributions or profits usually decreasing or stopping shortly after). Financial statements start coming late and eventually cease altogether with continual excuses for the delay.

It is critical to maintain continued access to information to prevent wrongdoing before it starts. Texas, Delaware, and most other states’ business organization laws thus provide a non-waivable right of owners and managers to access the books and records. That can avoid unnecessary business disputes based on the suspicion of growing mistrust alone but also lead to the discovery of actual misconduct right when it starts. The law gives controlling owners a disincentive then by allowing every shareholder, partner, or other person with ownership interest the right to compel the production of information and recover attorney’s fees if it requires litigation. Often a letter from an attorney is enough to start obtaining information again, with resistance at that point indicating a more fundamental problem.

Texas Minority Oppression 

Shareholder oppression occurs when someone (or a bloc) holding more than 50% of the interests in a non-public or “closely-held” corporation uses that power to control everything in ways that primarily benefit themselves or systematically disadvantages those holding less than 50% of the shares (a minority owner). Some examples include:

  • Preventing minority shareholders from having a voice in important financial or management decisions;
  • Using superior knowledge from a controlling vantage to an unfair degree and “squeeze out” a minority shareholder by diluting interests or forcing them to sell at a low value;
  • Refusing to pay dividends (which must be done proportionately) and instead retaining all profit in the business to just pay themselves higher salaries and bonuses; or
  • Using their power to fundamentally change the structure, operations, or path of the business from what a minority investor expected or was told in the beginning.

Unfortunately, the Texas Supreme Court sharply curtailed a shareholder oppression cause of action in 2014, but there are still nuances in the business organization’s code and governing documents that may allow a minority owner to fight back in other ways and with other causes of action. Wright Commercial Litigation can help you assess all options in creative ways.

Derivative Suits

Because the Texas Supreme Court’s ruling in 2014 limited the ability of a shareholder to bring an action for oppression and achieve a fair buy-out by court order, aggrieved minority owners have increasingly turned to asserting a derivative lawsuit.  A derivative suit is brought on behalf of the company for the harm it suffers by breaches of its officers or directors. The damages recoverable generally accrue to the benefit of all shareholders.

There are procedural hurdles to bringing a derivative suit against a larger company. However, Texas has made it easier for shareholders in a closely-held corporation (less than 35 owners and not publicly traded) to bring a derivative suit by dispensing with the need to send a demand to the board controlled by the very wrongdoers at issue and giving a court the ability to award damages directly to a shareholder who brought suit in accordance with his or her ownership interests, as well as a recovery of attorney’s fees if the action benefited the company. That can give a minority shareholder some leverage against the unfair conduct of a majority owner.

Usurpation of Corporate Opportunities/Business

As part of their fiduciary duties, a partner, officer, director, and other corporate agents have an obligation not to misappropriate business or opportunities that fairly belong to the company. The doctrine arises when a business has a legitimate interest in and the financial resources to take advantage of an opportunity that comes to the attention of a fiduciary.

However, Texas strongly values the freedom of contract and allows owners in certain entities to contract around their duties, including those to not compete or usurp business opportunities. If a corporate opportunity has been usurped inappropriately, a shareholder or other owner can recover that portion of the opportunity they would have profited from. It is important to have an experienced commercial litigator review your documentation to determine all possible claims and options. Wright Commercial Litigation has successfully represented clients throughout Texas in their business dispute cases.

How Wright Commercial Litigation Can Help

Regardless of the nature of your business ownership dispute, Wright Commercial Litigation can work with you to achieve an optimal outcome. Whether you are dealing with a minor disagreement, full-blown business divorce, deadlock in management, or the need to rectify breaches of another owner, manager, or fiduciary who has gone down the self-dealing path, the firm has the knowledge, skills, and experience to protect and advance your interests to the maximum allowed by law.

Given the potentially high stakes of a business ownership dispute, it is crucial to have the strategic advice and objective insights of an experienced litigator. The lasting impact of ownership, partnership, and shareholder disputes cannot be overlooked. Wright Commercial Litigation is here to help by working with you to find a real-world practical solution to your Texas business dispute. Depending on the type of claim available and potential recoveries, the firm may also be able to handle your ownership dispute on a contingency or hybrid basis (and otherwise offers a reasonable hourly rate or other option).

Contact the firm here to request an initial consultation on your ownership dispute.

Wright Commercial Litigation serves clients throughout Texas, including in McKinney, Collin County, Dallas County, Denton County, and beyond with their shareholder and ownership dispute claims.