Fiduciary Duties Among Members of an LLC – A Look at Developing Texas Law
Whether or not members of a Texas-formed limited liability company owe fiduciary duties to one another has been a highly litigated issue for a few decades. Recent opinions from the Texas judiciary indicate that the fiduciary duty tides may be changing in the LLC arena.
In 2025, the Texas Supreme Court noted that members of an LLC do not owe fiduciary duties to fellow members “simply because of their relationship as co-members.” Since 2022, several courts of appeals have confirmed that general rule under Texas law but also that there could be fiduciary duties owed by a managing member to a non-managing member, akin to the duties owed by a general partner to a limited partner in a partnership organization. A toehold argument for members of an LLC likely exists, at least with respect to managing members, under Texas law.
As a general rule, “members of limited-liability companies . . . do not owe formal fiduciary duties to fellow members simply because of their relationship as co-members.” Bertucci v. Watkins, 709 S.W.3d 534, 544 (Tex. 2025) (citing Suntech Processing Sys., L.L.C. v. Sun Commc’ns, Inc., No. 05-99-00213-CV, 2000 WL 1780236, at *6 (Tex. App.-Dallas Dec. 5, 2000, pet. denied) and Gadin v. Societe Captrade, No. CIV.A. 08-CV-3773, 2009 WL 1704049, at *3 (S.D. Tex. June 17, 2009) (“Texas courts have not yet held that a fiduciary duty exists as a matter of law among members in a limited liability company.”).
On June 30, 2026, a court of appeals followed suit: “Under Texas law, the equal and co-managing members of a limited-liability company owe a fiduciary duty to the company, but they do not owe a fiduciary duty to each other.” Zhu v. VivaTech Elecs., LLC, No. 03-23-00522-CV, 2026 WL 1871213, at *7 (Tex. App.–Austin June 30, 2026, no pet. h.) (citing Bertucci v. Watkins, 709 S.W.3d 534, 544 (Tex. 2025)).
On May 15, 2026, the El Paso Court of Appeals held that a managing member owes fiduciary duties to the non-managing members, akin to the duties owed by a general partner to limited partners:
Generally, “members of limited-liability companies [ ] do not owe formal fiduciary duties to fellow members simply because of their relationship as co-members.” Bertucci v. Watkins, 709 S.W.3d 534, 544 (Tex. 2025). However, as other courts have recognized “the relationship between a managing member of an LLC and a nonmanaging member is similar to that of a general partner/limited partner relationship, and [ ] such an arrangement thereby creates a fiduciary obligation on the part of the managing member.” Davis v. Crawford, 700 S.W.3d 438, 449 (Tex. App.—Eastland 2024, no pet.).
Moreover, the Texas Business Organizations Code allows an LLC’s governing documents to impose duties that members would not otherwise have. Tex. Bus. Orgs. Code § 101.401 (permitting an LLC’s company agreement to “expand, restrict, or eliminate any duties, including fiduciary duties, and related liabilities that a member, manager, officer, or other person has to the company or to a member or manager of the company[ ]”).
Mundy v. Savell, No. 08-25-00258-CV, 2026 WL 1375482, at *4 (Tex. App.—El Paso May 15, 2026, no pet.).
See also Gilbreath v. Horan, 682 S.W.3d 454, 518 (Tex. App.—Houston [1st Dist.] 2023, no pet.) (addressing fiduciary duty in a limited partnership context as well as a possible “control test” that has percolated in the Fifth Circuit).
The Texas Supreme Court has yet to squarely address the issue for LLCs, and for now, the law in Texas is developing on this very important subject. Ideally, the company agreements will expressly indicate what is or is not expected of those who manage the LLC. But, the common law may fill in fiduciary duty gaps that may exist in the company’s internal expectations and legal relationship requirements.
This article is provided for general informational purposes only and does not constitute legal advice. Reading it creates no attorney-client relationship. The law here is fact-specific and subject to change, and you should consult qualified counsel about your particular circumstances.
