Jury Finds that Manager Did Not Breach Fiduciary Duties

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Jury Finds that Manager Did Not Breach Fiduciary Duties

In the recent Texas case of Trinh v. Cent. River Healthcare Grp., a pair of siblings engaged in a legal dispute over whether one sibling had breached a fiduciary duty in the management of a PLLC. NO. 03-19-00393-CV (Tex. App. Jun. 9, 2021).

The brother and sister, Khiem and Loann, held the family business, Central River Healthcare Group, P.L.L.C. (CRHG). CRHG’s clinics were failing, and Khiem became disenchanted with the company.

As the clinics continued to decline, Khiem paid sums for the upkeep and tax liability of the company.  He maintained that Loann promised to pay him a salary and did not do so and that he contributed more than $500,000 while his sister claimed to own 100% of the PLLC. At the same time, he communicated via emails and text messages with Loann and their father regarding control of the business. Other communications entered into the record were those of conversations between the siblings, and there was some dispute between the parties as to what the communications actually conveyed.

Ultimately, the evidence was presented to a jury.  The appellate court summarized the evidence of the pertinent communications:

But some evidence at trial showed that Khiem may have forfeited whatever interest he had in CRHG. In October 2011, he emailed Loann: “I don’t want to run the clinics. I am saving it before they collapse. Those are your clinics. I built them in the beginning for you. . . . I want you to take over without any headache. . . . Every investment in there is yours.” Loann testified to the point of Khiem’s email: “So basically he’s willing to forfeit everything so that way I can come back and run and resuscitate the clinic. That to me means that everything is under my management, my care[]. The whole business is legally under my direction[].” She also testified that she understood this email to mean “that he’s relinquished all his positions whether management, ownership, all investment. So it says every investment is yours.” Loann then explained that there was an effective “changing of the guard” and that she took over the business in November.

Trinh v. Cent. River Healthcare Grp., NO. 03-19-00393-CV, 5-6 (Tex. App. Jun. 9, 2021).

The jury did not find compelling the conflicting testimony from Khiem that Loann had offered him an annual salary and that she forced him to pay a portion of the business taxes. The testimony offered from Khiem was that he was to receive $110,000.00 per year from the company.  Loann conceded that she may have offered him a salary, but it was never accepted. The Court stated that an offer is not sufficient to form a contractual agreement. There must be a meeting of the minds and consideration, and both must be determined to exist by the jury.

In the end, the Jury ruled in favor of Loann, finding there was no breach of any fiduciary duty.