Vinson & Elkins
MONTH-IN-BRIEF (Oct 2026)
Texas Business Court Reinforces Contractual Limits on LLC Fiduciary Duties
By Morgan Smith
In Hinds v. Sandman Offshore, LLC, 2026 Tex. Bus. 63 (11th Div. Sep. 14, 2026), the Texas Business Court reinforced Texas’s strong contractual approach to LLC fiduciary duties. The dispute arose after an oil-and-gas LLC removed one of its co-managers and subsequently expelled him as a member, prompting claims for breach of contract, breach of fiduciary duty, and other alleged misconduct. The plaintiff challenged his removal and expulsion as improper, while the defendants alleged that the plaintiff’s conflicting business interests justified their actions. The court held that an LLC agreement limiting managers to fiduciary duties expressly stated in the agreement foreclosed claims premised on additional duties arising from removal or expulsion of a member. Some claims based on expressly preserved obligations, including willful misconduct, survived. The court also declined to recognize an informal fiduciary relationship despite allegations of a sixteen-year business relationship marked by trust and reliance. The decision underscores the importance of carefully drafting fiduciary duty provisions in Texas LLC agreements.