Texas Business Court Decision – September 14, 2026

No. 26-BC11A-0053   Russell Hinds v. Sandman Offshore, LLC, et al (Eleventh Division, Judge Sharp) 2026 Tex. Bus. 63

Rule 91a/Contracts/fiduciary duty/fraud/conversion/tortious interference.

Background.

Hinds, Wegner and three others each held a 20% membership interest in Sandman Offshore, LLC, an oil and gas company, with Hinds and Wegner serving as co-managers. Hinds alleged that in March 2026 the other members removed him as co-manager, and the following month expelled him as a member without notice or a hearing. Sandman contends the removal was warranted because Hinds steered business to EnviroCare, Inc., his own drilling-services company, without disclosing his ownership, and prioritized EnviroCare’s payments over Sandman’s lease payments. Hinds countered that the members knew of his EnviroCare ownership and alleged that Wegner orchestrated his ouster out of personal animus and self-interest. Sandman and Wegner moved for dismissal under Texas Rule of Civil Procedure 91a of Hinds’s breach-of-contract, breach-of-fiduciary duty, good-faith-and-fair dealing, fraud, conversion, and tortious-interference claims.

Issues Presented:

1. Whether Wegner owed Hinds a fiduciary duty as an LLC member or manager, and if so, its scope. Dismissed in part.
2. Whether Hinds adequately pleaded breach of the implied covenant of good faith and fair dealing. Dismissed.
3. Whether Hinds adequately pleaded breach of contract based on his removal/expulsion procedures, the lack of “cause,” and Sandman’s refusal to hold a special meeting. Dismissed in part.
4. Whether Hinds adequately pleaded fraud by nondisclosure and constructive fraud against Wegner. Dismissed.
5. Whether Hinds adequately pleaded conversion of his membership interest. Dismissed.
6. Whether Hinds adequately pleaded tortious interference with prospective business relations against Wegner. Dismissed.

Discussion.

1. Fiduciary Duty. Members owe no fiduciary duty to fellow members absent an express agreement, and an LLC’s company agreement may expand, restrict, or eliminate managerial fiduciary duties. Tex. Bus. Orgs. Code Sec. 101.401; Bertucci v. Watkins, 709 S.W.3d 534 (Tex. 2025). Section 5.10 of the Sandman Agreement eliminated all managerial fiduciary duties except those “expressly set forth,” which included liability for willful misconduct. Because the Agreement separately authorized action without notice, claims premised on lack of notice of Hinds’s removal/expulsion are dismissed, but claims alleging willful misconduct in management survive this dismissal motion. The Court also rejects an informal-fiduciary-duty theory based on the parties’ 16-year business relationship, finding it fell short of the trust-and-confidence threshold set out in Pitts v. Rivas, 709 S.W.3d 517 (Tex. 2025).
2. Good Faith and Fair Dealing. Because no special relationship existed, this claim fails as a matter of law. Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 490 (Tex. 2019).
3. Breach of contract. Claims based on the lack of procedural notice are dismissed because the Agreement expressly permitted action by written consent without notice, and courts may not add procedural protections the parties omitted. Sundown Energy LP v. HJSA No. 3 P’ship, 622 S.W.3d884 (Tex. 2021). Hinds’s expulsion-for-cause claim is dismissed because the Agreement vested the “conflicting business activity” determination in the Majority Interest, not the court, citing Pak v. AD Villarai, LLC, 2018 WL 2077602 (Tex. App. – Dallas 2018, pet. denied). However, Hinds’s claim based on Sandman’s refusal to hold a timely-requested special meeting survives dismissal, as he adequately pleaded compliance with the notice requirements in Section 5.7 of the Agreement.
4. Fraud. Both of Hinds’s fraud theories depend on a duty to disclose the expulsion plan, which Sec. 5.10 of the Agreement foreclosed; a belatedly raised partial-disclosure theory was not supported by the pleadings.
5. Conversion. Membership interests are presumed uncertificated absent contrary governing-document language, and Texas conversion claims generally required tangible property or the merger exception. The Sandman agreement was silent on certification, so the claim is dismissed.
6. Tortious interference. Because Wegner was a party to, not a stranger to, Hinds’s business relationship with Sandman, he could not tortiously interfere with it. Friendswood Dev. Co. v. McDade & Co., 926 S.W.2d 280 (Tex. 1996).

The Court declines to award attorney’s fees under Rule 91a, finding all parties advanced good-faith positions.