Can I Sue My Business Partner in Texas?

Yes, and the statute says so

Texas does not make co-owners wait for the company to fall apart before they can go to court. For general partnerships, section 152.211 of the Texas Business Organizations Code gives a partner the right to sue the partnership or another partner for legal or equitable relief, including an accounting of partnership business, to enforce a right under the partnership agreement or under the statute. Section 152.210 makes a partner liable to the partnership and to the other partners for breaching the agreement or violating a statutory duty that causes harm.

LLC members and shareholders have the same ability through contract law, fiduciary law and the derivative-suit provisions of the Code. The question is rarely whether you can sue. It is what you sue for, in whose name, and whether the time has run.

What can you sue a business partner for?

Most partner lawsuits in Texas rest on one or more of these claims:

• Breach of the partnership or company agreement. Unpaid distributions, votes taken without the required approval, a transfer of interests the agreement forbids, a refusal to follow a buy-sell clause. The agreement is the contract; the claim is breach of contract.
• Breach of fiduciary duty. Partners owe each other and the partnership duties of loyalty and care under sections 152.204 to 152.206. Taking company money, diverting customers or competing with the partnership can breach the duty of loyalty. The full list is in what fiduciary duties partners and LLC managers owe in Texas.
• Fraud or fraudulent inducement. A partner who lied to get your capital, or who misstated the books to shrink your share, may be liable for fraud on top of breach.
• Conversion or civil theft. Taking money or property that belongs to the company or to you.
• An accounting. A court-ordered reconstruction of what came in, what went out and who got it. Section 152.211(b) names it as a remedy for partners, and it is often the first thing a judge orders when the books are in one partner's hands.

Is the claim yours, or does it belong to the company?

This is the question most owners skip, and it decides who the plaintiff is. If your partner stole from the company, the company was harmed first; your loss is a smaller slice of a smaller company. Texas law treats that as the company's claim, which an owner brings as a derivative suit in the company's name. If your partner broke a promise made to you personally, such as refusing to honor your buyout right or lying to you to get your investment, the claim is yours and you sue directly.

For small companies the line is softer. Section 101.463 (LLCs) and section 21.563 (corporations) let a court treat a derivative claim by an owner of a closely held company, meaning fewer than 35 members or shareholders and no public trading, as a direct action if justice requires, and let the recovery go straight to the owner. The procedure and the demand requirement are explained in suing on behalf of the company.

Example

Suppose two members own a Dallas HVAC installer 60/40. The 60 percent member pays himself a consulting fee the agreement never authorized and stops sending the 40 percent member the quarterly financials she is entitled to. The unauthorized fee harmed the company, so that claim is derivative (or treated as direct under section 101.463). The refusal to share records violates her own statutory right under section 101.502, so that claim is hers. A well-drafted petition pleads both, in the right capacities, with the right requested relief for each.

How long do you have?

Texas Civil Practice and Remedies Code section 16.004 sets a four-year limitations period for fraud, breach of fiduciary duty and debt, and a specific four-year period for a suit against a partner for settlement of partnership accounts, which runs from the day the parties' dealings together cease. Breach of a written agreement generally also carries four years. The clock usually starts when the wrongful act happened or when you discovered it, depending on the claim and the facts, and the discovery question is where many partner cases are won or lost. A written derivative demand under the Code also pauses the clock while the company reviews it.

Which court hears it?

Most partner disputes are filed in a Texas district court in the county where the company has its principal office or where the defendant lives. Since September 1, 2025 the Texas Business Court has concurrent jurisdiction over derivative proceedings, disputes about the governance or internal affairs of an organization and claims that an owner breached a duty of loyalty or good faith, when the amount in controversy exceeds $5 million (Government Code section 25A.004, as amended). Smaller disputes stay in district court. If the agreement has an arbitration clause, the fight may not be in court at all; see whether an arbitration clause holds up in Texas.

What if there is no written agreement?

You can still sue. Texas recognizes oral and implied partnership and company agreements, and where the agreement is silent the Code supplies default rules on voting, profit sharing, records and winding up. The defaults are often not what the partners assumed, which is why the statute, not memory, decides many of these cases. A separate guide covers what happens in an LLC dispute with no operating agreement.

What it costs the business while you decide

A lawsuit between owners is paid for twice: in fees and in attention. Customers notice when the two people who run the company stop speaking. Lenders read litigation disclosures. Key employees start taking calls. None of that is a reason to stay silent while money leaves, but it is a reason to think about sequence: a records demand and a firm letter often produce more, faster, than a petition filed in anger. For the pre-suit path see demand letters and pre-suit negotiation.

When to bring in a litigator

Early, if any of these is true: money is moving out and you cannot see where; a deadline is near or unclear; the agreement has an arbitration, buy-sell or forum clause you have not read closely; or your partner has already hired counsel. A litigator's first job is not to file. It is to pin down the claim, the plaintiff, the deadline and the forum, and to make sure the records you will need still exist. Tina Wysk represents owners on both sides of partnership disputes in Dallas state and federal courts and in arbitration.