How a Partnership Lawsuit Unfolds in Texas, Start to Finish

Before anything is filed

The first weeks decide more than the trial does. Three things happen in order.

Preserve and gather. Statements, ledgers, agreements, texts and emails you lawfully hold. Write down dates. Do not access accounts or devices you are not authorized to use.

Demand the records. A written demand under section 101.502 (LLC member) or section 152.212 (partner) stating a proper purpose. The company's refusal is itself a claim with a fee award under section 101.503, and the response fixes what the company admits it has. The mechanics are in an LLC member's right to records.

Decide whose claim it is. Money taken from the company, a diverted opportunity or a bad related-party deal harms the company; the claim is the company's and is brought derivatively. Your own unpaid distribution, a breach of a promise made to you, or a refusal of your records is yours directly. For a derivative claim, section 101.453 requires a written demand to the company stating the matter with particularity and a wait until the 91st day, unless the company rejects the demand sooner or waiting would cause irreparable injury. Section 101.452 requires that you were a member when the act occurred. For companies with fewer than 35 members, section 101.463 lets the court treat the claim as yours and pay you directly, but the demand is still the safe course. The full procedure is in suing on behalf of the company.

Choosing the court

Most partner disputes are filed in the district court of the county where the company has its principal office, which is also the court with receivership power under section 11.402. An arbitration clause in the agreement moves the dispute to arbitration and leaves the court only emergency and enforcement roles. The Texas Business Court has concurrent jurisdiction over derivative proceedings, governance and internal-affairs disputes, and claims that an owner or manager breached a duty of loyalty or good faith, when more than $5 million is in controversy excluding interest, fees and exemplary damages (Government Code section 25A.004(b), as amended in 2025); a publicly traded party removes the threshold. Federal court is unusual between co-owners of a Texas company because they are typically all Texas citizens, unless a federal claim such as trade secret misappropriation is included. The Business Court's rules are described in which cases qualify for the Texas Business Court.

The petition

The petition pleads the facts, the claims, and the relief, and it must state the discovery level under Texas Rule of Civil Procedure 190 and the category of relief sought under Rule 47. Partner cases typically plead some combination of breach of the company or partnership agreement, breach of fiduciary duty, an accounting (section 152.211), conversion or civil theft where money was taken, fraud where misrepresentations were made, declaratory relief on what the agreement means, and, where warranted, a receiver or judicial winding up under sections 11.404 and 11.314. Derivative claims are pleaded as such, with the demand and the company's response, and the company is named as a nominal party.

The emergency phase

If money is leaving or an asset is about to be sold, the petition is filed with an application for a temporary restraining order under Rules 680 through 684. A TRO can be granted the same day on a verified showing, lasts no more than 14 days unless extended, and must be followed by a temporary injunction hearing where both sides present evidence. Orders in partner cases typically bar transfers outside the ordinary course, require two signatures on accounts, preserve records and prohibit interference with customers. Where the business itself is at risk, the application may seek a receiver over specific property under section 11.403 or over the business under section 11.404. The temporary injunction hearing is the first real test of the evidence and often reshapes the case; see TROs and temporary injunctions in Texas business cases.

The answer and the counterclaim

The defendant partner answers and, almost always, counterclaims: that you breached first, that you took money too, that you failed to perform, that you are the one who should be expelled or bought out. Expect a records demand from his side. A common early motion is a plea that the claim is derivative and the demand was not made, or a Rule 91a motion to dismiss a claim with no basis in law. These are why the pre-suit sequence matters.

Discovery

Each side serves the required disclosures under Rule 194 within 30 days after the first answer, then written requests for documents and interrogatories. Partner cases are document cases: bank and credit card statements, the general ledger and QuickBooks files, payroll, tax returns, related-party contracts, texts and emails. A forensic accountant is typically retained to reconstruct the finances and trace money, and a valuation expert where a buyout or damages measured by the value of the interest is in play. Depositions of the partners, the bookkeeper and the CPA follow. Protective orders keep financial information confidential, and a records demand refused before suit becomes a discovery dispute with fee consequences. The scope of discovery is the largest single cost driver in these cases.

Mediation

Dallas-area district courts routinely order mediation before trial, and most partner cases mediate once discovery has produced the financial picture. The mediation is where the buyout is negotiated: price, payment terms, releases, non-competes, transition of customers, tax treatment, and what happens to pending claims. A valuation report on each side, even a preliminary one, is usually the price of a productive session. See how to prepare for mediation in a business dispute.

Summary judgment and trial

Where the agreement's meaning or the statute of limitations can be decided on paper, either side may move for summary judgment. Claims that survive go to trial, by jury if either side demanded one. The jury decides breach, whether a fiduciary duty was breached, damages and, where pleaded, whether conduct was fraudulent or malicious. The judge decides equitable remedies: an accounting, disgorgement, a constructive trust, reformation of a self-dealing contract, a receiver, winding up, and attorney's fees where a statute or the agreement allows them. A judgment in a partner case often reallocates money without changing who owns the company, which is why so many settle on a buyout instead.

After judgment

Collection against a partner who still holds an interest can proceed by turnover and charging orders; appeal to the court of appeals is available to either side and takes its own time. Where the judgment includes a winding up or a receiver, the court supervises that process until the assets are distributed.

Example

Suppose two members of a Dallas staffing LLC fall out after one discovers the other has been paying a 'consulting fee' to his own entity for three years. She sends a records demand, which is refused, and a derivative demand. On day 20 she learns he is moving the company's receivables to a new LLC, and files suit with a TRO application, pleading irreparable injury to excuse the rest of the waiting period. The TRO is granted; at the temporary injunction hearing two weeks later the court orders two signatures on all accounts and bars further payments to his entity. He counterclaims that she abandoned her duties. Discovery runs for several months; a forensic accountant traces the fees and the receivables. At court-ordered mediation, with both valuations on the table, the parties agree that she buys his interest at a price that credits the diverted fees, with a non-compete and mutual releases. The case ends by agreed judgment without a trial.

What drives time and cost

Not the amount at stake, mostly. The number of years of financial records to reconstruct, the state of the books, whether an emergency phase was needed, how many experts are required, how many motions the other side files, and whether the court's docket is crowded. A case with clean books and a clear agreement moves fast; one with commingled accounts and a handshake agreement does not. A litigator who has seen the documents can estimate the path, and the first meeting is where that estimate is built.

Deadline

Four years for breach of fiduciary duty, fraud and settlement of partnership accounts under Civil Practice and Remedies Code section 16.004; conversion is shorter. Filing the derivative demand does not extend your deadline by itself, so the pre-suit sequence should start well inside the period.

When to involve a litigator

Before the records demand goes out. The demand, the derivative demand and the preservation steps are the foundation of everything that follows, and each is cheap to do correctly and expensive to redo. Tina Wysk represents owners on both sides of partnership and LLC lawsuits in Dallas state and federal courts and in arbitration.