Who Owes a Fiduciary Duty in a Texas Business?

Why the question comes first

Every breach of fiduciary duty case begins with the same question: did this person owe this plaintiff a fiduciary duty at all? If the answer is no, the plaintiff is left with contract and fraud claims, which require a broken promise or a false statement. If the answer is yes, the fiduciary's silence, self-interest and undisclosed profits become actionable, and the burden of proving fairness shifts to the fiduciary. The Texas Supreme Court has said that because fiduciary duties override the ordinary rules of contract, courts do not create them lightly. What follows is who owes them, who does not, and where the lines are contested.

Formal fiduciaries: duties imposed by law

Certain relationships are fiduciary as a matter of law. No proof of special trust is needed; the relationship itself carries the duty.

• Partners. Section 152.204 of the Business Organizations Code provides that a partner owes the partnership and the other partners a duty of loyalty and a duty of care, and must act in good faith. This applies to general partners of general and limited partnerships. The specifics of the loyalty duty are in section 152.205: account for benefits derived from the business, do not represent adverse interests, do not compete.
• Agents. A person authorized to act for another, whether as employee, broker, manager or representative, owes the principal loyalty within the scope of the agency. Texas treats the principal-agent relationship as formally fiduciary.
• Corporate officers and directors. They owe fiduciary duties to the corporation they serve. The Texas Supreme Court applied the rule to officers' self-dealing in International Bankers Life Insurance Co. v. Holloway (Tex. 1963), placing on the officer the burden of proving the transaction was fair.
• Trustees, executors and guardians. Each holds property for others and owes the highest duties the law recognizes.
• Attorneys. The attorney-client relationship is fiduciary, which is why fee forfeiture for a lawyer's disloyalty exists as a remedy.

Within these categories the duty exists even when the parties also have a contract. A partnership agreement can shape the duty, as discussed below, but it does not remove the relationship from the fiduciary category.

Who does not owe a fiduciary duty by default

The list of relationships Texas courts have declined to treat as fiduciary is as important as the list above.

• Co-shareholders. Texas has not recognized a formal fiduciary duty running from a majority shareholder to a minority shareholder in a closely held corporation. The officers and directors owe duties to the corporation; a shareholder as such owes none to another shareholder. Minority owners' protections come from the certificate, the shareholder agreement, derivative claims and the Business Organizations Code, as discussed in minority shareholder oppression in Texas.
• LLC members. The Business Organizations Code does not itself impose fiduciary duties on LLC members or managers. Their duties come from the company agreement and from the roles they take: a manager who acts for the company is an agent and owes agency duties; a member who merely holds an interest generally owes the others nothing beyond the agreement. See fiduciary duties of partners and LLC managers.
• Lenders and borrowers. A bank does not owe a fiduciary duty to its borrower, however long the relationship.
• Buyers and sellers, vendors and customers, landlords and tenants. Arm's-length counterparties owe each other honesty, not loyalty.
• Accountants and other professionals, automatically. In Pitts v. Rivas (Tex. 2025) the Texas Supreme Court held that an accountant-client relationship does not by itself create a fiduciary duty; a plaintiff must prove the facts of an informal fiduciary relationship.

Informal fiduciary relationships: rare and narrowly drawn

Texas does recognize that a fiduciary duty can arise from a relationship of trust and confidence that is not on the formal list. But the Texas Supreme Court has set demanding conditions. In Meyer v. Cathey (Tex. 2005) the court held that two men who had done several deals together, were friends and trusted one another did not have a fiduciary relationship, because the relationship of trust must exist prior to, and apart from, the agreement that is the basis of the suit. Trust that arises from the deal itself does not count. Subjective trust, friendship and a long course of dealing are not enough.

Pitts v. Rivas (Tex. 2025) reaffirmed those limits and went further: a concurring opinion joined by several justices questioned whether the informal fiduciary doctrine should survive at all, noting that the court had not found such a relationship in decades. As of 2026 the doctrine still exists, but a plaintiff relying on it should expect to lose unless the evidence of a pre-existing relationship of dependence and confidence is unusually strong.

Example

Suppose two Dallas entrepreneurs form an LLC to develop a mixed-use project. One is a developer with decades of experience; the other is a physician investing for the first time. The company agreement names the developer as manager. The developer owes the LLC the duties of an agent and whatever the agreement specifies. Does he owe the physician an informal fiduciary duty because she trusted his expertise? Under Meyer, almost certainly not: her trust arose from the deal, not before it. Her protection is the agreement's terms, the manager's agency duties to the company, a derivative claim on the company's behalf, and fraud if he lied to her. If, by contrast, the developer had managed her investments for ten years before proposing the project, the analysis changes.

Can the agreement change who owes what?

Yes, within limits that differ by entity type.

Section 101.401 was amended by Senate Bill 29, effective May 14, 2025, to state expressly that an LLC company agreement may eliminate fiduciary duties, not only expand or restrict them. For anyone evaluating an LLC dispute as of 2026, the company agreement is therefore the first document to read: it may have removed the very duty the plaintiff wants to enforce, or it may have imposed duties the law would not otherwise supply.

Employees

An employee owes the employer a duty of loyalty while employed: not to compete, not to divert opportunities, not to misappropriate confidential information. Whether that duty is "fiduciary" in the full sense depends on the employee's role; an officer or an agent with authority to bind the company clearly owes fiduciary duties, while a rank-and-file employee's duty is narrower. The topic has its own article: do employees owe a duty of loyalty in Texas.

What this means for your dispute

Before alleging a breach of fiduciary duty, identify the relationship precisely. Was the defendant a partner, an agent, an officer, a trustee? Then the duty exists and the fight is about breach and remedy. Was the defendant a co-member, a co-shareholder, a lender, a seller or an advisor? Then the duty must be found in the agreement or proven as an informal relationship that predated the deal, and the fraud and contract theories should be developed in parallel. A litigator will read the governing documents before the allegations, because in Texas the documents often answer the question. Tina Wysk advises and represents owners and executives in fiduciary duty disputes in Dallas.