This page consolidates every frequently asked question from across the Cook Keith & Davis Dallas business litigation site into a single searchable reference. It collects 181 of the most common questions organized by topical cluster, with each answer linking back to the underlying practice area page for full treatment.
If you are looking for the quick answer to a specific business litigation question, use the list below to jump to the relevant section. If you need to discuss your specific situation with one of our attorneys, reach the firm through the sidebar.
Jump to a section:
- General Business Litigation
- Contract & Commercial Disputes
- Business Torts
- Owner & Partner Disputes
- Non-Compete & Trade Secrets
- Emergency Relief (TROs & Injunctions)
- Procedure & Strategy
- Damages & Remedies
- Declaratory Judgment
- When You’re Sued (defendant)
- Cross-Practice Bridges
- Situational Questions
- FAQ Deep Dives
General Business Litigation
Business litigation is the prosecution and defense of legal disputes between businesses, between business owners, and between businesses and individuals where the underlying issues are commercial. The principal categories include breach of contract, business torts (fraud, tortious interference, civil conspiracy), owner and partner disputes (business divorce, fiduciary duty, shareholder oppression), non-compete and trade secret matters, emergency relief proceedings (TROs, temporary injunctions, receiverships), and complex damages claims. The field covers the full lifecycle of commercial disputes from pre-suit demand through trial, post-judgment collection, and appeal.
We focus on aggressive, file-first business litigation since 1994. The firm represents business owners, executives, and entities in Texas commercial disputes across the principal practice clusters. Founding member Darrell W. Cook leads a team including Catherine A. Keith, Stephen W. Davis, Douglas L. Bynum, Jose R. Espinosa, Ethan M. Herrema, and Melissa J. Parker. The firm's companion practices handle collections (texascollections.com), landlord-tenant (dallaslandlordlawyer.com), fraudulent transfers (dallasfraudulenttransferlawyer.com), injunctions (dallasinjunctionlawyer.com), construction liens (dallaslienlawyer.com), and foreclosure (dallas-lawyer-foreclosure-bankruptcy.com).
Most Texas business litigation cases resolve in 12 to 24 months from filing. Simpler contract cases can resolve in 6 to 12 months; complex cases involving multiple parties, extensive discovery, expert work, or appeals can take 24 to 48 months or longer. Most cases settle before trial, typically at mediation occurring 9 to 18 months into the case. The Texas Business Court (operational since September 1, 2024) targets faster resolution for qualifying cases above the $5 million threshold.
Costs vary substantially. Simple contract cases may cost $25,000 to $100,000 in legal fees. Standard commercial disputes typically cost $100,000 to $300,000. Complex multi-party cases involving extensive discovery and trial can cost $300,000 to $1,000,000 or more. Most Texas business cases are handled on hourly fee arrangements; some cases support contingency or hybrid arrangements. Texas Civil Practice and Remedies Code Chapter 38 (amended by HB 1578 effective September 1, 2021 to cover organizations) provides prevailing-party attorney's fees in contract cases, substantially affecting the cost-benefit analysis.
Yes, in many cases. Texas Civil Practice and Remedies Code Chapter 38 provides prevailing-plaintiff attorney's fees in contract claims against individuals and organizations (the HB 1578 amendment effective September 1, 2021 expanded coverage to LLCs and other entity types previously outside the statute). The Texas Theft Liability Act (Chapter 134) provides attorney's fees in theft cases. Statutory fraud claims, declaratory judgment actions, the Texas Citizens Participation Act, and various other Texas statutes provide fee-shifting in specific contexts. Many commercial contracts also include their own fee-shifting provisions.
A specialized state court created by HB 19 (effective September 1, 2024) for sophisticated commercial cases. HB 40 (effective September 1, 2025) lowered the threshold to $5 million. Five operational divisions cover Dallas, Austin, San Antonio, Fort Worth, and Houston. The court handles qualifying business disputes with specialized judges and case management focused on commercial litigation. Non-compete cases under Business and Commerce Code Chapter 15 and DTPA cases under Chapter 17 are excluded and remain in district court. Cases meeting the threshold and substantive criteria can produce faster, more sophisticated resolution than ordinary district court.
When the underlying claims have merit, the damages or recovery is meaningful enough to justify the investment, the defendant is collectible or the relief sought (injunctive, declaratory) is meaningful regardless of collectibility, and pre-suit alternatives (demand, negotiation, settlement) have been pursued or are not appropriate for the case. Cases involving emergency situations (ongoing harm, asset dissipation, time-critical relief) may warrant filing without significant pre-suit work. Cases with limitations approaching should be filed promptly regardless of pre-suit posture.
Engage litigation counsel immediately. Texas Rule of Civil Procedure 99 requires an answer within 20 days after service in most cases (with specific calculation rules). Failure to answer can result in default judgment. Before answering, counsel evaluates jurisdiction, venue, dismissal motions (including Rule 91a motions to dismiss for no basis in law or fact), TCPA anti-SLAPP motions where applicable, and other procedural responses. Substantive analysis of the claims, identification of counterclaims, and litigation strategy follow. Do not communicate with the plaintiff about the case once represented.
Court-ordered mediation is common in Texas commercial cases under the Texas Alternative Dispute Resolution Procedures Act (Tex. Civ. Prac. & Rem. Code Chapter 154). Most Texas business cases include mediation at some point, typically 9 to 18 months into the case. Some contracts also require mediation as a condition to litigation. Approximately 70-80% of Texas business mediations produce settlement. Mediation is a confidential settlement process facilitated by a neutral mediator; the mediator does not impose decisions, so settlement requires the parties' agreement.
Post-judgment collection. The judgment itself is the foundation; collection requires affirmative steps including abstract of judgment (creating a lien on real property in the filing county), writs of execution (against personal property), writs of garnishment (against bank accounts and accounts receivable), post-judgment discovery (deposing the debtor about assets), turnover orders (for property not reachable by other writs), and writs of attachment (for specific assets in unusual cases). When the debtor is moving assets to avoid collection, fraudulent transfer claims under TUFTA may apply. Our firm coordinates judgment collection with our companion Texas Collections practice.
We file first. Since 1994, our practice has been built on aggressive, file-first business litigation rather than measured, defensive approaches. We bring emergency relief (TROs, temporary injunctions, asset freezes, receiverships) early in cases when warranted. We coordinate substantive business litigation with our companion practices in collections, landlord-tenant, fraudulent transfers, injunctions, construction liens, and foreclosure. We focus on Texas commercial disputes specifically, with deep knowledge of the procedural and substantive frameworks that drive outcomes. We are responsive, with same-day or next-day response on most matters, with emergency response when warranted.
Contract & Commercial Disputes
No. Texas enforces oral contracts and contracts implied from conduct in most circumstances. Some specific categories, such as real estate sales, promises that cannot be performed within a year, and agreements to pay another person's debt, must be in writing under the statute of frauds. Outside those categories, an oral or implied contract is enforceable. The practical problem with oral contracts is proof. Written contracts make easier cases.
Four years from the date of breach, under Texas Civil Practice and Remedies Code section 16.051. The clock starts when the contract is breached, not when you discover it. A handful of doctrines can extend the period (fraudulent concealment, the discovery rule, contractual modifications of the limitations period), but the safe assumption is four years.
Anticipatory breach occurs when a party to a contract, before the time for performance arrives, makes clear that it will not perform when performance is due. The repudiation can be by words, by conduct that makes performance impossible, or by a combination. When anticipatory breach occurs, the non-breaching party does not have to wait for the actual performance date to file suit.
No, if the other side has anticipatorily breached. Texas law allows the non-breaching party to elect either to (1) treat the repudiation as an immediate breach and sue right away for the full contract damages, or (2) wait for the performance date and sue then if the other side still has not performed. The choice between these options is one of the most important decisions in an anticipatory breach case.
UCC Article 2 is the chapter of the Texas Business and Commerce Code that governs transactions in goods, codified at Chapter 2 of the Texas Business and Commerce Code. It applies to the sale of movable, tangible personal property, but not to real estate, services, or intangible rights. Mixed transactions involving both goods and services are analyzed under the predominant purpose test.
Texas Business and Commerce Code section 2.201 requires contracts for the sale of goods of $500 or more to be in a writing sufficient to indicate that a contract for sale has been made, signed by the party against whom enforcement is sought. There are exceptions for partial performance, specially manufactured goods, admissions in litigation, and certain merchant-to-merchant transactions.
Failure to deliver, late delivery, delivery of non-conforming goods, pricing disputes (especially when long-term contracts run into volatile commodity markets), volume disputes under requirements or output contracts, payment disputes, and disputes over warranty claims and product defects. Most cases involve some combination of these in a single contract relationship.
When the dispute involves the sale of goods, yes. Texas Business and Commerce Code Chapter 2 governs sale of goods transactions and provides specific rules for formation, warranties, perfect tender, and remedies. When the vendor relationship involves services rather than goods, common-law contract principles govern. Mixed transactions involving both goods and services are analyzed under the predominant purpose test.
Texas Property Code Chapter 93 governs commercial tenancies, providing some baseline statutory rights and obligations. The lease itself controls most aspects of the relationship. Unlike residential tenancies under Chapter 92, commercial leases give the parties broad freedom to bargain over terms, and the lease language generally controls when not contrary to specific statutory requirements.
Yes, in carefully limited circumstances. Texas Property Code section 93.002 allows commercial landlords to use lockouts to recover possession from defaulting tenants, but only when the lease expressly authorizes the lockout and only after specified notice procedures. Unauthorized lockouts expose the landlord to statutory damages, actual damages, and attorney's fees under section 93.002(g).
A guaranty is a promise by one party (the guarantor) to be responsible for the obligation of another party (the principal) if the principal fails to perform. Guaranties are common in commercial leases, business loans, vendor extensions of credit, and equipment financing. They allow creditors to look to the personal assets of a guarantor (or to the assets of a parent company guarantor) when the primary obligor defaults.
Yes. Under Texas Business and Commerce Code section 26.01(b)(2), a promise to answer for the debt, default, or miscarriage of another is unenforceable unless in a writing signed by the party charged. This is the guaranty provision of the Texas statute of frauds. Oral guaranties generally cannot be enforced. The exception applies when the primary purpose of the promise is to benefit the promisor, not to support the third-party debtor.
A promissory note is a particular type of contract, an unconditional written promise to pay a specified sum of money on demand or at a specified time. Promissory notes can also be negotiable instruments governed by UCC Article 3 (codified at Chapter 3 of the Texas Business and Commerce Code), which gives them special enforcement characteristics not available with ordinary contracts. Note holders generally have stronger remedies and fewer affirmative pleading burdens than ordinary contract plaintiffs.
Acceleration declares all remaining principal and interest on an installment note immediately due and payable, typically following a default. Most commercial promissory notes contain express acceleration clauses; acceleration is also available under UCC section 3.118 in some contexts. Texas courts require strict compliance with notice provisions in acceleration. Acceleration without proper notice can be set aside, leaving the lender to pursue only the past-due installments.
A joint venture is a business arrangement in which two or more parties combine resources to pursue a specific business undertaking. Texas treats joint ventures as a species of partnership, typically a partnership formed for a single transaction or limited purpose rather than an ongoing general business. The same legal principles that govern partnerships generally apply to joint ventures, including the framework of the Texas Business Organizations Code and Texas partnership case law.
Texas courts generally require four elements for a joint venture: (1) a community of interest in the venture, (2) an agreement to share profits, (3) an agreement to share losses (or some agreement allocating the venture's economic burdens), and (4) a mutual right of control over the venture. Each element must be present; the absence of any one defeats the joint venture characterization. Texas joint venture cases often turn on whether all four elements were really present in the arrangement the parties created.
Business Torts
A business tort is a civil wrong that one business or businessperson commits against another, usually causing economic loss rather than physical injury. Common Texas business torts include fraud, tortious interference with contract, tortious interference with prospective business relations, business disparagement, civil conspiracy, violations of the Texas Deceptive Trade Practices Act, and civil claims under the Texas Theft Liability Act.
See: Business Torts (hub)
Sometimes, but not as a reflex. Tort claims can open the door to exemplary damages and bypass certain contract defenses, but the Texas economic loss rule blocks many tort claims that arise solely from the breach itself. Adding tort claims also expands discovery and pleading burdens. The decision should be strategic, based on the specific facts and what additional relief the tort claim genuinely makes available.
See: Business Torts (hub)
Texas common-law fraud has six elements: (1) a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act on it; (5) the other party acted in reliance on the representation; and (6) the other party suffered injury as a result.
Fraudulent inducement is fraud that occurs in connection with the formation of a contract. The defendant makes a material false representation to induce the plaintiff to enter the contract, the plaintiff relies on it in deciding to enter the contract, and is harmed when the truth comes out. Fraudulent inducement is one of the few situations where the Texas economic loss rule generally does not bar a tort claim alongside a contract claim.
Negligent misrepresentation is a tort claim against a party who, in the course of business or a transaction in which the party had a pecuniary interest, supplied false information for the guidance of others in their business transactions, where the supplier failed to exercise reasonable care in obtaining or communicating the information. Texas follows the Restatement (Second) of Torts section 552 framework. The claim is narrower than fraud and limited to specific recipients of the information.
Three principal differences. First, fraud requires intent to deceive or reckless disregard; negligent misrepresentation only requires negligence. Second, fraud allows recovery for the benefit of the bargain or out-of-pocket damages; negligent misrepresentation is limited to pecuniary out-of-pocket loss. Third, fraud claims can support exemplary damages; negligent misrepresentation generally does not. The element-by-element pleading and proof are accordingly different.
Tortious interference with contract is a tort claim against a third party who willfully and intentionally interfered with an existing contractual relationship between the plaintiff and another party, where that interference proximately caused damages. The classic example is a competitor that hires a key employee bound by a non-compete with the plaintiff, knowing about the non-compete and intending to induce the breach. The claim allows the plaintiff to pursue both the breaching party for breach of contract and the third party for the interference.
Four elements: (1) the existence of a contract subject to interference; (2) a willful and intentional act of interference with the contract by the defendant; (3) that proximately caused the plaintiff's injury; and (4) actual damages or loss. The defendant must have known about the contract or at least had knowledge of facts that would lead a reasonable person to investigate. Inadvertent interference, no matter how harmful, does not support the claim.
Tortious interference with prospective business relations is a tort claim against a defendant who intentionally prevented a prospective business relationship from forming or continuing through conduct that was independently tortious. The claim is narrower than tortious interference with an existing contract, it requires the defendant's conduct to have been independently wrongful, not just intentional. The framework was set in *Wal-Mart Stores, Inc. v. Sturges* in 2002.
Four elements under the *Wal-Mart v. Sturges* framework: (1) a reasonable probability that the plaintiff would have entered into a business relationship; (2) an independently tortious or unlawful act by the defendant that prevented the relationship from occurring; (3) the defendant did the act with a conscious desire to prevent the relationship or knew the interference was certain or substantially certain; and (4) damages from the interference. The "independently tortious" element is what makes the claim narrower than interference with existing contracts.
Yes, in many cases. The Texas DTPA, codified at Chapter 17 of the Business and Commerce Code, applies to consumers, which the statute defines as individuals, partnerships, or corporations who seek or acquire goods or services by purchase or lease. Most businesses qualify as consumers when they buy goods or services for their own use. The most significant exception is the large transaction exemption, the DTPA does not apply to transactions valued at $500,000 or more (with some exceptions including those involving consumer's residence).
Texas Business and Commerce Code section 17.46(b) contains a list (commonly called the "laundry list") of specific deceptive trade practices that are actionable per se under the DTPA. The list includes misrepresentations about the source, nature, or quality of goods or services; misrepresentations about characteristics of warranties; pricing misrepresentations; bait-and-switch practices; and numerous other specific categories. Plaintiff need not separately prove deception or reliance for laundry list violations beyond what the specific provision requires.
Civil conspiracy is a derivative tort claim that holds multiple parties jointly and severally liable for a tort committed in furtherance of a common plan. It is not a stand-alone tort, Texas requires the plaintiff to prove an underlying tort that the conspirators conspired to commit. The most common business cases involve conspiracies to commit fraud, tortious interference, or breach of fiduciary duty. The value of the conspiracy claim is its ability to reach defendants who would not otherwise be liable for the underlying tort.
See: Civil Conspiracy
Five elements: (1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) one or more unlawful, overt acts in furtherance of the object; and (5) damages as a proximate result. The "unlawful" act element requires Texas courts to identify a specific underlying tort that the conspiracy was formed to commit. Without an actionable underlying tort, the conspiracy claim fails.
See: Civil Conspiracy
Defamation involves false statements that harm a person's or entity's reputation. Business disparagement involves false statements that disparage the quality of a business's goods, services, or economic interests. The categories overlap but are distinct. Defamation focuses on reputational harm; business disparagement focuses on economic harm to commercial interests. Texas allows both claims to be pleaded together when the same statements implicate both forms of harm.
Defamation per se involves statements so inherently damaging that they are presumed to cause harm, falsely accusing someone of a crime, accusing someone of a loathsome disease, falsely imputing serious sexual misconduct, or making statements that injure a person in their office, profession, or occupation. Defamation per quod involves statements that are not inherently damaging but cause actual harm proven by specific evidence. Defamation per se allows recovery without proof of specific damages; per quod requires proof of actual injury.
The Texas Theft Liability Act (TTLA), codified at Chapter 134 of the Texas Civil Practice and Remedies Code, creates a civil cause of action for theft as defined in specific provisions of the Texas Penal Code. The TTLA allows victims of theft to recover their actual damages plus additional statutory damages and mandatory attorney's fees, all in a civil action separate from any criminal prosecution. The act is regularly used in business cases involving employee theft, partner misappropriation, and similar misconduct.
The TTLA incorporates by reference specific theft offenses from the Texas Penal Code, primarily theft under Penal Code section 31.03, theft of services under section 31.04, theft of trade secrets under section 31.05, and theft by check under section 31.06. The civil claim requires the plaintiff to prove the elements of the underlying Penal Code offense as a matter of civil proof. Misappropriation that does not meet the Penal Code elements may be actionable under other theories but not under the TTLA.
Owner & Partner Disputes
Maybe, but not as easily as in many other states. Whether a forced buyout is available depends on the entity type, the governing documents, and the facts. After *Ritchie v. Rupe* (2014), Texas closely-held corporations no longer have a common-law shareholder oppression claim that supports a forced buyout. Texas LLCs and partnerships have different rules. If your governing documents contain a buy-sell provision, that contract usually controls. The shortest accurate answer is that a forced buyout is available in some Texas business divorces and not in others, and identifying which kind of case you have is the first job of your lawyer.
*Ritchie v. Rupe* held that Texas does not recognize a common-law shareholder oppression claim. The exclusive statutory remedy for shareholder oppression is the rehabilitation receivership under TBOC section 11.404, which has a high bar. Minority shareholders still have claims for breach of fiduciary duty, breach of contract, and derivative claims for harm to the corporation, but the easy path to a forced buyout that exists in other states does not exist in Texas.
Not as a stand-alone common-law cause of action. The Texas Supreme Court's 2014 decision in *Ritchie v. Rupe* held that Texas does not recognize a common-law cause of action for shareholder oppression. Minority shareholders in Texas pursue oppression-style relief through different theories, primarily breach of fiduciary duty, the statutory receivership provisions in the Texas Business Organizations Code, and derivative actions on behalf of the corporation. The substantive misconduct that other jurisdictions call oppression is still actionable, but under these distinct theories.
*Ritchie v. Rupe* was a 2014 Texas Supreme Court decision that closed the door on common-law shareholder oppression claims that some Texas courts of appeals had recognized in the prior decade. The decision held that Texas had no common-law cause of action for shareholder oppression and that the statutory receivership remedy in the Texas Business Organizations Code was the exclusive statutory remedy for oppression-style conduct. The decision substantially narrowed the relief available to minority shareholders compared to the prior law.
The Texas Business Organizations Code, Title 3 (governing limited liability companies), together with the LLC's company agreement (the Texas equivalent of an operating agreement). The TBOC provides default rules and certain mandatory provisions, but allows broad freedom of contract through the company agreement. Most LLC disputes turn first on what the company agreement says and second on what the TBOC supplies by default for matters the agreement does not address.
See: LLC Member Disputes
The default rule under TBOC section 101.401 is that the company agreement governs duties. The company agreement can expand, restrict, or eliminate most duties, with specific statutory exceptions. Where the company agreement is silent, Texas LLC managers generally owe the LLC duties of loyalty and care analogous to corporate fiduciary duties. Members in a member-managed LLC owe similar duties. The company agreement is usually the starting point for any duty analysis.
See: LLC Member Disputes
Several categories of rights, depending on entity type. Statutory inspection rights to corporate books and records under TBOC section 21.218 and parallel LLC provisions. Voting rights on certain fundamental matters. Standing to bring derivative actions for harm to the entity. Fiduciary duty protections from directors, officers, managers, and (in limited cases) controlling owners. Contract rights under the governing documents bylaws, shareholder agreements, company agreements, buy-sell agreements. Specific dissent and appraisal rights in some transactions.
Only in specific circumstances. Texas does not provide a general right to forced buyout in oppression-style cases after *Ritchie v. Rupe*. Forced buyout is available when the governing documents (buy-sell agreement, shareholder agreement, company agreement) provide for it, when dissent and appraisal rights apply in fundamental transactions, when a court orders buyout as a fair value remedy in specific contexts, or when settlement of a litigation matter produces buyout as part of resolution. The default is no forced buyout.
A derivative lawsuit is a suit brought by an owner of an entity (shareholder, member, partner) on behalf of the entity to recover for harm caused to the entity itself. The cause of action belongs to the entity, but the entity will not pursue it typically because the wrongdoers control the entity. The derivative procedure allows individual owners to step into the entity's shoes and prosecute the claim on its behalf. Recovery flows to the entity, not directly to the suing owner.
See: Derivative Lawsuits
Under TBOC section 21.553, the plaintiff in a derivative action must first make written demand on the corporation requesting that it take suitable action on the underlying claim. The plaintiff must then wait 90 days after the demand before filing suit unless an exception applies. The demand requirement is jurisdictional, failure to comply generally results in dismissal. Unlike some other states, Texas does not allow demand to be excused as futile in for-profit corporations; demand is mandatory.
See: Derivative Lawsuits
Several categories. Directors and officers of Texas corporations owe fiduciary duties to the corporation. General partners owe duties to the partnership and to fellow partners. Managers and managing members of LLCs owe duties to the LLC subject to the company agreement. Trustees owe duties to beneficiaries. Agents owe duties to principals. Controlling shareholders may owe duties in specific contexts. Attorneys, accountants, and certain other professionals owe fiduciary duties to clients. The scope of the duties varies by relationship.
The duty of loyalty requires the fiduciary to act in the entity's or principal's best interest, without self-dealing or pursuing personal interests at the expense of the duty. The duty includes avoidance of conflicts of interest, full disclosure of material information, and refraining from taking corporate or partnership opportunities for personal benefit. The duty of care requires the fiduciary to exercise reasonable care, skill, and diligence in performing fiduciary functions, including making informed decisions and reasonable business judgments.
Texas does not provide a general right to force buyout absent specific contractual or statutory provisions. Forced buyout becomes available when the governing documents (shareholder agreements, company agreements, buy-sell agreements) provide for it on specified triggering events. Statutory dissent and appraisal rights under TBOC Chapter 10 Subchapter H apply in certain fundamental transactions. Courts occasionally order buyout as part of settlement of fiduciary duty or other claims. The default is no forced buyout.
A buy-sell agreement is a contract among owners of a closely-held entity that addresses what happens to ownership interests on specified events, death, disability, retirement, termination of employment, divorce, attempted transfer, dispute resolution, or other triggers. Buy-sell agreements typically specify whether the buyout is mandatory or optional, who is required to buy, who is required to sell, and how the price is determined. Well-drafted buy-sell agreements substantially reduce litigation risk by addressing exit scenarios in advance.
Several theories may apply. Breach of fiduciary duty, which carries disgorgement and constructive trust remedies. The Texas Theft Liability Act (Chapter 134) when the conduct meets Penal Code section 31.03 theft elements, carrying mandatory attorney's fees. Conversion, the common-law tort for unauthorized exercise of dominion over property. Accounting actions to compel financial disclosure. Where assets continue to disappear, emergency relief receivership or injunction, to stop the bleeding while the underlying claims proceed.
Generally not, and often it is counterproductive. Confronting a partner who is actively misappropriating frequently leads to further misappropriation, concealment of assets, or destruction of evidence before suit can be filed. Counsel typically counsels against confrontation until protective steps are in place, typically involving asset analysis, evidence preservation, and where appropriate emergency relief filed simultaneously with the underlying lawsuit.
Several features. The owners often have personal relationships family, longtime friends, longtime business partners, that complicate the legal dispute. The business often depends on continuing cooperation among the owners for ongoing operations. There is no liquid market for the ownership interests, so disputes over exit have no easy reference point. The governance documents are often less developed than in larger entities, and informal practices fill the gaps. These features make resolution more difficult than in disputes with arm's-length sophisticated parties.
Through the same legal framework as other closely-held disputes, fiduciary duty claims, contract claims under the governing documents, derivative actions, accounting actions, and the relevant statutory provisions. The substantive law does not change because the parties are related. The procedural realities, however, do change. Family business disputes often involve heightened emotional intensity, longer pre-litigation history, and complex interactions with estate planning and personal relationships. Settlement dynamics differ accordingly.
Non-Compete & Trade Secrets
A non-compete prohibits a former employee from working in competition with the former employer. A non-solicitation prohibits the former employee from soliciting the employer's customers, employees, or both. Both must meet the same statutory requirements under Texas Business and Commerce Code sections 15.50-52: ancillary to an otherwise enforceable agreement, with reasonable time, geographic, and scope limitations. Non-solicitation agreements are often more enforceable in Texas than broad non-competes because the restrictions are narrower.
The Texas Uniform Trade Secrets Act (TUTSA), codified at Texas Civil Practice and Remedies Code Chapter 134A, is the state-law framework for trade secret claims in Texas. The Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836, is the federal framework. Both follow similar substantive principles, but the DTSA provides federal court jurisdiction and authorizes a civil seizure remedy that TUTSA does not. Most Texas trade secret cases plead both statutes.
Yes, when they meet the requirements of the Texas Covenants Not to Compete Act, Business and Commerce Code sections 15.50 through 15.52. The covenant must be ancillary to or part of an otherwise enforceable agreement, and must contain reasonable limitations on time, geographic area, and scope of activity. Texas courts will reform overly broad covenants rather than declare them entirely unenforceable in most cases.
The federal FTC rule that would have banned most non-competes nationwide is no longer in effect. The Northern District of Texas struck it down in August 2024. The FTC initially appealed but formally abandoned the appeal in September 2025, and the Fifth Circuit dismissed the appeal that same month. The FTC has acceded to vacatur of the rule. Texas non-compete law under Business and Commerce Code sections 15.50-52 controls in Texas.
A non-solicitation agreement is a contract restricting one party from soliciting another party's customers, employees, or both, typically for a specified period after termination of employment or some other triggering event. Customer non-solicits restrict approaches to specific customers or categories of customers; employee non-solicits restrict recruitment of specific employees or categories of employees. Texas treats most non-solicitation agreements as restraints on trade subject to the same Chapter 15 framework that governs non-compete agreements.
Yes, when they satisfy Texas Business and Commerce Code section 15.50. The agreement must be ancillary to an otherwise enforceable agreement, contain reasonable limitations as to time, geographic area, and scope of activity to be restrained, and not impose a greater restraint than necessary to protect the goodwill or other business interest of the promisee. Texas courts apply the same framework to customer non-solicits, employee non-solicits, and traditional non-competes.
The Texas Uniform Trade Secrets Act (TUTSA), codified at Chapter 134A of the Texas Civil Practice and Remedies Code, is Texas's adoption of the Uniform Trade Secrets Act with modifications. TUTSA provides a statutory cause of action for trade secret misappropriation, defines trade secrets and misappropriation, and establishes the available remedies including injunctive relief, damages, exemplary damages, and attorney's fees in willful misappropriation cases. TUTSA replaced the prior Texas common-law framework for trade secret cases when adopted in 2013.
Information including a formula, pattern, compilation, program, device, method, technique, process, financial data, or list of actual or potential customers or suppliers, that derives independent economic value from not being generally known and is the subject of reasonable efforts to maintain its secrecy. The two elements, independent economic value from secrecy and reasonable efforts to maintain secrecy, control the analysis. Information that has no economic value beyond what is publicly known, or that the owner has not protected through reasonable measures, does not qualify.
The Defend Trade Secrets Act (DTSA), enacted in 2016 and codified at 18 U.S.C. section 1836 et seq., is a federal statute providing a federal cause of action for trade secret misappropriation. The DTSA generally follows the Uniform Trade Secrets Act framework adopted by most states (including Texas through TUTSA) but adds a federal forum and certain distinctive procedural features. Plaintiffs can typically pursue DTSA and state-law trade secret claims together in federal court.
The DTSA applies to trade secrets related to products or services used in or intended for use in interstate or foreign commerce. The requirement is broadly interpreted, most modern trade secrets used in commercial activity satisfy the standard. Trade secrets purely local to a single state without any connection to interstate commerce may fall outside DTSA coverage, but the federal commerce reach makes this a relatively narrow limitation in practice.
Often yes. Customer lists qualify as trade secrets under TUTSA when they have independent economic value from not being generally known and are protected through reasonable secrecy measures. A list compiled through substantial investment of time and resources, containing customer relationship details that competitors would value, and protected through confidentiality agreements and access controls typically qualifies. Publicly available directories or lists of obvious customers in the industry generally do not.
Several immediate steps. Preserve evidence by securing the employee's company devices, email accounts, and other materials. Document what the employee accessed in the period before departure. Send a demand letter to the employee and new employer notifying them of the obligation to return materials and refrain from use. Where the taking is clear and use is imminent, file suit seeking temporary restraining order. The action window is short, taking these steps within days rather than weeks is essential.
A garden leave provision requires an employee, after giving notice of resignation or upon receiving notice of termination, to remain employed and on payroll for a specified period during which the employee does not perform work for the employer or for anyone else. The provision keeps the employee out of the market during the leave period while continuing to compensate the employee. Garden leave originated in English commercial practice and has gained traction in some U.S. industries, financial services and senior executive positions in particular.
A notice provision requires an employee or employer to give specified advance notice before terminating the employment relationship. Notice periods commonly range from two weeks for ordinary employees to six months or longer for senior executives. The provision delays separation, giving the employer time to prepare for the transition and giving the employee continued employment and compensation. Notice provisions are often paired with garden leave terms, the employee gives notice and is then placed on garden leave for the notice period.
Emergency Relief (TROs & Injunctions)
Emergency relief is preliminary court intervention granted before the merits of a case are tried. The most common forms in Texas business litigation are temporary restraining orders (TROs), temporary injunctions, asset freeze orders, receiverships, and pre-judgment writs of attachment, garnishment, or sequestration. Each requires a showing of urgency, a likelihood of success on the merits, and some form of harm that cannot be adequately addressed by a money judgment after trial.
A TRO is short-term emergency relief, typically granted on a verified petition with limited evidence, lasting up to 14 days with one possible 14-day extension. A temporary injunction follows after a contested evidentiary hearing and lasts until the case is tried on the merits. The standards are the same (cause of action, probable right to recover, imminent and irreparable injury, no adequate remedy at law), but the showing required at the temporary injunction stage is supported by actual evidence rather than just verified pleadings.
A temporary restraining order is an emergency court order that requires a party to stop or start doing something while a longer-term temporary injunction hearing is pending. Under Texas Rules of Civil Procedure 680-687, a TRO is available without notice in genuine emergencies and lasts up to 14 days, with one 14-day extension permitted. The TRO holds the status quo while the court evaluates whether to grant a temporary injunction.
Four things: (1) a cause of action against the defendant, (2) a probable right to recover on that cause of action, (3) a probable, imminent, and irreparable injury in the interim if the TRO is not granted, and (4) no adequate remedy at law. The same standard applies to the temporary injunction hearing that follows. Each element must be supported by specific facts in a verified pleading or affidavit, not generalized allegations.
A temporary injunction is a court order prohibiting or requiring specific conduct by a party, in effect until final disposition of the case. The temporary injunction is the longer-term counterpart to the temporary restraining order, TROs last up to 14 days, while temporary injunctions remain in place until the case is resolved on the merits. Temporary injunctions are issued after evidentiary hearings on notice rather than ex parte, and require the same elements as TROs.
Three elements. First, a cause of action against the defendant. Second, a probable right to relief on the underlying claim. Third, probable, imminent, and irreparable injury in the interim absent the injunction. "Irreparable" means the injury cannot be adequately compensated by money damages, typically because of loss of unique property, loss of goodwill, or other harm that cannot be quantified. The plaintiff must establish each element through admissible evidence at the temporary injunction hearing.
Expedited discovery is discovery conducted on an accelerated schedule, typically before or alongside emergency injunctive proceedings. The discovery may take place before the ordinary discovery period begins, on shortened response deadlines, or with specialized inspection procedures. Expedited discovery is used to develop evidence quickly enough to support pending injunction proceedings or to preserve evidence at risk of destruction. Texas trial courts have substantial discretion to order expedited discovery in appropriate cases.
See: Expedited Discovery
When good cause exists. Common contexts include pending TRO or temporary injunction proceedings requiring evidence development quickly, evidence at risk of destruction or alteration, witnesses leaving jurisdiction, and cases where the ordinary discovery timeline would defeat the purpose of the litigation. Texas courts balance the need for expedited process against the burden on the responding party. Cases involving trade secret allegations, asset hiding, and ongoing tortious conduct most commonly support expedited discovery.
See: Expedited Discovery
In specific circumstances. Texas does not provide a general pre-judgment asset freeze remedy for ordinary money damages claims. Pre-judgment asset restraints are available when the plaintiff seeks specific equitable relief tied to particular assets (constructive trust, equitable lien, return of specific property), when the case involves fraudulent transfers under TUFTA, when traceable funds doctrine applies, or through specific statutory remedies like pre-judgment attachment under Chapter 61. The default rule is no general asset freeze on damages-only claims.
See: Asset Freeze Orders
The traceable funds doctrine allows a plaintiff to follow specific identifiable funds through transfers and restrain those specific funds pre-judgment. The doctrine applies when the plaintiff can identify particular funds, for example, embezzled money, misappropriated trust funds, or proceeds of specific transactions, and trace them to specific bank accounts or other identifiable locations. Texas courts recognize the doctrine in appropriate cases, allowing freeze orders on the traced funds even when general asset freezes would not be available.
See: Asset Freeze Orders
A receivership is a court-supervised arrangement in which a neutral third party (the receiver) takes possession and control of a business or specific business assets while underlying disputes are resolved. The receiver is an officer of the court charged with preserving the business value, conducting operations as necessary, investigating allegations of misconduct, and reporting to the court. Receivership is an extraordinary remedy used in cases involving deadlock, oppression, waste, or fraud where less intrusive remedies cannot adequately protect the parties' interests.
TBOC section 11.404 provides specific grounds for receivership of a domestic entity: when the directors or those in control are deadlocked and the entity is suffering or threatened with irreparable injury; when the acts of the directors or those in control are illegal, oppressive, or fraudulent; when the entity's property is being misapplied or wasted; or when the entity's assets are abandoned. The grounds are demanding, and Texas courts impose receiverships sparingly. Less intrusive remedies, temporary injunctions, monitored operations, special masters, are preferred where adequate.
Three distinct statutory remedies. Attachment under Chapter 61 of the Texas Civil Practice and Remedies Code allows pre-judgment seizure of a defendant's property in cases meeting specific grounds. Garnishment under Chapter 63 reaches property of the defendant held by a third party (typically a bank or other debtor of the defendant). Sequestration under Chapter 62 applies to specific property at issue in the litigation when the plaintiff has a claim to that specific property. Each has different elements, procedures, and applicable contexts.
Chapter 61 requires the plaintiff to establish one of the statutory grounds: the defendant is about to remove property from Texas with intent to defraud creditors, has secreted or disposed of property with that intent, is about to do so, has converted property held in a fiduciary capacity, is a nonresident, or other specifically enumerated grounds. The grounds are demanding, pre-judgment attachment is not available simply because the plaintiff fears non-payment. Evidence of dissipation intent or other statutory grounds must be presented to the court.
Procedure & Strategy
In Texas district court or county court at law, your written answer is due by 10:00 a.m. on the Monday following the expiration of 20 days from the date you were served. In Texas justice court, you have 14 days from service, not counting the day of service. In federal court, you have 21 days from service. Missing these deadlines allows the plaintiff to take a default judgment against you.
It depends on the type of claim and the type of policy. Commercial general liability, directors and officers, employment practices liability, professional liability, and cyber liability policies each cover different categories of claims. The first analysis we run when a client forwards us a petition is whether any insurance policy is triggered. If coverage exists, the insurer typically has a duty to defend you and pays the defense costs. If coverage is denied when it should be provided, the Texas Insurance Code gives you leverage to push back.
The first-filer typically chooses the forum, frames the legal theory the case will be tried on, sets the initial litigation tempo, and gains tactical advantages that compound through the case. Texas applies a first-to-file rule that gives priority to the case filed first when parallel cases are pending in different courts on substantially the same dispute. Filing first does not guarantee victory but provides meaningful procedural advantages that often translate to better outcomes.
When the underlying dispute is heading toward litigation and the business has substantive claims worth pursuing rather than just defenses to assert. Specifically: when the other side's anticipated forum would be unfavorable, when the dispute could be characterized as either plaintiff or defendant action depending on framing, when fast injunctive relief is needed, when statute of limitations concerns exist, and when settlement leverage would be improved by being the first to act.
Under Civil Practice and Remedies Code section 15.002, the general rule is that an action may be brought in: (1) the county in which all or a substantial part of the events giving rise to the claim occurred; (2) the county of the defendant's residence at the time of accrual, for an individual defendant; (3) the county of the defendant's principal office in Texas, for a defendant that is not an individual; or (4) the county in which the plaintiff resided at the time of accrual, if (1) through (3) do not apply. Mandatory venue provisions and permissive venue provisions create exceptions.
Mandatory venue provisions require the case to be brought in a specific county regardless of the general venue rules. Chapter 15, Subchapter B, contains the principal mandatory venue statutes. Common mandatory venue contexts include actions for recovery of real property (county where property is located), suits involving certain trust matters, suits against political subdivisions, suits involving certain securities and oil and gas matters, and others. Mandatory venue overrides any contrary venue selection the plaintiff might otherwise make.
When the federal court would have had original jurisdiction over the case. The principal bases are diversity jurisdiction (complete diversity of citizenship and more than $75,000 in controversy under 28 U.S.C. section 1332), federal question jurisdiction (a claim arising under federal law under 28 U.S.C. section 1331), and CAFA jurisdiction (specific class action and mass action removal under 28 U.S.C. section 1332(d)). Removal is by the defendant; plaintiffs cannot remove cases they filed.
Generally 30 days. Under 28 U.S.C. section 1446(b), the defendant must file the notice of removal within 30 days after receiving the initial pleading or the summons (whichever is earlier under specific rules). When the basis for removal becomes apparent later, for example, when a non-diverse defendant is dismissed making the case diverse, a new 30-day window opens from receipt of the document showing removability. Removal more than one year after commencement is barred in diversity cases except for bad-faith plaintiff conduct.
The Texas Citizens Participation Act (TCPA), codified at Chapter 27 of the Civil Practice and Remedies Code, is Texas's anti-SLAPP statute. It provides an expedited motion-to-dismiss procedure for legal actions based on, related to, or in response to the exercise of the constitutional rights of free speech, petition, or association. The TCPA was substantially amended in 2019 to narrow its scope and address overuse in ordinary commercial litigation, but it remains a significant procedural tool when applicable.
See: TCPA Anti-SLAPP
Step one: the movant has the burden to show the legal action is based on, related to, or in response to the movant's exercise of the right of free speech, petition, or association. Step two: the burden shifts to the non-movant to establish a prima facie case for each essential element of the claim by clear and specific evidence. Step three: if the non-movant meets the burden, the movant can still obtain dismissal by establishing each essential element of a valid defense as a matter of law. Failure at any step has consequences for the dismissal motion.
See: TCPA Anti-SLAPP
A Rule 91a motion to dismiss is a Texas procedural mechanism that allows the court to dismiss a cause of action having no basis in law or fact. The motion is filed by the defendant and decided based solely on the pleading and the documents attached to the pleading, no evidence outside the pleadings is considered. The rule was adopted in 2013 to give Texas a procedure analogous to the federal Rule 12(b)(6) motion to dismiss for failure to state a claim, though the Texas standard differs in significant ways.
The cause of action has no basis in law (no legal theory supports the claim taking the facts as alleged) or no basis in fact (no reasonable person could believe the facts pleaded). The court must take the well-pleaded factual allegations as true and draw reasonable inferences in favor of the pleader. Dismissal is appropriate only when the deficiency is apparent from the pleading itself, Rule 91a is not a vehicle for evidentiary challenges or for testing factual questions that turn on disputed evidence.
Summary judgment is a procedural mechanism allowing the court to dispose of claims without trial when there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Texas Rule of Civil Procedure 166a provides two distinct mechanisms: traditional summary judgment under Rule 166a(c) and no-evidence summary judgment under Rule 166a(i). The two have different standards, burdens, and timing, but both serve to resolve cases or specific claims before trial.
Traditional summary judgment under Rule 166a(c) requires the movant to establish that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. The movant must support the motion with summary judgment evidence, affidavits, deposition testimony, admissions, documents, and similar materials. The burden is on the movant to negate at least one essential element of each cause of action or to conclusively establish each element of an affirmative defense.
Often, but not in every case. Texas courts have broad authority under Chapter 154 of the Civil Practice and Remedies Code to order parties to mediation, and most courts in the major counties order it as a matter of course in business cases. The order requires the parties to attend mediation in good faith but does not require settlement, the parties may walk away with no resolution. Even when not court-ordered, mediation is voluntary and widely used in Texas business cases because of its cost effectiveness and confidentiality.
Timing depends on case profile. Mediation works best when both sides have enough information to evaluate the case realistically, typically after meaningful discovery but before trial preparation costs become substantial. Too early, and parties lack basis for realistic settlement. Too late, and discovery costs have eroded settlement value while trial preparation has hardened positions. The middle of the case, usually after key depositions and document production, is the most common productive window.
Yes, for most claims. The Texas Constitution and Texas Rules of Civil Procedure provide a right to jury trial on factual issues for legal claims. Some equitable claims and certain statutory proceedings do not carry a jury trial right. The right must be timely invoked through filing a jury demand and paying the jury fee; failure to do so within prescribed deadlines waives the right and produces a bench trial.
See: Bench vs. Jury Trial
Under Texas Rule of Civil Procedure 216, a party must file a written request for jury trial with the clerk a reasonable time before the date set for trial, but not less than 30 days in advance. The party must also pay the jury fee specified by Rule 217. Practical practice typically involves filing the jury demand with the petition or shortly after answer. Late demands may be allowed if no party shows surprise, but the safer course is timely filing.
See: Bench vs. Jury Trial
Texas business litigation appeals follow a two-tier path. The first appeal goes to one of the fourteen intermediate courts of appeals. Dallas County cases go to the Fifth Court of Appeals (the Dallas Court of Appeals), although the Texas Supreme Court can transfer a case to another court of appeals to equalize dockets. From the court of appeals, parties may petition the Supreme Court of Texas for further review. The Supreme Court grants review selectively, typically taking cases involving important legal questions or splits among the courts of appeals.
An interlocutory appeal is an appeal taken before final judgment. Texas Civil Practice and Remedies Code section 51.014 authorizes interlocutory appeals from specific kinds of orders, including temporary injunction orders, certain class certification orders, TCPA dismissal orders, and others. The Texas Supreme Court can also grant permissive interlocutory appeal under specific conditions. Most orders in Texas business litigation are not interlocutorily appealable, they must wait for appeal from final judgment.
Damages & Remedies
Texas allows several categories of damages in business litigation: direct (out-of-pocket) damages, consequential damages including lost profits, liquidated damages where the contract provides for them, exemplary or punitive damages where the conduct supports them, and attorney's fees under various statutory and contractual frameworks. The categories available depend on the specific claims pleaded. Contract claims, tort claims, and statutory claims each have their own damages framework.
Texas requires lost profits to be proven with reasonable certainty, not mathematical precision, but more than speculation. The most common methods are financial projections based on the business's actual historical performance, comparison to similar businesses, and reconstruction of what would have happened but for the breach or tort. Established businesses with consistent track records have an easier time meeting the reasonable certainty standard than startups with no operating history.
Yes, in most cases. Texas Civil Practice and Remedies Code Chapter 38, section 38.001, authorizes the prevailing party in a breach of contract case to recover reasonable attorney's fees from the losing party. Since the 2021 amendment (House Bill 1578, effective September 1, 2021), the recovery is available against an "individual or organization," which includes corporations, LLCs, partnerships, and other business entities.
Yes. Texas Civil Practice and Remedies Code section 38.002 requires the claimant to present the claim to the opposing party and to wait at least 30 days after presentment before filing suit. If the opposing party pays the claim within the 30-day window, attorney's fees are not recoverable. Presentment is a strict prerequisite, and failure to make proper presentment forfeits Chapter 38 fee recovery on the contract claim.
Texas requires lost profits to be proved with reasonable certainty, not absolute certainty, but more than speculation. The plaintiff must present competent evidence showing that profits would have been earned absent the wrongful conduct, with calculations supported by objective facts, figures, or data. The standard is fact-intensive and varies in application across cases. Lost profits proof generally requires either historical performance data, comparable business data, or detailed expert analysis of market conditions, costs, and revenues.
See: Lost Profits Damages
Yes, but with greater difficulty than established businesses. The older Texas rule restricting new business lost profits has been substantially modified. New businesses can recover lost profits when they meet the reasonable certainty standard through alternative proof, comparable business data, expert analysis of the specific market, contracts already in hand, or other concrete evidence. The "new business doctrine" is no longer an absolute bar, but new businesses face higher evidentiary burdens than established operations with historical performance data.
See: Lost Profits Damages
Out-of-pocket damages restore the plaintiff to the position before the wrongful conduct. The calculation is the consideration the plaintiff paid less the value the plaintiff actually received. The measure focuses on what the plaintiff lost rather than what the plaintiff would have gained. Out-of-pocket damages are the default measure in Texas fraud cases under the Texas Supreme Court's framework, available alongside the benefit-of-the-bargain measure as alternative remedies.
Benefit-of-the-bargain damages give the plaintiff the position the plaintiff would have been in if the representations had been true or the contract had been performed. The calculation is the value of what the plaintiff was promised less the value of what the plaintiff received. The measure focuses on what the plaintiff would have gained. Benefit-of-the-bargain is the default measure in Texas contract cases and is available as an alternative in fraud cases.
When the plaintiff establishes by clear and convincing evidence that the harm resulted from fraud, malice, or gross negligence (Texas Civil Practice and Remedies Code section 41.003), or when a specific statute authorizes exemplary damages on different terms. Common business case contexts include fraud claims, business torts involving malice, fiduciary duty breaches involving knowing misconduct, and statutory claims like the Texas Theft Liability Act and DTPA when knowing or intentional conduct is shown.
Under Texas Civil Practice and Remedies Code section 41.008, exemplary damages are generally capped at the greater of: (1) two times the amount of economic damages, plus an amount equal to non-economic damages found by the jury, not to exceed $750,000; or (2) $200,000. The cap applies on a per-defendant basis. Specific exceptions remove some categories of misconduct from the cap, including specific felony-based liability for sexual assault, theft, and other categories listed in section 41.008(c).
Specific performance is an equitable remedy that orders the breaching party to perform the contract as agreed rather than paying damages. The remedy is available when monetary damages would not adequately compensate the plaintiff, typically for real estate contracts and contracts for unique goods. The court issues an order compelling specific conduct (typically transfer of the property or delivery of the unique goods), enforced through the court's contempt power. Specific performance is not available as a matter of right; the plaintiff must satisfy the equitable elements.
Generally yes. Texas treats real estate as inherently unique, making monetary damages presumptively inadequate. Specific performance is the standard remedy for buyer enforcement of real estate purchase contracts when the seller refuses to convey. Sellers can also obtain specific performance against breaching buyers in some contexts, though the analysis is somewhat different because the seller's interest in receiving money can usually be addressed through damages. The Texas Supreme Court has long recognized the unique character of real estate for specific performance purposes.
Several. Common equitable remedies in Texas business litigation include rescission (unwinding a contract), reformation (correcting written terms to reflect the parties' actual agreement), accounting (court-ordered tracing of business funds), constructive trust (imposing fiduciary obligations on property held wrongfully), unjust enrichment (preventing one party from retaining benefits unjustly), and declaratory judgment (judicial determination of rights without requiring damages). Injunctive relief and specific performance are also equitable remedies covered on dedicated pages.
When the contract was procured through fraud, mutual mistake, duress, undue influence, failure of consideration, or material breach that destroys the fundamental purpose. Rescission unwinds the transaction, restoring both parties to the position before contract formation. The plaintiff must return the consideration received (or be ready to do so) as a condition of rescission. Rescission is an alternative remedy to damages, the plaintiff cannot have both for the same harm. Strategic use of rescission depends on whether unwinding the transaction is preferable to damages.
Declaratory Judgment
A declaratory judgment is a court order declaring the rights, duties, status, or other legal relations of the parties, without necessarily awarding money damages or other coercive relief. Under the Texas Uniform Declaratory Judgments Act (UDJA), codified at Chapter 37 of the Texas Civil Practice and Remedies Code, courts can resolve uncertainty about legal rights before a breach occurs or a damages claim accrues. Declaratory judgments are common in contract interpretation disputes, insurance coverage cases, lien and title disputes, and corporate governance controversies.
Yes, when there is a justiciable controversy. The UDJA does not require an actual breach or completed harm. It allows parties to obtain judicial resolution of genuine legal disputes before they ripen into damages claims. The justiciable controversy requirement does require more than a hypothetical question. There has to be a real, existing dispute between adverse parties with concrete legal interests at stake.
When You're Sued (defendant)
Take immediate action. Engage litigation counsel within days of service, before answer deadlines run. Secure business records, electronic communications, and financial documentation that will be relevant. Avoid further direct communications with the partner about the dispute, those communications often become evidence. Identify potential counterclaims based on the partner's own conduct. Assess the financial position of the business and whether the litigation will affect operations. Most partner suits are heading toward broader resolution of the business relationship, so the immediate response should account for that broader context.
Almost always. Partner disputes are rarely one-sided, and the conduct that led to the suit usually has counterpart conduct on the other side. Common counterclaims include breach of fiduciary duty, breach of partnership agreement or LLC operating agreement, misappropriation of partnership opportunities, conversion or theft of business assets, partnership theft under TTLA, and tortious interference. The Texas Rules of Civil Procedure allow broad counterclaim joinder, and counterclaims often shift the strategic balance of partner litigation.
Element-based defenses (no enforceable contract, no breach, no causation, no damages), affirmative defenses (statute of limitations, waiver, estoppel, modification, accord and satisfaction, prior breach by the plaintiff, impossibility or impracticability, fraud in the inducement, mistake, unconscionability, statute of frauds), and procedural defenses (lack of jurisdiction, venue, capacity, standing). Most breach of contract cases involve multiple defenses applied in combination, with element-based and affirmative defenses working together.
Four years from the date of breach under Texas Civil Practice and Remedies Code section 16.051. The four-year period begins when the breach occurred, the date when the breaching party failed to perform an obligation that was due. The accrual date can be contested, particularly in cases involving continuing obligations or installment contracts. The limitations defense is one of the most important defenses to evaluate at the outset of any contract case.
Through challenges to the threshold enforceability of the agreement and to the reasonableness of the specific restrictions. Threshold challenges attack the ancillary-to-otherwise-enforceable-agreement requirement, the consideration adequacy, the scope of confidential information protected, and similar foundational elements. Reasonableness challenges attack the geographic scope, time period, and activity restrictions as broader than necessary to protect legitimate interests. Texas allows reformation of overbroad provisions, so successful reasonableness challenges typically produce reformed (narrower) restrictions rather than complete unenforceability.
No. The FTC rule banning most employee non-competes was struck down by *Ryan, LLC v. FTC* in the Northern District of Texas in August 2024. The FTC abandoned its appeal in September 2025, the Fifth Circuit dismissed the appeal in September 2025, and the FTC formally acceded to vacatur of the rule in February 2026. The rule never took effect and is no longer subject to litigation. Texas non-competes are governed by Texas state law under Chapter 15 of the Business and Commerce Code as they were before the FTC's attempt to preempt the field.
Texas common-law fraud requires the plaintiff to prove: (1) a material misrepresentation; (2) that was false; (3) made with knowledge of its falsity or reckless disregard for the truth; (4) with intent that the plaintiff act on the misrepresentation; (5) actual reliance by the plaintiff; (6) justifiable reliance; and (7) damages caused by the reliance. Each element must be proved by clear and convincing evidence in some contexts and preponderance of the evidence in others. The multiple elements provide multiple defense vectors.
Failure of the reliance elements. The plaintiff must prove both actual reliance (the plaintiff actually relied on the misrepresentation) and justifiable reliance (the reliance was reasonable under the circumstances). Many fraud claims fail because the plaintiff did not actually rely on the statement, the plaintiff conducted independent investigation, or the reliance was unreasonable given available information. Reliance is often the most fact-intensive element and the most vulnerable to defense.
Engage litigation counsel immediately. TROs in Texas typically expire in 14 days under Rule 680 and are followed by a temporary injunction hearing within that window. Comply with the order while challenging it, violating a TRO produces contempt exposure even if the order is ultimately determined to be wrongful. Preserve all documents and communications relevant to the underlying dispute. Identify the specific conduct the TRO restrains and the potential business impact. Most TROs require immediate strategic response to preserve options at the temporary injunction hearing.
See: Responding to a TRO
Sometimes. A motion to dissolve can be filed challenging the procedural propriety of the TRO, defective Rule 683 specificity, inadequate bond under Rule 684, failure to give notice when notice was required, or other procedural problems. Motions to dissolve are heard expeditiously but the temporary injunction hearing typically follows within the TRO's 14-day life, so most defendants focus their resources on the temporary injunction hearing rather than separate dissolve motions.
See: Responding to a TRO
Cross-Practice Bridges
Winning at trial produces a judgment, not money. The judgment must then be collected. In Texas, collection involves abstracting the judgment to create liens on real property, garnishing bank accounts under Chapter 63, pursuing turnover relief under section 31.002, conducting post-judgment discovery to locate assets, and using other statutory tools. The collection phase can be as time-consuming as the litigation itself, particularly when the judgment debtor is unwilling to pay or has structured assets to be hard to reach.
Generally ten years from the date of the judgment, with the ability to renew for additional ten-year periods through writ of execution or other enforcement activity. Judgments that are not enforced or renewed within the period become dormant and may eventually be barred. Active enforcement keeps the judgment alive and accumulating post-judgment interest, currently at the statutory rate.
The Texas Uniform Fraudulent Transfer Act, codified at Chapter 24 of the Texas Business and Commerce Code, is Texas's adaptation of the uniform act addressing transfers made by debtors to avoid creditors. TUFTA allows creditors to set aside transfers made with actual intent to hinder, delay, or defraud creditors, and to set aside constructively fraudulent transfers where the debtor received less than reasonably equivalent value and met other statutory criteria. TUFTA remedies include avoidance of transfers, attachment of transferred property, and other equitable relief.
When the defendant has moved or appears likely to move assets in ways that would impair the plaintiff's ability to collect a judgment. Common signs include: transfers to family members or affiliates without consideration, transfers in apparent response to the litigation, complex transaction structures appearing to shield assets, business reorganizations producing new asset-less entities, and substantial declines in defendant net worth during litigation. TUFTA claims often run in parallel with the underlying litigation, reaching transferred property as part of the same case.
When the dispute moves beyond mechanic's lien filing and payment demand into actual litigation involving substantive claims and defenses. Common transitions occur when the property owner contests the lien, when claims and counterclaims expand to include breach of contract, defects, delays, fraud, or other business claims, when multiple parties are involved with complex factual disputes, or when damages exceed the value of the lien itself. At that point, the case is functionally commercial litigation regardless of where it began.
Yes, and they typically should be. The Texas Property Code Chapter 53 lien framework is the principal recovery tool for unpaid contractors and suppliers, but the underlying claims usually include breach of contract, breach of warranty, quantum meruit, fraud, and other business causes of action. Combining the lien enforcement claim with the substantive claims in a single case is standard practice. The combined case proceeds more efficiently than separate proceedings.
Through the contract terms of the lease itself plus the Texas Property Code framework. Commercial leases are largely contracts of adhesion drafted by landlords with substantial protections, and Texas courts generally enforce them as written. Disputes typically involve interpretation of specific lease provisions (rent calculations, operating expenses, default provisions, renewal options), claims for breach (unpaid rent, holdover, damage to premises), and counterclaims (constructive eviction, breach of covenant of quiet enjoyment, repair issues). Most commercial lease disputes proceed in district court rather than the justice court framework used for residential evictions.
Substantial. Residential tenants have specific statutory protections under Texas Property Code Chapter 92 that do not generally apply to commercial tenants. Commercial leases are governed primarily by contract law, with the Property Code providing default rules where the lease is silent. Eviction procedures differ, residential evictions go through justice court under the forcible detainer framework; commercial evictions often proceed through district court particularly when broader claims are involved. The statutory frameworks, remedies, and procedural rules differ across most aspects of the relationship.
Lender liability refers to claims that borrowers can bring against lenders based on the lender's conduct in the lending relationship. Common Texas lender liability theories include breach of contract (when the lender fails to perform under the loan documents), breach of good faith and fair dealing (in specific contexts), fraud (when the lender made misrepresentations), tortious interference (when the lender's conduct harmed the borrower's other relationships), and economic duress (in extreme circumstances). Texas courts have generally been protective of lenders in their commercial lending decisions, but specific conduct can support liability claims that affect the broader workout or foreclosure dynamics.
Possibly, through litigation seeking injunctive relief. Texas non-judicial foreclosure proceeds under Property Code section 51.002 with specific notice and timing requirements. Borrowers seeking to stop foreclosure typically file TROs and temporary injunctions, asserting claims like wrongful foreclosure, breach of forbearance agreement, lender misconduct, defects in the foreclosure process, or other grounds. Courts require strong showings to enjoin foreclosure, typically substantial likelihood of success on the merits plus irreparable harm. Many emergency foreclosure cases settle into negotiated workouts.
Situational Questions
Breach of fiduciary duty (the principal claim in most partner cases), breach of partnership agreement or LLC operating agreement, misappropriation of partnership opportunities, conversion or theft of business assets, partnership theft under the Texas Theft Liability Act, accounting (requiring the partner to fully account for partnership financial affairs), derivative claims (brought on behalf of the entity against the partner), and shareholder oppression claims (for minority interest holders). Most cases involve combinations of these theories.
Partner cases typically take 12 to 24 months or longer from filing to resolution. Cases involving significant claims, multiple parties, or complex accounting often run longer. Most cases resolve at mediation or settlement during the case rather than proceeding to trial. The realistic timeline shapes the expectations for both the litigation strategy and the operational picture during the case.
Under UCC Article 2, the buyer may cover by purchasing substitute goods from another seller and recover the difference between the cover price and the contract price as damages (UCC section 2-712); recover damages measured by the difference between the market price and the contract price (UCC section 2-713); cancel the contract; and in some cases obtain specific performance for unique goods (UCC section 2-716). Consequential damages including lost profits from non-delivery are also recoverable when foreseeable. The buyer's choice of remedy depends on the specific situation, including whether substitute goods are available and how time-sensitive the need is.
See: Vendor Won't Deliver
Sometimes. When the goods are unique and damages would be inadequate, specific performance with supporting emergency relief (TRO and temporary injunction) may be available to prevent the vendor from selling to third parties or to compel delivery. The standard requires showing irreparable harm and other temporary injunction elements. Most commercial cases proceed through ordinary cover damages rather than emergency relief because substitute goods can typically be obtained in the market, making damages adequate.
See: Vendor Won't Deliver
The choice depends on the size of the debt, the strength of the underlying claim, whether the debt is contested or undisputed, the debtor's financial position, and the cost-benefit analysis. Undisputed debts often resolve through collection efforts (demand letters, negotiation, payment arrangements) without litigation. Contested debts, where the customer disputes amounts, asserts defenses, or denies liability, typically require litigation to establish entitlement to recovery. Smaller debts often do not justify litigation costs; larger debts often warrant it.
See: Customer Won't Pay
Texas Civil Practice and Remedies Code Chapter 38 provides for prevailing-party attorney's fees in claims based on contract against an individual or organization. Following HB 1578 (effective September 1, 2021), the statute applies to claims against organizations including LLCs and other entities, not just corporations. Specific contractual fee provisions may also apply. The recoverable fees can substantially offset the cost of litigation when the case is successful and the debtor is collectible.
See: Customer Won't Pay
File for emergency relief, typically a TRO and application for temporary injunction. The relief seeks restoration of access to the premises, restoration of access to financial accounts and records, prohibition of unauthorized transactions during the litigation, and preservation of business operations pending resolution. Lockouts often signal that the locking partner has been engaged in misconduct that is now being concealed, so the lockout response usually includes claims for breach of fiduciary duty, accounting, conversion, and similar substantive theories alongside the emergency relief.
Texas Business Organizations Code section 101.502 provides LLC members with access rights to specific company records, including the certificate of formation, the company agreement, financial statements, tax returns, and other specified items. The exact scope depends on the LLC's company agreement. Members denied access often have direct rights to enforce inspection through court order. Limited partnerships and corporations have parallel but distinct access frameworks under their respective statutory provisions.
Unexplained variances in financial statements, missing or altered records, transactions to unfamiliar entities or individuals, declining margins without explanation, inventory shortages, customer payments going through unusual routes, vendor relationships with partner-connected entities, unauthorized expenses, missing or restricted access to financial systems, defensive behavior when questions are asked, and lifestyle indicators inconsistent with the partner's stated compensation. Theft is often discovered incidentally rather than through direct observation; the partner has typically structured the conduct to evade detection.
Yes, but the civil remedies are typically more effective. Criminal prosecution requires district attorney involvement and follows the prosecutor's priorities and resource constraints. The civil framework, including the Texas Theft Liability Act's statutory damages and attorney's fees, breach of fiduciary duty claims with potential exemplary damages, and the broader remedies of equitable accounting and constructive trust, typically produces better practical outcomes than criminal prosecution alone. Many cases pursue both tracks, with the criminal threat creating leverage that supports the civil case.
Indemnification claims based on breaches of representations and warranties (financial statements were inaccurate, undisclosed liabilities existed, contracts were misrepresented, etc.); working capital adjustments where the target's working capital at closing differs from the agreement's reference amount; earnout disputes over how the target's post-closing performance is calculated; fraud claims alleging seller misrepresentations during diligence; breach of covenant claims relating to specific seller post-closing obligations; and tax indemnification claims relating to pre-closing tax periods. Most cases involve combinations of these categories.
Almost always. Sophisticated M&A agreements include specific procedural requirements, notice periods, claim baskets and caps, survival periods for different categories of representations, escrow holdback procedures, and dispute resolution mechanisms. Most agreements require formal notice within specified periods, with specific information about the claim and the basis. Failure to comply with the contractual notice procedures can defeat otherwise valid claims. Indemnification practice is contract-specific and turns on careful adherence to the agreement's procedures.
An earnout is a portion of the purchase price that is paid contingent on the acquired business achieving specific performance metrics after closing. Typical earnouts pay out over a defined period (often one to three years) based on the target's revenue, EBITDA, gross profit, or other agreed metrics. Earnouts are used when the buyer and seller cannot agree on a fixed valuation reflecting the target's future performance, the earnout effectively shifts some of the valuation risk based on actual results.
See: Earnout Disputes
Because the buyer controls the business during the earnout period and the seller is typically a passive recipient of the payments, the structure creates inherent conflicts of interest. Buyers may operate the business in ways that minimize the earnout payments, reallocating customers, changing accounting methods, deferring revenue, allocating expenses, integrating the target with the buyer in ways that affect performance metrics. Sellers may believe the metrics they negotiated were not honored. Most earnouts produce some level of friction; substantial earnouts often produce litigation.
See: Earnout Disputes
It depends on the specific provisions and the parties' intent. Most LOIs and term sheets are partially binding and partially non-binding. Provisions like exclusivity, confidentiality, expense allocation, and dispute resolution are typically expressly binding. The substantive deal terms, purchase price, structure, representations, indemnification, are typically expressly non-binding because they remain subject to definitive documentation. The analysis turns on whether the document specifies binding versus non-binding status for each provision and on whether the substantive deal terms are sufficiently definite to support enforcement.
Yes, in specific circumstances. When the LOI contains binding provisions that the party has breached (exclusivity, confidentiality, expense reimbursement), breach claims are available. When the parties have proceeded to definitive documentation that supports enforcement, contract claims may apply. Fraud claims are available if misrepresentations during the LOI period induced reliance. Recovery is typically limited to reliance damages (out-of-pocket costs incurred in reliance on the LOI) rather than benefit-of-the-bargain damages (the full value of the contemplated transaction), unless the LOI was actually enforceable as a complete agreement.
FAQ Deep Dives
Most Texas business litigation cases resolve within 12 to 24 months from filing. Simpler contract cases with clear facts can resolve in 6 to 12 months, particularly when summary judgment is available. Complex cases involving multiple parties, extensive discovery, expert work, or appellate review can take 24 to 48 months or longer. The Texas Business Court (operational since September 1, 2024) targets faster resolution for qualifying cases. Most cases settle before trial, usually at mediation occurring 9 to 18 months into the case.
Discovery in Texas business litigation typically takes 6 to 12 months. The 2021 Rule 190 amendments updated the discovery framework, Level 1 cases (under $250,000) have a 180-day discovery period; Level 2 cases (standard) have 6 to 9 months depending on the trial setting; Level 3 cases (complex) have court-ordered schedules tailored to the case. The phase includes initial disclosures, written discovery (requests for production, interrogatories, requests for admission), document production, depositions, and expert designation. Complex cases with substantial document review often extend the discovery period.
Costs vary substantially based on case complexity. Simpler partnership disputes resolving in 9 to 12 months may cost $25,000 to $100,000 in legal fees. Standard partnership disputes with full discovery and expert work typically cost $100,000 to $300,000. Complex cases involving multiple parties, forensic accounting, extensive depositions, and trial can cost $300,000 to $1,000,000 or more. Most Texas business partner cases handled on hourly fee arrangements; some cases support contingency or hybrid arrangements when the recovery potential and case profile fit.
Yes, in many cases. Texas Civil Practice and Remedies Code Chapter 38 provides for prevailing-party attorney's fees in contract claims, including breach of partnership agreements and LLC operating agreements. The Texas Theft Liability Act (Chapter 134) provides for attorney's fees in partnership theft cases. Many partnership agreements have specific fee-shifting provisions that apply regardless of the statutory framework. The combined fee recovery often substantially offsets litigation costs when the case succeeds. Fee recovery analysis should inform case strategy from the beginning.
Yes, under Texas Civil Practice and Remedies Code Chapter 38. A prevailing plaintiff in a breach of contract claim may recover reasonable and necessary attorney's fees against an individual or organization. HB 1578 (effective September 1, 2021) amended the statute to replace "individual or corporation" with "individual or organization," expanding coverage to LLCs, partnerships, and other entity types that had previously been outside the statute. The fee recovery substantially affects the economics of contract litigation.
Following the HB 1578 amendment effective September 1, 2021, Chapter 38 covers claims against organizations including corporations, LLCs, limited partnerships, general partnerships, limited liability partnerships, and other business entities. Pre-amendment case law had limited the statute to individuals and corporations, leaving claims against LLCs and partnerships outside fee recovery. The amendment closed that gap. The statute applies to claims based on rendered services, performed labor, furnished material, freight or express overcharges, lost or damaged freight or express, killed or injured stock, sworn account, and oral or written contracts.
Generally when the breach occurs. The cause of action accrues when the contract is breached and the plaintiff has the legal right to sue. For installment contracts and continuing breaches, separate causes of action may accrue with each successive breach, though specific limitations rules apply. For contracts requiring repayment at a date certain (notes, leases), accrual typically occurs at the missed payment date. Demand notes may accrue at making rather than demand under some circumstances. The accrual analysis is fact-specific.
Generally no. Texas applies the legal injury rule rather than the discovery rule to most contract claims, the cause of action accrues when the breach occurs regardless of the plaintiff's awareness. Limited exceptions apply for fraudulent concealment (when the defendant has concealed the breach) and for inherently undiscoverable injuries (a narrow doctrine applied case-by-case). For UCC sales of goods, section 2-725 expressly disclaims the discovery rule. The general inapplicability of the discovery rule makes early action important when potential breach claims are identified.
Four years from accrual under Texas Civil Practice and Remedies Code section 16.004. The four-year period applies to common-law fraud, statutory fraud under section 27.01 of the Business and Commerce Code, and fraudulent inducement claims. Unlike most contract claims, Texas applies the discovery rule to fraud claims, the period typically runs from when the plaintiff discovered or in the exercise of reasonable diligence should have discovered the fraud, not from when the fraudulent conduct occurred. This is one of the most important differences between fraud and contract limitations.
Texas applies the discovery rule to fraud claims. The cause of action accrues when the plaintiff discovers, or in the exercise of reasonable diligence should have discovered, the fraud. The doctrine recognizes that fraud is inherently concealed, by the time the plaintiff would normally have reason to investigate, the limitations period may have already expired under a non-discovery rule. The plaintiff bears the burden of pleading and proving the discovery rule's application, including the date of actual or constructive discovery.
Yes, in specific circumstances. Texas courts can issue asset freeze orders through several legal frameworks: TUFTA injunctions under Business and Commerce Code section 24.008 (when fraudulent transfer is alleged); TRO and temporary injunction relief in fiduciary duty cases (when the partner is dissipating partnership assets); attachment under Civil Practice and Remedies Code Chapter 61; and sequestration under Chapter 62. The plaintiff must show specific factual circumstances, typically a clear right to recovery, the threat of asset dissipation, and irreparable harm if assets are not preserved.
The scope depends on the specific order. Typical asset freeze orders prohibit the defendant from transferring, encumbering, or dissipating identified categories of assets bank accounts, real property, investments, business interests, and similar property. Some orders cover all non-ordinary-course transactions; others target specific assets. Comprehensive orders address both direct transfers and indirect arrangements that would effectively dissipate value. Orders typically permit ordinary-course business operations and reasonable living expenses while restricting unusual transfers.
Yes, when the underlying claims and factual circumstances support it. Common bases include enforcement of an enforceable non-compete agreement, protection of trade secrets under TUTSA (Texas Uniform Trade Secrets Act) or the federal Defend Trade Secrets Act (DTSA), prevention of customer solicitation in violation of a non-solicitation agreement, and prevention of tortious interference with the employer's customer or employee relationships. The employer must satisfy the Texas temporary injunctive relief elements: probable right to relief, probable and imminent injury, irreparable harm, and no adequate remedy at law.
No. The FTC's non-compete ban (issued in April 2024) was vacated by the U.S. District Court for the Northern District of Texas in *Ryan, LLC v. FTC* on August 20, 2024. The FTC abandoned its appeal on September 5, 2025, and the Fifth Circuit dismissed the appeal on September 8, 2025. The FTC formally acceded to vacatur on February 12, 2026. Texas non-compete enforcement proceeds under Texas Business and Commerce Code section 15.50 and related case law as the federal rule never took effect. The ordinary Texas reasonableness analysis governs.
Discovery is the formal process during litigation in which the parties exchange information about the case. Texas discovery includes initial disclosures (required automatic exchange of basic case information under the 2021 amendments to Rule 194), written discovery (requests for production, interrogatories, requests for admission), document production, depositions (oral examinations under oath), and expert witness designation. The discovery phase typically runs 6 to 12 months in standard commercial cases and is when most of the evidence is developed.
Texas Rule of Civil Procedure 190 establishes three discovery levels. Level 1 applies to cases with limited monetary relief (currently under $250,000) and provides a streamlined discovery period of 180 days from the first request, with limits on the number of interrogatories, depositions, and other discovery. Level 2 applies to most other cases and provides 6 to 9 months of discovery depending on the trial setting. Level 3 applies to complex cases and uses court-ordered case-specific schedules. The level determines the available discovery scope and timing.
Most Texas business cases mediate 9 to 18 months into the case, after sufficient discovery has been completed to support meaningful evaluation but before substantial trial preparation has been incurred. Some cases mediate earlier when the issues are clear or when emergency relief has shifted dynamics; others mediate later when discovery extends. The court typically orders mediation at a scheduled point in the case management order, but the parties can mediate earlier by agreement. The timing matters, too early often produces unsuccessful mediation because positions are not informed; too late wastes resources on preparation that becomes unnecessary.
Mediation is a confidential settlement process facilitated by a neutral mediator. Typical Texas business mediations run 4 to 12 hours over one or sometimes multiple days. The parties and counsel meet with the mediator, who shuttles between rooms with each side and works toward settlement. Mediations involve mediator analysis of the case, settlement proposals from each side, and ongoing negotiation. The mediator does not impose a decision; settlement requires the parties' agreement. Approximately 70-80% of Texas business mediations produce settlement, sometimes during the mediation and sometimes in the weeks following.