On September 14, 2026, the Texas Business Court dismissed most of the claims a former co-manager brought after his fellow LLC members voted him out of management and then expelled him from the company. He had no advance notice and no hearing. The court held that none of that was required, because the company agreement he signed said it was not.
The case is Hinds v. Sandman Offshore, LLC, 2026 Tex. Bus. 63, Cause No. 26-BC11A-0053. It is an oil and gas dispute from the Business Court’s Eleventh Division, but the lesson applies to any closely held Texas LLC, including the professional practices, family companies, and investor-backed ventures common across Collin, Denton, and Dallas Counties. Your company agreement is not background paperwork. When owners fall out, it is very often the whole case.
What Happened in Hinds v. Sandman Offshore
According to the opinion, Sandman Offshore, LLC had five members, each holding a 20% interest. Two of them, Russell Hinds and David Wegner, served as co-managers. Hinds says he was the day-to-day manager and devoted thousands of hours to the business.
In March 2026, the other members removed Hinds as a co-manager. The next month they expelled him as a member. Both actions were taken by written consent, without notice to Hinds and without giving him an opportunity to be heard.
The company’s side of the story is that Hinds recommended a drilling-services company he owned to a related business without disclosing his interest, and then prioritized payments to his own company over lease payments owed to Sandman. Hinds disputes that. He says the other members knew about his company all along and that it did not compete with Sandman in any event.
Hinds sued for breach of the company agreement, breach of fiduciary duty, breach of the duty of good faith and fair dealing, fraud by nondisclosure, constructive fraud, conversion of his membership interest, and tortious interference. The defendants moved to dismiss under Texas Rule of Civil Procedure 91a, which asks whether a claim has any basis in law or fact based on the pleadings alone.
That procedural posture matters. The court did not decide who was telling the truth about the drilling company. It took Hinds’s allegations as true and asked whether, even so, the law gave him a claim. For most of his theories, the answer was no.
Members Do Not Automatically Owe Each Other Fiduciary Duties
Many business owners assume their co-owners owe them loyalty the way partners or trustees do. In a Texas LLC, that is not the default.
The court quoted the Texas Supreme Court’s 2025 decision in Bertucci v. Watkins: members of limited liability companies “do not owe formal fiduciary duties to fellow members simply because of their relationship as co-members.” Sandman’s company agreement contained no language creating fiduciary duties between members, so Wegner owed Hinds none simply by being a fellow member.
Hinds also argued that he and Wegner had an informal relationship of trust. He pleaded that they had been business associates for about sixteen years, with mutual trust and reliance on one another’s judgment. The court held that this came nowhere close to the special relationship Texas law requires, relying on the Texas Supreme Court’s 2025 decision in Pitts v. Rivas. The court also pointed out that Hinds, knowing the history between them, chose to reduce their obligations to writing in a company agreement that sharply limited them.
The same reasoning ended his good faith and fair dealing claim. The court cited the Texas Supreme Court’s statement in Barrow-Shaver Resources Co. v. Carrizo Oil & Gas, Inc. (2019) that, absent a special relationship, parties to a contract have no duty to act in good faith.
The Company Agreement Can Now Eliminate Manager Duties
Managers are a different question. As the opinion notes, Texas courts of appeals have imposed fiduciary duties on LLC managers where the company agreement does not limit them or expressly imposes them. Either way, the company agreement is where the answer starts.
Section 101.401 of the Texas Business Organizations Code now provides that a company agreement “may expand, restrict, or eliminate any duties, including fiduciary duties, and related liabilities” that a member, manager, officer, or other person owes to the company or to its members or managers. The word “eliminate” is new. Before Senate Bill 29 amended the statute in 2025, it allowed a company agreement only to “expand or restrict” those duties. The amendment took effect May 14, 2025.
Sandman’s agreement used that authority. Section 5.10 provided that, except for duties expressly set out in the agreement, a manager was not subject to any duties, fiduciary or otherwise, in managing the company. The duties the agreement did preserve included a duty not to manage the company through gross negligence, willful misconduct, or breach of the agreement.
So the court split Hinds’s fiduciary claims in two:
- Dismissed: claims that Wegner breached a fiduciary duty by orchestrating the expulsion, concealing the plan, or replacing Hinds as manager without notice or a hearing. The agreement expressly allowed action without notice and laid out its own removal and expulsion procedures, so no fiduciary duty could require something different.
- Survived for now: claims that Wegner committed willful misconduct in managing the company, including alleged usurpation of company opportunities and diversion of a royalty interest. Willful misconduct was one of the duties the agreement kept.
The court quoted Pitts again on the principle behind that result: “The freedom of contract includes the freedom to define the nature and scope of a business relationship in a way that forecloses the imposition by courts of duties inconsistent with the parties’ agreement.”
No Notice, No Hearing, No Breach
Hinds’s contract claims fared much the same. The Business Organizations Code allows an LLC to act by written consent, without a meeting, prior notice, or a vote, if the consent is signed by the required number of owners (Section 101.358). Sandman’s agreement said the same thing in Section 5.8(d).
The agreement permitted expulsion only “for cause” and only by a majority interest decision. Section 5.11 then said that conflicting business activity, “as determined by Majority Interest of the Members,” would be cause. Hinds insisted his drilling company was not a conflict. The court did not accept the company’s finding as true, but it held that the agreement gave the majority, not a single member and not the court, the authority to make that determination. Because Hinds did not allege he was expelled without a majority determination, the claim failed.
His removal as manager was simpler. Hinds conceded that the agreement allowed a manager to be removed with or without cause.
The court drew on its own earlier rulings for a principle every owner should keep in mind: a court “cannot impose a condition that the parties omitted from their agreements under the guise of construing their contracts.” If you want notice, a hearing, a cure period, or a supermajority before you can be pushed out, those protections have to be written into the agreement.
What Hinds Kept
Not everything was dismissed, and the survivors are instructive.
The special meeting claim. Sandman’s agreement allowed members holding at least 10% of the sharing ratios to call a special meeting on at least ten days’ notice. Hinds pleaded that he still held his 20% interest when he delivered a timely demand and that Sandman refused to hold the meeting. That claim, grounded in the plain language of the agreement, survived.
His ownership. Expulsion did not take away Hinds’s economic interest. Under the agreement, it forfeited his voting rights but left him owning the interest, which he could sell through a valuation process using a third-party appraiser. Sandman conceded he kept those rights.
That point also defeated his conversion claim. A membership interest in a Texas LLC is personal property under Section 101.106(a) of the Business Organizations Code, but Texas conversion claims generally require tangible property, and LLC interests are presumed uncertificated unless the governing documents say otherwise. With no certificate and an agreement silent on the subject, there was nothing tangible to convert.
Finally, the court dismissed the tortious interference claim because Wegner was a party to the business relationship, not a stranger to it, and declined to award attorney’s fees to anyone at this stage.
What This Ruling Does and Does Not Settle
Keep the ruling in proportion.
- It is a pleading-stage ruling. The court decided only whether Hinds’s claims, taken as true, stated a legal basis for relief. The surviving claims and the company’s counterclaims remain pending.
- It is a trial-level opinion. Appeals from the Business Court go to the Fifteenth Court of Appeals, which has exclusive jurisdiction over them under Texas Government Code Section 25A.007(a). A different panel or a higher court could see parts of this differently.
- The outer limits are still open. Section 101.401 now permits elimination of duties, but how far a company agreement can go, and what conduct no agreement can excuse, has not been fully worked out by the Texas Supreme Court since the 2025 amendment. Sandman’s agreement preserved liability for willful misconduct and gross negligence. An agreement that tried to go further would present a harder question.
- It turns on the words of one agreement. A different agreement, with different notice, cause, or duty language, could produce the opposite result on the same facts.
What the ruling does confirm is the direction of travel. Texas courts, including the Business Court, are reading LLC agreements as written and declining to add protections the owners did not bargain for.
Five Questions to Ask About Your Own Company Agreement
For North Texas owners, the practical takeaway is to read your agreement now, while everyone is still getting along. Start with these questions.
- What duties do managers and members owe? Look for an exculpation or duty-limitation section. Does it eliminate fiduciary duties entirely, restrict them, or say nothing? Since May 14, 2025, all three are possible.
- Can you be removed or expelled, and by whom? Find the removal and expulsion provisions. Is it with or without cause? Who decides whether cause exists? A simple majority, a supermajority, or a neutral?
- Is notice required before action is taken? Check whether the agreement allows action by written consent without notice. If it does, the other owners may be able to act before you know a vote is happening.
- What happens to your economic interest if you are pushed out? Does the agreement preserve your ownership, force a buyout, or set a valuation method? Who picks the appraiser, and what discounts apply?
- What rights do you keep as a minority owner? Special meeting rights, information rights, and consent rights on major decisions are often the only tools a minority owner has once a dispute starts. Make sure you know what yours are.
If the answers surprise you, the time to renegotiate is before a dispute, when amendments are a business conversation rather than a litigation position.
Talk to a Texas Business Litigation Attorney
An ownership fight inside an LLC moves quickly, and the company agreement usually decides who holds the leverage from the first day. If you are facing a removal, an expulsion, or a disagreement among co-owners, or you want your agreement reviewed before one starts, visit our Partnership Disputes page to learn more and to reach our team.