Business Court Retains Jurisdiction Over LLC Winding-Up Despite Parallel District Court Litigation
Read the Court's Opinion (PDF)
Judge Brian Stagner
In Martens v. Lamkin Land & Cattle Company, Judge Stagner rejected defendants' attempt to dismiss or abate a Business Court action seeking involuntary winding-up of an LLC under Section 11.314, holding that the claim was not compulsory in earlier-filed district court litigation over sale proceeds and that the two cases were not sufficiently interrelated to invoke dominant jurisdiction. The decision clarifies that Business Court jurisdiction over entity governance disputes is not defeated by parallel contract claims in traditional courts.
Court Staff Summary
This case presents two issues: (i) whether the Business Court has subject-matter jurisdiction over the plaintiff’s application for an involuntary winding-up of a limited liability company, and, if so, (ii) whether an earlier-filed lawsuit in district court between the same parties requires dismissal or abatement of this action under the doctrine of dominant jurisdiction. The Court concludes it has subject-matter jurisdiction and that the district court case and this case are not sufficiently interrelated to invoke dominant jurisdiction. Accordingly, the defendants’ motion to dismiss, plea to the jurisdiction, and plea in abatement are denied.
Background: Feuding Sisters and a Family LLC
Elizabeth Martens and Stephanie Ezzell are sisters who each own 50% of Lamkin Land & Cattle Company, LLC, a company originally formed by their parents through a family partnership. Ezzell has acted as the LLC's sole manager, though Martens alleges Ezzell "unilaterally declared herself to be Manager (and did so without any authority)" because the LLC's regulations require a majority vote to elect a manager—impossible with a 50/50 deadlock. The dispute erupted in July 2022 when Martens learned that Ezzell had sold a 200-acre tract for $5.5 million without informing her or distributing her share of the proceeds.
Two Lawsuits: Parker County and the Business Court
Martens initially sued in Travis County in September 2022, seeking her share of the sale proceeds through claims for breach of contract, failure to distribute available funds, and related theories. That case was transferred to the 415th Judicial District Court in Parker County, where it remains pending with a September 8, 2025 trial date. After the pleading deadline passed in December 2024, Martens sought to add a claim for involuntary winding-up under Texas Business Organizations Code Section 11.314, but defendants opposed the amendment. Instead, on June 3, 2025, Martens filed a separate action in the Business Court seeking only the involuntary termination of the LLC based on Ezzell's alleged mismanagement, including tax fraud (underreporting capital gains by over $3 million), embezzlement of nearly $600,000 in 2025 alone, and making it "not reasonably practicable to carry on the business" with Ezzell.
The Jurisdictional Challenge
Defendants moved to dismiss and filed a plea to the jurisdiction, arguing that the winding-up claim was compulsory in the Parker County case and thus effectively predated September 1, 2024—the earliest date for Business Court jurisdiction. They also sought abatement under the dominant jurisdiction doctrine, contending the Parker County court should control both cases. Judge Stagner rejected both arguments. On jurisdiction, the Court applied the summary-judgment-like standard for jurisdictional fact challenges, noting that
a court deciding a plea to the jurisdiction is not required to look solely to the pleadings but may consider evidence and must do so when necessary to resolve the jurisdictional issues raised.The Court concluded it had subject-matter jurisdiction over the winding-up application. On dominant jurisdiction, the Court found the two cases were not "sufficiently interrelated" to warrant abatement, distinguishing between Martens's contract-based claims for sale proceeds in Parker County and her governance-based claims for entity dissolution in the Business Court.
Significance for Texas Commercial Practice
This decision provides important guidance on the Business Court's willingness to exercise jurisdiction over entity governance disputes even when related contract claims are pending in traditional courts. The ruling suggests that claims under Chapter 11 of the Business Organizations Code—particularly involuntary winding-up under Section 11.314—will be treated as distinct from breach-of-contract and distribution claims, avoiding compulsory counterclaim issues. The decision also signals a narrow application of the dominant jurisdiction doctrine in the Business Court context, requiring a high degree of interrelatedness before the court will defer to earlier-filed litigation. Practitioners should note that the Business Court appears prepared to proceed with governance and fiduciary disputes independently of parallel proceedings involving the same parties and related facts, particularly where the remedies sought are fundamentally different.