Texas Shootout Provisions Are Enforceable: Court Orders Specific Performance of Buy-Sell Option Despite Breach Claims
Read the Court's Opinion (PDF)
Judge Jerry D. Bullard
In Crain v. Northern, Division 8 of the Business Court of Texas granted summary judgment enforcing a mandatory buy-sell option clause in LLC company agreements, ordering the offeree to transfer his 50% membership interests to the offeror despite claims of prior breaches and unclean hands. The court rejected arguments that alleged fiduciary duty violations or valuation disputes created fact issues precluding specific performance of the "Texas Shootout" provision.
Court Staff Summary
This Opinion addresses the enforcement of a mandatory Buy-Sell Option clause and its specific performance remedy after the Offeror tendered the requisite buy/sell notice and the Offeree failed to respond to the notice and claimed the Offeror violated the underlying Company Agreement. The Court ultimately finds the Offeror is entitled to specific performance from the Offeree under the Buy-Sell Option clause. The Court awards the Offeror attorneys’ fees.
Background: A 50-50 Deadlock and the Buy-Sell Trigger
Michael Crain and William Northern each held 50% membership interests in three related LLCs: Northern Crain Realty, LLC and its two subsidiaries, Northern Crain Property Management, LLC and Northern Crain, LLC. Each entity was governed by nearly identical company agreements signed by both members in 2020. The agreements contained a "Buy-Sell Option" clause in Section 10.08—commonly known as a "Texas Shootout" provision—establishing a mandatory buy-sell procedure if either member sought to sell or buy membership interests.
In June 2025, Crain sued Northern alleging breach of fiduciary duties related to Northern's acquisition of the Woodhaven Project. Northern counterclaimed for specific performance and declaratory relief, seeking to enforce the buy-sell mechanism. On October 23, 2025, Northern moved for summary judgment requiring Crain to execute assignments transferring his membership interests in all three entities.
The Dispute: Can Prior Breach Claims Defeat Specific Performance?
Crain opposed summary judgment on three grounds: (1) Northern's alleged prior breaches of the company agreements precluded him from enforcing the buy-sell clause; (2) Northern had unclean hands; and (3) genuine fact issues existed regarding Northern's valuation of the membership interests absent the Woodhaven Project's potential profit. The court held a hearing on December 3, 2025, and issued its amended opinion on February 2, 2026.
The Court's Analysis: Company Agreements Are Contracts Subject to Traditional Rules
The court began by establishing that company agreements are interpreted using general principles of contract construction. The court emphasized that the company agreements, including the buy-sell option clauses, are valid agreements governing the NC Entities and their express terms must be enforced.
The court applied traditional summary judgment standards under Texas Rule of Civil Procedure 166a, placing the burden on Northern to show no genuine issue of material fact existed and that he was entitled to judgment as a matter of law. The court noted that Crain's response relied on conclusory assertions and broad record references without pinpointing specific evidence. The court rejected Crain's submission of his attorney's declaration, finding it did not comport with Rule 166a(f) and lacked probative value because it failed to establish a credible foundation for personal knowledge.
Ultimately, the court found Northern entitled to specific performance, ordering Crain to execute irrevocable assignments of his membership interests in all three entities. The court also awarded Northern attorneys' fees.
Why It Matters: Enforceability of Texas Shootout Provisions
This decision reinforces that mandatory buy-sell provisions in LLC company agreements will be enforced according to their terms, even when one party alleges the other has committed prior breaches of the agreement or fiduciary duties. The court's willingness to grant specific performance demonstrates that Texas Shootout clauses provide an effective mechanism for resolving deadlocks between 50-50 LLC members, and that claims of breach or unclean hands will not automatically defeat enforcement of these provisions absent proper summary judgment evidence.