Joint Venture Claims Fail Without Allegations of Profit-and-Loss Sharing; No Fiduciary Duty Pass-Through from Corporate Manager to Individual Officers
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Judge Melissa Davis Andrews
In Enosis Investments v. Jensen, the Business Court's Third Division granted early resolution under Rule 166(g), holding that plaintiffs failed to plead a joint venture because they did not allege an agreement to share both profits and losses, and that written company agreements disclaiming joint ventures and containing integration clauses independently defeated the claim. The court further held that while a manager of manager-managed LLCs may owe fiduciary duties to the LLCs, a corporate manager's fiduciary duty does not pass through to its individual officers and owners absent grounds for piercing the corporate veil.
Court Staff Summary
Pursuant to Texas Rule of Civil Procedure 166(g) and the parties’ Joint Advisory on Early Legal Issues, the Court rules on whether Texas law recognizes the asserted fiduciary duties under the facts alleged here. The Court holds: (1) The pleadings do not support a joint venture because they do not allege an agreement to share profits and losses; additionally, the company agreements explicitly disclaim the existence of any joint venture and expressly supersede any prior or contemporaneous agreements; (2) While the manager of these manager-managed LLCs may owe fiduciary duties to the LLCs, a non-managing member generally does not; nor is a corporate manager’s fiduciary duty passed through to its individual officers and owners absent some basis for piercing the corporate veil.
In a decision addressing the boundaries of fiduciary duties in manager-managed LLC structures, the Business Court's Third Division rejected claims that individual participants and their corporate vehicles owed fiduciary duties arising from an alleged joint venture or pass-through liability. The opinion in Enosis Investments, LLC v. Jensen, 2026 Tex. Bus. 19, provides guidance on pleading requirements for joint venture claims and the limits of derivative fiduciary liability.
Procedural Posture
Pursuant to the Scheduling Order and Texas Rule of Civil Procedure 166(g), the parties filed a Joint Advisory on Early Legal Issues identifying issues that could be resolved early in the case to facilitate efficiency or resolution. The court ruled on whether Texas law recognizes the asserted fiduciary duties under the facts alleged in the pleadings.
The Joint Venture Pleading Deficiency
The court held that the pleadings do not support a joint venture because they do not allege an agreement to share profits and losses. This element is essential to establishing a joint venture under Texas law. The court emphasized that without factual allegations supporting a sharing of both profits and losses, no joint venture can exist as a matter of law.
The court provided an independent basis for rejecting the joint venture theory: the company agreements explicitly disclaim the existence of any joint venture and expressly supersede any prior or contemporaneous agreements. These integration clauses in the written agreements controlled over any conclusory allegations in the pleadings.
No Pass-Through Fiduciary Duty from Corporate Manager
The court addressed whether fiduciary duties flow from a corporate manager to its individual officers and owners. The court held that while the manager of manager-managed LLCs may owe fiduciary duties to the LLCs themselves, those duties do not pass through to the corporation's individual officers and owners absent some basis for piercing the corporate veil.
Additionally, the court clarified that a non-managing member of a manager-managed LLC generally does not owe fiduciary duties. This holding reinforces the distinction between managers and non-managing members in the LLC context and limits the circumstances under which individual liability may attach for corporate actions.
Significance
The Enosis decision provides important guidance on two fronts. First, it underscores the pleading requirements for joint venture claims, particularly the necessity of alleging an agreement to share both profits and losses with specificity. Second, it clarifies that fiduciary duties in manager-managed LLCs are not automatically imputed to individuals behind corporate managers, preserving the corporate form absent veil-piercing circumstances. The ruling demonstrates the Business Court's willingness to resolve threshold legal issues early under Rule 166(g) when the pleadings are insufficient as a matter of law.