In Power v. Power, one brother sued the other brother for breach of fiduciary duty related to their partnership in real estate investing. No. 05-19-01557-CV, 2022 Tex. App. LEXIS 2926 (Tex. App.—Dallas May 3, 2022, no pet. history). The trial court found for the plaintiff, and the defendant appealed. The court first addressed whether the plaintiff had standing to sue in his individual capacity (and not on behalf of the partnership):

“Whether a claim brought by a partner actually belongs to the partnership is . . . a matter of capacity because it is a challenge to the partner’s legal authority to bring the suit.” Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 779 (Tex. 2020). Section 152.210 of the Texas Business Organizations Code provides that one partner is liable to other partners for violating a duty to the other partners that causes harm to the other partners. Tex. Bus. Orgs. Code § 152.210(2). A partner owes other partners a duty of care. See id. § 152.204(a)(2). A partner’s duty of care to other partners “is to act in the conduct and winding up of the partnership business with the care an ordinarily prudent person would exercise in similar circumstances.” Id. § 152.206(a). A partner shall discharge his duties to the partnership and other partners in good faith and in a manner the partner reasonably believes to be in the best interest of the partnership. Id. § 152.204(a), (b). Section 152.211 delineates the authority of partners and partnerships to bring claims and seek various remedies. Pike, 610 S.W.3d at 779-80. Section 152.211 provides that one partner “may maintain an action against . . . another partner for legal or equitable relief” to, among other things, enforce a partner’s rights under Sections 152.204 and 152.206 and to “enforce the rights and otherwise protect the interests of the partner, including rights and interests arising independently of the partnership relationship.” See Tex. Bus. Orgs. Code § 152.211(b)(2)(A), (b)(3).

The jury found Craig and Braden created a partnership to purchase, develop, and sell properties. Craig does not challenge this finding and, thus, it is binding on this Court… As a partner, Craig owed a duty of care to Braden, see TEX. BUS. ORGS. CODE § 152.206(a), and was required to discharge his duties to Braden in good faith, see id. § 152.204(a), (b). The business organizations code allowed Braden to maintain an action against Craig for relief from Craig’s violations, if any, of these duties and to enforce and protect his interest as a partner. Braden did just that. Braden in his individual capacity sued Craig in his individual capacity for breach of fiduciary duty, fraud, fraud by non-disclosure, statutory fraud, and civil theft alleging Braden was injured by Craig’s actions. Braden produced evidence showing that Craig failed to pay Braden his proportionate share of profits generated by the partnership and made false representations to Braden about the financial condition of their businesses. In doing so, Craig breached his duty of care to Braden and caused injury to Braden. Braden’s alleged damages were suffered by him personally rather than by the partnership. Thus, Braden had capacity to assert the claims he did. We note that Braden did not claim, for example, that Craig’s actions reduced the value of the partnership or devalued his ownership interest, which would be an injury to the partnership. Rather, he contended Craig hid assets from him and failed to pay him his share of the partnership profits. Any recovery Braden sought was not a partnership asset; it was his individual share of the partnership assets that Craig allegedly took and to which Braden personally was entitled.

Id. The court then affirmed the jury’s finding on when the plaintiff should have discovered the wrongful conduct, which was inside the limitations period. The court then reversed the judgment on the basis of a spoliation instruction in the charge. The court remanded for a new trial.

Email this postTweet this postLike this postShare this post on LinkedIn
Photo of David Fowler Johnson David Fowler Johnson

[email protected]

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary…

[email protected]

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. Read More

David’s financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.

David also has experience in estate and trust disputes including will contests, mental competency issues, undue influence, trust modification/clarification, breach of fiduciary duty and related claims, and accountings. David’s recent trial experience includes:

  • Representing a bank in federal class action suit where trust beneficiaries challenged whether the bank was the authorized trustee of over 220 trusts;
  • Representing a bank in state court regarding claims that it mismanaged oil and gas assets;
  • Representing a bank who filed suit in probate court to modify three trusts to remove a charitable beneficiary that had substantially changed operations;
  • Represented an individual executor of an estate against claims raised by a beneficiary for breach of fiduciary duty and an accounting; and
  • Represented an individual trustee against claims raised by a beneficiary for breach of fiduciary duty, mental competence of the settlor, and undue influence.

David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification in Civil Trial Law, Civil Appellate and Personal Injury Trial Law by the Texas Board of Legal Specialization.

Additionally, David is a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization. This commission writes and grades the exam for new applicants for civil trial law certification.

David maintains an active appellate practice, which includes:

  • Appeals from final judgments after pre-trial orders such as summary judgments or after jury trials;
  • Interlocutory appeals dealing with temporary injunctions, arbitration, special appearances, sealing the record, and receiverships;
  • Original proceedings such as seeking and defending against mandamus relief; and
  • Seeking emergency relief staying trial court’s orders pending appeal or mandamus.

For example, David was the lead appellate lawyer in the Texas Supreme Court in In re Weekley Homes, LP, 295 S.W.3d 309 (Tex. 2009). The Court issued a ground-breaking opinion in favor of David’s client regarding the standards that a trial court should follow in ordering the production of computers in discovery.

David previously taught Appellate Advocacy at Texas Wesleyan University School of Law located in Fort Worth. David is licensed and has practiced in the U.S. Supreme Court; the Fifth, Seventh, and Eleventh Federal Circuits; the Federal District Courts for the Northern, Eastern, and Western Districts of Texas; the Texas Supreme Court and various Texas intermediate appellate courts. David also served as an adjunct professor at Baylor University Law School, where he taught products liability and portions of health law. He has authored many legal articles and spoken at numerous legal education courses on both trial and appellate issues. His articles have been cited as authority by the Texas Supreme Court (twice) and the Texas Courts of Appeals located in Waco, Texarkana, Beaumont, Tyler and Houston (Fourteenth District), and a federal district court in Pennsylvania. David’s articles also have been cited by McDonald and Carlson in their Texas Civil Practice treatise, William v. Dorsaneo in the Texas Litigation Guide, and various authors in the Baylor Law ReviewSt. Mary’s Law JournalSouth Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law