Overview
(April 30, 2026, Houston) – Steptoe partner Jarod Stewart and associate Brent Hanson obtained a significant early litigation victory when the Texas Business Court dismissed fiduciary duty claims against the firm's clients.
In a 14-page opinion dated April 23, 2026, Judge Melissa Andrews of the Business Court's Third Division held that "under the facts pleaded by Plaintiffs, (1) [Steptoe clients] Jensen, Braverman, and Southfork do not owe fiduciary duties to Lake and Enosis because the pleadings do not establish a joint venture; and (2) Jensen and Southfork do not owe fiduciary duties to the LLCs." The Court utilized Texas Rule of Civil Procedure 166(g), which "empowers a trial court to convene a pretrial conference” in order to “assist in the disposition of the case without undue expense or burden to the parties." The Third Division's procedures require parties to submit a joint advisory on early legal issues, and pursuant to the parties’ advisory, Judge Andrews invited the parties to brief the threshold legal issue of whether fiduciary duties existed as a matter of law. In a reasoned opinion, Judge Andrews rejected Plaintiffs’ fiduciary duty theories based on an alleged joint venture and purported managerial control.
The underlying dispute arises from the parties' acquisition and management of a mixed-use real estate development and resort-style community called The Reserve at Lake Travis. The parties' disputes cover management, control, and operation of the entities associated with the development, including claims over the assignment of declarant rights, breaches of contract, and breaches of fiduciary duty. When acquiring and setting up the ownership and management structure for The Reserve at Lake Travis, the parties did so through several different single-purpose companies and LLCs, whose governing agreements delineated the parties' various rights and responsibilities. In the lawsuit, Plaintiffs allege that Defendants owe them fiduciary duties because the parties agreed to an overarching joint venture and because Steptoe clients Brett Jensen and Southfork Development Partners LLC allegedly exercised managerial control over the LLCs.
After reviewing the parties' briefing, the Court ruled, in relevant part: (1) The governing agreements expressly disclaimed any partnership or joint venture relationship and contained integration clauses, negating any intention to establish a joint venture that would impose fiduciary duties; (2) Plaintiffs' joint venture allegations were legally insufficient, as they failed to plead facts establishing an agreement to share profits and losses; (3) Texas law does not impose inherent fiduciary duties on non-managing members of a manager-managed LLC absent contractual agreement; and (4) fiduciary duties will not be imposed on a corporate officer or controlling member of an LLC that is itself an LLC manager absent any allegations supporting veil piercing. Judge Andrews emphasized that fiduciary duties are not lightly created and that courts must respect freedom of contract and corporate separateness, particularly where sophisticated parties deliberately structured their business relationships. The Court's ruling narrows the case, streamlining discovery and trial preparation for Steptoe's clients.
Click here to read the opinion.
About Steptoe
In more than 110 years of practice, Steptoe has earned an international reputation for vigorous representation of clients and innovative thinking before governmental agencies, successful advocacy in litigation and arbitration, and creative and practical advice in structuring business transactions. Steptoe has more than 500 lawyers and other professional staff across offices in Beijing, Brussels, Chicago, Hong Kong, Houston, London, Los Angeles, New York, San Francisco, and Washington, DC. For more information, visit www.steptoe.com.
