Hinds v. Sandman Offshore, 2026 Tex. Bus. 63 (11th Div.) (mem. op.)

2026 Tex. Bus. 63
T HE B USINESS C OURT OF T EXAS
ELEVENTH DIVISION
RUSSELL A. HINDS,
Plaintiff,
v.
SANDMAN OFFSHORE, LLC, and
DAVID WEGNER,
Defendants,
v.
ENVIROCORE, INC.,
Third-Party Defendant.
§
§
§
§
§
§
§
§
§
§
§
§
§
Cause No. 26-BC11A-0053
═══════════════════════════════════════
MEMORANDUM OPINION AND ORDER
═══════════════════════════════════════
¶1 	Before the court are the partial motions to dismiss under Rule 91a filed by
Defendant Sandman Offshore, LLC (“Sandman”) and Defendant David Wegner on
July 31, 2026. Having considered the parties’ briefing and oral argument, the
pleadings, and the relevant law, the court partially grants Sandman’s motion and
partially grants Wegner’s motion for the reasons set forth below.
FACTUAL AND PROCEDURAL B ACKGROUND
¶2 	Sandman is an oil and gas company with five members each holding a 20%
interest, including Hinds and Wegner, who acted as co-managers. According to
FILED IN
BUSINESS COURT OF TEXAS
BEVERLY CRUMLEY, CLERK
ENTERED
9/14/2026

2
Hinds’s First Amended Petition (“Pet.”), he was the day-to-day manager who devoted
thousands of hours of service to Sandman and Wyotex Offshore, LLC (“Wyotex”), the
assignee of one of Sandman’s oil and gas leases. Then, in March 2026, Sandman’s
members removed him as a co-manager and expelled him as member the next month—
all without notice or an opportunity to be heard.
¶3 	In response, Sandman pleads that Hinds’s removal and expulsion was prompted
by his self-dealing and conflicting business activity. Specifically, Sandman pleads,
Hinds recommended that Wyotex hire Hinds’s own drilling-services company, Third-
Party 	Defendant 	EnviroCore, 	Inc., 	without 	disclosing 	his 	ownership 	interest.
According to Sandman’s counterclaims, Hinds then acted unilaterally to prioritize
Wyotex’s payments to EnviroCore over Wyotex’s lease payments to Sandman, causing
delay in funds owed. Sandman also accuses Hinds of making other unilateral action
property and tax filings without obtaining proper approval.
¶4 	Hinds pleads that 	Sandman’s members 	have known all along about his
ownership of EnviroCore, and that its services were not in conflict with Sandman’s
business in any event. He, in turn, accuses Wegner of self-dealing management,
alleging that Wegner was motivated by personal animus, retaliation, and his own
economic gain to orchestrate the written consents for Hinds’s removal and expulsion.
¶5 	Under Texas Rule of Civil Procedure 91a, all parties move for dismissal.
Sandman moves to dismiss Hinds’s breach-of-contract and conversion claims. Wegner

3
moves to dismiss Hinds’s contract and breach-of-fiduciary-duty claims to the extent
they are based on Hinds’s removal and expulsion as Sandman manager and member,
and he moves for dismissal of the remaining claims against him in their entirety. 1 At
least three days before the hearing on the Rule 91a motions, Hinds nonsuited his claim
for tortious interference with an existing contract. See T EX. R. C IV. P. 91a.5. The court
now considers Defendants’ motions as to the remaining claims.
LEGAL STANDARD
¶6 	A motion under Texas Rule of Civil Procedure 91a seeks dismissal of a claim
“on the grounds that it has no basis in law or fact.” T EX. R. C IV. P. 91a.1. A claim lacks
basis in law “if the allegations, taken as true, together with inferences reasonably
drawn from them, do not entitle the claimant to the relief sought.” Id. A claim lacks
basis in fact “if no reasonable person could believe the facts pleaded.” Id.
¶7 	To survive dismissal, the plaintiff must satisfy Texas’s notice-pleading rules. In
re First Rsrv. Mgmt., L.P., 671 S.W.3d 653, 662–63 (Tex. 2023). Beyond giving fair
notice of the claims themselves, the petition must contain “the essential factual
allegations supporting those claims, which must be sufficient to support a judgment if
ultimately proven.” Id. at 663 (internal quotations omitted).
¶8 	The court may not consider evidence to decide a Rule 91a motion, basing its
1 Hinds and EnviroCore later moved for Rule 91a dismissal of Defendants’ counterclaims, but those
motions have been taken under advisement and are not addressed here.

4
ruling “solely on the pleading of the cause of action, together with any pleading
exhibits permitted by Rule 59.” T EX. R. C IV. P. 91a.6. Rule 59 permits that “written
instruments, constituting, in whole or in part, the claim sued on” may be “made a part
of the pleadings by copies thereof, or the originals, being attached or filed and referred
to as such.” Id. at R. 59.
A NALYSIS
I. 	Hinds’s claim against Wegner for breach of fiduciary duty is dismissed
in part.
¶9 	Wegner’s motion seeks partial dismissal of Hinds’s two claims for breach of
fiduciary duty to the extent the claims are based on Hinds’s expulsion and removal.
The court partially grants the motion.
¶10 	“The 	elements 	of 	a 	breach 	of 	fiduciary 	duty 	claim 	are: 	(1) 	a 	fiduciary
relationship between the plaintiff and defendant, (2) a breach by the defendant of his
fiduciary duty to the plaintiff, and (3) an injury to the plaintiff or benefit to the
defendant as a result of the defendant's breach.” Lundy v. Masson, 260 S.W.3d 482,
501 (Tex. App.—Houston [14th Dist.] 2008, pet. denied).
¶11 	Wegner’s motion seeks dismissal for lack of any fiduciary duty he owed to
Hinds. Whether a fiduciary duty exists is a question of law. See Nat’l Plan Adm’rs, Inc.
v. Nat’l Health Ins. Co., 235 S.W.3d 695, 704 (Tex. 2007).
A. 	Wegner owed no fiduciary duty as LLC member.
¶12 	According to Hinds’s pleading, Wegner is a member and manager of Sandman.

5
Pet. ¶¶ 14–16. “[M]embers of limited-liability companies . . . do not owe formal
fiduciary duties to fellow members simply because of their relationship as co-
members.” Bertucci v. Watkins, 709 S.W.3d 534, 544 (Tex. 2025). Texas law permits
a company agreement to “expand, restrict, or eliminate any duties, including fiduciary
duties, and related liabilities” owed by a member. T EX. B US . ORGS . C ODE § 101.401.
Here, Sandman’s Company Agreement, the entity’s operative governing document
(“Sandman Agreement”), contains no language creating fiduciary duties between
members.2 Wegner owes no fiduciary duty merely by virtue of his membership
interest.
B. 	Wegner owed a limited fiduciary duty as LLC manager.
¶13 	Whether Wegner owed fiduciary duties to Hinds as a manager equally depends
on whether the Sandman Agreement expanded or restricted those duties. See T EX.
B US . ORGS . C ODE § 101.401 (allowing LLC company agreement to “expand, restrict,
or eliminate any duties, including fiduciary duties, and related liabilities” owed by a
manager). Here, the Agreement stated:
2 Hinds sues on the Sandman Agreement, which he attaches to his live pleading, and no party objects
to the court’s consideration of the Agreement’s terms under Texas Rules of Civil Procedure 91a and
59. See Hensarling v. Carmichael, No. 25-BC04B-0014, 2025 Tex. Bus. 50, ¶¶ 11–12, 2025 WL
3688733, at *2 (4th Div.).

6
Pet. Ex. A § 5.10.
¶14 	The Texas Supreme Court has cautioned that imposing a fiduciary duty between
parties who disclaimed such duties in a written contract would “give judges and
juries—rather than the parties themselves—the authority to define the parameters of
the parties’ legal relationship.” Pitts v. Rivas, 709 S.W.3d 517, 529–30 (Tex. 2025).
This court previously analyzed an LLC company agreement stating that “no special
relationship shall exist between any Manager and the Members, and no Member or
Manager shall have any duty to any Member, whether fiduciary or otherwise,” and
limiting liability “unless the loss or damage shall have been the result of gross
negligence, fraud or intentional misconduct.” Tall v. Vanderhoef, 2025 Tex. Bus. 15,
¶ 26, 2025 WL 1165208, at *3 (8th Div.). The court dismissed the claims for fiduciary
breach under Rule 91a, noting that the parties “chose to contractually eliminate
fiduciary duties between them and liability for losses or damages sustained by them,
except for those arising from gross negligence, fraud, or intentional misconduct.” Id.;
see also Reeder v. Wood Cnty. Energy, LLC, 395 S.W.3d 789, 797 (Tex. 2012)
(enforcing joint operating agreement’s exculpatory clause exempting operator “unless
the liability arises from gross negligence or willful misconduct”).

7
¶15 	In contrast, courts have imposed fiduciary duties on LLC managers where the
company agreement contains no limitation of a manager’s fiduciary obligations or
expressly imposes them. See Davis v. Crawford, 700 S.W.3d 438, 447–49 (Tex.
App.—Eastland 2024, no pet.) (citing Strebel v. Wimberly, 371 S.W.3d 267 (Tex.
App.—Houston [1st Dist.] 2012, pet. denied)).
¶16 	Here, the Sandman Agreement unequivocally limits the duties owed. Rather
than eliminate all managerial fiduciary duties, Section 5.10 eliminates any fiduciary
duties owed by managers, “[e]xcept for such duties as may be expressly set forth in
this Agreement.” Pet. Ex. A § 5.10 (emphasis added). Among the duties “expressly set
forth” is the duty not to manage the company with acts or omissions of gross
negligence, willful misconduct, or breach of the Agreement. Id.
¶17 	All parties concede in their briefing and in oral argument that Sandman’s
managers owed some fiduciary duties to the company and its members, though each
party describes the scope of those duties differently. Wegner contends the “only
fiduciary duty pertinent to viable claims in this case is the one barring a specific type
of conflicted business activity,” referencing Section 5.11. Wegner Reply at 6. But
Section 5.10 on its face also preserves liability for willful misconduct, which Hinds
has pleaded here. Pet. ¶¶ 59–60, 107; see Gilbreath v. Horan, 682 S.W.3d 454, 529–
30, 532 n.60 (Tex. App.—Houston [1st Dist.] 2023, pet. denied) (holding that
fiduciary-duty claims arising under a limited partnership agreement were properly

8
pleaded and submitted to the jury where the agreement’s limitation-of-liability
provision 	excepted 	gross 	negligence, 	bad 	faith, 	willful 	breach, 	and 	willful
misconduct); cf. Tex. Commerce Bank, N.A. v. Grizzle, 96 S.W.3d 240, 251 (Tex.
2002) (under now-superseded version of trust statute, holding that clause limiting
liability “except in the case of gross negligence, bad faith, or fraud” applied to limit
duty against self dealing that was owed by trustee); Marshall v. Marshall, 738 S.W.3d
548, 574 (Tex. App.—Houston [14th Dist.] 2025, no pet.), as clarified on denial of
reh’g (Mar. 3, 2026) (concluding that clause precluding trustee’s liability except for
gross negligence, bad faith, or fraud limited fiduciary duty owed).
¶18 	Hinds pleads no gross negligence by Wegner, and his contract claims are
separately pleaded and addressed below in this opinion. At this stage of the suit based
on Hinds’s factual allegations as pleaded, his claims for fiduciary breaches based on
Wegner’s alleged willful misconduct in managing Sandman and in usurpation of
corporate opportunities and diversion of Hinds’s royalty interest are grounded in the
pleadings, including in the Sandman Agreement.
¶19 	Wegner is correct, though, that several of Hinds’s pleaded fiduciary breaches
are based on duties that are not express exceptions under Section 5.10—and that
instead contradict the Agreement’s terms. Hinds accuses Wegner of orchestrating
Hinds’s expulsion, “concealing his plan to expel” Hinds, and of appointing a
replacement manager without affording Hinds notice or an opportunity to be heard.

9
Pet. ¶ 71(a), (d), (e). But the Agreement outlines the procedures for expulsion and
removal and provides that “[a]ny action required or permitted to be taken at such a
meeting may be taken without a meeting, without prior notice, and without a vote if a
consent or consents in writing, setting forth the action so taken, is signed by the”
requisite majority. Id. Ex. A § 5.8(d).
¶20 	The Sandman Agreement expressly permits company action without notice and
specifies a procedure for removal of managers and expulsion of members. So neither a
fiduciary duty to give such notice—nor a fiduciary duty not to remove a manager or to
expel a member using the Agreement’s procedure—could possibly be carved out as
“duties 	. 	. 	. 	expressly 	set 	forth 	in 	this 	Agreement” 	that 	would 	override 	the
Agreement’s exculpatory clause. Id. §§ 5.8(d); 5.10.
¶21 	“The freedom of contract includes the freedom to define the nature and scope
of a business relationship in a way that forecloses the imposition by courts of duties
inconsistent with the parties’ agreement.” Pitts, 709 S.W.3d at 529–30. Wegner, as
manager, was subject to Section 5.10, which exposes him to only the limited, express
fiduciary duties in the Agreement. Id. Hinds’s fiduciary-breach claims that are based
solely on his removal and expulsion, or lack of notice of those actions, are legally
baseless. His remaining fiduciary-breach claims, as limited by the willful-misconduct
standard, survive the Rule 91a pleadings analysis.

10
C. 	No other basis for a fiduciary duty exists between Wegner and
Hinds.
¶22 	Hinds pleads no facts supporting the creation of a fiduciary duty stemming from
any source beyond Wegner’s managerial role.
¶23 	The Supreme Court of Texas has held “that an informal fiduciary relationship
can arise from personal relationships of special trust and confidence.” Pitts, 709
S.W.3d at 528. Courts do not lightly impose informal fiduciary duties in a commercial
setting, id., and prior “arms-length transactions entered into for the parties’ mutual
benefit” are not enough. Meyer v. Cathey, 167 S.W.3d 327, 330 (Tex. 2005). Where a
plaintiff over an extensive period of time “relied heavily” on and had “a high degree
of trust and confidence” in defendants, including a history as family friends, enjoying
dinners together, and exchanging free or discounted services for each other over the
years, the Texas Supreme Court held that “[t]his evidence comes nowhere close to
creating a fiduciary relationship under our precedents.” Pitts, 709 S.W.3d at 529.
¶24 	While Hinds cites authority in the insurance context or based on other
inapplicable relationships, Texas precedent creates no fiduciary duty due to a power
imbalance alone, and Hinds himself pleads no facts invoking such a doctrine in any
event. He instead alleges he and Wegner were equal co-managers and co-members of
Sandman. Hinds’s Resp. at 6; Pet. ¶¶ 14–16. Even so, seeking to benefit from the
informal-fiduciary doctrine, Hinds pleads that “[a] special relationship of trust and
confidence existed,” with Wegner. Pet. ¶ 64. Hinds alleges that he and “Wegner were

11
business associates for approximately sixteen years through Sand Hill Resources and
related ventures beginning in or about 2010, an association marked by mutual trust,
reliance on one another’s judgment, and personal confidence.” Id.
¶25 	These 	facts 	preclude 	the 	creation 	of 	any 	informal 	fiduciary 	duty 	under
established Texas precedent. Taking them as true, Hinds and Wagner shared a trusting
business relationship that, as in Pitts, came nowhere close to an informal fiduciary
relationship. 709 S.W.3d at 529. Instead, according to Hinds’s own pleading, he knew
he held a longstanding, trusting relationship with Wegner—but then chose to
stringently restrict the obligations owed between them, reducing them to writing in
the Sandman Agreement. Under these facts, no additional fiduciary duties will be
imposed. See id. (noting that “nothing in the parties’ engagement letters suggests that
either party contemplated that the law would treat them as having a special
relationship of trust and confidence.”); Enosis Inv., LLC v. Jensen, 2026 Tex. Bus. 19,
¶¶ 6–9, 737 S.W.3d 357, 361–62 (3rd Div.) (rejecting fiduciary-duty theory where
LLC governing documents foreclosed a joint-venture relationship on which the duty
depended and reasoning that, “[i]f the parties had wished to structure their Reserve
endeavor as a joint venture or partnership, that option was available to them”).
¶26 	On this basis, Wegner’s motion to dismiss Hinds’s claim for breach of fiduciary
duties is granted in part and denied in part.

12
II. 	Hinds’s claim for breach of the implied covenant of good faith and fair
dealing is dismissed.
¶27 	The Texas Supreme Court has been “clear that absent a special relationship,
parties to a contract have no duty to act in good faith.” Barrow-Shaver Res. Co. v.
Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 490 (Tex. 2019). Hinds’s claim for breach
of the implied covenant of good faith and fair dealing must therefore hinge on a special
relationship between Wegner and Hinds. See id. at 490–91.
¶28 	For the reasons described above, when taking every fact in the Petition as true,
Hinds fails to allege a special relationship recognizable under Texas law. Though
Hinds distinguishes Wegner’s cited case law based on the procedural posture of those
cases, this court applies the Rule 91a standard to reach its conclusion. And the court
must grant motion to dismiss when, as here, the facts as pleaded “do not entitle the
claimant to the relief sought.” T EX. R. C IV. P. 91a.1. Hinds’s petition negates the
existence of a special relationship under well-settled Texas law. See Pitts, 709 S.W.3d
at 529–30. The good-faith claim must be dismissed.
III. 	Hinds’s claim for breach of contract against Defendants is dismissed in
part.
¶29 	Hinds alleges Sandman breached the Sandman Agreement by expelling him as
a member and stripping his membership interest and economic rights without proper
cause, notice, or other procedural requirements; and by refusing his demand for a
special meeting. Hinds also alleges Wegner breached the Agreement by orchestrating

13
Hinds’s removal as manager and expulsion as member, along with other alleged
breaches on which Wegner has not moved for dismissal at this stage.
¶30 	A 	breach-of-contract 	claim 	requires 	a 	valid 	contract, 	the 	claimant’s
performance 	or 	tendered 	performance, 	the 	respondent’s 	breach, 	and 	resulting
damages. Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 890
(Tex. 2019).
A. Hinds’s claim based on procedural deficiencies is dismissed.
¶31 	Hinds’s claim based on Sandman’s failure to comply with notice, hearing, and
procedural requirements is legally baseless and must be dismissed.
¶32 	The Business Organizations Code generally states that LLCs may take action
with or without a meeting, and it allows the LLC’s governing documents to alter those
requirements. T EX. B US . ORGS . C ODE § 101.358 (for actions required or authorized to
be taken at special or annual meeting, the “action may be taken without holding a
meeting, providing prior or subsequent notice, or taking a vote if a written consent or
consents stating the action to be taken is signed by the number” necessary); id.
§ 101.359 (permitting LLC members and managers to “take action at a meeting of the
members or managers or without a meeting in any manner permitted by this title, Title
1, or the governing documents of the company”). Here, the Sandman Agreement
specified the circumstances under which expulsion may occur and specified that “an
act of a Majority Interest shall be an act of the Members.” Pet. Ex. A §§ 	2.9, 5.7. As

14
described above, the Agreement further specified that company action “may be taken
without a meeting, without prior notice, and without a vote if” a sufficient majority
executed a written consent. Id. § 5.8(d).
¶33 	In 	sum, 	Sandman’s 	Agreement 	permitted 	action—including 	expulsion—
without notice or an opportunity to be heard. This court recently rejected a similar
attempt to impose an advance-notice requirement that the parties had omitted from
their agreement, emphasizing that courts may not rewrite contracts to add procedural
protections that the parties could have negotiated but did not. Primexx Energy
Opportunity Fund, LP v. Primexx Energy Corp., 2025 Tex. Bus. 9, ¶¶ 179–81, 709
S.W.3d 619, 654–55 (1st Div.), recons. den. at 2025 Tex. Bus. 13, 713 S.W.3d 416.
And Hinds identifies no facts in his pleading, nor any basis in the Sandman
Agreement, for these procedural duties he claims were breached. Hinds pleads no facts
that allow even a reasonable inference that Defendants failed to follow the procedural
protections found within the four corners of the Agreement. Without more, “the court
cannot impose a condition that the parties omitted from their agreements under the
guise of construing their contracts.” Dallas Sports Grp., LLC v. DSE Hockey Club, L.P.,
2026 Tex. Bus. 15, ¶ 156, 735 S.W.3d 759, 791 (1st Div.) (citing Sundown Energy LP
v. HJSA No. 3 P’ship, 622 S.W.3d 884, 889 (Tex. 2021)). This basis for Hinds’s
contract claim must be dismissed.

15
B. Hinds’s breach-of-contract claim based on his expulsion and removal
is dismissed.
¶34 	Hinds also pleads Defendants Sandman and Wegner breached the Sandman
Agreement by expelling him as member without valid “cause.” Hinds’s pleading
negates a valid contract claim and must be dismissed.
¶35 	Sandman’s Company Agreement outlined the conditions for expulsion:
Pet. Ex. A § 2.9. While Section 2.9 addressed grounds and process for expulsion,
Section 5.11 addressed one particular “cause” for expulsion. It read:
Pet. Ex. A § 5.11.
¶36 	In sum, Section 2.9 prohibits expulsion except “for cause and only with a
Majority Interest decision.” Pet. Ex. A §§ 2.2, 2.9, 5.11. Section 5.11 then identifies
one such act that would warrant a for-cause expulsion: if a member or manager were
to “engage in and possess interests in other oil and gas business ventures conflicting
with the interest of the Company.” Id. § 5.11. Under Section 5.11, one discrete event

16
“shall be cause”—“[s]uch conflicting business activity, as determined by Majority
Interest of the Members.” Id. (emphasis added).
¶37 	Under Texas law, an entity and its managers do not breach the company
agreement if they act according to its terms—including by removing members or
managers. E.g. Pak v. AD Villarai, LLC, No. 05-14-01312-CV, 2018 WL 2077602, at
*1 (Tex. App.—Dallas May 4, 2018, pet. denied); Macy v. Waste Mgmt., Inc., 294
S.W.3d 638, 646 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). In Pak, the
entity’s governing documents permitted a manager’s removal “by the vote of a
majority of the members.” Pak, 2018 WL 2077602, at *3. Enforcing the documents’
plain language, the court determined the majority had, indeed, voted for the removal
and concluded the removal was proper. Id. at *3, 9. 	In Macy, the court similarly
enforced the contractual process for a board’s for-cause determination. Macy, 294
S.W.3d at 646–48. Based on the contractual terms, the court “conclude[d] the intent
of the Agreement is that the determination of cause must be made by Waste
Management alone.” Id. at 646 (internal quotations omitted).
¶38 	Hinds’s contract claim is founded on the Sandman Agreement. The court
construes the Agreement, as it must, by its express terms. Hinds’s petition attaches
the written consent he received, which states that a Majority Interest found that Hinds
conducted and possessed “interests in other oil and gas business ventures[,]” thereby
engaging in conflicting business activity. Pet. Ex. G. While such a consent may be

17
“made a part of the pleadings” under Texas Rule of Civil Procedure 59, the court in
analyzing a motion to dismiss may not take as true the contents of the statements
made within that document. See T EX. R. C IV. P. 91a.1. The court does not accept as
true that Hinds’s conduct was “conflicting business activity.” Rather, according to
Hinds’s petition, his disputed business, Defendant EnviroCore, is not an “oil and gas
business venture” and it does not conflict with Sandman. Pet. ¶¶ 45–47. For his part,
Hinds claims he conducted “no conflicting business activity” creating cause for his
expulsion. Id. ¶ 37.
¶39 	But the Agreement dictates that the Majority Interest determines which
conduct is “conflicting business activity”—not any one LLC member or the court.
Upon the Majority Interest’s determination, such conduct “shall be cause” under the
Agreement. Id. Ex. A § 5.11. Section 2.9, which requires expulsion only for cause and
with a Majority Interest determination, is therefore satisfied upon this specific type of
for-cause finding by the Majority Interest. Id. Ex. A § 2.9.
¶40 	Hinds’s pleading contains no facts alleging he was expelled without such a
determination from the Majority Interest, so dismissal is proper. At the Rule 91a
stage, if the pleading lacks “the essential factual allegations supporting th[e] claims .
. . sufficient to support a judgment if ultimately proven,” the claim must be dismissed.
See In re First Rsrv. Mgmt., L.P., 671 S.W.3d at 662. Taking Hinds’s own pleading as

18
true, the petition contains no factual allegation supporting a breach by Defendants of
any identifiable clause of the Agreement based on Hinds’s removal as member.
¶41 	Hinds’s claim also alleges Wegner’s orchestration of his removal of manager
breached the Agreement, and he concedes the relevant section of the Agreement
“permits removal of a manager with or without cause.” Hinds Resp. at 5 (citing Pet.
Ex. A § 5.3). Hinds points to no discrete clause in the Agreement that was even
arguably breached by his removal. Hinds’s breach-of-contract claim against Wegner
based on his removal as manager is dismissed.
C. Hinds’s contract claim based on Sandman’s refusal to hold a special
meeting satisfies Rule 91a’s standards.
¶42 	Hinds’s claim for breach of the provision requiring a special meeting is based
on the plain language of the Sandman Agreement. See Pet. Ex. A § 5.7 (providing that
special meetings may be called by managers or by members with “at least ten percent
of the Sharing Ratios” of all members and requiring that notice of a special meeting
“shall be delivered to each Member at least ten days prior to such meeting”); id. § 9.2
(specifying delivery requirements for notice to members). Hinds pleads that, on April
29, 2026, he requested a meeting concerning his expulsion and that, the following day
and after the expulsion was executed, he delivered notice of his request for a special
meeting to be held on May 11. Pet. ¶¶ 36–37, Ex. E. He alleges Sandman then breached
the Agreement “by refusing to honor [Hinds’s] demand for a Special Meeting pursuant
to Section 5.7 of the Agreement.” Pet. ¶ 53.

19
¶43 	Hinds adequately pleads that he complied with the Agreement’s special-
meeting requirements because he owned a 20% share of Sandman when he delivered
his request for a special meeting to each of the members “at least ten days prior to”
the proposed meeting date. See Pet. Ex. A § 5.7. And Sandman’s refusal to honor
Hinds’s timely special-meeting demand 	violates Section 5.7 based on Hinds’s
allegations, taken as true. Defendants have not moved for dismissal based on a failure
to adequately plead injury or causation. The Petition states a valid contract claim
predicated on the denied special meeting.
IV. 	Hinds’s fraud claims against Wegner are dismissed.
¶44 	To 	plead 	a 	valid 	fraud 	claim, 	the 	claimant 	must 	allege: 	(1) 	a 	material
misrepresentation 	was 	made; 	(2) 	the 	representation 	was 	false; 	(3) 	when 	the
representation was made, the speaker knew it was false or made the statement
recklessly 	without 	any 	knowledge 	of 	the 	truth; 	(4) 	the 	speaker 	made 	the
representation with the intent that the other party should act on it; (5) the party acted
in reliance on the representation; and (6) the party thereby suffered injury. See
Formosa Plastics Corp. USA v. Presidio Eng’s & Contractors, Inc., 960 S.W.2d 41, 47
(Tex. 1998). Wegner seeks dismissal of Hinds’s claim for fraud by nondisclosure and
constructive fraud, arguing Wegner owed no duty to disclose and that Hinds’s reliance
on any nondisclosure was not justifiable as a matter of law.

20
A. Hinds’s claim for fraud by nondisclosure is dismissed.
¶45 	Fraud by nondisclosure is a subcategory of fraud that occurs when a party has
a duty to disclose certain information and fails to disclose it. Bombardier Aerospace
Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d 213, 219 (Tex. 2019). To establish
fraud by nondisclosure, the plaintiff must show: (1) the defendant deliberately failed
to disclose material facts; (2) the defendant had a duty to disclose such facts to the
plaintiff; (3) the plaintiff was ignorant of the facts and did not have an equal
opportunity to discover them; (4) the defendant intended the plaintiff to act or refrain
from 	acting 	based 	on 	the 	nondisclosure; 	and 	(5) 	the 	plaintiff 	relied 	on 	the
nondisclosure, which resulted in injury. Id. at 219–20. Constructive fraud is “the
breach of some legal or equitable duty which, irrespective of moral guilt, the law
declares fraudulent because of its tendency to deceive others, to violate confidence, or
to injure public interests.” Keyes v. Weller, 692 S.W.3d 274, 278 n.4 (Tex. 2024).
¶46 	Based on his pleading, Hinds’s fraudulent-concealment and constructive-fraud
claims both hinge on a fiduciary duty he claims Wegner owed him. See Pet. ¶¶ 81, 85,
87. As explained above, the confines of any fiduciary duty Wegner owed depend on the
Sandman Agreement’s limitation-of-liability clause. See T EX. B US . ORGS . C ODE §
101.401; Pet. Ex. A § 5.10. And the Agreement specifies that, “[e]xcept for such duties
as may be expressly set forth in this Agreement, a Manager shall not be subject to any
duties (including fiduciary duties) in the management of the Company.” Pet. Ex. A §

21
5.10. Hinds fraud claims accuse Wegner of “conceal[ing] his plan to expel Mr. Hinds
and seize Sandman’s royalty interest . . . without providing Mr. Hinds any advance
notice or warning.” Pet. ¶¶ 81, 85 (accusing Wegner of “orchestrat[ing] Mr. Hinds’s
expulsion without notice or opportunity to cure in order to seize valuable royalty
interests . . . .”).
¶47 	As described above, the Sandman Agreement expressly permits action without
notice, so Wegner was under no fiduciary or other special duty to provide the notice
Hinds complains Wegner did not give him. The Agreement’s exculpatory clause
restricts fiduciary duties to those expressly stated in the Agreement, and—rather than
impose a duty to provide notice of company action—the Agreement eliminates such a
duty. Pet. Ex. A at §§ 5.8(d); 5.10. Accepting every factual inference in Hinds’s favor,
his fraud-by-nondisclosure and constructive-fraud claims fail as a matter of law for
these reasons.
¶48 	At the motion-briefing stage, Hinds also proposed a partial-disclosure theory.
See Bombardier, 572 S.W.3d at 220 (acknowledging duty to disclose may arise when
a party makes a partial disclosure that created a false impression or voluntarily
discloses only some information). While Hinds’s response brief suggests Wegner
partially disclosed 	the nature of 	EnviroCore’s business to 	the other Sandman
members, Hinds’s fraud pleading is based on failure to disclose his expulsion plan to
Hinds; not a partial disclosure of EnviroCore’s business to other Sandman members.

22
See Pet. ¶¶ 80–87; In re First Fin. Bank N.A., No. 09-22-00324-CV, 2023 WL
4781648, at *5 (Tex. App.—Beaumont July 27, 2023, pet. denied) (affirming Rule 91a
dismissal of fraud-by-omission claim because, although petition alleged bank failed to
disclose facts about a builder’s financing and work, petition failed to plead a partial or
voluntary disclosure triggering a duty to disclose). The partial-disclosure doctrine is
not grounded in Hinds’s pleading and does not save the legally baseless fraud claim.
B. The court need not address justifiable reliance.
¶49 	“Justifiable reliance usually presents a question of fact for the jury to decide.”
Maya Walnut LLC v. Ly, 738 S.W.3d 764, 768 (Tex. 2026) (internal quotations
omitted). “But the element can be negated as a matter of law when circumstances
exist under which reliance cannot be justified, because those circumstances show it is
extremely unlikely that there is actual reliance on the plaintiff’s part.” Id. (internal
quotations and citations omitted). Under the red-flag doctrine, “a person may not
justifiably rely on a representation if there are red flags indicating such reliance is
unwarranted.” Id. (internal quotations and brackets omitted).
¶50 	Defendants argue that, because the contract permitted member expulsion
without notice, Hinds’s alleged reliance on the nondisclosure of the expulsion plan
was not justifiable. Having concluded that Hinds’s fraud theories fail as a matter of
law for lack of any duty owed by Wegner to disclose his plans for expulsion, the court
does not reach Wegner’s justifiable-reliance theory.

23
V. 	Hinds’s conversion claim against Defendants is dismissed.
¶51 	Both Sandman and Wegner move for dismissal of Hinds’s conversion claim. A
conversion claim requires a showing that: (1) the plaintiff owned, had possession, or
entitlement to possession of property; (2) the defendant unlawfully and without
authorization assumed and exercised control over the property to the exclusion of, or
inconsistent with, the plaintiff’s rights; and (3) the plaintiff demanded the property’s
return, (4) which the defendant refused. Guillory v. Dietrich, 598 S.W.3d 284, 292
(Tex. App.—Dallas 2020, pet. denied). A plaintiff also must establish it was injured
by the conversion. See USAA Cas. Ins. Co. v. Letot, 690 S.W.3d 274, 285 (Tex. 2024).
¶52 	Hinds claims the Defendants converted his LLC interest in Sandman. “A
membership interest in a limited liability company is personal property.” T EX. B US .
ORGS . C ODE § 101.106(a). This property “interest includes a member’s share of profits
and losses or similar items and the right to receive distributions.” Sohani v. Sunesara,
546 S.W.3d 393, 404 (Tex. App.—Houston [1st Dist.] 2018, no pet.), quoted in Tall,
2025 Tex. Bus. at ¶ 12. The interest “does not include an owner’s right to participate
in management.” T EX . B US . ORGS . C ODE § 1.002(54)).
¶53 	Hinds’s LLC membership interest is unquestionably personal property. But he
does not plead facts showing Defendants stripped him of that interest. Instead, he
claims a Sandman majority expelled him as a member, which by the Agreement’s
terms forfeited his voting rights but preserved his ownership of the interest itself—

24
such that he is permitted to sell it using a specified valuation process through a third-
party appraiser. Pet. Ex. A §§ 2.9, 2.12. Sandman concedes Hinds has retained these
contractual membership rights. Sandman Reply at 1, 5.
¶54 	A viable Texas conversion claim generally requires that an interest be tangible
personal property. See Carrington v. Corsi, 2026 Tex. Bus. 57, ¶ 9, 2026 WL 2547071,
at *2 (11th Div.) (citing Bell v. Bay Area RV Parks, L.L.C., 722 S.W.3d 176, 211 (Tex.
App.—Houston [1st Dist.] 2025, no pet.)). The merger exception applies only when
an intangible right has been merged into a physical document, and that physical
document is converted. Id. ¶ 9 (citing Bell, 722 S.W.3d at 211); see also Express One
Int’l v. Steinbeck, 53 S.W.3d 895, 901 (Tex. App.—Dallas 2001, no pet.) (“Texas law
has never recognized a cause of action for conversion of intangible property except in
cases where an underlying intangible right has been merged into a document and that
document has been converted.”).
¶55 	In Texas, LLC membership interests are presumed to be uncertificated unless
the governing documents provide otherwise. T EX. B US . ORGS . C ODE § 3.201(c); Bell,
722 S.W.3d at 215–16. In Carrington, this court held that a governing document’s
provisions stating units “may, but need not be certificated” did not displace the
statutory presumption. 2026 Tex. Bus. 57, at ¶ 12. Under Rule 91a, the court therefore
dismissed the claim for conversion of uncertificated LLC membership interests,

25
holding the plaintiffs failed to allege dominion over any tangible personal property
sufficient to invoke the merger exception. Id. ¶¶ 9–13.
¶56 	Here, the Sandman Agreement contains no clause pertaining to certification of
membership 	interests—much 	less 	any 	language 	requiring 	certification 	of 	the
intangible voting rights that were allegedly stripped from Hinds. Hinds’s petition and
the Agreement’s silence leave the statutory default rule intact, such that the rights
that were allegedly forfeited here fall outside the merger exception for intangible
property. Id. ¶ 13.
¶57 	Hinds 	correctly 	points 	to 	the 	Texas 	Supreme 	Court’s 	recognition 	of 	a
conversion 	claim 	based 	on 	a 	corporation’s 	refusal 	to 	recognize 	or 	transfer 	a
stockholder’s ownership interest. Rio Grande Cattle Co v. Burns, 17 S.W. 1043, 1045
(Tex. 1891). In Rio Grande, the plaintiff’s stock interest was a certificated interest,
but the defendant refused to issue the certificate or transfer the interest. Id. Rio
Grande concerned the unlawful exercise of control over a certificated corporate
stock—not a forfeiture of intangible LLC voting rights. Based on Hinds’s pleading, his
conversion claim based on forfeiture of his voting rights is legally baseless
¶58 	The “economic loss rule generally precludes recovery in tort for economic
losses resulting from a party’s failure to perform under a contract when harm consists
only of the economic loss of a contractual expectancy.” Chapman Custom Homes, Inc.
v. Dall. Plumbing Co., 445 S.W.3d 716, 718 (Tex. 2014) (per curiam). Given its

26
conclusion as to the unavailability of conversion liability here, the court does not
reach whether the claim would be foreclosed by the economic-loss doctrine. The
conversion claim is dismissed.
VI. 	Hinds’s claim for tortious interference with business relations against
Wegner is dismissed.
¶59 	To support a cause of action for tortious interference with prospective business
relationship, a pleading must establish “(1) there was a reasonable probability that the
plaintiff would have entered into a business relationship with a third party; (2) the
defendant either acted with a conscious desire to prevent the relationship from
occurring or knew the interference was certain or substantially certain to occur as a
result of the conduct; (3) the defendant’s conduct was independently tortious or
unlawful; (4) the interference proximately caused the plaintiff injury; and (5) the
plaintiff suffered actual damage or loss as a result.” Coinmach Corp. v. Aspenwood
Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013).
¶60 	Under well-settled law, in the context of a claim for tortious interference with
existing contract, the plaintiff must prove “tortious interference against any third
person (a stranger to the contract) who wrongly induces another contracting party to
breach the contract.” Holloway v. Skinner, 898 S.W.2d 793, 795 (Tex. 1995). “A
party to a contract cannot tortiously interfere with its own contract.” Friendswood
Dev. Co. v. McDade & Co., 926 S.W.2d 280, 283 (Tex. 1996). Courts have long applied
this doctrine to similarly bar tortious-interference claims against the agents of the

27
entity holding the prospective business relationship with the plaintiff. See Tarleton
State Univ. v. Rosiere, 867 S.W.2d 948, 952–53 (Tex. App.—Eastland 1993, writ
dism’d); Am. Med. Int’l, Inc. v. Giurintano, 821 S.W.2d 331, 335-38 (Tex. App.—
Houston [14th Dist.] 1991, no writ); Baker v. Welch, 735 S.W.2d 548, 549 (Tex.
App.—Houston [1st Dist.] 1987, writ dism’d).
¶61 	Hinds pleads he had a “reasonable probability of continuing” his relationship
with Sandman, but that Wegner maliciously interfered with it by orchestrating
Hinds’s expulsion. Pet. ¶¶ 99–100. As is clear from Hinds’s petition, though, both
Wegner and Hinds were in an existing contractual and business relationship with
Sandman. Assuming without deciding that a tortious-interference claim for existing
business relationships exists in Texas,3 a tortious-interference claim is actionable
against a third party to the relationship. See Coinmach Corp., 417 S.W.3d at 923. Just
as a party to a contract cannot tortiously interfere with its own contract, Friendswood,
926 S.W.2d at 283, a party to a business relationship cannot interfere with his own
relationship. E.g. Frontier NanoSystems, LLC v. Cleveland Terrazas PLLC, 2023 WL
3737118, at *9 (Tex. App.—El Paso May 31, 2023, pet. denied) (emphasis omitted)
(concluding plaintiff failed to plead prima facie claim for tortious interference with
prospective business relationship where pleading did not “identify with specificity
3 See Boeing Co. v. Sw. Airlines Pilots Ass’n, 716 S.W.3d 140, 151 (Tex. 2025) (“Texas law recognizes
two types of tortious-interference claims: one based on interference with an existing contract and one
based on interference with a prospective business relationship.”) (internal quotations omitted).

28
any third party with whom he would have entered into a business relationship”)
(emphasis omitted).
¶62 	Because Hinds pleads Wegner was a party, not a stranger, to Hinds’s business
relationship with Sandman, Hinds has no viable tortious-interference claim against
Wegner for the alleged interference. The claim must be dismissed.
VII. 	The court declines to award attorneys’ fees to any party under Rule 91a.
Rule 91a permits, but does not mandate, an award of attorney’s fees and costs
to the prevailing party. T EX. R. C IV. P. 91.7; Sanchez v. Striever, 614 S.W.3d 233, 248
n.10 (Tex. App.—Houston [14th Dist.] 2020, no pet.) (“any award of fees and casts is
discretionary, not mandatory”). In their briefing and at the hearing, all parties
appeared through counsel and presented good-faith arguments in support of their
requests for relief at this stage of the suit. The court finds no basis for fee-shifting
under Rule 91a in this case and declines to award fees or cost to any party.
C ONCLUSION AND ORDER
For the reasons stated above, the court GRANTS IN PART Sandman’s motion
to dismiss and GRANTS IN PART Wegner’s motion to dismiss.
It is therefore ORDERED that:
a. 	Hinds’s claim for breach of contract against Sandman is dismissed with
prejudice as to the breaches in Count I Paragraph 53(a), 53(b), 53(c), and 53(d).
b. Hinds’s claim for breach of contract against Wegner is dismissed with prejudice
as to Count II Paragraph 60(a).

c. 	Hinds 's claim for breach of the implied covenant of good faith and fair dealing
against Wegner (Count III) is dismissed with prejudice.
d. 	Hinds's claim for breach of fiduciary duty against Wegner as to Count IV
Paragraph 71(a), (d), and (e) is dismissed with prejudice. Wegner's motion to
dismiss is denied as to Hinds's remaining claims for breach of fiduciary duty
(Counts IV and V) 	based on Wegner's alleged acts or omissions in the
management of the Company constituting willful misconduct.
e. 	Hinds's claim for fraudulent concealment against Wegner 	(Count VI) 	is
dismissed with prejudice.
f. 	Hinds's claim for constructive fraud against Wegner (Count VII) is dismissed
with prejudice.
g. 	Hinds's claim for conversion against Sandman and Wegner (Count VIII) is
dismissed with prejudice.
h. 	Hinds's claim for tortious interference with prospective business relationships
against Wegner (Count X) is dismissed with prejudice.
In all other respects, Defendants' motions to dismiss are DENIED.
SO ORDERED.
11!::t~Judge of the Texas Business
Court, Fourth Division
SIGNED ON: September 14, 2026
29