In Re Umth General Services, L.P., Umt Holdings, L.P., Umth Land Development, L.P., Hollis M. Greenlaw, Todd F. Etter, Ben L. Wissink, and Cara D. Obert

Supreme Court of Texas
══════════
No. 24-0024
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In re UMTH General Services, L.P., UMT Holdings, L.P., UMTH
Land Development, L.P., Hollis M. Greenlaw, Todd F. Etter,
Ben L. Wissink, and Cara D. Obert,
Relators

═══════════════════════════════════════
On Petition for Writ of Mandamus
═══════════════════════════════════════

Argued September 9, 2025

JUSTICE BLAND delivered the opinion of the Court.

Justice Hawkins did not participate in the decision.

In this original proceeding, we decide whether individual
shareholders may sue a third party based on the third party’s agreement
with the shareholders’ corporate entity. The shareholders rely on an
advisory agreement they contend creates a separate duty to individual
shareholders rather than the entity as a collective whole.
We hold that the agreement does not create a duty to individual
shareholders distinct from obligations to the entity. The shareholders
thus must pursue claims for an injury to the entity via a derivative
action. Absent both a personal cause of action and an individual injury,
shareholders lack the capacity to bring claims the corporate entity owns.
Accordingly, we hold that the trial court erred in denying dismissal of
the shareholders’ claims. We conditionally grant mandamus relief and
direct the trial court to dismiss the case with prejudice.
I
United Development Fund IV is a Maryland real estate
investment trust with more than 12,000 shareholders. The declaration
of trust forming the fund governs its shareholders’ rights. The
declaration provides that the Trust’s shareholders are entitled “only to
those rights provided in the Declaration.” The shareholders “have no
interest in the assets of the Trust” and “have no right to compel any
partition, division, dividend or Distribution of the Trust or of its assets.”
The Trust’s bylaws designate Maryland as the exclusive forum for
derivative actions brought on the Trust’s behalf.1
The declaration authorizes the Trust’s board of trustees to
delegate management authority to an advisor subject to board
“supervision and control.” In 2014, the board appointed UMTH General
Services, L.P., as an advisor to manage the Trust’s investments and
day-to-day operations. Trust Chief Executive Officer Hollis M. Greenlaw
executed the agreement on behalf of the Trust, and UMTH President
David Hanson executed it on behalf of UMTH. The agreement
states: “The Advisor shall be deemed to be in a fiduciary relationship to
the Trust and its Shareholders.”
Individual shareholders are not parties to the advisory
agreement. The agreement is “by and between” the Trust and UMTH.

1 The Trust is not a party to the underlying suit, nor to this original

proceeding.

2
The section establishing UMTH’s duties refers to duties to the Trust.
Apart from requiring the advisor to maintain shareholder ownership
records and to supervise the filing of returns and reports to shareholders
on the Trust’s behalf, the agreement does not refer to the shareholders
except for passing references in the fees, expenses, and indemnification
provisions.
In June 2021, Shareholder Nexpoint Diversified Real Estate
Trust sued the Trust derivatively in Maryland for mismanagement after
the trustees became the subjects of a criminal investigation. In
December 2021, Nexpoint transferred its Trust shares to its wholly
owned subsidiary, Nexpoint Real Estate Opportunities.2 The Maryland
court dismissed Nexpoint’s derivative claims for lack of standing and
subject matter jurisdiction.
While the Maryland suit was pending, Nexpoint and its
subsidiary sued UMTH and its affiliates (collectively, the Advisors) in
Dallas County.3 Nexpoint and its subsidiary (collectively, the
Shareholders4) allege that the Advisors committed corporate waste and

The Trust’s securities were publicly traded for a time, but the
2

NASDAQ delisted the Trust in May 2017. The Securities and Exchange
Commission subsequently deregistered the Trust’s securities in August 2020.
3 In addition to UMTH General Services, L.P., Relators include UMT

Holdings, L.P., UMTH Land Development, L.P., Hollis M. Greenlaw, Todd F.
Etter, Ben L. Wissink, and Cara D. Obert. The Shareholders allege that these
parties are current and former managers, officers, or trustees of the Trust or
UMTH.
4 Although we refer to Nexpoint and its subsidiary collectively as the

Shareholders, the subsidiary is the record holder of the Trust’s shares in this
suit.

3
mismanagement, including improper advancement of legal fees on
behalf of the Trust’s management and refusal to disclose requested
information. Relying on the advisory agreement, the Shareholders claim
that the Advisors owe each Trust shareholder an individual duty, thus
permitting the Shareholders—who are not signatories to the
agreement—to sue the Advisors directly. The advisory agreement
provides that Texas law governs suits arising out of it.
In response to the suit, the Advisors filed a plea to the
jurisdiction, a verified plea in abatement, and special exceptions. The
Advisors argued that the Shareholders’ claims are derivative and owned
by the Trust; thus, the Shareholders have neither standing nor the
capacity to sue the Advisors directly. After the trial court denied the
Advisors’ motions, they unsuccessfully sought mandamus relief in the
court of appeals.5
The Advisors now seek relief from this Court. They request that
we order the trial court to dismiss the underlying suit because: (1) the
Shareholders cannot meet the ownership requirements necessary to sue
derivatively in Texas and thus lack standing to sue; and (2) the
Shareholders lack the capacity to directly sue the Advisors.
II
We first address the Advisors’ jurisdictional attack on the
Shareholders’ standing to sue.6 In assessing a plea to the jurisdiction,

5 716 S.W.3d 701, 701 (Tex. App.—Dallas 2023).

6 See Tex. Right to Life v. Van Stean, 702 S.W.3d 348, 352–53 (Tex. 2024)

(discussing appellate courts’ duty to ensure they have jurisdiction before
reaching the merits).

4
we construe a plaintiff’s pleadings liberally, taking the facts alleged as
true.7 The Advisors argue that the Shareholders fail to meet the
requirements for derivative standing. The Shareholders respond that
the ownership requirements necessary to confer derivative standing do
not apply to their claims against the Advisors because the Shareholders
have alleged their claims as individuals and not derivatively on behalf
of the Trust. We agree.
In Pike v. Texas EMC Management, LLC,8 we held “that a partner
or other stakeholder in a business organization has constitutional
standing to sue for an alleged loss in the value of its interest in the
organization.”9 Thus, in Texas, even though a shareholder ordinarily
cannot recover in an individual capacity for diminution in stock value
resulting from an injury to the corporation,10 such an allegation satisfies
the personal injury requirement for constitutional standing.11 The Court
in Pike also held that “statutory provisions that . . . protect the
organization’s status as a separate and independent entity,” including

7 Heckman v. Williamson County, 369 S.W.3d 137, 150 (Tex. 2012).

8 610 S.W.3d 763 (Tex. 2020).

9 Id. at 778.

10 See Massachusetts v. Davis, 168 S.W.2d 216, 221 (Tex. 1942)
(explaining that suits for diminution of stock value usually belong to a
corporation and can be brought only by the corporation or derivatively on its
behalf). Texas law treats corporations and real estate investment trusts
equally in assessing derivative claims. See Tex. Bus. Orgs. Code § 200.002(a).
We thus treat “corporation” as interchangeable with “real estate investment
trust” in this case.
11 Pike, 610 S.W.3d at 775, 778 (distinguishing constitutional standing

from capacity).

5
provisions governing derivative actions, do not deprive a shareholder of
standing to sue for corporate wrongs.12 A shareholder alleging an injury
sufficient to confer constitutional standing, however, may nonetheless
lack the capacity to pursue and recover for such a claim.13 Because the
Shareholders allege financial losses due to the Advisors’
mismanagement and assert direct claims in their individual capacities,
the Shareholders have constitutional standing under Pike.14
Observing that Nexpoint transferred its shares to its subsidiary
in December 2021, the Advisors argue that the Shareholders do not meet
the contemporaneous and continuous ownership requirements for Texas
derivative standing because the subsidiary is the only record owner of
shares and it did not obtain them until long after allegations of
mismanagement and fraud surfaced. The Shareholders respond that the
Advisors’ mismanagement included improper diversion of Trust funds
both before and after the transfer.
Under the Business Organizations Code, a shareholder must
prove it “was a shareholder of the corporation at the time of the act or
omission complained of” to have standing to bring a derivative
proceeding.15 Because the Texas derivative statute requires share
ownership to “institute or maintain a derivative proceeding,”16 a

12 See id. at 778.

13 Id. at 775, 778.

14 Id. at 778.

15 Tex. Bus. Orgs. Code § 21.552(a)(1)(A).

16 Id. § 21.552(a) (emphasis added).

6
shareholder must own an interest in the corporate entity for the
duration of the suit.17
The Shareholders in this case, however, disavow any intent to sue
derivatively, conceding that the Trust’s governing documents foreclose
a derivative action in Texas. Maryland is the exclusive forum for
derivative actions against the Trust’s management, and Maryland law
governs.18 Whether the Shareholders can bring a derivative action is a
question for Maryland courts to consider under Maryland law.19 For the
purpose of confirming the trial court’s subject matter jurisdiction to
resolve this dispute alleging individual shareholder claims, it is enough

17 The courts of appeals have consistently required shareholders to have

both contemporaneous and continuous ownership of shares to maintain a
derivative action. See In re LoneStar Logo & Signs, LLC, 552 S.W.3d 342, 351
(Tex. App.—Austin 2018, orig. proceeding) (citing Zauber v. Murray Sav. Ass’n,
591 S.W.2d 932, 937 (Tex. App.—Dallas 1979), writ ref’d n.r.e., 601 S.W.2d 940
(Tex. 1980), and Somers ex rel. EGL, Inc. v. Crane, 295 S.W.3d 5, 14–15 (Tex.
App.—Houston [1st Dist.] 2009, pet. denied)). A majority of other jurisdictions
also require shareholders to maintain ownership throughout a derivative
action. See, e.g., Grosset v. Wenaas, 175 P.3d 1184, 1194 n.9 (Cal. 2008)
(collecting cases from Florida, Georgia, Indiana, Oklahoma, Louisiana, New
York, Illinois, Delaware, Oregon, and Arizona); see also Schilling v. Belcher,
582 F.2d 995, 999 (5th Cir. 1978) (stating that courts generally interpret
Federal Rule of Civil Procedure 23.1 to imply a continuous ownership
requirement).
18 See Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 108–09 (1991)

(holding that the law of a corporation’s state of incorporation governs
shareholder derivative litigation).
19 We do not opine as to the Shareholders’ derivative rights in Maryland;

their rights in Maryland are not before this Court.

7
to conclude that both plaintiffs allege a financial injury sufficient to
confer constitutional standing to sue.20
III
We next turn to the independent question of whether the
Shareholders possess the capacity to sue the Advisors.21 The Advisors
filed a verified plea in abatement, which is a proper way to challenge
capacity.22
To answer the capacity question, we examine whether the
Shareholders are entitled to recover damages individually based on
breaches of the advisory agreement and the attendant duties it creates.
The Advisors argue that the Shareholders lack the capacity to sue
individually because the Shareholders cannot establish a personal cause
of action or personal injury based on the advisory agreement. In the
Advisors’ view, the agreement benefited the Trust and its shareholders
collectively, but the agreement did not confer a benefit on any individual
shareholder. The Shareholders respond that the agreement creates a
duty to each individual shareholder, not just to the Trust and the
shareholders collectively. Alternatively, the Shareholders argue that
they are third party beneficiaries of the advisory agreement.

20 Pike, 610 S.W.3d at 778.

21 See id. at 775 (distinguishing capacity from constitutional standing).

22 See Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 853 n.7 (Tex.

2005); Tex. R. Civ. P. 93(2) (requiring a verified plea to assert “[t]hat the
plaintiff is not entitled to recover in the capacity in which he sues”). We review
capacity questions de novo. See Austin Nursing Ctr., 171 S.W.3d at 848
(explaining that capacity is a procedural issue concerning a party’s legal
authority to sue or be sued).

8
A
We first consider the Shareholders’ assertion that the advisory
agreement confers a direct cause of action to each individual
shareholder. A shareholder generally “cannot recover damages
personally for a wrong done solely to the corporation, even though he
may be injured by that wrong.”23 Accordingly, suits for injuries to a
corporation—including claims for diminution in stock value—ordinarily
must be brought by the corporation itself or derivatively on its behalf.24
This default rule embodies “the principle that where such an injury
occurs[,] each shareholder suffers relatively in proportion to the number
of shares he owns, and each will be made whole if the corporation obtains
restitution or compensation from the wrongdoer.”25
A shareholder may individually sue for a violation of a duty owed
directly to that shareholder.26 Such a duty must exist separate and apart
from a duty to the corporate entity.27 “[T]o recover individually, a
stockholder must prove a personal cause of action and personal injury.”28
The shareholder thus must suffer disparately from “injury to the

23 Pike, 610 S.W.3d at 775 (quoting Wingate v. Hajdik, 795 S.W.2d 717,

719 (Tex. 1990)).
24 Wingate, 795 S.W.2d at 719 (citing Davis, 168 S.W.2d at 221).

25 Id. (quoting Davis, 168 S.W.2d at 221).

26 Id.

27 Id.

28 Pike, 610 S.W.3d at 775 (quoting Wingate, 795 S.W.2d at 719).

9
property of a corporation, or the impairment or destruction of its
business, [which] is vested in the corporation.”29
The provision at issue states that the advisor “shall be deemed to
be in a fiduciary relationship to the Trust and its Shareholders.”
“Shareholders” is defined as “record holders of the Shares as maintained
in the books and records of the Trust or its transfer agent.”
The Shareholders rely on the phrase “the Trust and its
Shareholders” to claim that the agreement created contractual fiduciary
duties to each individual shareholder. The Advisors respond that “the
Trust and its Shareholders,” in context, reflects a bedrock principle of
corporate law: fiduciary duties flow to a corporation and its shareholders
collectively, not to shareholders individually. The Advisors further
argue that implying individual fiduciary duties to thousands of
shareholders is incompatible with duties owed to the Trust and its
shareholders collectively.
We conclude that the phrase “and its Shareholders” refers to the
Trust’s shareholders collectively. The Trust executed the agreement,
acting on behalf of its shareholders. No shareholder separately signed
the agreement, much less in an individual capacity. Absent an express
undertaking to an individual shareholder, fiduciary duties generally
flow to the corporation and its shareholders collectively, not to any
particular shareholder.30

29 Davis, 168 S.W.2d at 221.

30 See In re Est. of Poe, 648 S.W.3d 277, 288–89 (Tex. 2022) (citing
Ritchie v. Rupe, 443 S.W.3d 856, 888–89 (Tex. 2014)).

10
The principle of shareholder collectivity overcomes the
“incompatible” nature of simultaneous duties owed to a corporation and
duties owed to a particular shareholder, whose interests may not align
with the corporate entity as a whole.31 In recognition of this tension, we
have held that “a director cannot simultaneously owe these
two potentially conflicting duties.”32 Although a party might agree to
undertake a duty to both a corporate entity and one or more of its
shareholders—as may be the case for mutual shareholder agreements
in closely held corporations—such an agreement should not be inferred
without an express recognition of the shareholder as a party to the
contract in its individual capacity. Absent indicia of mutual assent to
undertake a duty to an individual, we read the relationship created by
the Trust and the third party as intended to benefit the Trust’s
shareholders collectively through the Trust itself.
The Shareholders’ contrary interpretation of the advisory
agreement would confer conflicting duties on an advisor responsible for
managing the Trust’s investments and daily operations33—an
unworkable result we decline to imply when individual shareholders are
not signatories to the agreement. The intermediate court decisions that
the Shareholders cite, Allen v. Devon Energy Holdings, L.L.C.,34 and

31 Id. at 288.

32 Id.

33 See id. at 287–88.

34 367 S.W.3d 355 (Tex. App.—Houston [1st Dist.] 2012, pet. granted,

judgm’t vacated w.r.m.).

11
Strebel v. Wimberly,35 are inapposite. Unlike the advisory agreement in
this case, the agreements in those cases conferred mutual rights and
obligations between members of closely held limited liability companies
who were parties to the agreements at issue and directly benefitted from
them.36 In this case, in contrast, the Shareholders are not parties to the
advisory agreement. Further, the declaration of trust expressly provides
that the Shareholders “have no interest in the assets of the Trust” and
“shall have no right to compel any partition, division, dividend or
Distribution of the Trust or of its assets,” disavowing any Shareholder
intent to obtain a direct benefit through the Trust’s contractual
undertakings.
B
The Shareholders alternatively argue that the advisory
agreement confers third-party beneficiary status to the Trust’s
shareholders, affording each shareholder a direct cause of action. This
claim proves too much. A shareholder is an intended beneficiary of any
contract a corporate entity undertakes, but only in the collective sense.
Absent terms that unequivocally express the parties’ intent to confer

35 371 S.W.3d 267 (Tex. App.—Houston [1st Dist.] 2012, pet. denied).

36 See id. at 277–78 (interpreting “the Managers shall have fiduciary

duties to the Company and the Members” in an LLC agreement as creating
duties members owe other members individually); Allen, 367 S.W.3d at 396–
97 (same with regards to “duty of loyalty to [the company] or its members”);
see also Tex. Bus. Orgs. Code § 101.052(g) (stating that “[a] member or
manager of a limited liability company . . . is bound by the company
agreement, regardless of whether” they sign it).

12
third-party beneficiary status on thousands of individual shareholders,
we decline to imply such status.37
Texas law outside the shareholder context yields the same
conclusion. Generally, “the benefits and burdens of a contract belong
solely to the contracting parties.”38 Thus, Texas law features a
“presumption against, not in favor of, third-party beneficiary
agreements.”39 Overcoming the presumption requires more than
showing that contracting parties knew the third party would benefit or
that the third party intended or expected to benefit.40 The parties’ intent
to confer a direct benefit on a third party “must be clearly and fully
spelled out” in the contract.41 When “the contract’s language leaves any
doubt about the parties’ intent, those ‘doubts must be resolved against
conferring third-party beneficiary status.’”42 No one disputes that the
Trust’s shareholders stood to indirectly benefit from the investment and

37 See Basic Cap. Mgmt., Inc. v. Dynex Com., Inc., 348 S.W.3d 894, 900

(Tex. 2011) (“A court will not create a third party beneficiary contract by
implication.”).
38 First Bank v. Brumitt, 519 S.W.3d 95, 102 (Tex. 2017) (citing House

v. Hou. Waterworks Co., 31 S.W. 179, 179 (Tex. 1895)).
39 MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 652

(Tex. 1999) (citations omitted).
40 First Bank, 519 S.W.3d at 102.

41 MCI Telecomms., 995 S.W.2d at 651.

42 First Bank, 519 S.W.3d at 103 (quoting Tawes v. Barnes, 340 S.W.3d

419, 425 (Tex. 2011)).

13
management services provided pursuant to the agreement, but an
indirect benefit “is not enough.”43
Because the Shareholders lack the capacity to sue for the claims
they bring through the advisory agreement, we hold the trial court erred
in denying the Advisors’ plea in abatement.44
III
Mandamus relief is appropriate when (1) a trial court errs in a
matter of law and (2) the aggrieved party lacks an adequate remedy by
appeal.45 Courts do not issue relief merely to avoid some “expense or
delay” associated with appellate relief.46 Relief may be warranted,
however, when an appeal would amount to an “irreversible waste of
judicial and public resources.”47 In this case, the question is not merely
one of capacity, but also one of forum. As we have held, the Shareholders’
claims sound derivatively, not individually. Under the Trust agreement,
derivative claims must be brought in Maryland according to Maryland
law.

43 Id. at 102.

44 Because the Shareholders lack a personal cause of action, we need

not decide whether the Shareholders have a personal injury. See Wingate, 795
S.W.2d at 719 (“[T]o recover individually, a stockholder must prove a personal
cause of action and personal injury.”).
45 Trial courts have “no ‘discretion’ in determining what the law is or

applying the law to the facts.” In re Prudential Ins. Co. of Am., 148 S.W.3d 124,
135–36 (Tex. 2004) (quoting Walker v. Packer, 827 S.W.2d 833, 840 (Tex.
1992)).
46 Id. at 136 (quoting Walker, 827 S.W.2d at 842).

47Id. at 137 (quoting In re Masonite Corp., 997 S.W.2d 194, 198
(Tex. 1999)).

14
We have granted relief to enforce forum selection clauses when
proceeding in the incorrect forum would result in “a meaningless waste
of judicial resources.”48 Proceeding in the wrong forum “inject[s]
inefficiency by enabling forum-shopping, wasting judicial resources,
delaying adjudication on the merits, and skewing settlement
dynamics.”49 Forcing the Shareholders’ action to proceed presents the
same hazards. Additionally, third parties depend on the corporate
framework to ensure they are doing business with an entity “run by its
board of directors” in procedurally predictable ways without risk of
exposure to suits brought by shareholders who attempt to bypass
statutory safeguards by bringing derivative claims directly.50
Additional proceedings in Texas would result in an “‘unnecessary
waste of economic and judicial resources’ as the case is tried in the wrong
court.”51 We hold that the Advisors lack an adequate remedy by appeal
and are entitled to relief. The defect in capacity is incurable, insofar as
the litigation in Texas improperly seeks derivative relief through

48 In re AIU Ins. Co., 148 S.W.3d 109, 118 (Tex. 2004); see also In re

Laibe Corp., 307 S.W.3d 314, 316 (Tex. 2010) (collecting cases).
49 Pinto Tech. Ventures, L.P. v. Sheldon, 526 S.W.3d 428, 436–37 (Tex.

2017) (quoting In re Lisa Laser USA, Inc., 310 S.W.3d 880, 883 (Tex. 2010)).
50 In re Schmitz, 285 S.W.3d 451, 459 (Tex. 2009) (citing Kamen, 500

U.S. at 101 (explaining that the demand requirement for derivative actions
“was adopted to preserve the principle that a corporation should be run by its
board of directors, not a disgruntled shareholder or the courts”)).
51 In re J.B. Hunt Transp., Inc., 492 S.W.3d 287, 298–99 (Tex. 2016)

(quoting Coastal Oil & Gas Corp. v. Flores, 908 S.W.2d 517, 518 (Tex. App.—
San Antonio 1995, orig. proceeding)).

15
individual causes of action.52 The trial court therefore erred in failing to
dismiss the Shareholders’ suit with prejudice.
* * *
The advisory agreement benefits the Trust’s shareholders
collectively. The Trust is charged with enforcing those rights. Individual
shareholders may demand that the Trust undertake such enforcement
via a derivative action on behalf of the Trust. The advisory agreement,
however, does not confer individual rights upon Trust shareholders to
sue the Advisors directly.
Because the Shareholders lack the capacity to bring the claims
they assert, we conditionally grant mandamus relief. We direct the trial
court to vacate its order denying the Advisors’ plea in abatement, grant
the plea, and dismiss the case with prejudice. We are confident that the
trial court will comply with our order; the writ will issue only if it does
not.

Jane N. Bland
Justice

OPINION DELIVERED: November 14, 2025

52 See Curtis v. Gibbs, 511 S.W.2d 263, 267–68 (Tex. 1974) (directing a

judge to sustain a plea in abatement and dismiss where the court erred in
denying a plea in abatement); see also Mower v. Boyer, 811 S.W.2d 560, 563 n.2
(Tex. 1991) (stating that a suit filed subsequent to a suit in another court with
dominant jurisdiction must be dismissed if a party to the subsequent suit
challenges it through a plea in abatement).

16