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Eric Fryar

Eric Fryar

Houston business lawyer Eric Fryar is a recognized authority on shareholder oppression law and devotes his practice almost entirely to fighting for the rights of business owners in closely-held companies.

Author's Posts

The Business Judgment Rule in Civil Procedure

Eric Fryar

How is the business judgment rule applied procedurally? What impact does it have on pleading, motions practice, and jury charge?

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Topics: Fiduciary Duties

Sale-to-a-Looter Breach of Fiduciary Duty Claim

Eric Fryar

What if the majority shareholder sells out to a crook who subsequently loots the company? The minority shareholders may have a breach of fiduciary duty claim. An example of a claim that is brought under the duty of care is liability for selling control of a corporation to a looter.

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Topics: Fiduciary Duties

When Does the Business Judgment Rule Not Apply?

Eric Fryar

When does the business judgment rule not apply to a claim of mismanagement?

Obviously, the business judgment rule does not apply to a claim not brought under the duty of care. If the management steals money, then the claim would be made as a violation of the duty of loyalty. If the board commits an ultra vires act, then the claim would be made as a violation of the duty of obedience. There would be no need for the plaintiff to take the extra step of proving negligence or a breach of due care. The business judgment rule would never be at issue.

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Topics: Fiduciary Duties

Texas Business Judgment Rule Defense

Eric Fryar

“The business judgment rule in Texas generally protects corporate officers and directors, who owe fiduciary duties to the corporation, from liability for acts that are within the honest exercise of their business judgment and discretion.” 

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Topics: Fiduciary Duties

How To Draft an Enforceable Shareholder Settlement

Eric Fryar

Agreements that settle shareholder disputes or that provide for shareholder buy-outs are extremely vulnerable to later attack on grounds of fraud and breach of fiduciary duty. Drafting such settlements to achieve true finality is extremely challenging. Here is a drafting checklist and sample language to use in settlements involving shareholder buy-outs.

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Topics: Fraud

Corporate Fiduciary Duties in Texas

Eric Fryar

“Corporation officers and directors are fiduciaries.” “Directors, or those acting as directors, owe a fiduciary duty to the corporation in their directorial actions.”

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Topics: Fiduciary Duties

Can Fiduciary Duties Be Waived in a Settlement

Eric Fryar

Waiving Fiduciary Duties

Settlements of shareholder disputes may later be attacked and set aside if the settlement violated fiduciary duties owed by the defendant to the plaintiff. A normal disclaimer of reliance won't provide a defense because reliance is not an element of breach of fiduciary duties. You need an explicit waiver of fiduciary duties to achieve a truly final settlement. However, does the law permit such a waiver?

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Topics: Fiduciary Duties

Disclaimers of Reliance in Shareholder Settlements

Eric Fryar

Settlement agreements that disclaim reliance may provide a defense against a subsequent fraud claim.

But not always. When are disclaimers of reliance effective and enforceable? How do they effect claims of fraudulent non-disclosure. How do they affect claims of breach of fiduciary duties?

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Topics: Fraud

Attacking Shareholder Settlements

Eric Fryar

How can you buy-out a fellow shareholder (or have the company do so) and make sure that the deal is final? The law makes it very difficult. A situation that appears repeatedly is that an unhappy shareholder will sell out to the company or to his partner and sign a settlement agreement and release. Later, the shareholder learns that the former partner sold the whole company for a profit. The shareholder sues seeking to get out of the settlement on the grounds of fraud or breach of fiduciary duties. If the former partner was aware of the opportunity to sell at a profit and kept that to himself, he may have a problem.

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LLC Oppression Remedies Under §11.314

Eric Fryar

Texas Business Organizations Code section 11.314 provides that the limited liability company becomes subject to district court jurisdiction to order winding up and termination if a petitioning member satisfies one or more of three tests, which we will refer to as the “economic purpose test,” the “owner conduct test,” and the “reasonable practicability test.” 

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Topics: Shareholder Oppression, Limited Liability Company
Fryar Law Firm Knows Shareholder Oppression-Knowledge Makes the Difference

About this blog

The Shareholder Oppression Blog provides timely updates and commentary on the development of Texas Shareholder Oppression law in the wake of the Texas Supreme Court's Ritchie v. Rupe decision, together with legal analysis of the rights, duties, and legal remedies in disputes among business owners in all types of closely-held businesses.

Visit Shareholder Oppression complete legal resource

Fryar Law Firm | Shareholder Oppression Attorneys

About the Author

Eric Fryar

Eric Fryar is a Houston, Texas business litigation attorney, whose practice focuses almost exclusively on shareholder oppression and similar disputes among business owners. Recognized as an authority in this area of the law, Eric Fryar has written, taught, and practiced the law the governing shareholder and business owner rights for more than a quarter century. He achieved the largest fraud verdict in the state of Texas for a group of minority shareholders in 2015--one of the largest verdicts in the country that year, and has recently published a law review article in the Texas Journal of Business Law on the future of shareholder oppression litigation in Texas.

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