Judge Stacy Sharp
The Business Court has largely granted an oil and gas company’s Rule 91a motion to dismiss various claims brought by a member and former co-manager whom the other members expelled for conflicts of interest.
Russell A. Hinds v. Sandman Offshore, LLC, and David Wegner v. Envirocore, Inc. (2026 Tex. Bus. 63; September 14, 2026) arose from a dispute between an oil and gas company and a former co-manager of the company (Hinds). In March 2026, the company’s members removed Hinds as co-manager and expelled him as a member, without notice or opportunity to be heard. Sandman alleged that Hinds’ participated in self-dealing and conflicting business activity, specifically that Hinds recommended that Wyotex Offshore, the assignee of one of the Sandman’s oil and gas leases, hire Hinds’s own drilling-services company, Envirocore (without disclosing his ownership interest). Hinds further acted unilaterally to prioritize Wyotex’s payment to Envirocore over its lease payments to Sandman, delaying those payments. Hinds alleged that Sandman’s members knew all along about his ownership of Envirocore and that no conflict existed. He accused Wegner, also Sandman’s co-manager, of self-dealing and engineering Hinds’s ejection from the company.
All parties moved for dismissal under Rule 91a. Sandman moved to dismiss Hinds’s breach-of-contract and conversion claims, and Wegner moved to dismiss Hinds’s contract and breach-of-fiduciary-duty and other claims.
In an opinion by Judge Sharp, the court granted the motions in part. First, Wegner’s motion sought partial dismissal of Hinds’s two claims for breach of fiduciary duty to the extent the claims were based on Hinds’s expulsion and removal on the basis that Wegner owed Hinds no fiduciary duties. The court agreed. Under Sandman’s company agreement, members didn’t owe each other fiduciary duties. But the agreement did impose a limited fiduciary duty on Wegner (and Hinds) as a manager for acts or omissions resulting from gross negligence, fraud, or willful misconduct. As to Wegner’s alleged self-dealing, Hinds did not plead gross negligence but did plead willful misconduct. Based on Hinds’s pleading, consequently, the only claim that can survive a Rule 91a motion were Hinds’s “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. All of Hinds’s other breach of fiduciary claims were baseless based on the express language of the company agreement.
The court rejected Hinds’s argument that an “informal fiduciary relationship” existed in this case. Hinds pleaded no facts but merely asserted conclusorily that “a special relationship of trust and confidence existed” with Wegner. Their many years of association in business “came nowhere close to an informal fiduciary relationship.” Additionally, the court observed, if the two were such great buddies, why did Sandman’s operating agreement restrict the fiduciary duties they owed each other? The court granted Wegner’s motion with respect to that claim.
Turning to Hinds’s breach of the implied covenant of good faith and fair dealing claim, the court observed that SCOTX has been “clear that absent a special relationship, parties to a contract have no duty to act in good faith.” Having already concluded that Hinds and Wegner had no such relationship, the court dismissed Hinds’s claim. Hinds’s breach of contract claim against Defendants came next. Hinds alleged that Sandman breached the company agreement by kicking him out without proper cause, notice, or other procedural requirements, and that Wegner breached it by orchestrating his expulsion. As to the procedural issues, the court observed that the company 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.’” The agreement further specified that company action didn’t require a meeting, prior notice, or even a vote, if a sufficient majority executed a written consent. In the absence of anything in the contract to the contrary, the court dismissed Hinds’s breach of contract claim against Sandman. His claim against Wegner remained alive, but only because Wegner hadn’t yet moved to dismiss it.
Likewise, Hinds’s breach-of-contract claim based on his removal without cause failed. While the company agreement prohibited expulsion except for cause, it specifically identified a member or manager’s conflict of interest, as determined by the majority interest of the members, as cause for removal. In this case, the majority interest determined that Hinds engaged and had interests in other oil and gas businesses that conflicted with Sandman’s interest. The majority thus acted within their contractual rights by getting rid of Hinds. Though the court didn’t accept the majority’s determination of the conflict as true, it didn’t make any difference to its actions under the contract. In addition to that, Hinds’s claim that Wegner orchestrated his removal in breach of the agreement fell flat because the relevant section of the agreement permitted removal of a manager “with or without cause.”
One of Hinds’s contract claims survived. Hinds alleged that he requested a special meeting of the members in accordance with the company agreement, which the members refused to honor. The court agreed with Hinds on the basis that he met the minimum ownership required to request the meeting and that he otherwise complied with the provision. Defendants, however, had not yet moved for dismissal based on a failure to adequately plead injury or causation, so the court didn’t dismiss the claim yet. Once Defendants do that, we expect that claim will go the way of the others, since there doesn’t appear to be any evidence that a special meeting would have changed anybody’s mind.
Hinds’s claims against Wegner for constructive fraud and fraud by nondisclosure failed as well. Those causes of action depend on the existence of a fiduciary duty Hinds claimed Wegner owed to him under the agreement. But the agreement “expressly permit[ted] action without notice, so Wegner was under no fiduciary or other special duty to provide the notice Hinds compalins Wegner did not give him.” Sandman and Wegner moved to dismiss Hinds’s conversion claim, which alleged that Defendants converted his LLC interest. But Hinds failed to plead facts showing that Defendants stripped him of his interest, only of his voting rights. Hinds tried to argue that his forfeited rights had been converted, but since the Sandman agreement “contain[ed] no clause pertaining to certification of members interests—much less any language requiring certification of the intangible voting rights that were allegedly stripped from Hinds,” those rights fell outside the merger exception for intangible property.
Finally, the court dismissed Hinds’s tortious interference with prospective business relationship claim because such a claim is only actionable against a third party to the contractual relationship. Here Hinds and Wegner were parties to the same contract. As the court put it, “a party to a business relationship cannot interfere with his own relationship” (citations omitted). The court declined to award any attorney’s fees because “all parties appeared through counsel and presented good-faith arguments in support of their requests for relief at this stage of the suit.”
