We are frequently hired by members of LLCs and shareholders of companies to bring claims of breach of contract. When shareholder and LLC member disputes must be tried, the law provides multiple avenues for recovery of not only actual and punitive damages, but attorneys’ fees as well. Given the intensity in which LLC and corporate litigation is fought, the ability to collect attorneys’ fees on behalf of our clients can be extremely important.
LLC member and corporate shareholder disputes typically involve contracts that are at the heart of the case. The starting place for our efforts to recover attorneys’ fees on behalf our clients in LLC member lawsuits is Chapter 38 of the Texas Civil Practice and Remedies, which authorizes the recovery of attorneys’ fees for claims of breach of contract. In LLC cases, agreements such as the company agreement or operating agreement are often critical evidence and claims of breach of these types of contracts are usually available. If the business entity is not an LLC but another form of business, there will commonly be shareholder and subscription agreements that can give rise to a breach of contract cause of action.
Under § 38.001 et. seq. of the Texas Civil Practice and Remedies Code, an award of attorneys’ fees is mandatory for a party who prevails on a cause of action for breach of contract if they have “presented” the claim for breach of contract to the other side and after 30 days the matter has not been resolved. The requirements of Chapter 38 are satisfied by a demand letter that offers to settle the claims that are in dispute.
There are many forms of damages available to shareholders and LLC members when they pursue their claims in litigation or arbitration. It is important to remember that Texas law also authorizes the recovery of attorneys’ fees for breach of shareholder, company, operating, subscription and other types of agreements.