Joint and Several Liability for Breach of Fiduciary Duty

When may a defendant be held jointly and severally liable for the tortious conduct of another? Civil Conspiracy, Aiding and Abetting, Knowing Participation

The classic statement was given by Professors Prosser and Keeton as follows:

All those who, in pursuance of a common plan or design to commit a tortious act, actively take part in it, or further it by cooperation or request, or who lend aid or encouragement to the wrongdoer, or ratify and adopt the wrongdoer's acts done for their benefit, are equally liable.

W. Page Keeton, et al., Prosser and Keeton on the Law of Torts § 46, at 323 (5th ed. 1984) (quoted in Juhl v. Airington, 936 S.W.2d 640, 643 (Tex. 1996)).

Texas law provides three distinct bases for imposing on one person joint and several liability for the tortious conduct of another: contract, causation, and participatory conduct. Each of these bases involves different legal concepts, different public policies, and different elements and applicability. Unfortunately, Texas appellate courts often confuse the different theories, intermingle the elements, and use the incorrect terminology. The recent Houston [1st Dist.] court of appeals decision, Wooters v. Unitech Int'l, Inc., 01-15-00174-CV, 2017 WL 372165 (Tex. App.—Houston [1st Dist.] Jan. 26, 2017), is an apt example of the failure to distinguish these distinct bases of these different theories of liability.

In litigation involving shareholder oppression and other internal disputes in closely-held companies, these theories of joint and several liability are incredibly important. Often majority shareholders and directors who engage in oppressive conduct have no direct legal duty against the minority shareholders they oppress. Often the money and opportunities that corporate officers and directors misappropriate are funneled into other entities that are controlled by or aligned with the disloyal officer and directors, but the recipients of the stolen assets may not themselves owe any duty to the corporation. Often a judgment against the party owing the primary duty and committing the actual tort is worthless. In many such cases, justice can only be done if all the involved parties are held jointly and severally liable for the misconduct. We have previously explored these concepts in the context of joint and several liability for the breach of trust cause of action and the individual liability of majority shareholders and officers and directors for the tort of stock conversion.

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