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Texas Legislature mends the LLC loophole in attorneys’ fees statute

June 25, 2021 by Palter Law

Effective September 1, 2021, in actions commenced on or after that date, Texas litigants may seek to recover attorneys’ fees from their Limited Liability Company opponents under Section 38.001 of the Texas Civil Practice and Remedies Code. Previously, because the statute permitted recovery of attorneys’ fees from “an individual” or “corporation,” Section 38.001 had been interpreted to exempt Limited Liability Companies, partnerships and other entities from attorneys’ fees claims under its provisions. By deleting the word “corporation” and replacing it with:

“individual or organization [as defined in Section 1.002 of the Tex. Bus. Org. Code] other than a quasi-governmental entity authorized to perform a function by state law, a religious organization, a charitable organization, or a charitable trust,”

the Texas Legislature appears to have closed the “loophole” that has previously blocked attorneys’ fees claims against certain business organizations. Read the full text of the new Section 38.001 here.

Filed Under: News/Press

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