Second Court of Appeals Rejects Dissolution on Basis of “Toxic Workplace”
On July 18th, 2024, the Second Court of Appeals in Fort Worth decided a much-awaited case that could have had severe consequences for Texas partnerships.1 At stake was whether a judge may dissolve a partnership because of a “toxic” relationship between the partners. This would open the door to the current vogue of “I’m offended” as a basis for terminating a profitable business. Further, it would enable a quarreling partner to leverage other partners via a “give me my way, or I will burn it down” strategy.2
In Ryne et al. vs. Lyons et al.,3 Judge Cosby of the 67th District Court in Tarrant County heard evidence of toxic behavior, including testimony that an employee called one of the partners “Squirrel” and that the partner physicians disliked each other. However, both testified that personal animosity was left behind when they worked together in patient care. Primarily based on a tit-for-tat spat between partners, Judge Cosby ordered the dissolution of the highly profitable partnership.
In a forceful opinion by Chief Judge Sudderth, the Second Court of Appeals reversed Judge Cosby. Regarding the power of a court to order dissolution, the Court cited a long line of Texas cases that shed light on the fundamental issue:
Such caution is consistent with the state’s strong public policies favoring the freedom of contract and promoting trade and economic development. See Tex. Const. 36 art. I, § 16 (prohibiting “any law impairing the obligation of contracts”); Marsh USA Inc. v. Cook, 354 S.W.3d 764, 768–69 (Tex. 2011) (discussing noncompete provisions and recognizing statutorily declared public policy “to maintain and promote economic competition in trade and commerce”); Fairfield Ins. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 663 (Tex. 2008) (noting “Texas’ general policy favoring freedom of contract”); Wood Motor Co. v. Nebel, 238 S.W.2d 181, 185 (Tex. 1951) (“[I]f there is one thing which more than another public policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice.”
The demon is back in the box. Partners are now again free to banter with each other without fear of losing their livelihood. 4
_____________________________
1 Kasey Holdridge; Robert A. Lyons, P.A.; Robert A. Lyons, M.D; and Clearview Surgery Center, Inc. Appellants v. Wallace Ryne, O.D., P.C.; and Wallace “Wally” Ryne, Appellees. No. 02-23-00420-CV. Available for download at www.dontbelunch.com
2 Counsel for Parties: Kelly Hart and Hallman, LLP for Dr. Ryne and his entities. Verislaw, PLLC for Dr. Lyons and his entities Vickers Kempf, PLLC for Dr. Holdridge.
3 Wallace Ryne O.D., P.C., and Wallace “Wally” Ryne vs. Robert A. Lyons, P.A. Robert A. Lyons, Clearview Surgery Center, Inc., and Kacey Holdridge, No.067-333004-22. Available for download at www.dontbelunch.com
4 Chris Vickers authored this article and is responsible for its content.
Chris Vickers -Member – Multi-Million Dollar Advocates Forum - limited to attorneys who have won a multi-million-dollar jury verdict.
Chris Vickers was named a “Top Attorney” in Business law by a vote of peers as published by DFW 360 Magazine in Jul. 2020 and Jul. 2022.
Chris Vickers was named a “Top Attorney” in business/commercial law by a vote of peers as published by Ft. Worth Magazine, Dec. 2015.
Robert Stanulis was named a “Top Attorney” in Business law by a vote of peers as published by DFW 360 Magazine in Jul. 2022.
