When a Co-Owner Leaves With the Client List

If your co-owner has left and taken the customer list, the strongest Texas claim is often not the
non-compete. It is trade secret misappropriation — because the statute reaches a breach of a duty to
maintain secrecy, and that duty can come from a source other than a signed covenant. In a business
divorce there frequently is no enforceable covenant, and the claim can still stand up.

Two things decide whether it does, and neither is the departing owner's job title. The first is
whether they owed a duty at all — which turns on their role in the company and on what your company
agreement says about it. The second is timing: what they did before they left is treated very
differently from what they did after.

Texas's trade secrets statute is the Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code
ch. 134A. Its definitions section is where the analysis starts:

"Improper means" includes "theft, bribery, misrepresentation, breach or inducement of a breach
of a duty to maintain secrecy, to limit use, or to prohibit discovery of a trade secret, or
espionage through electronic or other means."

"Misappropriation" means "(A) acquisition of a trade secret of another by a person who knows or
has reason to know that the trade secret was acquired by improper means; or (B) disclosure or use of
a trade secret of another without express or implied consent by a person who: (i) used improper
means…"

"Proper means" means "discovery by independent development, reverse engineering unless
prohibited, or any other means that is not improper means."

— Tex. Civ. Prac. & Rem. Code § 134A.002

"Breach or inducement of a breach of a duty to maintain secrecy." Improper means is not limited to
theft or hacking. A person who was entitled to the information, and who then used or disclosed it
in breach of a duty, is within the definition.

Texas does not impose a general duty on a departing employee not to compete. Absent a covenant
that satisfies Tex. Bus. & Com. Code § 15.50 — ancillary to an otherwise enforceable agreement, and
reasonable in time, geography and scope — competition after departure is lawful. That is true of
owners as well. The intuition that owner status by itself creates a lasting restraint is wrong, and
building a case on it invites an early dismissal.

What Texas does impose is a duty while the relationship lasts. Johnson v. Brewer & Pritchard,
P.C., 73 S.W.3d 193, 200–02 (Tex. 2002) recognises that a person in an agency relationship owes
loyalty obligations in matters connected with the agency — while explaining that those obligations
must accommodate legitimate competition, so preparing to compete is permitted. Abetter Trucking
Co. v. Arizpe, 113 S.W.3d 503, 510–13 (Tex. App.—Houston [1st Dist.] 2003, no pet.) identifies what
crosses the line: appropriating trade secrets, soliciting the company's customers, recruiting
co-workers away, or carrying off confidential information while still inside.

Read Abetter carefully, because it cuts the other way on its facts. The court affirmed a
finding of no breach — the departing employees' joint preparations did not amount to actionable
solicitation. Discussing a future venture with colleagues is not automatically recruiting. These
are agency and competition decisions that predate the trade secrets statute; neither is a
misappropriation holding.

Which is why the conduct matters more than the label. Soliciting your clients the week before
resigning is a different case from calling them the week after — and a manager of an LLC is the
company's agent by statute (Tex. Bus. Orgs. Code §§ 101.251, 101.254(a)), whether or not anyone used
the word fiduciary.

This is where the analysis gets more particular than most summaries admit. The question is not
simply whether misconduct happened before or after departure. It is how the information was
obtained, and what happened next. § 134A.002 draws two separate routes:

Improper acquisition. Getting the information through improper means in the first place — and
breach of a duty to maintain secrecy can supply those means where the breach is what caused the
acquisition.

Unauthorised use or disclosure. Someone who received the information lawfully, under
circumstances imposing a duty to keep it secret or limit its use, and who later used or disclosed it
without consent.

For a co-owner, the second route is usually the relevant one, and getting this wrong has
consequences. A co-owner did not acquire the client list improperly — they had it because they ran
half the company. In Title Source, Inc. v. HouseCanary, Inc., 612 S.W.3d 517, 530–32 (Tex. App.—San
Antonio 2020, pet. denied), the court held that post-acquisition confidentiality breaches could not
establish improper acquisition where the information had been supplied voluntarily, and reversed
because the jury charge included unsupported acquisition theories. The use-and-disclosure route was
still available; the acquisition route was not.

And the duty does not require a signature. In TASF, LLC v. Turn2 Specialty Cos., LLC, No.
01-21-00089-CV, 2022 WL 709836, at *11 (Tex. App.—Houston [1st Dist.] Mar. 10, 2022, no pet.) (mem.
op.), the court rejected the argument that the absence of confidentiality agreements defeated
protection: trusted roles and receipt of confidential information for the work supported a duty of
secrecy. That case concerned employees rather than co-owners, which is the step this page is
making.

Either route still requires an actual trade secret — information with independent economic value
from being secret, and reasonable measures taken to keep it that way. § 134A.002(2), (6).

One question here is genuinely unsettled, and worth knowing before you rely on it. Since
May 2025 a company agreement may eliminate fiduciary duties outright (§ 101.401). As of
October 2026 we have found no Texas appellate decision on whether eliminating fiduciary duties also
eliminates the duty of secrecy this claim depends on. They may be separate duties from separate sources; a waiver clause
aimed at fiduciary duties may say nothing about an express confidentiality covenant. The answer
turns on where the duty came from and what the waiver actually reaches, which makes the company
agreement the first document to read rather than the last.

Three practical differences, and they change which claim you lead with.

An owner had legitimate access. They were not sneaking. They had the list because they ran half the
business, which removes the acquisition-by-improper-means route and puts the weight on use or
disclosure in breach of a duty.

Whether a duty existed at all depends on the papers, not on the job title. This is the part most
owners get wrong in both directions. Under Tex. Bus. Orgs. Code § 101.401, an LLC's company agreement
may expand, restrict, or eliminate the duties its members and managers owe — the word eliminate
added by Senate Bill 29 in May 2025. So an owner is not automatically a fiduciary because they are an
owner: a manager of a manager-managed LLC is the company's agent and is generally held to loyalty
duties on that footing, while a passive member with a narrowing clause in the agreement may owe very
little. If your structure is a partnership rather than an LLC, the answer is firmer — a partnership
agreement cannot eliminate the duty of loyalty, and that duty expressly includes not competing with
the partnership (§§ 152.002, 152.205).

What that means for this claim. Where a duty does exist, it can survive the absence of a signed
confidentiality covenant, which is the reason this theory is worth pleading. Where the agreement
narrowed or removed it, the covenant's absence is fatal and the case has to run on trade secret or
contract instead. The company agreement is the first document to read, before anyone characterises
the conduct.

An owner usually knows what is actually secret. Which pricing was negotiated, which contacts came
from the company and which they brought with them, which margins are not public. That cuts both ways
in litigation and it is why these cases turn on documents rather than on characterisation.

A customer list is not automatically protected. Three questions decide it, and they are the questions a
defendant's counsel will ask first:

Is it actually not public? A list of businesses in a sector, assembled from a trade directory, is
not a trade secret. A list showing which of them buy what, at what price, on what renewal cycle,
usually is.

Does its secrecy give it value? The value has to come from the fact that competitors do not have
it.

Did you treat it as secret? This is where most cases are won and lost, and it is the only one of
the three you control in advance. Access limits, confidentiality provisions in the company agreement,
exit procedures, and a record of who could see what. A company that emailed the master list to
everyone quarterly has a harder argument than one that did not.

Texas covenants not to compete are governed by
Tex. Bus. & Com. Code § 15.50(a),
which requires the covenant to be ancillary to an otherwise enforceable agreement and its time,
geographic and activity limits to be reasonable. That is a real analysis with a real failure rate, and
where Texas non-compete law now stands covers where it has moved.

The trade secret claim does not depend on any of it. If both are available, they are usually pleaded
together — and if the covenant is weak, the trade secret theory is the one that carries the case. What
an NDA does and does not reach when the person leaving is an owner is
a related question with its own answer.

Hypothetical. Not a client matter and not a real company.

Two owners run a commercial landscaping business, 60/40. The 40% owner resigns her officer role, gives
notice, and forms a new entity three weeks later. Within two months, eleven of the company's ninety
accounts have moved, and all eleven are accounts she personally managed.

What is not a trade secret. The identity of eleven commercial property managers in the metro. Any
competitor can find them.

What might be. The renewal dates. The per-property pricing, which was negotiated individually and
is not published. The internal margin figures showing which accounts could absorb a discount. The
service-history notes that let a competitor arrive knowing exactly what to promise.

What decides it. Whether the company treated those things as confidential — and whether the eleven
accounts moved on relationship or on a proposal that reproduced the pricing structure. The second is
provable from documents. The first is a much harder case.

A co-owner leaving with the customer list is rarely only a trade secrets matter — it usually arrives
alongside a fiduciary claim and, frequently, a buyout negotiation. The wider picture is
what a locked-in Texas owner can actually do, and if this is happening
right now, what to do in the first seventy-two hours
is the more urgent page. Ours is
a Texas partner dispute practice rather than an IP practice, and
that is the right home for this problem.

Disclaimer. This publication is provided by Amini & Conant, LLP for educational and informational purposes only and is not intended and should not be construed as legal advice. Should the reader seek further analysis of the subject matter or answers to specific questions about the subject matter, please contact the author at neema@aminiconant.com. This publication is considered advertising under applicable state laws.

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