In Pitts v. Rivas, Rivas brought claims against his accountants for negligence/malpractice, fraud, breach of fiduciary duty, and breach of contract, based on alleged errors in financial statements that harmed his business. 709 S.W.3d 517 (Tex. 2025). The central legal issue involved the “anti-fracturing rule” developed by Texas courts, which prevents plaintiffs from recharacterizing professional negligence or malpractice claims as other causes of action (such as fraud or breach of fiduciary duty) to obtain litigation advantages. The court held that this rule applies to accounting malpractice cases. The Court stated:
Importantly, the anti-fracturing rule does not categorically bar a client from pursuing multiple causes of action against a professional, including claims for fraud or breach of fiduciary duty. Instead, the rule prohibits plaintiffs from attaching these labels, and others like them, to their allegations when the gravamen of the allegations is that the defendant failed to exercise the requisite degree of care or skill in the provision of professional services. If additional facts supporting additional claims are supported by the allegations and evidence, then the gravamen of the claim may extend beyond a claim for professional negligence, and the plaintiff may rightly maintain such a claim.
Id. The court determined that Rivas’s fraud claim was barred by the anti-fracturing rule because the gravamen of the allegations was negligent conduct (errors and failure to disclose), not intentional fraud.
The Court also held that, as a matter of law, no fiduciary duty existed between Rivas and his accountants under the undisputed facts and the terms of their engagement. The Court held that the accountant-client relationship, even when accompanied by personal trust or friendship, does not create a fiduciary duty unless a legally recognized fiduciary role is undertaken. The Court also addressed an argument that there was an informal fiduciary duty. The Court stated:
Unlike the attorney-client relationship, Texas courts have not held that an accountant-client relationship automatically gives rise to fiduciary duties under Texas law. Rivas does not argue otherwise, so we have no occasion to comment on that question. Rivas argues instead that an informal fiduciary relationship arose due to his close personal and business relationship with his accountants. We disagree.
We have held in the past that an informal fiduciary relationship can arise from personal relationships of special trust and confidence. Neither party has questioned that precedent, and we need not reconsider it here in order to reject Rivas’s argument that fiduciary duties arose under these facts.
Because a fiduciary relationship entails exceptionally high duties, this Court has repeatedly held that the law will not lightly impose fiduciary duties on the parties in a business relationship. Under our precedent, in order for there to be any possibility that parties to a business relationship owe each other informal fiduciary duties arising from a special relationship of trust and confidence, the special relationship must have existed “prior to, and apart from, the agreement made the basis of the suit.”
Further, a party’s subjective belief that his business associate is a fiduciary is always insufficient to create such a relationship. Were the law otherwise, an unusually trusting person could unilaterally impose fiduciary duties on business associates who do not expect to be subjected to such heightened duties.
Id. The Court also addressed the parties’ engagement letter and its impact on fiduciary duties:
These written contracts provide a strong, objective indication that these parties, however friendly and cordial their relationship may have been, contemplated that the law would treat them as having an arm’s-length business relationship—not a fiduciary relationship giving rise to special legal duties. To impose a fiduciary duty on a party who enters into a business transaction using an engagement letter that disclaims such duties and goes to great pains to hold the counter-party at arm’s length would be to give judges and juries—rather than the parties themselves—the authority to define the parameters of the parties’ legal relationship. The freedom of contract includes the freedom to define the nature and scope of a business relationship in a way that forecloses the imposition by courts of duties inconsistent with the parties’ agreement. The parties did so here, and Rivas’s evidence about their personal relationship cannot displace the choices reflected in the parties’ written agreement. Because there was no fiduciary relationship as a matter of law, summary judgment on the breach of fiduciary duty claim was proper.
Id. The Court reversed the lower court’s decision that allowed the fraud and breach of fiduciary duty claims to proceed, rendering judgment for the defendants (the accountants).
Justice Huddle had a concurring opinion to discuss her thoughts on informal fiduciary relationships:
In a nutshell, Rivas asserted that while the law does not technically regard the accountant-client relationship as fiduciary in nature, a fact-finder could nevertheless find that a fiduciary relationship and corresponding duties materialized because Rivas’s accountants, Brandon and Linda Pitts, were close personal friends in whom Rivas developed subjective feelings of trust and confidence. This sort of theory—that an “informal” fiduciary duty may arise based on a “special” or “confidential” business or social relationship that the law does not recognize as fiduciary in nature—is routinely advanced. It also routinely...
