By Chris Bankler

On February 21, 2025, the Supreme Court of Texas delivered a significant ruling in the case of Pitts v. Rivas, addressing the issue of fiduciary duties within professional relationships. The Court concluded that no fiduciary duty existed between the parties involved, emphasizing the absence of such duties in the accountant-client context under the specific facts of the case.

Case Background

Rudolph Rivas, a home builder and real estate developer, found himself in a financial quagmire. He blamed his accountants, Brandon and Linda Pitts of Pitts & Pitts, for errors in financial statements that he claimed led to the collapse of his business. Rivas took his grievances to court, alleging negligence, fraud, and breach of fiduciary duty among other claims.

Court’s Analysis on Fiduciary Duty

Chief Justice James D. Blacklock, delivering the opinion of the Court, clarified that no fiduciary duty existed between the parties involved, but more intriguingly, it declined to wade into the murky waters of whether accountants owe fiduciary duties to their clients as a matter of course. 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.” As Rivas did not argue that the relationship with the accountants created a formal fiduciary duty, the Court had “no occasion to comment on that question.”

Rivas contended that an informal fiduciary relationship had developed due to his close personal and business ties with the accountants. However, the Court dismissed this argument, noting, “There is no evidence that a special relationship of trust and confidence preceded the parties’ business agreement. Rivas’s subjective trust in the Accountants is no evidence of a fiduciary relationship.” The Court further explained that “providing discounted commercial services to a business associate does not impose fiduciary duties on the recipient.”

The Court also highlighted the engagement letters between the parties. The letters stated, “Our engagement cannot be relied upon to identify or disclose any financial statement misstatements, including those caused by fraud or error, or to identify or disclose any wrongdoing within the entity or noncompliance with law and regulations.”

The Concurring Opinion: A Reality Check on Informal Fiduciary Duties

Justice Rebeca A. Huddle, joined by Justices Lehrmann, Bland, and Young, concurred with the Court’s opinion but provided additional commentary on the concept of informal fiduciary duties. Justice Huddle expressed skepticism about the viability of informal fiduciary relationships, stating, “The concept our cases describe as an ‘informal’ fiduciary relationship is a fiction we should no longer entertain.”

Justice Huddle argued that fiduciary duties should be tied to legally recognized roles that afford the fiduciary a high degree of control over another’s affairs. “In my view, these weighty duties cannot sprout into existence absent evidence that one has undertaken a role that Texas law recognizes as fiduciary in nature,” she wrote.

Justice Huddle further criticized the notion that subjective feelings of trust and confidence could create fiduciary duties, warning that such a standard would lead to unpredictable legal outcomes. “A so-called ‘informal’ fiduciary would have no reason to perceive that he might owe fiduciary obligations if he does not occupy a recognized fiduciary role or undertake such a fiduciary duty by contract,” Justice Huddle noted.

While Justice Huddle’s opinion fell short of capturing a majority required to change Texas law, it will be critical to monitor this significant development in the coming years.

Implications of the Ruling

The ruling clarifies that, under Texas law, fiduciary duties are not automatically imposed in accountant-client relationships unless explicitly agreed upon or arising from a legally recognized fiduciary role. This decision provides greater predictability and clarity for professional relationships.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice. For more information, please contact Chris Bankler or a member of the Trial & Appellate Litigation practice.

Meet Chris

Chris Bankler focuses on the resolution of disputes for businesses and financial institutions. He counsels clients through the process of complex business litigation, including general business disputes, fraud claims, breach of fiduciary duty cases, and complex business bankruptcy litigation. He has served as litigation counsel in more than 100 cases in state and federal courts, as well as FINRA and AAA arbitrations.