United Development Fund IV is a Maryland real estate investment trust with more than 12,000 shareholders, whose rights are governed by its declaration of trust; the declaration says the shareholders "have no interest in the assets of the Trust" and no right to compel any distribution, and the trust's bylaws designate Maryland as the exclusive forum for derivative actions brought on its behalf.¹ In 2014 the trust's board appointed UMTH General Services, L.P. as an advisor to manage the trust's investments and day-to-day operations under an advisory agreement "by and between" the trust and UMTH, signed for the trust by its chief executive officer, Hollis Greenlaw; individual shareholders are not parties to it.² The agreement states that "[t]he Advisor shall be deemed to be in a fiduciary relationship to the Trust and its Shareholders," and, apart from record-keeping and reporting duties and passing references in the fee, expense, and indemnification provisions, it does not otherwise refer to the shareholders.³

In June 2021, shareholder NexPoint Diversified Real Estate Trust sued the trust derivatively in Maryland for mismanagement after the trustees became subjects of a criminal investigation, and in December 2021 it transferred its shares to its wholly owned subsidiary, NexPoint Real Estate Opportunities; the Maryland court dismissed the derivative claims for lack of standing and subject-matter jurisdiction.¹ While that suit was pending, NexPoint and its subsidiary (the Shareholders) sued UMTH and affiliated managers, officers, and trustees (the Advisors) in Dallas County for corporate waste and mismanagement, including improper advancement of legal fees and refusal to disclose information, relying on the advisory agreement to claim that the Advisors owe each shareholder an individual duty.² The Advisors filed a plea to the jurisdiction, a verified plea in abatement, and special exceptions, all denied, and the court of appeals denied mandamus.³ The Advisors petitioned for mandamus in this Court on January 9, 2024; the Court requested merits briefing on June 21, 2024, heard argument on September 9, 2025, and decided the case on November 14, 2025.⁴

Original petition for writ of mandamus after the court of appeals denied relief; argued September 9, 2025, and decided November 14, 2025.⁵

The Advisors present whether the trial court clearly abused its discretion in treating claims alleging collective harm to the trust and its shareholders as direct instead of derivative, and in refusing to dismiss claims for which the shareholders lack standing, and whether they lack an adequate remedy by appeal.¹ The Shareholders ask whether the trial court abused its discretion by rejecting the Advisors' characterization of the claims as derivative when they sued to enforce fiduciary duties owed to them individually under the advisory agreement, and in rejecting the standing challenge.² The Court decided whether the Shareholders have standing and whether they have capacity to sue the Advisors individually on the agreement.³

Mandamus is appropriate when a trial court errs in a matter of law and the aggrieved party lacks an adequate remedy by appeal, and trial courts have no discretion in determining or applying the law.¹ In assessing a plea to the jurisdiction the Court construes the pleadings liberally and takes the facts alleged as true, and it reviews capacity questions de novo.²

Whether the Shareholders may sue the Advisors directly.

Relators (the Advisors): A stockholder may recover individually only by proving a personal cause of action and a personal injury distinct from the harm to the corporation, and fiduciary duties of an officer or advisor run to the corporation and its shareholders collectively, not to any individual shareholder; nothing in the advisory agreement creates an individual duty, the Shareholders are neither parties to it nor third-party beneficiaries, and their alleged harm affects them only indirectly through their share ownership.¹ They also argued that the Shareholders cannot meet the contemporaneous and continuous ownership requirements for derivative standing.²

Real parties in interest (NexPoint and its subsidiary): The claims are direct, not derivative, because they enforce fiduciary and contractual duties that the Advisors owed NexPoint individually under the plain text of the advisory agreement, which is why the Advisors' attacks that rely on the derivative characterization and on lack of privity fail; at a minimum NexPoint is a beneficial shareholder and a third-party beneficiary.³

The Advisors argued that the trial court clearly abused its discretion in permitting NexPoint to bring derivative claims directly, and that they lack an adequate remedy by appeal.¹ The Court noted that the question is also one of forum, because derivative claims must be brought in Maryland.² The Shareholders responded that mandamus is unavailable because the trial court did not abuse its discretion in treating the claims as direct.³

None. The docket shows no amicus filings.

Holding

The advisory agreement does not create a duty to individual shareholders distinct from obligations to the trust, so the Shareholders lack a personal cause of action and the capacity to bring claims the trust owns; the trial court erred in denying the plea in abatement, and the Advisors lack an adequate remedy by appeal.¹

Reasoning

Standing. Under Pike v. Texas EMC Management, an owner has constitutional standing to sue for loss in the value of its interest, and the derivative-action provisions do not deprive a shareholder of standing; because the Shareholders allege financial losses from the Advisors' mismanagement and sue as individuals, they have constitutional standing, and whether they may sue derivatively is a question for the Maryland courts, which the Court did not address.²

Capacity. A shareholder may sue individually only for violation of a duty owed directly to it, separate from the duty to the corporation, which requires a personal cause of action and personal injury.³ The phrase "the Trust and its Shareholders" refers to the shareholders collectively: the trust executed the agreement, no shareholder signed it, and absent an express undertaking to an individual, fiduciary duties flow to the entity and shareholders collectively, because simultaneous duties to the entity and to particular shareholders would conflict.⁴ The Court distinguished the cited LLC cases, in which the agreements conferred mutual rights on members who were parties, and noted that the declaration of trust disavows any shareholder interest in trust assets.⁵ The third-party-beneficiary theory proves too much, since a shareholder benefits from any contract the entity makes only collectively, and Texas law presumes against third-party beneficiary status absent terms that clearly and fully express intent to confer a direct benefit.⁶

Mandamus. The question is also one of forum: because the claims sound derivatively and must be brought in Maryland under Maryland law, proceeding in Texas would waste judicial resources, enable forum shopping, and expose the entity to suits that bypass statutory safeguards, and the capacity defect is incurable, so the Advisors lack an adequate remedy by appeal.⁷

Disposition

The Court conditionally granted mandamus relief and directed the trial court to vacate its order denying the Advisors' plea in abatement, grant the plea, and dismiss the case with prejudice; the writ will issue only if it does not comply.⁸

Vote Breakdown

Majority Opinion by Justice Bland

Joined by Blacklock, C.J., and Busby, Devine, Huddle, Lehrmann, Sullivan, and Young, JJ.

Did Not Participate

Hawkins, J.