A New Era for Business Litigation: What Lensabl Signals About Texas’s Corporate Jurisdiction

I. Introduction

The Texas Business Court, created by House Bill 19 and operational as of September 1, 2024,¹ and further supported by the Legislature’s 2025 modernization of Texas corporate law,² has begun to develop a distinct, text-centered jurisprudence in complex commercial matters. In one of its earliest and most analytically significant decisions, Judge Brian Stagner of the Eighth Division clarified the pleading and liability standards governing veil-piercing, fraud, and contract claims under Texas law in Lensabl, Inc. v. RBH SPE One, LLC, 2025 Tex. Bus. 44 (Bus. Ct. Tex. Nov. 5, 2025).³

II. Factual Background and Procedural Posture

Lensabl, an online eyewear company, entered into a $29 million equity acquisition agreement under which RBH SPE One, LLC would acquire a 49% stake with an option to obtain majority control.⁴ RBH SPE signed as purchaser and RBH Holdings signed as guarantor, both controlled by Robert Byrnes.⁵ The agreement required RBH SPE to be “adequately funded” at each closing and expressly stated that the transaction was not conditioned on obtaining financing.⁶

After repeated failures to fund the closing, Lensabl terminated the agreement and sued the entities and individual Byrnes family members for breach of contract, fraud, negligent
misrepresentation, principal–agent liability, and veil piercing.⁷ The Byrnes defendants moved to dismiss under Texas Rule 91a.⁸

III. The Court’s Holdings and Reasoning

A. Strict Pleading Standards Under Rule 91a

Judge Stagner emphasized that Texas law requires factual specificity and rejects conclusory assertions—“threadbare recitals” do not survive dismissal.⁹ This approach is consistent with the Texas Supreme Court’s recent reaffirmation that petitions must plead essential facts, not merely legal elements.¹⁰

It is also consistent with the Legislature’s recent reforms, including S.B. 29, which seek a more predictable and efficient environment to resolve internal entity claims and other complex business disputes.¹¹

B. Rejection of Delaware-Style Veil Piercing

Lensabl advanced a Delaware-inspired alter-ego theory based on under-capitalization, ignored formalities, family control, and insolvency.¹² The Business Court rejected these allegations as legally insufficient under Texas law.

Under Tex. Bus. Orgs. Code § 21.223, personal liability may be imposed only where the member or manager “perpetrate[s] an actual fraud . . . primarily for the direct personal benefit” of the individual.¹³ The Texas Supreme Court has held that this statutory limitation is exclusive and preempts broader common-law theories of liability.¹⁴

Judge Stagner stressed that allegations of undercapitalization or failure to observe for-malities “are legally insufficient” because the statute expressly prohibits piercing on those grounds.¹⁵ This posture reflects Texas’s long-standing departure from Delaware’s more flexible, equity-based veil-piercing regime—an important point highlighted in the corporate law literature¹⁶ and is consonant with S.B. 29’s broader text-centered philosophy.¹⁷

C. Breach of Contract Claims Against Individuals

The Court dismissed the breach-of-contract claim against Robert Byrnes individually. He was not a signatory to the transaction agreement, and Lensabl pled no other enforceable contract, no material terms, no formation facts, and no consideration.¹⁸

Under Texas law, a valid contract requires (1) a valid offer and acceptance, (2) performance or tendered performance by the plaintiff, (3) breach by the defendant, and (4) damages resulting from the breach.¹⁹ Lensabl pled none of these elements as to Byrnes personally, and the Court refused to infer a personal contract from negotiation-stage assurances.

D. The Fraud Claim Survives

Judge Stagner held that the fraud claim against Robert Byrnes was sufficiently pled. Lensabl alleged with specificity that:

Byrnes’s agent represented that Byrnes and the LLCs were adequately capitalized;

•    Byrnes himself repeated those representations;
•    the CFO warned Byrnes the representations were false;
•    Byrnes nevertheless instructed the company to sign the agreement; and
•    Lensabl relied by forgoing other opportunities.²⁰

These allegations satisfy the familiar elements of fraud: material misrepresentation, falsity, knowledge or recklessness, intent, reliance, and injury.²¹

IV. Broader Implications

A. Blueprint for Texas Corporate Law

Lensabl provides an early template for (1) heightened Rule 91a pleading scrutiny, (2) exclusive statutory veil-piercing limits, and (3) the Legislature’s emphasis—reflected, inter alia, in S.B. 29—on predictability and managerial protection.22 This orientation aligns with scholarship that favors clear statutory rules over unpredictable, ad hoc common-law balancing.²³

B. Competing with Delaware

While Delaware corporate law has historically relied heavily on equitable doctrines and flexible judicial standards in areas such as fiduciary duties and veil piercing, Texas in this context adheres to explicit statutory standards and a strict plain-meaning rule.²⁴ That combination yields a more predictable and relatively less plaintiff-friendly forum, particularly attractive to firms and managers seeking to reduce litigation volatility.²⁵

C. Expedient Case Management

The Business Court’s issuance of a detailed, written opinion at the Rule 91a stage advances the objectives of H.B. 19 in promoting judicial specialization and more efficient handling of  complex business disputes.²⁶ This practice fosters consistency and accelerates the development of Texas’s commercial jurisprudence.

V. Conclusion

Lensabl marks a foundational moment in Texas’s emerging business court jurisprudence. It demands factual specificity, enforces strong statutory protections for LLC members, recognizes viable fraud claims where properly pled, and privileges statutory text over equitable doctrines.²⁷ Together, these features position Texas as a modern, statute-centered corporate law jurisdiction poised to compete with Delaware in the market for corporate domicile.

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¹ H.B. 19, 88th Leg., Reg. Sess. (Tex. 2023) (establishing the Texas Business Court and specifying its effective date).

² S.B. 29, 88th Leg., Reg. Sess. (Tex. 2025) (codifying the statutory business judgment rule, exclusive-forum provisions for internal entity claims, and related corporate governance reforms).

³ Lensabl, Inc. v. RBH SPE One, LLC, 2025 Tex. Bus. 44, 1 (Bus. Ct. Tex. Nov. 5, 2025)(granting in part and denying in part a Tex. R. Civ. P. 91a motion and articulating early standards for veil piercing, contract claims, and fraud in the Texas Business Court).

⁴ Lensabl, 2025 Tex. Bus. 44, at 3–4 (describing the transaction under which the “Purchasing Parties” would acquire a 49% interest for $28,990,000 with an option to obtain a majority stake within twelve months).

⁵ Id. at 3 (noting that RBH SPE signed as purchaser and RBH Holdings, LLC signed as guarantor, and that both entities were owned by Byrnes).

⁶ Id. at 3 (citing Transaction Agreement § 5.14, which required adequate funding at each closing and disclaimed any condition precedent based on financing).

⁷ Id. at 4–5 (listing the causes of action asserted in Lensabl’s live pleading).

⁸ Tex. R. Civ. P. 91a; Lensabl, 2025 Tex. Bus. 44, at 1–2 (noting that the motion to dismiss was brought under Rule 91a and challenging the breach-of-contract, fraud, and veil-piercing claims).

⁹ Lensabl, 2025 Tex. Bus. 44, at 6–7 (explaining that inadequate content may justify dismissal because it does not provide fair notice of a legally cognizable claim); Smart v. Prime Mortg. & Escrow, LLC, 659 S.W.3d 155, 161 (Tex. App.—El Paso 2022, pet. denied) (holding that “threadbare recitals” of elements, supported by conclusory statements, do not suffice to state a claim).

¹⁰ In re First Rsrv. Mgmt., L.P., 671 S.W.3d 653, 661–62 (Tex. 2023) (orig. proceeding) (holding that a cause of action has no basis in law under Rule 91a if it is barred by an established legal rule and the plaintiff fails to plead facts demonstrating the rule does not apply).

¹¹See supra note 2 (describing S.B. 29’s codification of the business judgment rule, exclusive-forum provisions, and interpretive directives designed to enhance predictability).

¹² Lensabl, 2025 Tex. Bus. 44, at 9-10 (summarizing Lensabl's veil-piercing allegations that the LLCs were undercapitalized, insolvent, ignored corporate formalities, and served as a facade for the Byrnes family business).

¹³ Tex. Bus. Orgs. Code Ann. § 21.223(a)(2), (b), (a)(3) (West 2024) (conditioning shareholder or member liability for contractual obligations on proof of actual fraud primarily for direct personal benefit and barring liability based on failure to observe corporate formalities).

¹⁴ Willis v. Donnelly, 199 S.W.3d 262, 272 (Tex. 2006) (holding that § 21.223 provides the exclusive standard for imposing personal liability for contractual obligations, displacing broader common-law veil-piercing theories).

¹⁵ Lensabl, 2025 Tex. Bus. 44, at 11 (concluding that allegations of undercapitalization and failure to observe formalities do not satisfy § 21.223’s actual-fraud requirement).

¹⁶See, e.g., Michal Barzuza, Market Segmentation: The Rise of Nevada & the Decline of Delaware, 98 Va. L. Rev. 935, 975–78 (2012) (discussing how jurisdictions compete by offering different levels of managerial protection and liability).

¹⁷See Tex. Bus. Orgs. Code § 1.056(a) (West 2024) (directing courts to apply the plain meaning of the TBOC and prohibiting reliance on foreign law to supplant or modify the Code’s text).

¹⁸ Lensabl, 2025 Tex. Bus. 44, at 13–14 (explaining that Lensabl did not allege any separate contract with Byrnes and that he was not a party to the written agreement).

¹⁹ Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 890 (Tex. 2019) (setting out the elements of a breach-of-contract claim under Texas law).

²⁰ Lensabl, 2025 Tex. Bus. 44, at 15–16 (detailing the fraud allegations, including representations of adequate capitalization, internal warnings of falsity, and reliance through foregone opportunities).

²¹ Int’l Bus. Machs. Corp. v. Lufkin Indus., LLC, 573 S.W.3d 224, 228 (Tex. 2019) (reciting elements of fraud under Texas law); Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 496 (Tex. 2019) (same).

²²See supra notes 8, 13 (describing the Rule 91a and § 21.223 standards).

²³See John Armour & Brian Cheffins, Delaware’s Balancing Act, 87 Ind. L.J. 1345 (2012) (exploring Delaware’s reliance on equitable doctrines and judicial balancing in corporate law).

²⁴ Tex. Bus. Orgs. Code § 1.056(a) (West 2024) (requiring courts to apply the TBOC according to its plain language).

²⁵See Lucian Bebchuk & Ehud Kamar, The Myth of State Competition in Corporate Law, 55 Stan. L. Rev. 679, 684–86 (2002) (discussing how managers may prefer jurisdictions offering greater protection and predictability).

²⁶See supra note 1 (noting that H.B. 19 established the Texas Business Court to address complex business disputes).

²⁷ Lensabl, 2025 Tex. Bus. 44, at 16 (summarizing the Court’s rulings granting dismissal of veil-piercing and contract claims while allowing the fraud claim to proceed).