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Texas Aiding and Abetting

Aiding and abetting is a theory whereby a third party can be held liable for knowingly participating in a breach of duty owed by someone else to the plaintiff. In Texas it has been held applicable in securities cases, breach of fiduciary duty cases,1 and is possibly available in fraud cases.2 For example, where a third party knowingly participates in the breach of duty of a fiduciary, such third party becomes a joint tortfeasor with the fiduciary and can be liable as such.3

Some statutes incorporate what is similar to aiding and abetting liability directly into the framework of prohibited conduct. For example, under Texas’ Fraud in Real Estate or Stock Transaction statute, a third-party can be held liable for fraud even though that person did not make the false representation, where that person: 1) has actual awareness of the falsity of the representation or promise made by another person, 2) fails to disclose the falsity of the representation or promise to the person defrauded, and 3) benefits from the false representation or promise.4  Actual awareness may be inferred where the objective manifestations indicate that a person acted with actual awareness.

Notes
1. See Kline v. O'Quinn, 874 S.W.2d 776, 786 (Tex. App. – Houston [14th Dist.] 1994, writ denied).
2. The Texas Supreme Court noted the issue, but declined to decide it based on the facts of the case at issue. See Ernst & Young, L.L.P. v. Pacific Mut. Life Ins. Co., 51 S.W.3d 573, 583 (Tex. 2001).
3. See Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 514 (1942); Hendricks v. Thornton, 973 S.W.2d 372, (Tex. App. – Beaumont 1998,  ); Kline v. O'Quinn, 874 S.W.2d 776, 786 (Tex. App. – Houston [14th Dist.] 1994, writ denied); Horton v. Robinson, 776 S.W.2d 260, 266 (Tex. App. – El Paso 1989, no writ); Herider Farms-El Paso, Inc. v. Criswell, 519 S.W.2d 473, 477 (Tex. Civ. App. – El Paso 1975, writ ref'd n.r.e.).
4. See Tex. Bus. & Com. Code Ann. § 27.01(d) (Vernon 1987).