Dismissed and Plurality, Concurring, and Dissenting Opinions filed April 22, 

2014.

In The

Fourteenth Court of Appeals

NO. 14-12-00158-CV

YUVAL LAPINER, Appellant

V.

JACKOB MAIMON, MAX PRIDGEON, MICHELLE R. CINNAMONFLORES, HAIM TSUFF, GOODRICH GLOBAL LTD., ISRAMCO, INC.,

JEFFREY GOLDSTEIN, AND THEODORE STEINBERG, Appellees

On Appeal from the 55th District Court

Harris County, Texas

Trial Court Cause No. 2009-34535

PLURALITY OPINION

Appellees Jeffrey Goldstein and Theodore Steinberg (collectively 

“plaintiffs”) each initiated a shareholder derivative suit on behalf of nominal 

defendant Isramco, Inc. against appellees Jackob Maimon, Max Pridgeon, Michelle 

R. Cinnamon-Flores, and Haim Tsuff (collectively “individual defendants”), as 

well as Goodrich Global Ltd. Following consolidation of the two cases and two 
years of informal discovery, the plaintiffs and defendants negotiated a settlement 

that the trial court preliminarily approved. Appellant Yuval Lapiner received a 

notice of the proposed settlement and filed an objection as well as a petition in 

intervention. Following a hearing, the trial court struck Lapiner’s petition in 

intervention and denied his objection. The court also signed a final judgment 

approving the settlement, and it later denied Lapiner’s motion for attorney’s fees

and expenses. 

Lapiner appeals, contending the trial court abused its discretion when it 

approved the settlement and denied his motion for fees and expenses. Appellees 

moved to dismiss, arguing that Lapiner lacks the requisite standing to appeal. We 

grant the motion, and dismiss. 

BACKGROUND

A. Plaintiffs file their shareholder derivative suits, alleging breaches of 

fiduciary duty.

Plaintiffs filed their separate shareholder derivative lawsuits on behalf of 

Isramco in June 2009. Both suits alleged that the individual defendants had 

violated their fiduciary duties as members of Isramco’s board of directors when 

they voted to approve a consulting agreement with Goodrich. Plaintiffs alleged the 

consulting agreement benefited Tsuff, Isramco’s chief executive officer, chairman 

of the board, and controlling shareholder. The two lawsuits were eventually 

consolidated in the 55th District Court of Harris County.

In April 2010, Yuval Ran filed a shareholder derivative lawsuit on behalf of 

Isramco. While Ran’s lawsuit alleged claims similar to those initially raised by 

plaintiffs, he also alleged additional claims and named additional defendants. 

Ran’s lawsuit was eventually transferred to the 55th District Court and 

consolidated with plaintiffs’ lawsuits.

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B. Lapiner files a Delaware derivative suit that is dismissed in favor of the 

Texas action.

In July 2010, Lapiner filed a shareholder derivative action in Delaware, 

making many of the same claims involved in plaintiffs’ ongoing Texas derivative 

lawsuit. In October 2010, the Delaware court dismissed Lapiner’s action in 

deference to the previously filed Texas action.

Approximately one month later, Lapiner served a demand for investigation 

of his claims on Isramco’s board of directors. In response to the demand, Isramco 

formed a Special Committee of the Board comprised of its independent directors. 

The Special Committee then investigated Lapiner’s complaints. At the conclusion 

of the investigation, the Special Committee notified Lapiner that it had determined: 

(a) Lapiner’s claims were identical to the claims pending in the Texas litigation; 

(b) the parties to the Texas litigation had reached a tentative settlement of the 

claims asserted in that litigation; (c) Lapiner’s claims had been thoroughly 

investigated both by Isramco and lead counsel for plaintiffs in the Texas litigation, 

and therefore no further investigation was necessary; and (d) any further 

investigation into Lapiner’s claims would not be in the best interest of Isramco or 

its shareholders. Lapiner continued his efforts to negotiate a settlement with 

Isramco, but Isramco refused and referred him to the Texas plaintiffs’ lead counsel. 

C. The parties settle the Texas derivative suit.

Ultimately, in April 2011, the parties to the Texas suit memorialized their

settlement agreement in a Memorandum of Understanding. The parties then 

executed a Stipulation of Settlement setting forth the settlement terms in August 

2011.

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Soon after the parties executed the Stipulation of Settlement, plaintiffs filed 

a motion seeking the trial court’s preliminary approval of the proposed derivative 

suit settlement. The trial court preliminarily approved the proposed settlement 

subject to further consideration at a final settlement hearing. In its order, the trial 

court set a deadline and established procedures for objecting to the Stipulation of 

Settlement. Finally, the trial court ordered Isramco to file a notice of the proposed 

settlement with the Securities and Exchange Commission and to publish the notice 

in Investor’s Business Daily. 

D. Lapiner objects to the settlement, attempts to intervene, and 

participates in the final hearing.

On the last day permitted for filing objections to the proposed settlement,

Lapiner filed a petition in intervention and an objection to the proposed settlement 

of the derivative lawsuit. Lapiner primarily objected that the settlement was not 

fair, reasonable, or adequate because there was evidence to support allegations that 

Isramco had suffered “hundreds of millions of dollars” worth of damages as a 

result of the sale of its participation units in Isramco Negev. Lapiner contended 

that the settlement recovered none of these alleged damages for Isramco, but

instead cost Isramco $1 million in attorney’s fees and costs.

Subsequently, Lapiner filed a supplemental objection to the settlement and 

attached a “Summary Report of Legal Compliance Deficiencies in Isramco, Inc. 

(ISRL) and Affiliates” prepared by Dennis Holifield, a former general counsel of 

Isramco. Holifield’s allegations differed from those tentatively settled in plaintiffs’

derivative lawsuit. Nonetheless, lead counsel for plaintiffs, whom Holifield had

also contacted with his allegations, moved to continue the final hearing on the

proposed settlement to allow her to depose Holifield and, if necessary, conduct any 

other discovery necessary to explore Holifield’s allegations. The trial court

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granted the motion and ordered the deposition of Holifield. Holifield’s deposition 

took place in camera under the direct supervision of the trial judge. Following 

Holifield’s deposition, lead counsel for plaintiffs reset the hearing on the final 

approval of the settlement.

Plaintiffs, Isramco, and defendants collectively moved to strike Lapiner’s 

petition in intervention on numerous grounds, including that Lapiner had no 

justiciable interest in the pending derivative lawsuit because he did not own 

Isramco stock at the time of the acts complained of in the amended consolidated 

petition. Lapiner responded to the motion to strike and, as part of his response,

submitted confidential materials for in camera review by the trial court. Plaintiffs

and defendants filed responses to Lapiner’s objection and also submitted 

confidential materials for in camera review.

Following Holifield’s deposition, plaintiffs, Isramco, and defendants entered 

into an Addendum to Stipulation of Settlement. This addendum supplemented the 

definition of “Released Claims” found in the Stipulation of Settlement by 

excluding “any claim based on allegations contained in the document titled 

‘Summary Report of Legal/Compliance Deficiencies in Isramco, Inc. (ISRL) and 

Affiliates,’ authored and submitted by Dennis Holifield to the U.S. Securities and 

Exchange Commission on or about September 22, 2011 and not otherwise 

expressly adjudicated in this case.”

In December 2011, the trial court conducted an oral hearing on the pending 

derivative suit settlement. The trial court first considered the motions to strike 

Lapiner’s intervention and granted that motion. The trial court then turned its 

attention to the proposed settlement, which it approved as fair, reasonable, and 

adequate. The trial court signed a “Final Order and Judgment” approving the 

settlement on December 12, 2011.

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E. Lapiner requests attorney’s fees, files a motion for new trial, and then 

appeals.

Ten days after the trial court signed the final judgment approving the

settlement, Lapiner filed a motion seeking attorney’s fees and expenses. 

According to Lapiner, the filing of his objection to the settlement had “conferred a 

substantial benefit to Isramco.” The trial court signed an order denying Lapiner’s 

request for attorney’s fees and expenses on January 11, 2012. Lapiner filed a 

motion for new trial the same day his fee request was denied, and that motion was 

overruled by operation of law. Lapiner then filed his notice of appeal on February 

12, 2012. 

MOTIONS TO DISMISS

Before we address the issues Lapiner raises in his appeal, we must consider 

the motions to dismiss filed by both sets of appellees that challenge our 

jurisdiction. First, all appellees argue we must dismiss Lapiner’s appeal because 

he did not timely file his notice of appeal. Specifically, they argue Lapiner could 

not extend the time for filing his notice of appeal by filing a motion for new trial 

because he was a nonparty; as such, his notice of appeal filed more than thirty days 

following the final judgment was untimely. Second, the defendants seek dismissal 

of Lapiner’s appeal on the further basis that because Lapiner did not own Isramco 

stock at the time of the events at issue in the derivative lawsuit, he did not have 

standing to initiate a shareholder derivative action and, therefore, does not have 

standing to appeal the trial court’s approval of the derivative suit settlement. 

We begin the analysis with the timeliness of Lapiner’s appeal. It is 

undisputed that the trial court entered judgment in this cause on December 12, 

2011. It is further undisputed that Lapiner filed his notice of appeal of this action 

on February 12, 2012, more than thirty days after the trial court entered judgment. 

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Under the general rule, Lapiner’s notice of appeal was due thirty days after the 

judgment. See Tex. R. App. P. 26.1 (“The notice of appeal must be filed within 30 

days after the judgment is signed, except as follows . . . ). 

Rule 26.1 extends the time to appeal to ninety days if “any party” timely 

files a motion for new trial, a motion to modify the judgment, a motion to reinstate,

or a request for finding of fact or conclusions of law. See Tex. R. App. P. 26.1. 

Appellees do not dispute that Lapiner filed a motion for new trial on January 11, 

2012. Rather, they urge that Lapiner’s January 11 motion for new trial was 

ineffective to extend the appellate timetable because he was not a party below. 

It is a general rule in Texas that only named parties may appeal the trial 

court’s judgment. City of San Benito v. Rio Grande Valley Gas Co., 109 S.W.3d 

750, 754 (Tex. 2003); see Tex. R. App. P. 25.1 (“The filing of a notice of appeal 

by any party invokes the appellate court’s jurisdiction over all parties to the trial 

court’s judgment or order appealed from.”). Lapiner is a nonparty. Lapiner filed a 

petition in intervention in the action. Defendants moved to strike the intervention. 

The trial court granted defendants’ motion and struck Lapiner’s intervention. 

Lapiner does not appeal the trial court’s order striking his intervention. Therefore, 

Lapiner is not an intervenor and not a named party in this Texas derivative action. 

See, e.g., Johnson v. Crook, 93 S.W.3d 263, 268 (Tex. App.—Houston [14th Dist.] 

2002, pet. denied) (“[A]n intervenor is a party for purposes of appeal only if 

(1) she timely files a pleading, and (2) the trial court does not strike the pleading 

before the entry of a final judgment.”). And where, as here, a nonparty has the 

right to appeal a decision of the trial court granting a motion to strike, such 

nonparty nonetheless cannot extend the appellate timetable by assailing the final 

judgment with a motion for new trial. Cf., e.g., Cent. Mut. Ins. Co. v. Dunker, 799 

S.W.2d 334, 336 Tex. App.—Houston [14th Dist.] 1999, writ denied) (holding 

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that, because appellant did not become a party by intervention before judgment 

was rendered, appellant may not extend the time to appeal by filing a motion for 

new trial); State v. Cnty. Mut. Fire Ins. Co. v. Kelly, 915 S.W.2d 224, 227 (Tex. 

App.—Austin 1996, no pet.) (holding that a nonparty’s motion for new trial and 

petition for intervention filed after the trial court signed a final judgment did not 

extend the court’s plenary jurisdiction).

However, Texas recognizes that one may be a “deemed party” under the 

doctrine of virtual representation. City of San Benito, 109 S.W.3d at 754–55. To 

be a deemed party, (1) the appellant must be bound by the judgment; (2) its privity 

of estate, title, or interest must appear from the record; and (3) there must be an 

identity of interest between the appellant and a party to the judgment. Id. at 755 

(citing Motor Vehicle Bd. of the Tex. Dep’t of Transp. v. El Paso Indep. Auto. 

Dealers Ass’n, 1 S.W.3d 108, 110 (Tex. 1999)). Thus, under the doctrine of virtual 

representation, the Texas Supreme Court recognizes unnamed, objecting class 

members as deemed parties for purposes of appeal. Id.

Lapiner does not cite, we do not find, and our dissenting colleague does not 

mention any case applying the “deemed party” analysis to Texas Rule of Appellate 

Procedure 26.1 for purposes of extending the appellate timetable. As such, without 

regard to whether Lapiner must intervene in order to have standing to appeal, the 

plain language of Rule 26.1 deprives Lapiner—a nonparty—of the right to extend 

the time for filing a notice of appeal. Nevertheless, under the unique facts of this 

case, we determine that even if the doctrine of virtual representation may be used 

to extend the Texas appellate timetable, Lapiner does not qualify as a deemed party 

under the doctrine.

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Under Texas law, Lapiner cannot satisfy any of the elements of the doctrine 

of virtual representation. Lapiner is not bound by the underlying judgment—

Isramco is bound. The claims adjudicated in this shareholder derivative action are 

for injury to the corporation, as distinguished from injury to its shareholders. See 

Swank v. Cunningham, 258 S.W.3d 647, 661–62 (Tex. App.—Eastland 2008, pet. 

denied); see also Redmon v. Griffith, 202 S.W.3d 225, 233 (Tex. App.— Tyler 

2006, pet. denied). Our analysis is not altered even though the shareholder 

derivative action judgment may “bring about reduced earnings, salaries, or 

bonuses.” See BJVSD Bird Family P’ship, L.P. v. Star Elec., L.L.C., 413 S.W.3d 

780, 785–86 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (holding that the 

appellant’s interest as a stakeholder in an entity did not satisfy the privity element 

of the virtual representation doctrine). 

Finally, there is no identity of interest between Lapiner and the plaintiffs. 

The plaintiffs are, as they must be to have standing, shareholders who owned stock 

in the corporation at the time of the transactions at issue. See Tex. Bus. Orgs. 

Code Ann. § 21.552 (providing that a shareholder “may not institute or maintain a 

derivate proceeding unless” the shareholder owned stock in the corporation at the 

time of the complained of acts or omissions). Lapiner, on the other hand, did not 

own stock at the time of the transactions and, therefore, could not have brought this 

lawsuit as a plaintiff. 

Because we determine that Lapiner did not timely file his notice of appeal, 

we sustain the first ground for dismissal. Because we sustain appellees first 

ground for dismissal, we need not address the second ground and determine 

whether Lapiner would have had standing, as an objector, to appeal the final 

judgment approving the shareholder derivative action. See Tex. R. App. P. 47.1.

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CONCLUSION

Having sustained appellees’ first issue in their motion to dismiss, we dismiss 

this appeal. 

/s/ Sharon McCally

Justice

Panel consists of Chief Justice Frost and Justices McCally and Busby. (Frost, C.J., 

concurring) (Busby, J., dissenting).

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