1 

In The 

Court of Appeals 

Ninth District of Texas at Beaumont 

____________________ 

NO. 09-13-00070-CV 

____________________ 

MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS L.P., 

MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS 

(BERMUDA) L.P. AND MATLINPATTERSON GLOBAL 

OPPORTUNITIES PARTNERS B, L.P., Appellants 

V. 

DEUTSCHE BANK SECURITIES, INC. AND CREDIT SUISSE 

SECURITIES (USA) LLC, Appellees 

_______________________________________________________ ______________ 

On Appeal from the 9th District Court 

Montgomery County, Texas 

Trial Cause No. 12-06-06544-CV 

________________________________________________________ _____________ 

MEMORANDUM OPINION 

This appeal by MatlinPatterson Global Opportunities Partners L.P., 

MatlinPatterson Global Opportunities Partners (Bermuda) L.P., and 

MatlinPatterson Global Opportunities Partners B, L.P., (collectively 

“MatlinPatterson”) from an order granting the plea to the jurisdiction filed by the 

appellees, Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC 
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(collectively “Banks”), presents two issues. First, we must decide whether 

MatlinPatterson may pursue a fraud claim against the Banks for making material 

misrepresentations concerning the financing of a failed merger between Hexion 

Specialty Chemicals, Inc. (a subsidiary of Apollo Management Holdings, L.P.) 

(“Hexion”) and Huntsman Corporation (“Huntsman”). Second, we must decide 

whether the trial court erred in dismissing the suit with prejudice. We hold that 

MatlinPatterson presented a derivative claim that it lacks standing to pursue and 

the jurisdictional defect cannot be cured by re-pleading. Accordingly, we affirm 

the judgment. 

Background 

Two companies, Basell AF (“Basell”) and Hexion, sought to acquire 

Huntsman, a publicly traded Delaware corporation. Each prospective buyer 

proposed a “cash-out merger” in which all Huntsman shareholders would receive 

the negotiated price per share of stock. Each merger proposal required the consent 

of the holders of a majority of Huntsman’s shares. At the time, MatlinPatterson 

was a major shareholder of Huntsman and its nominees held two positions on 

Huntsman’s ten-member board of directors. MatlinPatterson and Huntsman Family 

Holdings, who together held approximately 59% of the corporation’s stock under 

control of the HMP [Huntsman MatlinPatterson] Equity Trust, entered into a 

voting agreement in favor of the Basell merger. A party other than the Banks 
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would have financed the Basell merger. Huntsman signed a merger agreement with 

Basell. The merger agreement expressly excluded third-party beneficiaries but 

provided that Huntsman’s stockholders had a right to enforce their rights to receive 

the merger consideration upon consummation of the merger in the event the 

merger was consummated. 

Hexion raised its bid and during negotiations communicated to Huntsman 

the terms of the Banks’ commitment letter, which promised to lend the full merger 

funds. The Hexion merger agreement expressly disclaimed the existence of thirdparty beneficiaries. Huntsman’s board of directors unanimously determined that 

the Hexion merger agreement and the merger were in the best interests of the 

holders of Huntsman common stock. Huntsman’s definitive proxy statement 

included a disclosure that a Huntsman stockholder was not a third-party 

beneficiary of the merger agreement and could not enforce any of its terms. The 

definitive proxy statement also disclosed that MatlinPatterson and the Huntsman 

family entered into agreements with Hexion to vote an aggregate of approximately 

32.2% of Huntsman’s common stock in favor of the merger with Hexion. 

Huntsman terminated the Basell agreement and signed a merger agreement with 

Hexion. In addition to the merger agreement, Huntsman entered into an amended 

registration agreement with MatlinPatterson, and filed a shelf registration 
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statement registering for resale all of MatlinPatterson’s Huntsman shares. 

MatlinPatterson sold 56,979,062 Huntsman shares on August 6, 2007. 

On June 18, 2008, Hexion sued Huntsman for a declaration (1) that the 

merger could not be closed because the combined company would be insolvent and 

(2) that Hexion’s performance was excused because Huntsman suffered a material 

adverse effect. See Hexion Specialty Chems., Inc. v. Huntsman Corp., 965 A.2d 

715, 721-22, 736 (Del. Ch. 2008). Huntsman filed a counterclaim for breach of the 

merger agreement and requested specific performance. Id. at 746, 759. The court 

found that Hexion knowingly and intentionally breached the merger agreement in 

part by providing the Banks with an insolvency opinion without Huntsman’s 

consent. Id. at 746, 751-52, 756. The court declined to resolve the issue of whether 

the combined entity would be solvent because the issue was not ripe for judicial 

determination. Id. at 758. Finally, the court ruled that the contract excluded the 

remedy of specific performance of Hexion’s obligation to consummate the merger, 

but granted a judgment ordering Hexion to specifically perform its other 

obligations under the contract. Id. at 761-63. 

After obtaining the judgment against Hexion, Huntsman sued the Banks. 

Huntsman alleged, inter alia, that the Banks fraudulently induced Huntsman to 

terminate the Basell merger and enter into a merger agreement with Hexion. In its 

petition, Huntsman alleged: (1) Apollo and the Banks knew Huntsman’s board had 
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a fiduciary duty to consider any bid likely to result in a superior value to its 

shareholders; (2) Apollo’s commitment to close the merger at the higher price and 

the Banks’ firm funding commitment was the critical issue in the Hexion merger 

negotiations; (3) a successful syndication of the merger debt was not a condition to 

the Banks’ commitment to fund the full amount of the merger consideration at 

closing; (4) the Banks secretly demanded a dramatically reduced funding 

commitment from Apollo; (5) Apollo, Hexion, and the Banks assured Huntsman 

there were no undisclosed conditions to the funding commitment; (6) Huntsman’s 

transaction committee supported the Hexion merger in part due to the absence of a 

material adverse effect provision; (7) before signing the commitment letter, the 

Banks extracted assurances from Apollo that the Banks would be protected against 

losses on the financing; (8) Apollo and the Banks secretly agreed that the proceeds 

of nearly $1 billion of planned asset sales and divestitures would be credited 

against the committed financing in the form of a reduction in the amount that could 

be drawn on the financing; (9) before signing the commitment letters, Apollo and 

the Banks agreed the capped interest rates were illusory and they fully intended to 

adjust the rates; (10) the Banks lacked the ability to fund the commitment without 

violating their lending limits; (11) Hexion agreed to pay the Basell breakup fee and 

a “ticking fee” that secretly created a funding gap; (12) Apollo secretly assured the 

Banks that it would sell down the Banks’ exposure prior to closing; and (13) the 
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Banks knew Hexion’s representation that the committed financing was adequate to 

fund the acquisition was materially false when it was made, that there were 

multiple undisclosed material conditions to the financing, and that Hexion falsely 

represented that it had no knowledge of any circumstances reasonably likely to 

result in the funding not being made available. Huntsman alleged that Apollo, in 

furtherance of its secret agreement to protect the Banks from losses and in order to 

provide the Banks with a defense to enforcement of the financing commitment, 

obtained an opinion that the merger would render the combined entity insolvent 

and filed suit for declaratory judgment. 

In a motion for summary judgment, the Banks argued that Huntsman could 

not recover as fraud damages the benefit of the merger consideration that would 

flow to the stockholders, not to Huntsman. In response, Huntsman noted that the 

Banks had previously taken the position that Huntsman would have a claim for 

money damages if the Hexion merger failed to close due to someone’s fault, and 

argued that its shareholders lack standing to assert rights under the merger 

agreement because they received no third-party rights. The trial court denied the 

motion for summary judgment on Huntsman’s claim for common law fraud. 

On or about June 23, 2009, Huntsman and the Banks settled the Huntsman 

lawsuit in the midst of trial. The Banks paid Huntsman $620 million, agreed to 

reimburse Huntsman for as much as $12 million in litigation costs, and agreed to 
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$1.1 billion in debt financing. Huntsman released the Banks on behalf of 

Huntsman and its stockholders, and agreed to indemnify the Banks from the 

released claims. 

MatlinPatterson sold 1,265,602 shares of Huntsman common stock on 

October 15, 2009, and no longer owns or controls any common stock in Huntsman. 

MatlinPatterson filed this suit on June 18, 2012. MatlinPatterson makes the 

following allegations in its petition: (1) the Banks made materially false 

representations about the nature of the financing for the Huntsman merger for the 

purpose of inducing MatlinPatterson to abandon the Basell merger and support the 

Hexion merger; (2) the Banks knew MatlinPatterson would rely on the 

misrepresentations given its significant ownership of Huntsman stock and its 

employees’ positions on the Huntsman board; (3) MatlinPatterson relied on the 

Banks’ representations in deciding to abandon the one merger for the other; (4) the 

Banks were aware the misrepresentations were false when they were made; and (5) 

MatlinPatterson was damaged by its reliance on the Banks’ false representations. 

The Banks’ plea to the jurisdiction urged that any fraud claim belonged solely to 

Huntsman. The trial court granted the plea to the jurisdiction. 

Plea to the Jurisdiction 

We review de novo a trial court’s ruling on a plea to the jurisdiction because 

the dismissal of a case for lack of subject matter jurisdiction is a question of law. 
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Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). 

“[W]hether undisputed evidence of jurisdictional facts establishes a trial court’s 

jurisdiction is also a question of law.” Id. “[I]f a plea to the jurisdiction challenges 

the existence of jurisdictional facts, we consider relevant evidence submitted by 

the parties when necessary to resolve the jurisdictional issues raised, as the trial 

court is required to do.” Id. at 227. “When the consideration of a trial court’s 

subject matter jurisdiction requires the examination of evidence, the trial court 

exercises its discretion in deciding whether the jurisdictional determination should 

be made at a preliminary hearing or await a fuller development of the case[.]” Id.

In situations where the jurisdictional challenge implicated the merits of the 

plaintiffs’ cause of action and the plea to the jurisdiction included evidence, in 

reviewing the trial court’s ruling on a plea to the jurisdiction, we construe the 

pleadings liberally in favor of the plaintiff and determine if the plaintiff alleged 

facts that affirmatively demonstrate the court’s jurisdiction to hear the cause. Id. at 

226-27. 

Direct or Derivative Action 

 MatlinPatterson argues Texas law determines who owns the fraud claims 

alleged by MatlinPatterson. Texas law provides that the law of the state of 

incorporation governs the internal affairs of a corporation. See Tex. Bus. Orgs. 

Code Ann. § 1.102 (West 2012). Internal affairs of a corporation include (1) the 
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rights, powers, and duties of the corporation’s governing authority, governing 

persons, officers, owners, and members; and (2) matters relating to the 

corporation’s membership or ownership interests. See id. § 1.105. MatlinPatterson 

contends the false representations in the commitment letter caused MatlinPatterson 

to commit its voting and sale rights to the Hexion merger, without which the deal 

would not have gone forward. As a result, MatlinPatterson gave up the price it 

would have otherwise received for the disposition of its own assets, namely, its 

Huntsman shares. The voting rights and the sale rights are incidents of 

MatlinPatterson’s status as a shareholder of Huntsman. Because the rights and 

powers of a corporation’s shareholders are determined by the law of the state of 

incorporation, we apply Delaware law to determine whether MatlinPatterson’s 

fraud claim is a derivative claim. See id. §§ 1.102, 1.105. 

 Delaware law uses a two-part analysis to distinguish between direct and 

derivative actions. Tooley v. Donaldson, Lufkin, & Jenrette, Inc., 845 A.2d 1031, 

1035 (Del. 2004). In making this determination, the court first considers who 

suffered the alleged harm—the corporation, or the suing stockholders, individually. 

Id. Second, the court considers who would receive the benefit of any recovery—

the corporation, or the stockholders, individually. Id. “The stockholder’s claimed 

direct injury must be independent of any alleged injury to the corporation.” Id. at 

1039. We must determine whether the stockholder demonstrated “the duty 
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breached was owed to the stockholder” and whether the stockholder “can prevail 

without showing an injury to the corporation.” Id. “Where all of a corporation’s 

stockholders are harmed and would recover pro rata in proportion with their 

ownership of the corporation’s stock solely because they are stockholders, then the 

claim is derivative in nature.” Feldman v. Cutaia, 951 A.2d 727, 733 (Del. 2008). 

This rule applies even where the alleged harm is ultimately suffered by the 

stockholders. Id. “In order to state a direct claim, the plaintiff must have suffered 

some individualized harm not suffered by all of the stockholders at large.” Id. 

 MatlinPatterson argues the Banks’ false assurances that they would fund 

Hexion’s merger with Huntsman harmed MatlinPatterson in its individual capacity 

because MatlinPatterson voted to have Huntsman abandon the Basell merger and 

execute the Hexion merger. As a result, MatlinPatterson argues, it gave up the 

price it would have received for its Huntsman stock and suffered expectancy 

damages in the form of the proceeds that Hexion would have paid to 

MatlinPatterson if the merger had closed. 

After review of the record, we conclude that as a result of its reliance on the 

commitment letter that failed to disclose the material terms of the merger 

financing, MatlinPatterson suffered the harm suffered by all Huntsman 

stockholders in proportion to their common stock ownership. Additionally, 

MatlinPatterson’s support for the merger affected all of Huntsman’s stockholders 
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in proportion to their common stock ownership. The harm suffered by 

MatlinPatterson was also suffered by Huntsman—Huntsman’s board of directors 

relied on the commitment letter when it abandoned the Basell transaction, agreed 

to pay the termination fee in the Basell merger agreement, agreed to reimburse 

MatlinPatterson for certain fees MatlinPatterson would owe upon the closing of the 

Hexion merger, recommended that all Huntsman shareholders vote for the Hexion 

merger, and agreed to merge with Hexion. 

 MatlinPatterson contends it seeks to vindicate its own voting and sale rights, 

but every Huntsman stockholder possessed voting and sale rights in connection 

with the adoption of the merger agreement by Huntsman. MatlinPatterson alleged 

it was unique among Huntsman’s shareholders because its position was sufficiently 

large enough to veto the proposed merger, but any injury resulting from 

MatlinPatterson’s decision to support the merger affected all of Huntsman’s 

stockholders similarly in proportion to their common stock ownership, and 

Huntsman absorbed MatlinPatterson’s liability for its lack of performance of 

MatlinPatterson’s voting agreement with Basell. Because MatlinPatterson has not 

alleged individualized harm not suffered by the corporation or by the stockholders 

at large, the claim is derivative under Delaware law. See id. 

 We reach the same result under Texas law. MatlinPatterson contends it has a 

claim for injury to its own legal rights under Texas law because its complaint 
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concerns a fraud directed against it personally, as a powerful shareholder whose 

support was critical to the success of the Banks’ scheme. A corporate stockholder 

cannot recover damages personally for a wrong done solely to the corporation, 

even though it may be injured by that wrong, but it may recover damages for a 

wrong done to it personally for a duty owed directly by a wrongdoer to the 

stockholder. Wingate v. Hajdik, 795 S.W.2d 717, 719 (Tex. 1990). 

A corporate shareholder may have an action for personal damages where the 

wrongdoer violates a duty owing directly to the stockholder, provided the 

stockholder personally is the beneficiary of the contract or other liability. See In re 

Enron Corp., 292 B.R. 507, 511-12 (Bankr. S.D.N.Y. 2002) (applying Texas law 

and holding that third-party beneficiaries, including stockholders, could directly 

sue breaching buyer to enforce third-party beneficiary rights provided for in the 

merger agreement). Where “each shareholder suffers relatively in proportion to the 

number of shares he owns,” however, “each will be made whole if the corporation 

obtains restitution or compensation from the wrongdoer.” Massachusetts v. Davis, 

168 S.W.2d 216, 221 (Tex. 1942); see also Schoellkopf v. Pledger, 739 S.W.2d 

914, 918-20 (Tex. App.—Dallas 1987), rev’d on other grounds, 762 S.W.2d 145 

(Tex. 1988) (noting stockholder had a personal defense for being fraudulently 

induced into signing guaranty but he could not sue to recover the value of his stock 
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from the co-guarantor because the tortious interference claim belonged only to the 

corporation). 

MatlinPatterson argues it seeks to pursue a personal claim because its voting 

rights in Huntsman were affected by the voting agreement MatlinPatterson made 

with Hexion in reliance on the misrepresentations in the Banks’ commitment letter. 

The Banks’ false representation, that they would fully fund the Hexion merger if a 

majority of Huntsman’s shares were voted to support the Hexion merger, damaged 

MatlinPatterson by adversely affecting the price it received for Huntsman’s 

common stock. The harm was not to MatlinPatterson’s voting rights, which it 

exercised; rather, the wrong was directed toward the corporation, which by the 

cumulative vote of all its shareholders abandoned the Basell merger for the Hexion 

merger, and was suffered by the corporation and all of its shareholders in 

proportion to their ownership of Huntsman’s common stock. 

To recover individually under Texas law, “a stockholder must prove a 

personal cause of action and personal injury.” Wingate, 795 S.W.2d at 719. The 

Banks allegedly made misrepresentations the Banks knew would be relied upon by 

MatlinPatterson, but the fraud was obtaining Huntsman’s agreement to merge with 

Hexion under terms that in reality were less advantageous than the Banks 

represented they were. That was conduct directed towards Huntsman, through its 

stockholders who each had the right to vote for or against the competing merger 
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agreements, not MatlinPatterson. Accordingly, we conclude MatlinPatterson’s 

claim is not only a derivative claim under Delaware law, but is also a derivative 

claim under Texas law. We overrule issue one. 

Dismissal with Prejudice 

MatlinPatterson contends that the trial court erred in dismissing the suit with 

prejudice. If the pleadings affirmatively negate the existence of jurisdiction, a plea 

to the jurisdiction may be granted without allowing the plaintiffs an opportunity to 

amend. Miranda, 133 S.W.3d at 227. MatlinPatterson’s post-submission brief 

contends that if we remand the case it would disclaim any recovery based on harm 

to Huntsman assets—including corporate accounts, operations, reputation, and 

creditworthiness—and asserts what it argues are claims for its direct injuries: (1) 

the lost opportunity to obtain the Basell merger consideration; (2) the lost 

opportunity to sell the Huntsman stock that was committed through the Hexion 

voting agreement; (3) the lost opportunity to obtain the Hexion merger 

consideration; (4) the lost opportunity to obtain a premium for control of 

Huntsman; and (5) the time-value of the money from its lost opportunities. These 

injuries necessarily derive from wrongful acts of the Banks that caused Huntsman 

to fail to complete a merger, which harmed Huntsman’s stockholders relatively in 

proportion to the number of shares owned, and not from the Banks’ breach of an 

independent duty to MatlinPatterson. See Feldman, 951 A.2d at 733; Wingate, 795 
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S.W.2d at 719. If allowed to replead, MatlinPatterson’s complaints remain 

complaints that do not concern an individualized harm not suffered by all of the 

stockholders at large. Feldman, 951 A.2d at 733. Because MatlinPatterson’s 

pleadings and the undisputed evidence of jurisdictional facts affirmatively negate 

jurisdiction, the trial court did not err in dismissing the suit with prejudice without 

first allowing MatlinPatterson to amend its pleadings. Miranda, 133 S.W.3d at 

227. We overrule issue two and affirm the trial court’s judgment. 

AFFIRMED. 

 

 

 ________________________________ 

 CHARLES KREGER 

 Justice 

 

Submitted on November 7, 2013 

Opinion Delivered May 15, 2014 

Before McKeithen, C.J., Kreger and Horton, JJ.