Court Opinion

ID: 3070739
Source: CourtListenerOpinion
Date Created: 2015-10-16 00:29:18.546628+00
Date Added: 2024-06-11T07:38:23.677614
License: Public Domain

NUMBER 13-14-00262-CV

                             COURT OF APPEALS

                   THIRTEENTH DISTRICT OF TEXAS

                     CORPUS CHRISTI - EDINBURG

WHITE POINT MINERALS, INC.,                                                  Appellant,

                                            v.

DICK SWANTNER,                                                                 Appellee.

               On appeal from the County Court at Law No. 1
                        of Nueces County, Texas.

                                      OPINION
            Before Justices Rodriguez, Benavides, and Perkes
                      Opinion by Justice Benavides
       In this permissive interlocutory appeal, see TEX. CIV. PRAC. & REM. CODE ANN. §

51.014(d) (West, Westlaw through 2013 3d C.S.), we are asked to determine whether the

trial court erred in denying appellant White Point Minerals, Inc.’s (“Minerals”) plea to the

jurisdiction regarding appellee, Dick Swantner’s, standing to bring his underlying action
pursuant to the Texas Business Organizations Code. We reverse and remand.

                                   I.     BACKGROUND

      Swantner was a shareholder of White Point Oil & Gas Company (“O&G”), a Texas

corporation.   On November 1, 2012, O&G’s board of directors called a special meeting

of its shareholders, scheduled for November 28, 2012, to vote on an agreement and

merger plan with Minerals, a Texas corporation.         Prior to the November 28, 2012

meeting, O&G sent Swantner: (1) formal notice of the November 28, 2012 meeting; (2)

a copy of the ballot to vote on the merger; (3) a copy of the proposed merger agreement

with Minerals; (4) a copy of the relevant statutes under the Texas Business Organizations

Code regarding a shareholder’s right to dissent from a plan of merger; and (5) a copy of

the Minerals’ shareholders’ agreement.

      The shareholders’ meeting to vote on the O&G-Minerals merger took place on

November 28, 2012, and the merger was approved.         Swantner did not personally attend

the meeting to vote and did not vote by proxy.   The new merger took effect after midnight

on December 1, 2012.        The merger agreement contained the following language

regarding the conversion of stock ownership from O&G to Minerals:

      (c)      Manner and Basis of Converting Shares of Stock in White Point.
      Upon consummation of the merger, all of the shares of stock in [O&G] will
      be cancelled. [O&G’s] existing shareholders owning fifteen (15) or more
      shares of stock in [O&G] will receive one (1) share of common stock of
      Minerals in exchange for every fifteen (15) shares of stock in [O&G]. Cash
      will be paid in lieu of issuing fractional shares of Minerals stock on the basis
      of $232.00 per share of White Point stock. In addition, the shares of stock
      of all ineligible [O&G] shareholders will be converted into cash on the basis
      of $232.00 per share of [O&G] stock and distributed to such ineligible
      shareholders. Ineligible shareholders are shareholders of [O&G] owning
      less than fifteen (15) shares of [O&G] stock, shareholders who do not qualify
      as an S-Corporation shareholder and those who elect not sign [sic] a
      Shareholders’ Agreement required for the issuance of Minerals stock.

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      Minerals will be responsible for distributing the cash payments to the
      applicable shareholders of [O&G].

      On December 3, 2012, Swantner, through his attorney, requested a copy of “the

director’s meeting minutes from November 28, 2012” and a “list of the January 1, 2007,

and current stock holders including the amount each owns in shares” from O&G’s

attorney.1 On December 6, 2012 Swantner’s attorney made another request to O&G’s

attorney for the documents specified in the December 3, 2012 letter.              On December 13,

2012, O&G’s attorney responded to Swantner’s request informing him that Swantner

ceased being a shareholder with O&G as a result of the merger and did not become a

shareholder in Minerals, as a result of his failure to sign the shareholder agreement, as

required by the merger agreement.            Minerals enclosed a check to Swantner totaling

$7,656.00, representing the value of Swantner’s cancelled O&G stock.

      On February 22, 2013, Swantner filed suit against Minerals for access to the

requested documents and alleged that he was entitled to the corporation’s relevant books,

records of account, minutes, and share transfers pursuant to his shareholder rights under

the business organizations code.          See TEX. BUS. ORGS. CODE ANN. §§ 21.218, 21.222

(West, Westlaw through 2013 3d C.S.). Swantner later amended his petition to include

an allegation that O&G committed shareholder oppression against him and dealt with him

“unfairly” by failing to pay adequate dividends and by “squeez[ing] out disfavored

shareholders,” including Swantner.

      On May 10, 2013, Minerals filed a plea to the jurisdiction alleging that the trial court

lacked subject matter jurisdiction on the ground that Swantner lacked standing to bring

      1   O&G’s attorney represented Minerals in the underlying case as well as on appeal.

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his asserted claims under the business organizations code.        At the hearing on the plea,

Swantner testified that he made a written request to O&G while he was still a shareholder

of O&G for “a copy of the lease that they had for the White Point Oil and Gas for whoever

they leased to and didn’t get it,” as well as “a copy of the 2007 shareholder list with the

number of shares each person had,” but O&G was not responsive to this request.         Aside

from his testimony, however, Swantner did not produce any written evidence sent on his

behalf to O&G prior to the December 1, 2012 merger. Instead, the trial court admitted

into evidence a letter from O&G’s counsel to Swantner’s counsel dated November 15,

2012 stating in relevant part: “I have been provided your correspondence on behalf of

[Swantner].   I will follow up with my client regarding your requests on behalf of Mr.

Swantner.” Another letter dated November 16, 2012 was also admitted at the hearing,

again from O&G’s counsel to Swantner’s counsel, in which O&G turned over “some of”

the info Swantner requested on November 9, 2012 and November 14, 2012, including

“Company Bylaws, which were in effect from 1996 to 2009” and “Company Bylaws” which

were in effect from 2009 until the date of the letter. O&G also provided Swantner with

“Company Financial Statements for the years ending December 31, 2007 through 2011

and Company Federal Income Tax Returns for 2010 and 2011.” O&G’s counsel closed

the November 16th letter by stating that they “are working to determine which of the

additional documents” would be responsive to Swantner’s stated purposes and were “in

the process of gathering that information.”       The trial court denied Minerals’s plea, and

this permissive interlocutory appeal followed.      See TEX. CIV. PRAC. & REM. CODE ANN. §

51.014(d).

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                             II.     PLEA TO THE JURISDICTION

       By two issues, Minerals asserts that the trial court erred by denying its plea to the

jurisdiction (1) challenging Swantner’s standing to bring his claims under the business

organizations code; and (2) challenging the trial court’s subject-matter jurisdiction to hear

Swantner’s shareholder oppression claim.

A.     Standard of Review

       A plea to the jurisdiction is a dilatory plea, the purpose of which is to defeat a cause

of action without regard to whether the claims asserted have merit. Bland Ind. Sch. Dist.

v. Blue, 34 S.W.3d 547, 555 (Tex. 2000). Subject-matter jurisdiction is essential to a

court’s power to decide a case. Id. 554–55. Whether a court has jurisdiction is a

question of law that is reviewed de novo. City of Elsa v. Gonzalez, 325 S.W.3d 622, 625

(Tex. 2010); Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex.

2004). When reviewing a trial court’s ruling on a challenge to its jurisdiction, we consider

the plaintiff’s pleadings and factual assertions, as well as any evidence in the record that

is relevant to the jurisdictional issue. City of Elsa, 325 S.W.3d at 625.

       We construe the pleadings liberally in favor of the plaintiff and look to the pleader’s

intent. Miranda, 133 S.W.3d at 226. If the pleadings do not contain sufficient facts to

affirmatively demonstrate the trial court’s jurisdiction but do not affirmatively demonstrate

incurable defects in jurisdiction, the issue is one of pleading sufficiency, and the plaintiff

should be afforded the opportunity to amend. Id. If the pleadings affirmatively negate

the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing

the plaintiff an opportunity to amend. Id. at 227.

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       However, if 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 so. Id. at 227. In a case in

which the jurisdictional challenge implicates the merits of the plaintiffs’ cause of action

and the plea to the jurisdiction includes evidence, the trial court reviews the evidence to

determine if a fact issue exists. Id. at 227. If the evidence creates a fact question

regarding the jurisdictional issue, then the trial court cannot grant the plea to the

jurisdiction, and the fact issue will be resolved by the fact finder. Id. at 227–28. However,

if the relevant evidence is undisputed or fails to raise a fact question on the jurisdictional

issue, the trial court rules on the plea as a matter of law. Id. at 228.

B.     Discussion

       1. Texas Business Organizations Code Section 21.218 Claim

       By Minerals’s first issue, it asserts that Swantner lacks standing to bring such an

action under section 21.218.      In our review, we examine Swantner’s pleadings, his

assertion of rights pursuant to the business organizations code, and the relevant evidence

submitted by the parties.    Swanter invoked his rights to examine and copy Minerals’s

“relevant books, records of account, minutes, and share transfer records” pursuant to his

rights as a shareholder under section 21.218 of the business organization code.           See

TEX. BUS. ORGS. CODE ANN. §§ 21.218; 21.222(a).

       Standing is a prerequisite to subject-matter jurisdiction and may be raised by a

plea to the jurisdiction.   See Blue, 34 S.W.3d at 553–54.          Our review of the scant

number of cases addressing the relevant provisions yielded no results that are beneficial

to the disposition of this case. Therefore, in order to determine whether Swantner has

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standing under section 21.218, we preliminary construe the relevant statute de novo.

See Nathan v. Whittington, 408 S.W.3d 870, 872 (Tex. 2013) (per curiam) (“We . . . review

issues of statutory construction de novo.”).

         Our objective is to give effect to the Legislature’s intent, and we do that by applying

the statute’s words according to their plain and common meaning unless a contrary

intention is apparent from the statutes’ context or the plain meaning leads to absurd or

nonsensical results.      See id. (citing Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex.

2011)).     If the statute uses a term with a particular meaning or assigns a particular

meaning to a term, we are bound by the statutory usage.           TGS-NOPEC Geophys. Co.

v. Combs, 340 S.W.3d 432, 439 (Tex. 2011). Additionally, we consider statutes as a

whole rather than in isolation.     Id.   With these rules in mind, we turn to the statute at

issue.

         The relevant statute states the following:

         (a) In this section, a holder of a beneficial interest in a voting trust entered
             into under Section 6.251 is a holder of the shares represented by the
             beneficial interest.

         (b) Subject to the governing documents and on written demand stating a
             proper purpose, a holder of shares of a corporation for at least six
             months immediately preceding the holder's demand, or a holder of at
             least five percent of all of the outstanding shares of a corporation, is
             entitled to examine and copy, at a reasonable time, the corporation's
             relevant books, records of account, minutes, and share transfer
             records. The examination may be conducted in person or through an
             agent, accountant, or attorney.

         (c) This section does not impair the power of a court, on the presentation of
             proof of proper purpose by a beneficial or record holder of shares, to
             compel the production for examination by the holder of the books and
             records of accounts, minutes, and share transfer records of a
             corporation, regardless of the period during which the holder was a
             beneficial holder or record holder and regardless of the number of

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          shares held by the person.

TEX. BUS. ORGS. CODE § 21.218.

       A “shareholder” or “holder of shares” is defined as (A) the person in whose name

shares issued by a for-profit corporation, professional corporation . . . are registered in

the share transfer records maintained by the for-profit corporation, [or] professional

corporation . . . ; or (B) the beneficial owner of shares issued by a for-profit corporation,

whose shares are held in a voting trust or by a nominee on the beneficial owner's behalf,

to the extent of the rights granted by a nominee statement on file with the for-profit

corporation in accordance with sections 21.201(b) and (c).          Id. § 1.002 (81) (West,

Westlaw through 2013 3d C.S.). Therefore, after giving effect to the Legislature’s intent

and applying the statute’s plain and common meaning, see Nathan, 408 S.W.3d at 872,

we hold that the statutory rights addressed in section 21.218 apply solely to a record or

beneficial shareholder of a corporation at the time the demand is made or action is filed.

       Minerals argues that Swantner lacks standing under these provisions because he

has no vested interest in Minerals’s corporate affairs due to his inaction prior to the merger

with O&G and is, essentially, utilizing a shareholder-only statute to enforce a non-

shareholder action by his written request on December 6, 2012. As a starting point, we

look to Swantner’s pleadings.

       In his second-amended original petition—his live pleading before the trial court—

Swantner alleges the following facts:

       On December 6, 2012, [Swantner], a shareholder in [O&G], which merged
       with [Minerals], requested in writing that [Minerals] provide him a copy of
       the director’s meeting minutes for the meeting that occurred on November
       28, 2012, and a list of the January 1, 2007 shareholders and the amount
       each shareholder owned at the time in shares. [Minerals] refuses to

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      produce or allow [Swantner] access to these documents.

      In its plea to the jurisdiction, Minerals challenged Swantner’s pleadings. Minerals

argued that Swantner’s December 6, 2012 written request was made after Swantner was

no longer a shareholder.   It is Minerals’s position that as a non-shareholder, Swantner

was unable to properly invoke the provisions of section 21.218 of the business

organizations code. Minerals attached undisputed evidence to its plea establishing that

the O&G-Minerals merger took effect at midnight on December 1, 2012.        At the plea to

the jurisdiction hearing, however, Swantner testified that he made his first request for

corporate documents from O&G pre-merger in mid-November—not December 6.

Documents admitted at the hearing confirm Swantner’s testimony that he requested

certain documents from O&G prior to the merger in mid-November 2012.        However, the

substance of these document requests are unclear from the record.

      In sum, the record at this stage of the proceedings shows the following:         (1)

Swantner’s live pleading invoking section 21.218 of the business organization code

alleges that he made a written request for “a copy of the director’s meeting minutes for

the meeting that occurred on November 28, 2012, and a list of the January 1, 2007

shareholders and the amount each shareholder owned at the time in shares” on

December 6, 2012; (2) Minerals presented undisputed evidence that the O&G-Minerals

merger took place on December 1, 2012; and (3) testimony by Swantner and other written

evidence indicates that a request for certain documents was made to O&G by Swantner

before December 1, 2012.

      Therefore, after considering the pleadings and factual assertions, as well as the

evidence relevant to the jurisdictional issue submitted by both parties, see City of Elsa,

                                            9
325 S.W.3d at 625, we conclude that Swantner’s pleadings do not state sufficient facts to

demonstrate the trial court’s jurisdiction over his section 21.218 claims. See Miranda,
133 S.W.3d at 226. We sustain Minerals’s first issue. However, in light of the evidence

submitted related to the relevant jurisdictional issue of standing, Swantner’s pleadings

also do not affirmatively demonstrate incurable defects in jurisdiction. See id. The

issue in this case is one of pleading sufficiency, and Swantner should be afforded the

opportunity to replead in an attempt to cure the jurisdictional defects in his petition. See

Tex. Dep’t of Transp. v. Sefzik, 355 S.W.3d 618, 623 (Tex. 2011); Miranda, 133 S.W.3d

at 226–27; County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002).

       2. Shareholder Oppression Claim

       By its second issue, Minerals challenges the trial court’s subject matter jurisdiction

with regard to Swantner’s claim of shareholder oppression against Minerals and relies on

a recent Texas Supreme Court decision which held that Texas does not recognize a

common law action for minority shareholder oppression.         Ritchie v. Rupe, 443 S.W.3d
856, 877–91 (Tex. 2014). However, a review of the record shows that Minerals did not

make this specific challenge to the trial court’s jurisdiction in its plea.   To the contrary,

the entire substance of Minerals’s plea, as well as its arguments at the hearing on the

plea, focused solely on the interpretation of business organizations code 21.218 and how

it deprived Swantner of standing to bring such an action. As a result, Swantner was not

given any notice or opportunity to respond or potentially cure such a jurisdictional

challenge until this case was on appeal.        Likewise, the trial court was not given an

opportunity to rule upon Minerals’s challenge, if any, to Swantner’s shareholder

oppression claims.    Finally, we note that the Ritchie decision was issued a month after

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the trial court’s denial of Minerals’s plea to the jurisdiction.   See id.

        We strictly construe section 51.014(d) because it provides for an interlocutory

appeal as an exception to the general rule that only final judgments are appealable.   See

Corp. of Pres. of Church of Jesus Christ of Latter-Day Saints v. Doe, No. 13-13-00463-

CV, 2013 WL 5593441, at *1 (Tex. App.—Corpus Christi Oct. 10, 2013, no pet.) (mem.

op.).   Our scope of review in these types of appeals are limited to a (1) “controlling

question of law as to which there is a substantial ground for difference of opinion;” and

(2) our immediate resolution “may materially advance the ultimate termination of the

litigation.”   See TEX. R. APP. P. 28.3(e). We granted Minerals’s permissive interlocutory

appeal solely to address Swantner’s standing to bring a section 21.218 action.

Accordingly, in light of the procedural posture of this case and the provisions governing

permissive interlocutory appeals, we do not reach Minerals’s second issue because of

our limited scope of review in this permissive appeal.      See id. 28.3(e), 47.1.

                                      III.   CONCLUSION

        Without expressing any opinion on the merits of Swantner’s action, we reverse the

trial court’s denial of Minerals’s plea to the jurisdiction on the issue of whether Swantner

has standing to maintain a section 21.218 shareholder action and remand this case to

allow Swantner an opportunity to replead.

                                                            GINA M. BENAVIDES,
                                                            Justice

Delivered and filed the
28th day of May, 2015.

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