Denton County Electric Cooperative, Inc. D/B/A CoServ Electric v. Nicole Hackett, Individually and on Behalf of Others Similarly Situated
368 S.W.3d 765
Tex. App.2012Background
- CoServ Electric seeks to appeal a trial court class-certification order in an interlocutory appeal and the court vacates and remands.
- Plaintiffs Hackett and Brady, as intervenors, seek declaratory, injunctive, and statutory/fiduciary relief related to member information access and governance in CoServ’s board elections.
- Glover previously sued CoServ for misappropriation and breach, alleging disclosure of member information; he proposed a class of current CoServ members who vote in board elections.
- The certified Voting Subclass comprises CoServ members; the order lists numerous common questions about governance, voting, access to information, and fiduciary/statutory duties.
- The court undertakes a rigorous analysis under Rule 42, addressing live pleadings, statutory vs. contractual duties, and whether ECCA limits or supersedes Business Organizations Code provisions.
- The court determines that certain statutory duties claims under the Business Organizations Code do not apply because the ECCA governs electric cooperatives, and it sustains some duties while rejecting others, remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the class certification rests on proper law | Hackett contends CoServ owes statutory, fiduciary, and contractual duties. | CoServ argues the court misapplied law and certified improperly. | Remanded; certification vacated for further proceedings. |
| Whether live pleading supports declarations | Live pleadings include breach of statutory duties; consent to try issues. | Declarations must be supported by pleadings at time of hearing. | Declarations 19-20 are supported by live pleadings; portion sustained for live pleadings analysis. |
| Whether CoServ owes statutory duties under the ECCA vs. Business Organizations Code | ECCA imposes statutory duties; BOC provisions apply to members. | ECCA governs and supersedes; BOC provisions do not apply here. | Sustains part; ECCA controls; rejects specific BOC provisions 22.154, 22.158, 22.351 as to this context. |
| Whether the ECCA excludes a fiduciary duty owed to members | CoServ directors owe fiduciary duties to members. | No fiduciary duty is imposed by ECCA; any fiduciary theory is legislative matter. | Sustains the absence of a fiduciary duty claim by the cooperative itself; voids broad fiduciary duty certification. |
| Whether Hackett has standing and proper representation for the class | Hackett has standing under the class claims and proper representative qualities. | Standing and commonality questions are unresolved; class suitability is contested. | Not fully decided; remanded with broader class-certification remand; standing addressed in later proceedings. |
Key Cases Cited
- Southwestern Refining Co. v. Bernal, 22 S.W.3d 425 (Tex. 2000) (rigorous analysis required for Rule 42 certifications; abides remand when misapplied law affects certification)
- Exxon Mobil Corp. v. Gill, 299 S.W.3d 124 (Tex. 2009) (substantive merits should not determine class viability at certification)
- Lopez v. State Farm Mut. Auto. Ins. Co., 156 S.W.3d 550 (Tex. 2004) (viability issues to be addressed in trial court; proper procedural paths needed)