In Re Immobiliere Jeuness Establissement
422 S.W.3d 909
| Tex. App. | 2014Background
- IJE, a Liechtenstein entity and limited partner in two limited partnerships (29 Kuykendahl Rd., Ltd. and 9.2 Louetta Rd., Ltd.), sued derivatively alleging the general partner and others diverted $1.4 million of partnership funds for non‑partnership purposes.
- DCM (and joined parties Amegy/Pritchard) moved to abate, arguing (1) IJE, as an unregistered foreign entity, cannot maintain a suit arising from Texas business under Tex. Bus. Orgs. Code § 9.051(b), and (2) the Partnerships forfeited their right to transact business so cannot maintain suits under § 153.309(a)(1).
- The trial court granted abatement on March 8, 2013 and clarified on April 5, 2013 that abatement was based on both §§ 9.051 and 153.309, staying proceedings until IJE registered and the Partnerships revived their status.
- IJE obtained a separate order in another Harris County case authorizing it to wind up the Partnerships and to prosecute existing claims on their behalf, but the trial court denied motions to lift abatement.
- IJE sought mandamus directing the trial court to vacate the portions of the abatement order requiring revival of the Partnerships’ right to transact business; it conceded it chose not to register as a foreign entity and did not seek mandamus on that ground.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tex. Bus. Orgs. Code § 153.309(a)(1) (forfeiture bars the limited partnership from maintaining a suit) requires abatement of a derivative suit brought by a limited partner | §153.309 does not apply to derivative suits because the Partnerships themselves are not maintaining the action; a limited partner may sue on the Partnership’s behalf under §153.401 | §153.309 plainly bars the Partnerships from maintaining any action until revived, so the suit must be abated | Court: §153.309(a)(1) does not apply to a derivative suit; abatement on that ground was an abuse of discretion and must be vacated |
| Whether Tex. Bus. Orgs. Code § 9.051(b) (foreign entity registration) permits abatement until IJE registers to transact business in Texas | IJE argued the trial court should not abate on §9.051 because other circumstances (e.g., court authorization to wind up and prosecute claims) removed the impediment | DCM argued IJE must register before maintaining a suit arising from Texas business | Court: Did not decide abuse of discretion on §9.051; IJE has an adequate remedy by appeal because IJE controls whether to register, so mandamus relief on this ground is denied |
| Whether IJE has an adequate remedy by appeal for the §153.309-based abatement | IJE: no adequate remedy because only general partner can revive Partnerships and thus the abatement could be indefinite | DCM: mandamus inappropriate / delay, laches | Court: IJE lacks an adequate appellate remedy for the §153.309 abatement because the general partner controls revival; mandamus appropriate on that point; laches not a bar here |
Key Cases Cited
- In re Reece, 341 S.W.3d 360 (Tex. 2011) (mandamus standard: clear abuse of discretion and no adequate appellate remedy)
- In re Discovery Operating, Inc., 216 S.W.3d 898 (Tex. App.—Eastland 2007) (orig. proceeding) (indefinite abatement can deny an adequate appellate remedy)
- Pratt‑Hewit Oil Corp. v. Hewit, 52 S.W.2d 64 (Tex. 1932) (shareholders may prosecute suits for corporate wrongs despite corporate incapacity when directors refuse to act)
- In re Kimball Hill Homes Tex., Inc., 969 S.W.2d 522 (Tex. App.—Houston [14th Dist.] 1998) (orig. proceeding) (abatement precludes parties from proceeding until reinstatement)
- In re Int’l Profit Assocs., Inc., 274 S.W.3d 672 (Tex. 2009) (orig. proceeding) (equitable principles like laches can affect mandamus considerations)