Webre v. Sneed, 358 S.W.3d 322

Webre, a 24% Texas United shareholder, sits on the boards of Texas United and United Salt, which is a wholly owned subsidiary of Texas United.
United Salt acquired a Saltville mining facility; Webre alleges officers misrepresented and failed to properly investigate the Saltville Acquisition and related contracts.
Webre filed a shareholder derivative suit on April 9, 2009 on behalf of Texas United and United Salt against O’Donnell, Sneed, Wolgel, and Tichenor.
Defendants moved to dismiss/plead to jurisdiction arguing lack of standing, no written 5.14(C) demand, and other grounds; Texas United and United Salt intervened asserting lack of standing.
Trial court granted pleas to jurisdiction and dismissed the case for lack of standing; judgment entered November 23, 2009; appellate review ensued.
This court reverses and remands, holding standing exists under the Texas law governing derivative suits for closely held, parent-subsidiary structures.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to sue on behalf of Texas United and United Salt	Webre has derivative standing via Texas United as holder of Texas United stock and equitable owner of United Salt.	Webre lacks standing because he is not a direct shareholder of United Salt and does not comply with 5.14 requirements.	Webre has standing to sue for Texas United and United Salt.
Effect of 5.14(C) written demand for closely held corporations	Close-held status excises written demand requirement.	Demand requirements apply regardless of closeness of corporation.	Written demand not required; 5.14(C) not applicable to closely held corporations.
Estoppel as grounds for dismissal	Estoppel cannot defeat standing or preclude derivative suit in jurisdiction.	Receipt of Saltville benefits and changing position estops suit.	Estoppel sustained; issues cannot end standing determination at this stage.
Business judgment rule and closely held corporations	Business judgment rule does not bar standing in closely held derivative actions.	Board decisions and lack of fraud/self-dealing bar standing.	Webre may pursue standing; the rule does not bar standing in closely held cases.
Direct recovery under 5.14(L) and standing	5.14(L) allows direct action and direct recovery where appropriate, not a standing barrier.	Recovery basis could affect standing under 5.14(L).	Direct-recovery provision does not defeat standing to pursue derivative action.

Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) (standing implicit in subject-matter jurisdiction; de novo review)
In re Crown Castle Int’l Corp., 247 S.W.3d 349 (Tex.App.-Houston [14th Dist.] 2008) (derivative standing; board review and independent inquiry)
Wingate v. Hajdik, 795 S.W.2d 717 (Tex. 1990) (shareholder standing and derivative actions)
Redmon v. Griffith, 202 S.W.3d 225 (Tex.App.-Tyler 2006) (fiduciary duties; injury to corporation vs. shareholder action)
Faour v. Faour, 789 S.W.2d 620 (Tex.App.-Texarkana 1990) (corporate injury vs. shareholder action; derivative context)
Perry v. Cohen, 285 S.W.3d 137 (Tex.App.-Austin 2009) (standards for standing; derivative action principles)
Pace v. Jordan, 999 S.W.2d 615 (Tex.App.-Houston [1st Dist.] 1999) (board's demand refusal and business judgment rule distinction)
Roadside Stations, Inc. v. 7HBF, Ltd., 904 S.W.2d 927 (Tex.App.-Fort Worth 1995) (standing of equitable owners in derivative actions)
Zauber v. Murray Sav. Ass’n, 601 S.W.2d 940 (Tex. 1980) (derivative action framework and related doctrines)
Langston v. Eagle Publ’g Co., 719 S.W.2d 612 (Tex.App.-Waco 1986) (business judgment and derivative standing principles)
Cates v. Sparkman, 11 S.W. 846 (Tex. 1889) (historical basis for board control over litigation)
Miranda v. Tex. Dep’t of Parks & Wildlife, 133 S.W.3d 217 (Tex. 2004) (standards for subject-matter jurisdiction and deference to jurisdictional challenges)