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| Fact Finding in a Texas Shareholder Oppression Case |
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Author:
Eric Fryar
Eric Fryar
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Ritchie v. Rupe, No. 05-08-00615-CV, ___ S.W.3d ____, 2011 WL 1107214 (Tex. App.—Dallas 2011, ____). Read Opinion.
Shareholder oppression is a unique cause of action because the plaintiff is not seeking damages proximately caused by specific wrong-
doing; rather the plaintiff is seeking an equitable remedy (usually a forced buy-out) based on the existence a pattern of oppressive conduct.
See Davis v. Sheerin, 754 S.W.2d 375, 383-84 (Tex. App–Houston 1988, writ denied). In fact, the specific oppressive acts need not result in
any particular monetary loss or damage to the plaintiff. See, e.g., id. at 381; Allchin v. Chemic, Inc., 2002 WL 1608616, at *8 (Tex. App.—
Houston [14th Dist.] 2002, no pet.) (“jury’s failure to award damages is not a factor” in the determination of whether there was shareholder
oppression).
A plaintiff establishes liability by proving a pattern of discrete oppressive acts. Whether certain conduct constitutes shareholder oppression
is a question of law. Willis v. Bydalek, 997 S.W.2d 798, 801 (Tex. App.—Houston [1st Dist.] 1999, pet. denied). Therefore, in a shareholder
oppression case, there is no jury question requiring a finding of that the defendant oppressed the plaintiff. Rather, the court determines
whether oppression has occurred, and the court fashions the equitable remedy. The jury decides only whether the specific oppressive acts
occurred and the value of the shares. Typically, there is no factual dispute as to many of the oppressive acts; therefore, the trial court (or
appellate court) may base its conclusion that the defendant committed shareholder oppression on undisputed oppressive acts even if those
acts were never submitted to the jury. See Willis, 997 S.W.2d at 801; Davis, 754 S.W.2d at 380.
In the recent Dallas Court of Appeals opinion in Ritchie v. Rupe, No. 05-08-00615-CV, ___ S.W.3d ____, 2011 WL 1107214 (Tex. App.—
Dallas 2011, ____), the court explicitly addressed the procedural issues relating to submission of a shareholder oppression case. In that
case, the court of appeals affirmed a shareholder oppression judgment ordering a forced buy-out. In addition to jury findings, the trial court
also issued 43 numbered findings of fact and conclusions of law. Id. at *3. The appellants attacked the judgment as being based on factual
findings not submitted to the jury and argued that the findings of fact and conclusions of law should be disregarded. The court of appeals
rejected this argument. The court held:
Probably, the trial court should not have issued “findings of fact.” The issues decided by the trial court, including existence of facts that were
undisputed or conclusively established, are conclusions of law. However, the trial court had stated in its order that, “[t]o the extent
necessary, each of the findings of fact shall be treated as a conclusion of law and each conclusion of law shall be treated as a finding of
fact.”
The principal basis of the oppression judgment was that the defendants had refused to cooperate with plaintiff’s attempts to sell her shares
to third parties, thereby substantially defeating her reasonable expectation of free alienability of her stock. Id. at *14. The appellants
argued that this basis of liability had been waived because it was not submitted to the jury. The court of appeals noted: “The jury determines
what acts occurred (assuming those facts are in dispute), but whether those acts constitute shareholder oppression is a question of law for
the court.” Id. at *8. The fact that the defendants had refused to meet with prospective purchasers was undisputed. Therefore, no jury
question was necessary:
that had not been submitted in jury instructions. “As discussed above, the jury does not decide whether an act is oppressive; that decision
is one of law for the court. See Willis, 997 S.W.2d at 801; Davis, 754 S.W.2d at 380. Thus, the failure to include part of the definition in the
jury charge does not affect the trial court's ability to consider the complete definition in making a ruling on an issue of law.” Id. at *19. Under
the court’s reasoning, probably the submission of any instruction to the jury as to the definition of oppressive conduct whatsoever was
unnecessary.
Ritchie v. Rupe, No. 05-08-00615-CV, ___ S.W.3d ____, 2011 WL 1107214 (Tex. App.—Dallas 2011, ____). Read Opinion.
Shareholder oppression is a unique cause of action because the plaintiff is not seeking damages proximately caused by specific wrong-
doing; rather the plaintiff is seeking an equitable remedy (usually a forced buy-out) based on the existence a pattern of oppressive conduct.
See Davis v. Sheerin, 754 S.W.2d 375, 383-84 (Tex. App–Houston 1988, writ denied). In fact, the specific oppressive acts need not result in
any particular monetary loss or damage to the plaintiff. See, e.g., id. at 381; Allchin v. Chemic, Inc., 2002 WL 1608616, at *8 (Tex. App.—
Houston [14th Dist.] 2002, no pet.) (“jury’s failure to award damages is not a factor” in the determination of whether there was shareholder
oppression).
A plaintiff establishes liability by proving a pattern of discrete oppressive acts. Whether certain conduct constitutes shareholder oppression
is a question of law. Willis v. Bydalek, 997 S.W.2d 798, 801 (Tex. App.—Houston [1st Dist.] 1999, pet. denied). Therefore, in a shareholder
oppression case, there is no jury question requiring a finding of that the defendant oppressed the plaintiff. Rather, the court determines
whether oppression has occurred, and the court fashions the equitable remedy. The jury decides only whether the specific oppressive acts
occurred and the value of the shares. Typically, there is no factual dispute as to many of the oppressive acts; therefore, the trial court (or
appellate court) may base its conclusion that the defendant committed shareholder oppression on undisputed oppressive acts even if those
acts were never submitted to the jury. See Willis, 997 S.W.2d at 801; Davis, 754 S.W.2d at 380.
In the recent Dallas Court of Appeals opinion in Ritchie v. Rupe, No. 05-08-00615-CV, ___ S.W.3d ____, 2011 WL 1107214 (Tex. App.—
Dallas 2011, ____), the court explicitly addressed the procedural issues relating to submission of a shareholder oppression case. In that
case, the court of appeals affirmed a shareholder oppression judgment ordering a forced buy-out. In addition to jury findings, the trial court
also issued 43 numbered findings of fact and conclusions of law. Id. at *3. The appellants attacked the judgment as being based on factual
findings not submitted to the jury and argued that the findings of fact and conclusions of law should be disregarded. The court of appeals
rejected this argument. The court held:
- “Generally, failure to submit or request a jury question on a ground of recovery or defense results in waiver of that ground on appeal.
TEX.R. CIV. P. 279. However, jury questions “should not be submitted where the facts in question are conclusively established.” T.A.
Manning & Sons, Inc. v. Ken-Tex Oil Corp., 418 S.W.2d 324, 326 (Tex. Civ. App.—Austin 1967, writ ref'd n.r.e.); see also City of
Brenham v. Honerkamp, 950 S.W.2d 760, 769 (Tex. App.—Austin 1997, pet. denied) (“A proposition conclusively established by the
evidence should not be submitted to the fact finder.”). Further, in certain circumstances the trial court may make findings of fact on
elements of a ground of recovery or defense that were omitted from the charge. See TEX.R. CIV. P. 279. When part of a cause is
decided by the jury and part by the court, a party may request and the court may issue findings of fact and conclusions of law on
the court-decided issues. See Toles v. Toles, 45 S.W.3d 252, 264 n. 5 (Tex. App.—Dallas 2001, pet. denied), and the cases
cited therein.” Id.
Probably, the trial court should not have issued “findings of fact.” The issues decided by the trial court, including existence of facts that were
undisputed or conclusively established, are conclusions of law. However, the trial court had stated in its order that, “[t]o the extent
necessary, each of the findings of fact shall be treated as a conclusion of law and each conclusion of law shall be treated as a finding of
fact.”
The principal basis of the oppression judgment was that the defendants had refused to cooperate with plaintiff’s attempts to sell her shares
to third parties, thereby substantially defeating her reasonable expectation of free alienability of her stock. Id. at *14. The appellants
argued that this basis of liability had been waived because it was not submitted to the jury. The court of appeals noted: “The jury determines
what acts occurred (assuming those facts are in dispute), but whether those acts constitute shareholder oppression is a question of law for
the court.” Id. at *8. The fact that the defendants had refused to meet with prospective purchasers was undisputed. Therefore, no jury
question was necessary:
- We reject appellants' argument because uncontroverted issues need not be submitted to the jury. City of Keller v. Wilson, 168 S.W.3d
802, 814-15 & n. 52 (Tex.2005). “No jury finding is necessary to establish undisputed facts.” Id. (quoting Wright v. Vernon Compress
Co., 296 S.W.2d 517, 523 (Tex.1956)). Ritchie admitted, and put in writing, his refusal to speak with potential purchasers. No witness
testified that Ritchie or any other member of management agreed to meet or did meet any potential purchasers of the Stock.
Accordingly, this fact was conclusively established and did not require a jury finding. See TEX.R. CIV. P. 279 (independent grounds of
recovery are not waived if conclusively established).
that had not been submitted in jury instructions. “As discussed above, the jury does not decide whether an act is oppressive; that decision
is one of law for the court. See Willis, 997 S.W.2d at 801; Davis, 754 S.W.2d at 380. Thus, the failure to include part of the definition in the
jury charge does not affect the trial court's ability to consider the complete definition in making a ruling on an issue of law.” Id. at *19. Under
the court’s reasoning, probably the submission of any instruction to the jury as to the definition of oppressive conduct whatsoever was
unnecessary.
| Last Updated: 4/3/11 |