Texas recently forayed into appraisal by applying its statute to a corporation’s plan of merger. Subchapter H of Chapter 10 of the Texas Business Organizations Code provides that a voting shareholder of a for-profit corporation who dissents to a plan of merger is entitled to “obtain the fair value of [its] ownership interest through an appraisal.” TEX. BUS. ORGS. CODE ANN. § 10.354(a)(2).

In Am. Bank, N.A. as Tr. of Lisa Marie Buckley Tr. v. Moorehead Oil & Gas, Inc., 2018 WL 6219635, at *1 (Tex. App. Nov. 29, 2018), there was an additional wrinkle – the dissenting shares from the corporation’s plan of merger had been bequeathed to the trusts. Section 10.361(g) provides that a “beneficial owner of an ownership interest subject to dissenters’ rights held in a voting trust or by a nominee on the beneficial owner’s behalf” may file a petition for a valuation in that situation.

In Moorehead, the trusts had inherited a 3.8 percent stake in the oil and gas company Moorehead. Shortly thereafter, Moorehead finalized plans to reorganize itself, through a merger, to become a limited liability company, whereby the trusts’ shares would be canceled and converted into cash. The beneficiaries of the trusts objected to Moorehead’s valuation of $7.30 per share and filed an action seeking appraisal and recovery of the fair market value of their shares. Moorehead filed a motion for summary judgment on the grounds that (1) the petition was untimely because the original petition failed to correctly name the trustees of the trusts, and (2) several of the plaintiffs lacked standing.

The Court applied the doctrine of misnomer and found that the amended petition related back to the date of the timely filed petition. However, the Court dismissed the claim in part based on lack of standing. While the bank plaintiff had capacity to sue as trustee, the Court held that the beneficiaries of the trusts lacked standing as beneficial owners because the shares were never held in a voting trust or by a nominee, as is required pursuant to Section 10.361(g).

The post Focus on Texas Appraisal appeared first on Appraisal Rights Litigation.