By Samuel S. Nicholls, a senior associate in our Atlanta office, published in the June 8, 2015, issue of In-House Texas
, a monthly journal published by Texas Lawyer and ALM. This article is reprinted with the publisher's permission.
Sam’s article explores a recent Texas Supreme Court decision, Cardiac Perfusion Services v. Hughes. In this matter, the absence of a shareholder oppression statute in Texas required the litigants to pursue a legal claim—the Texas receivership statute. The language of that statute does not define “oppression,” and the legislative intent of that statute appears to have been to remedy instances of extreme mismanagement or criminal activity. Relief under a breach of fiduciary duty claim was not available because neither a formal nor informal fiduciary relationship could be established. Although relief may have been justified in the interest of fairness and supported through common law, as were the opinions of the trial and appellate courts in these matters, the Texas Supreme Court relied on the state statute. In the absence of clear language within the Texas receivership statute supporting the allegedly oppressed minority shareholders, the Texas Supreme Court had no choice but to interpret legislative intent, and to remand.