Andrews, John H. v. Martin J. Arisco and Richard J. Thomson, in Their Capacity as Directors of San Jacinto Optical of Baytown, Inc.

Opinion issued May 30, 2002 In The Court of Appeals For The First District of Texas NO. 01-00-00592-CV ____________ JOHN H. ANDREWS, Appellant V. MARTIN J. ARISCO AND RICHARD J. THOMSON, IN THEIR CAPACITY AS DIRECTORS OF SAN JACINTO OPTICAL OF BAYTOWN, INC., TRUSTEES OF THE 1997 SAN JACINTO OPTICAL OF BAYTOWN TRUST, AND SHAREHOLDERS OF SAN JACINTO OPTICAL OF BAYTOWN, INC., Appellees On Appeal from the 333rd District Court Harris County, Texas Trial Court Cause No. 97-47560 O P I N I O N Appellant, John H. Andrews, claims the trial court erred in granting Martin J. Arisco and Richard J. Thomson's motion for summary judgment because there were fact issues surrounding the propriety of the dissolution of San Jacinto Optical. We affirm. Background Andrews, Arisco, and Thomson are licensed opthalmologists who practiced together at the San Jacinto Regional Eye Center (the Eye Center). Arisco and Thomson were partners in the Eye Center, and they subleased space to Andrews. In 1989, the three doctors opened San Jacinto Optical of Baytown, Inc., next door to the Eye Center, to serve their patients after they had been seen by one of the doctors. Their patients could purchase glasses and other optical needs at San Jacinto Optical, and more than 90 percent of its business was derived from the Eye Center's patients. The Eye Center owned the lease, a computer system, and a telephone system which were all loaned to San Jacinto Optical for use on an at-will basis. The three doctors were the directors and shareholders of San Jacinto Optical. Andrews owned one-third of the stock in his name, and Arisco and Thomson each held legal title to one-third of the stock in trust for their children. In January of 1997, after a "falling out," Andrews terminated his office-sharing relationship with Arisco and Thomson at the Eye Center and opened his own office elsewhere. A couple of months later, he sued Arisco and Thomson to recover damages for alleged injuries to his practice. The suit was settled and dismissed. Arisco and Thomson decided it would be best to completely separate themselves from Andrews. Andrews had already left the Eye Center but remained one-third owner of San Jacinto Optical. Arisco and Thomson determined to end their relationship in San Jacinto Optical by exercising their statutory right of dissolution under the Texas dissolution statutes. See Tex. Bus. Corp. Act. Ann. art. 6.03 - .07 (Vernon 1980 and Supp. 2002). Andrews cast his one-third vote opposing the dissolution. He wanted Arisco and Thomson to sell the company and demanded they appraise and purchase his stock as if San Jacinto Optical were an ongoing business and not in dissolution. Arisco and Thomson filed suit for declaratory judgment seeking, among other things, to have the trial court declare that the dissolution was lawful and that the dissolution statutes prescribed a distribution of assets to Andrews. On December 1, 1997, after the requisite number of shareholders voted to dissolve, San Jacinto Optical ceased to exist. Andrews was given written notice that the shareholder-approved plan of liquidation would be implemented at a meeting on December 6, 1997. After paying its creditors, the assets of San Jacinto Optical were divided into three lots, and each lot was randomly given to the three shareholders. (1) After all the remaining assets were distributed and outstanding taxes were paid, the Secretary of State issued a certificate of dissolution. Arisco and Thomson continued their practice at the Eye Center, and Andrews continued his practice elsewhere. On December 4, 1997, Arisco and Thomson incorporated San Jacinto Professional Optical, Inc. (Professional Optical) to take the place of the dissolved San Jacinto Optical. Andrews claimed that, except for its name, Professional Optical was essentially San Jacinto Optical absent his partial ownership. Arisco and Thomson filed motions for summary judgment in their declaratory judgment action. Andrews countered that the "dissolution" was, in fact, an illegal transfer of the assets from one company to another. He argued that, as a dissenting shareholder, he was entitled to have his one-third stock appraised and then purchased for the appraised value. In their first supplemental motion for summary judgment, Arisco and Thomson addressed Andrews's transfer causes of action that sought recovery of the fair market value of the shares. The motion sought to establish that the Texas dissolution statutes governed the case and prescribed the distribution of assets, rather than an appraisal and purchase of stock. The trial court granted the motion; therefore, the case was set to be tried pursuant to the dissolution statutes, and Andrews was free to pursue his rights in dissolution to recover any asset he alleged was not properly distributed in dissolution. Andrews stipulated that he did not intend to assert or try any claims to recover the value of any specific assets and that the only claim for relief he intended to pursue was the recovery of the price of his stock at a value as if the corporation was an ongoing business and not in dissolution. (2) This stipulation, combined with the trial court's ruling, left no issue of fact for trial. Andrews memorialized his waiver of dissolution rights in the final judgment as follows: Following such ruling, Defendant Andrews STIPULATED of record that the only relief sought by Defendant Andrews against Plaintiffs and Third Party Defendants in this case was the recovery of the fair market value of his stock in San Jacinto Optical of Baytown, Inc. . . . and that he waived and non-suited all other claims for relief . . . . Defendant Andrews further stipulated that he waived, non-suited and would not seek an accounting for, seek recovery of, or offer any evidence of the fair market value of any particular items alleged to be assets of San Jacinto Optical of Baytown, Inc. Andrews appeals the granting of Arisco and Thomson's first supplemental motion for summary judgment. (3) Summary Judgment In six points of error, Andrews argues the trial court erred in granting Arisco and Thomson's motion for summary judgment because fact issues exist as to whether (1) they transferred substantially all of the assets of the subject corporation to their new entity thereby triggering his rights to the fair market value of his stock as a dissenting shareholder; (2) their conduct constituted fraud; (3) their conduct constituted a breach of their fiduciary duties as directors and officers to him as a shareholder; (4) their conduct constituted a civil conspiracy; (5) they converted his stock; and (6) he was entitled to any equitable buyout of his stock based on Arisco and Thomson's oppressive conduct. Standard of Review Under rule 166a(c), summary judgment is proper only when the movant establishes there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995); Lawson v. B Four Corp., 888 S.W.2d 31, 34 (Tex. App.--Houston [1st Dist.] 1994, writ denied). As movant, the defendant is entitled to summary judgment if the evidence disproves as a matter of law at least one element of each of the plaintiff's causes of action. Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991); Marchal v. Webb, 859 S.W.2d 408, 412 (Tex. App.--Houston [1st Dist.] 1993, writ denied). We will take all evidence favorable to the nonmovant as true. Johnson, 891 S.W.2d at 644; Lawson, 888 S.W.2d at 33. Dissolution In issue one, Andrews argues the trial court erred in granting Arisco and Thomson's motion for summary judgment because a fact issue existed as to whether they transferred substantially all of San Jacinto Optical's assets to their new entity, thereby triggering his rights to the fair value of his stock as a dissenting shareholder. The final judgment ordered, adjudged, and decreed the following: San Jacinto Optical was dissolved, and a certificate of dissolution was issued by the Secretary of State; Andrews's causes of action seeking damages and recovery of the fair market value of his stock were dismissed, and he took nothing; and, 3. Andrews's causes of action and relief were limited to an action for an accounting of the assets he believed were improperly distributed to him in dissolution . . . . Andrews stipulated that the only relief he sought was the recovery of the fair market value of his San Jacinto Optical stock, and he waived and nonsuited all other claims. He also stipulated that he waived and nonsuited recovery of, and would not seek an accounting for, the fair market value of the San Jacinto Optical assets. Andrews and Arisco and Thomson stipulated that the trial court's ruling barred the only claim for relief Andrews sought, and mooted Arisco and Thomson's declaratory relief claims. Part 6 of the Texas Business Corporation Act outlines the steps to take for a voluntary dissolution. A corporation may be dissolved by act of the corporation in the following manner: (1) the board of directors shall adopt a resolution recommending that the corporation be dissolved, and the question of dissolution shall be submitted to a vote of the shareholders; (2) written notice shall be given to each shareholder, stating the purpose of the meeting is to consider dissolution; (3) the shareholders shall vote, and the resolution recommending dissolution shall be adopted with an affirmative vote of at least two-thirds of the outstanding shares; and (4) upon adoption of the resolution, the corporation shall file the articles of dissolution with the Secretary of State. Tex. Bus. Corp. Act Ann. art. 6.03 (Vernon 1980 and Supp. 2002). After paying or discharging all its obligations, the corporation shall then distribute the remainder of its assets, either in cash or in kind, among its shareholders according to their respective rights and interests. Tex. Bus. Corp. Act Ann. art. 6.04 (Vernon 1980 and Supp. 2002). Once the assets have been distributed to the shareholders, the articles of dissolution shall be executed. Tex. Bus. Corp. Act Ann. art. 6.06 (Vernon 1980 and Supp. 2002). The articles of dissolution shall be delivered to the Secretary of State, and if he finds they conform to the law, he shall issue a certificate of dissolution, and the corporation shall cease to exist. Tex. Bus. Corp. Act Ann. art. 6.07 (Vernon 1980 and Supp. 2002). That is precisely what happened to San Jacinto Optical. The shareholders were notified that, on December 1, 1997, a vote for dissolution would be conducted. Arisco and Thomson, representing two-thirds of the shareholders, voted to dissolve San Jacinto Optical. After the creditors were notified and paid, the remaining assets were divided among the three shareholders. The articles of dissolution were submitted to the Secretary of State, who issued a certificate of dissolution. We hold that, as a matter of law, Arisco and Thomson established San Jacinto Optical was properly dissolved pursuant to the requirements of Part 6 of the Texas Business Corporation Act. See Eagle Pass Realty Co. v. Esparza, 474 S.W.2d 624, 625 (Tex. App.--San Antonio 1971, writ ref'd n.r.e.) (holding the burden of proving dissolution of corporation is cast upon person asserting such dissolution). Once dissolution is established, Andrews's only remedy is an accounting for any particular items he alleges were assets of San Jacinto Optical and which were not properly distributed to him in connection with the dissolution. See Mischer v. Burke, 456 S.W.2d 550, 558 (Tex. App.--Houston [1st Dist.] 1970, writ ref'd n.r.e.). Andrews, however, specifically stipulated he "waived, non-suited and would not seek an accounting for, seek recovery of, or offer any evidence of the fair market value of any particular items alleged to be assets of San Jacinto Optical." As such, he has expressly waived the only relief available to him under the voluntary dissolution statutes. We overrule issue one. Tort Claims In issues two, three, four, and five, Andrews contends the trial court erred in granting Arisco and Thomson's motion for summary judgment because a fact issue existed as to whether their conduct constituted fraud, a breach of fiduciary duty, civil conspiracy, and conversion. Having held, based on the summary judgment evidence, their conduct was proper under the dissolution statutes, we need not address these issues. We overrule issues two, three, four, and five. Equitable Buyout In issue six, Andrews argues the trial court erred in granting Arisco and Thomson's motion for summary judgment because a fact issue exists as to whether he was entitled to an equitable buyout of his stock based on their oppressive conduct. Again, having held, based on the summary judgment evidence, their conduct was proper under the dissolution statutes, we need not address this issue. We overrule issue six. We affirm the judgment. Frank C. Price Justice Panel consists of Justices Cohen, Nuchia, and Price. (4) Do not publish. Tex. R. App. P. 47. 1. Arisco and Thomson allege Andrews was given the right of first pick to select which lot he wanted, but he refused to attend the meeting and was given the lot remaining after Arisco and Thomson picked theirs. 2. Andrews filed a motion with the trial court seeking appointment of an appraiser to value his shares, pursuant to articles 5.11 and 5.12 of the Texas Business Corporation Act. Arisco and Thomson opposed the motion and argued the provisions of article 5.11 did not apply in dissolution. The trial court denied the motion. The 14th Court of Appeals and the Texas Supreme Court denied Andrews's mandamuses on the issue. 3. The parties stipulated that the trial court's ruling on the first supplemental motion for summary judgment rendered moot the claims of Arisco and Thomson "for declaratory relief (including but not limited to, whether alleged items in controversy were or were not assets of San Jacinto Optical of Baytown, Inc. that could or should have been distributed)." 4. The Honorable Frank C. Price, former Justice, Court of Appeals, First District of Texas at Houston, participating by assignment.