Richardson v. Newman

439 S.W.3d 538, 2014 WL 3673583, 2014 Tex. App. LEXIS 8064
CourtCourt of Appeals of Texas
DecidedJuly 24, 2014
DocketNo. 01-13-00757-CV
StatusPublished
Cited by9 cases

This text of 439 S.W.3d 538 (Richardson v. Newman) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Richardson v. Newman, 439 S.W.3d 538, 2014 WL 3673583, 2014 Tex. App. LEXIS 8064 (Tex. Ct. App. 2014).

Opinion

OPINION

MICHAEL MASSENGALE, Justice.

This appeal arises from a shareholder derivative action by appellant Margaret Richardson — as trustee of the H. and M. Richardson Revocable Survivor’s Trust— against the directors of Transocean Limited, a Swiss corporation. The directors successfully moved to dismiss the case in favor of proceeding in Switzerland, which they propose as a more convenient forum. On appeal, Richardson argues that the trial court abused its discretion in weighing the forum non conveniens factors. Finding no reversible error, we affirm.

Background

An American subsidiary of Transocean Limited (“Transocean”) owned and operated the seagoing drilling rig Deep Water Horizon. In April 2010, an explosion at the rig caused a fire that ultimately sank the Deep Water Horizon and precipitated a widely reported oil spill in the Gulf of Mexico.

Margaret Richardson, a resident of California, filed this lawsuit derivatively on behalf of Transocean against its directors in state district court in Harris County, Texas. She alleged that the directors’ actions in connection with the incident damaged the company by causing it to incur substantial costs, liability, and reputational harm. In her petition, Richardson alleged three causes of action: (1) breach of fiduciary duties of due care, good faith, and loyalty; (2) unjust enrichment to the detriment of Transocean; and (3) waste of corporate assets. Factually, Richardson alleged that Transocean and its subsidiaries have a documented history of safety, maintenance, and regulatory compliance issues similar to those involved in the Deep Water Horizon accident, that the Deep Water Horizon itself had a history of safety problems. She contended that the directors knew or should have known about these problems and failed to take adequate corrective action, and also that they made [542]*542false statements to investors regarding safety and regulatory compliance. Since Transocean is a Swiss company, the parties acknowledge that Swiss law applies to Richardson’s claims. See Tex. Bus. Orgs. Code Ann. § 21.562(a) (West 2012) (“In a derivative proceeding brought in the right of a foreign corporation, the matters covered by this subchapter are governed by the laws of the jurisdiction of incorporation of the foreign corporation .... ”).

Transocean’s business was founded in 1958 as a Delaware corporation headquartered in Houston. Its business was drilling for oil at sea. The company became a Cayman Islands corporation in 1999, and it then reorganized and reincorporated as a Swiss corporation in 2008, although its stock continues to trade on American exchanges. Transocean Limited is a holding company and does not itself directly conduct exploration for oil. Rather, it owns several corporate subsidiaries around the globe which manage extensive offshore drilling fleets. The American subsidiary that works in the Gulf of Mexico — Trans-ocean, Inc. — is headquartered in Houston. It employs thousands of people and operates fifteen drilling rigs in the Gulf region.

The directors moved for dismissal based on forum non conveniens, arguing that Switzerland was a more appropriate alternative forum. In particular, they stressed the difficulties the trial court would face in applying Swiss corporate law. After receiving extensive briefing and holding a hearing, the trial court dismissed Richardson’s action. She timely filed notice of appeal.

Analysis

Richardson argues that the trial court abused its discretion in weighing the forum non conveniens factors to dismiss her case. She emphasizes Transocean’s American origins, the substantial presence of its American subsidiary in Houston and the Gulf of Mexico, the American citizenship of a majority of its stockholders, the American residence of several directors, and the significant human, economic, and environmental costs to Texas and the Gulf wrought by the Deep Water Horizon accident.

“A director’s fiduciary duty runs only to the corporation, not to individual shareholders or even to a majority of the shareholders.” Somers ex rel EGL, Inc. v. Crane, 295 S.W.3d 5, 11 (Tex.App.-Houston [1st Dist.] 2009, pet. denied); see also Ritchie v. Rupe, No. 11-0447, 2014 WL 2788335, at *8 (Tex. June 20, 2014). As such, the “right to proceed against an officer or former officer of a corporation for breaching a fiduciary duty owed to the corporation belongs to the corporation itself.” Somers, 295 S.W.3d at 11. “A corporate stockholder cannot recover damages personally for a wrong done solely to the corporation, even though he may be injured by that wrong.” Wingate v. Hajdik, 795 S.W.2d 717, 718 (Tex.1990).

As a result of these principles, a suit by a shareholder to recover damages from corporate directors who breach their fiduciary duties ordinarily must be pursued on behalf of the corporation. See, e.g., In re Schmitz, 285 S.W.3d 451, 452 (Tex.2009) (explaining that shareholder derivative suits are nominally brought on a corporation’s behalf). In other words, a shareholder like Richardson who brings a derivative suit does not rely on her own claims but steps into the shoes of the corporation and asserts the corporation’s claims for damages against the directors. See In re Crown Castle Int’l Corp., 247 S.W.3d 349, 355 (Tex.App.-Houston [14th Dist.] 2008, orig. proceeding) (explaining that in a shareholder derivative suit, “the individual shareholder steps into the shoes of the corporation and usurps the board of [543]*543directors’ authority to decide whether to pursue the corporation’s claims”).

The Supreme Court of Texas distinguishes between a statutory and a common-law species of forum non conveniens. See Quixtar, Inc. v. Signature Mgmt. Team, LLC, 315 S.W.3d 28, 32 (Tex.2010) (per curiam). The relevant statutory provision, Tex. Civ. Prac. & Rem.Code Ann. § 71.051 (West 2008), applies to personal injury and wrongful death actions, and the parties did not reference it in either the trial court or their appellate briefs. Accordingly, we confine our analysis to the common law.

“The ‘central focus of the forum non conveniens inquiry is convenience.’ ” Quixtar, 315 S.W.3d at 33 (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 249, 102 S.Ct. 252, 262, 70 L.Ed.2d 419 (1981)). The doctrine allows a court to dismiss a claim based on practical considerations affecting litigants, witnesses, and the justice system. See id. at 34-35. Even though a court has jurisdiction and venue, it still may dismiss based on forum non conve-niens. See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507, 67 S.Ct. 839, 842, 91 L.Ed. 1055 (1947); In re Smith Barney, Inc., 975 S.W.2d 593, 596 (Tex.1998).

In deciding motions to dismiss based upon forum non conveniens, Texas courts follow the analysis of the United States Supreme Court in Gulf Oil. See Quixtar,

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439 S.W.3d 538, 2014 WL 3673583, 2014 Tex. App. LEXIS 8064, Counsel Stack Legal Research, https://law.counselstack.com/opinion/richardson-v-newman-texapp-2014.