Designated for publication
- Belliveau v. Barco, Inc., 19-50717, appeal from W.D. Tex.
- Jones, J. (Davis, Jones, Willett), Davis, J., concurring in part and dissenting in part; corporate veil piercing, breach of fiduciary duty
- Affirming district court’s summary judgment dismissing plaintiff’s claims against sole shareholder of company plaintiff claimed had grossly undervalued his intellectual property in a sublicensing agreement, applying Texas’s corporate veil-piercing law.
- The Court observed that the ability to pierce a corporate veil is highly proscribed under Texas law: “Texas law . . . insulates a shareholder from a corporation’s contractual or contractually related obligations ‘on the basis that the holder . . . is or was the alter ego of the corporation or on the basis of actual or constructive fraud, a sham to perpetrate a fraud, or other similar theory.’ TBOC § 21.223(a)(2). Section 21.223(b), however, creates an exception to this limitation. A shareholder may be held personally liable for a corporation’s obligations ‘if the obligee demonstrates that the . . . beneficial owner . . . caused the corporation to be used for the purpose of perpetrating and did perpetrate an actual fraud on the obligee primarily for the direct personal benefit of the . . . beneficial owner.’ Id. § 21.223(b).”
- Examining whether there was actual fraud, the Court first catalogued plentiful evidence in the record to support a finding that the plaintiff’s intellectual property had not been undervalued in the transaction at issue (since undervaluing could be some evidence of fraud), in light of the facts that the sublicensing agreement did not include further sublicense rights and was subject to a four-year non-competition period, and that there had been prior instances where the plaintiff’s IP rights had been sublicensed for even lower values where the plaintiff had been “intimately involved.”
- The Court then held that, more to the point, the plaintiff’s claims were as to his rights under his own contract with the corporation, and that he therefore had the opportunity at the time of contracting to account for the risks of the transaction he was entering into. “The High End License could have provided a number of alternative contractual measures to protect Belliveau’s interests and ward off claims he is now asserting. As it stands, this is a breach of contract case. The Texas statute does not authorize Belliveau to sue Barco, the shareholder, simply for operating according to the terms of the contract—even if Barco may have committed a breach—by artfully pleading dishonesty and intent to deceive. Dramatic as the expert’s opinion of Belliveau’s damages appears to be, this is not a case in which Barco attempted to purloin High End’s assets in order to deprive Belliveau of the benefit of his High End License rights to a minimum royalty or sublicense royalties in general. The parties’ dispute here, if anything, is about one particular sublicense royalty provision, not a denuding of the company to avoid a creditor.”
- The Court also affirmed the district court’s summary judgment dismissal of his breach of fiduciary duty claims. The Court first held that there was no formal fiduciary relationship, rejecting plaintiff’s argument that the shareholder corporation’s in-house counsel had an attorney-client relationship with the plaintiff in the matter of sublicensing his IP rights. The Court held that much of plaintiff’s argument was based on his subjective belief that they were his lawyers, which is insufficient to create an attorney-client relationship. The Court then held that there was no informal fiduciary relationship because plaintiff could not allege or support that there was a special relationship of trust between him and the shareholder that pre-dated the licensing agreement between him and the corporation.
- Judge Davis dissented in part. While agreeing with the majority’s holding as to the fiduciary duty claims, Judge Davis opined that the plaintiff had provided sufficient evidence to show a genuine factual dispute as to the material fact of actual fraud for purposes of corporate veil-piercing. Judge Davis wrote that the majority had impermissibly weighed evidence on the question of whether evidence in the record provided the “something more” necessary to support the fact issue as to whether the shareholder had a dishonest purpose in its efforts to drive the corporation’s sublicensing of the plaintiff’s IP rights. “The Barco Sublicense was confected between High End and its sole shareholder, Barco. This was clearly an ‘inside’ deal, executed in the middle of negotiations between Barco and ETC. Barco subsequently sold all of its shares in High End to ETC. A jury could infer that the Barco Sublicense played a part in persuading ETC to close the deal. Mr. Belliveau deserves to have a jury decide all of these fact issues. Therefore, I respectfully dissent.”
Unpublished
- U.S. v. Veasey, 17-10665, appeal from N.D. Tex.
- per curiam (Graves, Costa, Engelhart), criminal, juror strike, sufficiency of evidence, prosecutorial misconduct, jury instructions, sentencing
- Affirming four defendants’ convictions of multiple counts in a health care fraud case.
- Reed Migraine Centers of Texas, PLLC v. Ticer, 20-10156, appeal from N.D. Tex.
- per curiam (Barksdale, Southwick, Graves), attorneys’ fees, jurisdiction
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- Adriatic Marine, LLC v. Harrington, 20-30226, appeal from E.D. La.
- per curiam (Wiener, Costa, Willett), Jones Act
- Affirming summary judgment dismissing claimant’s claims.
- U.S. v. Pacheco-Ortuna, 20-40471, appeal from E.D. Tex.
- per curiam (Graves, Willett, Duncan), criminal
- Granting Anders motion to withdraw and dismissing appeal.
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