Tex.App.-San Antonio,2011.
Biolustre’ Inc. v. Hair Ventures LLC
Not Reported in S.W.3d, 2011 WL 540574 (Tex.App.-San Antonio)
Feb. 16, 2011.
From the 288th Judicial District Court, Bexar County, Texas, Trial Court No. 2010–CI-00217; Barbara Hanson Nel-
lermoe, Judge Presiding.FN1
FN1. The Honorable Olin Strauss presided over the hearing in the underlying cause, verbally pronounced a
Sitting CATHERINE STONE, Chief Justice, PHYLIS J. SPEEDLIN, Justice, STEVEN C. HILBIG, Justice.
MEMORANDUM OPINION
Opinion by CATHERINE STONE, Chief Justice.
Biolustre’ Inc. appeals the trial court’s order granting Hair Ventures LLC’s request for a writ of mandamus to
neous because the great weight and preponderance of the evidence established: (1) Hair Ventures had improperly
not acting in good faith or for a proper purpose in requesting the examination. Biolustre‘ also asserts the trial court
Hair Ventures owns 3,000,000 shares of Biolustre’s stock. On November 2, 2009, Hair Ventures sent Biolustre’
a written demand for an examination of Biolustre‘s books and records as permitted by Texas law. After Biolustre’
failed to respond to the demand, Hair Ventures filed a petition for writ of mandamus in the trial court, seeking to
compel the examination. Since neither party requested a jury trial, a bench trial was held, and the trial court signed
may file a petition for writ of mandamus requesting that the trial judge order the corporation to allow an inspection
relief is subject to the trial court’s discretion and would be reviewed for an abuse of discretion. Moore v. Rock Creek
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
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Oil Corp., 59 S.W.3d 815, 817 (Tex. Comm’n App.1933, judgm’t adopted). “[W]here a corporation, in resisting a
stockholder’s attempt to inspect the books and records, raises by its pleadings a fact issue over whether the stock-
holder has a proper purpose for wanting to see the books,” the corporation is entitled to a jury trial on that issue.
Uvalde Rock Asphalt Co., 425 S.W.2d at 820; see also In re Dyer Custom Installation, Inc., 133 S.W.3d at 881. Ac-
cordingly, when a finding regarding the shareholder’s purpose in requesting an inspection is challenged on appeal,
we review the sufficiency of the evidence to support the finding.
When reviewing a legal sufficiency or “no evidence” challenge, we determine “whether the evidence at trial
would enable reasonable and fair-minded people to reach the verdict under review.” City of Keller v. Wilson, 168
S.W.3d 802, 827 (Tex.2005). We view the evidence in the light favorable to the verdict, crediting favorable evi-
dence if reasonable jurors could and disregarding contrary evidence unless reasonable jurors could not. Id. Appellate
set aside the finding only if the evidence is so weak or if the finding is so against the great weight and preponder-
ance of the evidence that it is clearly wrong and unjust. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001).
The trier of fact is the sole judge “of the credibility of the witnesses and the weight to give their testimony.” City of
Keller, 168 S.W.3d at 819.
Discussion
nation. FN2 See Uvalde Rock Asphalt Co., 425 S.W.2d at 820 (corporation must raise fact issue on defense in plead-
ings); Moore, 59 S.W.2d at 818 (noting corporation must plead defense); In re Dyer Custom Installation, Inc., 133
S.W.3d at 881 (noting corporation must plead sufficient facts to raise defense). Accordingly, the only defense
properly presented at trial was whether Hair Ventures was making the request in good faith and for a proper pur-
pose. As a result, Biolustre’s first issue regarding improper use of information obtained through a prior examination
of finance. Woods had not received notice of any annual shareholders meetings and had not received any annual
fiscal reports since 2006. Woods also never received notice of a shareholders meeting to discuss and vote on a pub-
lic offering of Biolustre’s stock. Woods stated that she did not intend to harm the company, but wanted to examine
the books to obtain information regarding “what’s going on with the company.” On cross-examination, Woods testi-
fied that she was unaware of whether her boyfriend, Daniel Davila, contacted other shareholders to complain about
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
ing in 2006, 2007, or 2008, but had sent a shareholder review and report by email. Buchanan testified “that accord–
ing to our bylaws, we send out investor reports and those act as our shareholder meetings.” Buchanan testified that
the shareholders were emailed an update regarding the public offering which allowed the shareholders to respond,
and no negative feedback was received. Buchanan stated, “All shareholders were in favor of moving forward with
this.” Buchanan further testified, “there has a-a vote to move forward by the majority shareholders, which are myself
trying to do things with the company that Davila did not want them to do. Davila told Lane that he planned to set up
an investor meeting to discuss the company’s operations in England and to prevent the public offering of the compa-
ny’s shares. Lane had never received a notice of an annual shareholders meeting, but had received newsletters re-
garding the company’s progress. Lane did not recall receiving any information about the company making a public
offering of its stock. Lane did not attend a shareholder meeting to vote on a public offering.
tion. All of the shareholders testified that they had not received notice of a meeting to vote on the public offering of
Biolustre’s stock. Woods also testified that she had not received any financial information regarding the company
since 2006. In view of Hair Ventures‘s substantial investment and interest in the company, obtaining information
about the financial position of the company and its proposed public offering was a proper purpose for inspecting the
records. Although the trial court heard testimony regarding Davila’s contact with other shareholders, the trial court
garding the nature of Davila’s contacts with them and is the sole judge of the weight to give their testimony. See City
of Keller, 168 S.W.3d at 819. Accordingly, we conclude the evidence is legally and factually sufficient to support
the trial court’s finding that Hair Ventures had a proper purpose for seeking the inspection, and Biolustre’s second
issue is overruled.
pursuant to the Texas Business Organizations Code. Accordingly, Biolustre‘s third issue is overruled.
CONCLUSION
The trial court’s order is affirmed.
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Oil Corp., 59 S.W.3d 815, 817 (Tex. Comm’n App.1933, judgm’t adopted). “[W]here a corporation, in resisting a
stockholder’s attempt to inspect the books and records, raises by its pleadings a fact issue over whether the stock-
holder has a proper purpose for wanting to see the books,” the corporation is entitled to a jury trial on that issue.
Uvalde Rock Asphalt Co., 425 S.W.2d at 820; see also In re Dyer Custom Installation, Inc., 133 S.W.3d at 881. Ac-
cordingly, when a finding regarding the shareholder’s purpose in requesting an inspection is challenged on appeal,
we review the sufficiency of the evidence to support the finding.
When reviewing a legal sufficiency or “no evidence” challenge, we determine “whether the evidence at trial
would enable reasonable and fair-minded people to reach the verdict under review.” City of Keller v. Wilson, 168
S.W.3d 802, 827 (Tex.2005). We view the evidence in the light favorable to the verdict, crediting favorable evi-
dence if reasonable jurors could and disregarding contrary evidence unless reasonable jurors could not. Id. Appellate
set aside the finding only if the evidence is so weak or if the finding is so against the great weight and preponder-
ance of the evidence that it is clearly wrong and unjust. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001).
The trier of fact is the sole judge “of the credibility of the witnesses and the weight to give their testimony.” City of
Keller, 168 S.W.3d at 819.
Discussion
nation. FN2 See Uvalde Rock Asphalt Co., 425 S.W.2d at 820 (corporation must raise fact issue on defense in plead-
ings); Moore, 59 S.W.2d at 818 (noting corporation must plead defense); In re Dyer Custom Installation, Inc., 133
S.W.3d at 881 (noting corporation must plead sufficient facts to raise defense). Accordingly, the only defense
properly presented at trial was whether Hair Ventures was making the request in good faith and for a proper pur-
pose. As a result, Biolustre’s first issue regarding improper use of information obtained through a prior examination
of finance. Woods had not received notice of any annual shareholders meetings and had not received any annual
fiscal reports since 2006. Woods also never received notice of a shareholders meeting to discuss and vote on a pub-
lic offering of Biolustre’s stock. Woods stated that she did not intend to harm the company, but wanted to examine
the books to obtain information regarding “what’s going on with the company.” On cross-examination, Woods testi-
fied that she was unaware of whether her boyfriend, Daniel Davila, contacted other shareholders to complain about
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
ing in 2006, 2007, or 2008, but had sent a shareholder review and report by email. Buchanan testified “that accord–
ing to our bylaws, we send out investor reports and those act as our shareholder meetings.” Buchanan testified that
the shareholders were emailed an update regarding the public offering which allowed the shareholders to respond,
and no negative feedback was received. Buchanan stated, “All shareholders were in favor of moving forward with
this.” Buchanan further testified, “there has a-a vote to move forward by the majority shareholders, which are myself
trying to do things with the company that Davila did not want them to do. Davila told Lane that he planned to set up
an investor meeting to discuss the company’s operations in England and to prevent the public offering of the compa-
ny’s shares. Lane had never received a notice of an annual shareholders meeting, but had received newsletters re-
garding the company’s progress. Lane did not recall receiving any information about the company making a public
offering of its stock. Lane did not attend a shareholder meeting to vote on a public offering.
tion. All of the shareholders testified that they had not received notice of a meeting to vote on the public offering of
Biolustre’s stock. Woods also testified that she had not received any financial information regarding the company
since 2006. In view of Hair Ventures‘s substantial investment and interest in the company, obtaining information
about the financial position of the company and its proposed public offering was a proper purpose for inspecting the
records. Although the trial court heard testimony regarding Davila’s contact with other shareholders, the trial court
garding the nature of Davila’s contacts with them and is the sole judge of the weight to give their testimony. See City
of Keller, 168 S.W.3d at 819. Accordingly, we conclude the evidence is legally and factually sufficient to support
the trial court’s finding that Hair Ventures had a proper purpose for seeking the inspection, and Biolustre’s second
issue is overruled.
pursuant to the Texas Business Organizations Code. Accordingly, Biolustre‘s third issue is overruled.
CONCLUSION
The trial court’s order is affirmed.