## Facts

- Arnold White & Durkee, P.C. (AWD), a Texas professional corporation, negotiated a 1999–2000 combination with Howrey & Simon (H&S).
- AWD’s board called a January 7, 2000 shareholders’ meeting to vote on the combination and stated a two-thirds majority of Class B and Class C shares was required.
- Stephen G. Rudisill, Ronald B. Coolley, and Slawomir Z. Szczepanski, former AWD Class B/C shareholders, submitted written objections and voted against the transaction.
- The combination was approved by a two-thirds vote.
- Under the Combination Agreement, AWD transferred nearly all of its assets to H&S, excluding three vacation condominiums, two insurance policies, and several automobile leases.
- AWD did not dissolve; it became a “Level II Partner” in H&S, which later changed its name to Howrey Simon Arnold & White, L.L.P. (HSAW).
- AWD shareholders could become partners in HSAW by signing a partnership agreement; appellants declined, stopped working for AWD, and sued for declaratory relief.
- The trial court granted summary judgment for AWD and rendered a take-nothing judgment; appellants appealed.

## Issues

1. Whether the AWD–H&S transaction triggered statutory dissenters’ rights under the Texas Business Corporation Act as a “merger” or a “sale of all or substantially all” corporate assets.
2. If statutory dissenters’ rights did not apply, whether appellants were entitled to reinstatement of their full rights as AWD shareholders.
3. Whether AWD’s internal Redemption Agreement independently required AWD to redeem appellants’ shares based on the transaction and appellants’ decision not to join the new partnership.

## Decision

- The court of appeals affirmed the summary judgment for AWD.
- The court held the transaction was neither a statutory merger nor a statutory sale of all or substantially all assets that would create dissenters’ rights.
- The court rejected appellants’ requested reinstatement because it depended on a statutory-rights theory the court found inapplicable.
- The court held the Redemption Agreement did not provide a contractual right to redeem shares under the circumstances presented.

## Legal Principles

- Statutory dissenters’ rights arise only when a transaction falls within the specific categories defined by statute (including statutory mergers and qualifying sales of all or substantially all assets).
- A corporate restructuring that transfers most operating assets but leaves the corporation in existence and holding a continuing ownership interest (such as a partnership interest) is not necessarily a statutory “sale” that triggers dissenters’ rights.
- Declaratory relief and equitable restoration of shareholder rights are unavailable where the asserted loss of rights depends on a statutory trigger the court finds not satisfied.
- Redemption agreements are enforced according to their express triggering events; courts will not add unlisted triggering circumstances by implication.

## Conclusion

The court held that AWD’s combination with H&S, structured as an asset transfer with AWD continuing as an entity and acquiring a partnership interest, did not trigger statutory dissenters’ rights or support reinstatement, and the Redemption Agreement did not obligate AWD to redeem the dissenting shareholders’ stock.


Rudisill v. Arnold White & Durkee, P.C., 148 S.W.3d 556 (Tex. App.—Houston [14th Dist.] 2004)