How a Petition for Writ of Mandamus Can Help Minority Shareholders
What is a writ of mandamus in Texas, and what does it have to do with a shareholder’s right to inspect business records? According to an article in St. Mary’s Law Journal, a petition for writ of mandamus is “an original appellate proceeding that seeks extraordinary relief.”
More specifically, in the case of In re Kuster (2012), the Texas Court of Appeals clarifies that the writ of mandamus is a “judicial writ directed at an individual, official, or board to whom it is addressed to perform some specific legal duty to which the realtor is entitled under legal proceeding.”
According to the law journal article, the Supreme Court of Texas historically only granted mandamus relief in just over 10 percent of the cases. However, in 2004, the Supreme Court of Texas expanded mandamus relief, and more individuals who seek relief by filing a petition for writ of mandamus have had their petitions granted.
To put all of this another way, a petition for writ of mandamus is an action that can be taken by a minority shareholder, asking a court to require a business to open up its books or to provide business records when the business otherwise refuses to do so.
In most cases, the petition for writ of mandamus asks a higher court to require a lower court to do something or to take some sort of action. However, in a minority of cases, the petition for writ of mandamus can be used to ask a court to require a corporation to do something.
Learning More About Filing a Petition for Writ of Mandamus in Order to Inspect Corporate Books and Records
If you are a minority shareholder and you need to have access to a corporation’s books and records, how do file a petition for writ of mandamus? First, it is important to understand that the terms surrounding a writ of mandamus are a little bit different than those used to discuss other legal procedures.
Most notably, the individual or entity filing the petition for writ of mandamus is not called a plaintiff or complainant, but rather is known as the “realtor.” Then, the party against whom relief is being sought is not referred to as the defendant, but rather as the “respondent.”
In a case where a minority shareholder is seeking mandamus relief in order to inspect a corporation’s books or other records, the realtor typically is the minority shareholder while the respondent is the corporation. In other words, the minority shareholder will not be filing against an individual majority shareholder (or multiple majority shareholders) in the corporation, but rather against the corporation itself. As such, the corporation is the respondent.
Concurrent Jurisdiction in Texas Court of Appeals and Supreme Court of Texas
Now that you know more about the terminology used to discuss mandamus relief in the state of Texas, what do you need to know about the process of actually filing a writ of mandamus? In other words, where do you file your petition?
According to the St. Mary’s Law Journal article, it is important for a realtor seeking mandamus relief to understand that the Supreme Court of Texas and the Texas Court of Appeals have concurrent jurisdiction to grant mandamus relief to a minority shareholder. However, this does not mean that the realtor simply can file in either court. Rather, according to the Texas Rules of Appellate Procedure (TRAP), a realtor needs to file his or her petition in the court of appeals first.
Indeed, under TRAP, “an original appellate proceeding seeking extraordinary relief—such as a writ of habeas corpus, mandamus, prohibition, injunction, or quo warranto—is commenced by filing a petition with the clerk of the appropriate appellate court.” In terms of form, the petition must be captioned, according to the Texas Rules of Civil Procedure, as “In re [name of realtor].”
Standard for Mandamus Relief in Texas
In traditional filing for mandamus relief (when the realtor believes the trial court has abused its discretion), the realtor needs to pass a two-prong test. To be clear, the realtor must be able to show 1) that the trial court abused its discretion and 2) that there is no other adequate remedy at law. Mandamus relief is a form of extraordinary relief. As such, it will only be granted when there is no other available remedy.
How is this different when a realtor seeks mandamus relief in order to inspect corporate books, records, or other relevant materials? As the Dallas Bar Association explains, when there is a petition for writ of mandamus in a corporate law matter concerning the right of a business owner to inspect corporate books, the writ of mandamus typically is filed in order to enforce a statute: Texas Business Organizations Code (TBOC) Sections 21.218 through 21.222. Under Section 21.218(b), a shareholder has a right of inspection if she or he does the following:
- Makes a written demand to inspect books, records, or other relevant information;
- States a proper purpose for the demand to inspect books, records, or other relevant information; and
- Either has been a shareholder for at least six months before making the written demand or currently holds at least five percent of the corporation.
When a corporation refuses to abide by the statute, then a shareholder can seek mandamus relief in order to enforce the statute.
A Texas Business Law Attorney Can Assist with Your Case
Filing a petition for a writ of mandamus is extremely complicated. Courts need to take into account a number of different factors in deciding whether to grant mandamus relief, and the “realtor” often does not have multiple opportunities to seek this type of relief. However, as we mentioned, in some circumstances it may be the only option for a minority shareholder to obtain access to business records or to corporate books.
As such, you will need to have an experienced Texas business law attorney on your side who can assist you in filing a petition for writ of mandamus. To learn more, you should contact Lindquist Wood Edwards LLP. We can get started on your case today.