Texas Business Court Decision – March 11, 2026
No. 25-BC08A-0014 Michael D. Crain, etc., et al. v. William “Will” Northern (8th Div., Judge Bullard) 25-bc08a-0014-crain-v-northern-2026-tex-bus-11.pdf
Jurisdiction/Standing to Pursue Derivative Claims. In its February 2, 2026 Amended Opinion and Order the court granted Northern’s motion for summary judgment for specific performance of a buy-sell purchase agreement and ordered Crain to tender to Northern forms of Irrevocable Assignment of Membership Interest in several Northern Crain entities with December 19, 2024 as the effective date. In this plea to the jurisdiction, Northern now challenges Crain’s standing to bring derivative claims against on behalf of the Northern Crain entities; Northern contends, pursuant to Texas Business Code Section 101.463, Crain cannot pursue such derivative claims because he has not possessed a membership interest in each entity since December 19, 2024, the effective date of his transfer of membership interest. Held: Crain lacks standing, and the plea to the jurisdiction is granted; Crain’s derivative claims are dismissed for lack of subject matter jurisdiction.
Held: (1) Standing may be challenged through a plea to the jurisdiction; when the plea to the jurisdiction challenges the sufficiency of plaintiff’s pleading to confer jurisdiction, the court determines whether the pleader has alleged facts that affirmatively establish the court’s jurisdiction to hear the case; the matter is decided without delving into the merits of the case, and the plea should not be granted if a jurisdictional fact is at issue; the court takes as true all evidence favorable to the plaintiff; and (2) Based on the court’s determinations in its February 2, 2026 Amended Order and Opinion, Crain was not a member of the Northern Crain entities when he filed this suit in June, 2025, and has not possessed a membership interest in them since the sale of his ownership interest, which was effective as of December 19, 2024; as a result, he lacks a stake in the outcome of the derivative suit, and he lacks standing to assert derivative claims on the entities’ behalf.