Michael D. Crain v. William "Will" Northern

Summary

The Texas Business Court, Eighth Division, granted William Northern’s plea to the jurisdiction challenging Michael Crain’s standing to bring derivative claims on behalf of several limited liability companies. The court held that Crain was no longer a member of the entities when he filed suit and therefore lacked standing to assert derivative claims. The derivative claims were dismissed for lack of subject-matter jurisdiction.

Holdings

1. A person who was no longer a member of the limited liability companies when he filed suit lacked standing to assert derivative claims on their behalf.
2. Because Crain lacked standing to bring the derivative claims, the court lacked subject-matter jurisdiction over those claims and was required to dismiss them.

Questions Presented

1. Whether a former member of a closely held limited liability company has standing to bring derivative claims on the company's behalf when the member's interest terminated before the lawsuit was filed.
2. Whether the court lacked subject-matter jurisdiction over Crain's derivative claims because he was not a member of the limited liability companies when he filed suit.

Disposition

dismissed