United States District Court, N.D. Texas, Dallas Division
TEXAS PACIFIC LAND TRUST, and, solely in their respective capacities as trustees for Texas Pacific Land Trust, DAVID E. BARRY and JOHN R. NORRIS III, Plaintiffs,
ERIC L. OLIVER, Defendant, and ERIC L. OLIVER, SOFTVEST, L.P., HORIZON KINETICS LLC, and ART-FGT FAMILY PARTNERS LIMITED, Counterclaim Plaintiffs,
DAVID E. BARRY and JOHN R. NORRIS III, in their individual capacities and in their capacities as trustees for the Texas Pacific Land Trust, Counterclaim Defendants,
MEMORANDUM OPINION AND ORDER
J. BOYLE UNITED STATES DISTRICT JUDGE.
to the Court's order setting a schedule for matters
related to Counterclaim Plaintiffs' motion for a
declaratory judgment and preliminary injunction
(“preliminary injunction motion”), Plaintiffs
filed an expedited motion for limited discovery. Doc. 54,
Pls.' Mot. The parties have already agreed to conduct
some discovery before the hearing on the preliminary
injunction motion. But Plaintiffs seek additional discovery
on which the parties have not come to an agreement. After a
review of the briefing, the Court GRANTS
Plaintiffs' motion (Doc. 54).
case arises out of a dispute over the election of a trustee
to the Texas Pacific Land Trust (“TPL”). Doc. 1,
Compl. On one side of the dispute there are the two current
TPL trustees, Plaintiffs David E. Barry and John R. Norris
III, and on the other side there is a group of TPL
shareholders holding more than 25% of the TPL's
outstanding shares. The shareholder group includes Eric L.
Oliver; Softvest, LP; ART-FGT Family Partners Limited; Allan
Tessler; Tessler Family Limited Partnership; and Horizon
Kinetics LLC (together referred to below as the
“Horizon Group”). Horizon Kinetics is the single
largest shareholder of the TPL, owning about 23% of its
outstanding shares. Doc. 37, Mot. Prelim. Inj., 7. The other
members of the Horizon Group own around 2%. Id.
is a publicly traded entity listed on the New York Stock
Exchange (“NYSE”). Doc. 15, Am. Compl., ¶
10. It is one of the largest private landowners in Texas,
holding around 900, 000 acres of land. Id. ¶ 2.
The TPL is managed by three trustees, who serve until death,
resignation, or disqualification. Id. On February
25, 2019, one of the trustees resigned. Id. ¶
19. This left David E. Barry and John R. Norris III as the
remaining trustees. Id. The TPL's Declaration of
Trust (“DoT”) provides that a new trustee shall
be elected at a special meeting of the shareholders by
“a majority in the amount of certificate holders
present in person or by proxy[.]” Id., Ex. A,
45. After the resignation, the election process for the open
trustee position followed, whereby the current trustees
identified and investigated candidates. Id. ¶
24. Sometime after this process started, Allen Tessler
recommended Eric L. Oliver for the position. Id.
¶ 25. Barry and Norris reviewed Oliver's credentials
and past interactions with the TPL but declined to nominate
him for election. Id. ¶ 26. They instead
nominated Preston Young, and announced this nomination in a
Form 8-K filed on March 4, 2019. Id. The trustees
then called for a special meeting to take place in Dallas,
Texas on May 8, 2019. Doc. 37, Mot. Prelim. Inj., 6.
the trustees' nomination of Young, the Horizon Group
publicly disclosed in a Schedule 13D form filed on March 15,
2019 that they were nominating Oliver for election as
trustee. Doc. 15, Am. Compl., ¶ 27. After this filing,
the trustees started a dialogue with Murray Stahl, the CEO of
Horizon, to come to some sort of compromise on a candidate.
Doc. 15, Am. Compl., ¶ 28. At some point during these
conversations, the TPL started a search process where it
worked with a recruiting firm and other advisors to find
other possible candidates for the position. Id.
¶ 29. In the meantime, the Horizon Group filed a
preliminary proxy statement with the SEC on March 25, 2019
regarding Oliver's nomination. Id. ¶ 30.
Also on this date, the trustees announced that they were
postponing the special meeting scheduled for May 8, 2019 to
May 22, 2019. Id. ¶ 37. The trustees allege
that the delay was necessary to meet revised timelines for
preparing and mailing proxy materials in a contested
situation. Id. More discussions between Stahl and
the trustees took place to try to reach a compromise on a
candidate, but the Horizon Group eventually sent the trustees
an email stating that they would not consider candidates
other than Oliver. Id. ¶¶ 31-32.
April 7, 2019, the trustees replaced their candidate Young
with General Donald Cook, who one of the TPL's
third-party advisors recommended. Id. ¶ 33.
Counterclaim Plaintiffs allege that the trustees continued to
send out proxy materials to shareholders, advocating in favor
of Cook's candidacy and against Oliver's. Doc. 37,
Mot. Prelim. Inj., 9. With the May 22, 2019 vote approaching,
the Horizon Group sought assurances from the trustees that a
vote would be held as scheduled. Id. at 10. On May
8, 2019, the trustees announced that a special meeting would
occur on May 22, but that no vote would occur; instead, the
trustees stated that the meeting would be adjourned until
June 6, 2019. Id. at 11. The reason for the delay is
disputed: the TPL and the trustees claim that the delay was
necessary because of a “fundamental change” in
Cook's candidacy that required proxy supplementation;
Counterclaim Plaintiffs argue that the delay was manufactured
to “buy time” to make a case against Oliver.
Compare Doc. 15, Am. Compl., ¶¶ 38-40
with Doc. 37, Mot. Prelim. Inj., 10-11.
Additionally, the parties dispute whether the trustees had
the power under the TPL's DoT to adjourn or delay the
meeting. Compare Doc. 15, Am. Compl., ¶¶
38-40 with Doc. 37, Mot. Prelim. Inj., 10-11.
leading up to the May 22 meeting, the parties continued to
wage competing proxy campaigns. Plaintiffs allege that
Counterclaim Plaintiffs “engaged in a concerted
misinformation campaign intended to manipulate the trustee
election process . . . .” Doc. 55, Pls.' Mot., 3
(citing Doc. 15, Am. Compl., ¶¶ 56, 91). Plaintiffs
also detail in their amended complaint how they provided
Oliver with a questionnaire so they could reconsider his
candidacy. Doc. 15, Am. Compl., ¶ 41. Plaintiffs allege
the questionnaire solicited information on Oliver's
background, business interests, and conflicts. Id.
Plaintiffs further allege that while both Young and Cook
completed the questionnaire, Oliver refused. Id. In
a public response letter, Oliver asserted that the
questionnaire was unnecessary because the trustees had
already rejected his candidacy and because he would include
all necessary information in proxy materials. Doc. 56,
Countercl. Pls.' Resp., 6. Counterclaim Plaintiffs aver
that between April 8 and May 22, the trustees filed “at
least 49 different proxy solicitation materials that attacked
Mr. Oliver's character directly and through
proxy materials allegedly focused on Oliver's failure to
respond to the trustees' questionnaires and requests for
information. Id. at 6-7.
on May 16, 2019, the trustees announced in a public letter
that they would disqualify Oliver from serving as a trustee
because he had failed to respond to the questionnaire.
Id. at 8. This letter also purportedly
“demanded” responses to additional information
requests by May 20. Id. Oliver responded on May 20.
Id. Oliver claims he answered the additional
questions asked in the May 16 letter, but he continued to
challenge the trustees' demands that he answer the
questionnaire as a prerequisite to serve as a trustee.
Id. Plaintiffs allege that the answers provided to
the additional questions were inaccurate and incomplete. Doc.
15, Am. Compl., ¶ 44.
21, 2019, the TPL and the trustees filed this lawsuit. Doc.
1, Orig. Compl. The trustees also announced that same day
that the special meeting would be “postponed until
further notice.” Doc. 15, Am. Compl., ¶ 45. The
trustees allege they took these actions because of
Oliver's failure to provide the information requested and
because of Counterclaim Plaintiffs' misstatements and
omissions in proxy materials. Id.
Horizon Group was determined that the meeting take place.
Doc. 56, Countercl. Pls.' Resp., 9. The special meeting
was originally scheduled to occur on the morning of May 22,
at Sidley Austin's office in Dallas, Texas. Doc. 15, Am.
Compl., ¶ 48. When the law firm allegedly refused to
allow TPL shareholders up to its offices, they were
redirected to another floor of that building. Doc. 56,
Countercl. Pls.' Resp., 9. A meeting was conducted; an
election inspector was appointed; and shareholders cast
votes, in person and via proxy. Id. at 9-10. In all,
48.1% of all outstanding shares were voted at this meeting:
47.2% of outstanding shares were voted in favor of
Oliver's election, 0.7% were voted against, and 0.2%
abstained. Id. at 9. Thus, Oliver received 98.1% of
the votes that were cast. Id. at 10. The trustees
did not vote their proxies. Id. That same day, the
trustees filed an amended complaint, which alleged that the
meeting was invalid and that the vote was a sham. Doc. 55,
Pls.' Mot., 4. In the amended complaint, they ask this
Court to declare that the meeting was unlawful and that any
votes cast at the meeting are invalid and void. Doc. 15, Am.
Compl., ¶ 55. Plaintiffs also request that this Court
declare that Oliver was not duly elected as a trustee and
that he must make corrective disclosures before he is
eligible to seek election. Id. ¶ 117.
25, 2019, Counterclaim Plaintiffs filed a motion for a
declaratory judgment and preliminary injunction. Doc. 37,
Mot. Prelim. Inj. For injunctive relief, Counterclaim
Plaintiffs request that trustees Barry and Norris be
prohibited from: (1) taking action on the TPL's behalf
without Oliver's participation as a “fully
empowered trustee”; or (2) further attempting to
postpone the election. Id. at 4. For declaratory
relief, Counterclaim Plaintiffs seek declarations: (1) that
the TPL was required to hold a special meeting to elect a
successor trustee; (2) that Barry and Norris had no authority
to (a) “unilaterally postpone” the special