Appeal Dismissed, Petition Denied, and Memorandum Opinion filed August 13, 2009.
In The
Fourteenth Court of Appeals
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NO. 14-08-01136-CV
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COASTAL NEJAPA, LTD., Appellant
V.
CRYSTAL POWER COMPANY, Appellee
On Appeal from the 23rd District Court
Brazoria County, Texas
Trial Court Cause No. 46341
and
NO. 14-08-01127-CV
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IN RE COASTAL NEJAPA, LTD., Relator
ORIGINAL PROCEEDING
WRIT OF MANDAMUS
M E M O R A N D U M O P I N I O N
On May 1, 1999, Crystal Power Company (ACrystal@), a shareholder in Coastal Nejapa, Ltd., executed a subordination agreement that assigned to certain banks (Athe Banks@) some or all of Crystal=s rights to distribution payments. At that time, Crystal owned 8,467 class A shares and 5,000 class C shares of Coastal Nejapa=s stock. Thereafter, Coastal Nejapa paid the Banks the distributions attributable to Crystal=s shares.[1]
In October 2002, Crystal sued Coastal Nejapa in Brazoria County, Texas, asserting claims related to its alleged mistreatment as a minority shareholder. The Banks were not parties to this action.
In late 2006, Crystal asked Coastal Nejapa to pay future distributions in part to the Banks and in part to Crystal. In February 2007, Coastal Nejapa sought to make a distribution to its shareholders. Relying on a forum-selection clause in Crystal=s subordination agreement with the Banks, Coastal Nejapa filed an interpleader action in New York to determine the interested parties= rights to payment of approximately $13.3 million.
On October 9, 2008, Crystal asked the Texas court to enjoin Coastal Nejapa from depositing certain funds into the registry of the New York Court. Asserting comity grounds, Coastal Nejapa moved to stay further proceedings in the Texas court concerning those of Crystal=s claims related to distributions attributable to its shares in Coastal Nejapa. Although the judges of the Texas and New York courts corresponded and spoke by telephone, they issued conflicting orders on November 20, 2008. As relevant to this proceeding, the New York court ordered Coastal Nejapa to pay $803,980.00 into that court=s registry, while the Texas court ordered Coastal Nejapa not to pay these funds into the registry of the New York court, but instead to pay Crystal directly.
A. Interlocutory Appeal
Coastal Nejapa then filed this interlocutory appeal in which it argues that the trial court abused its discretion by (1) temporarily enjoining Coastal Nejapa from paying certain shareholder distributions into the registry of the New York court and (2) ordering Coastal Nejapa to pay those distributions directly to Crystal. The district court, however, subsequently modified its prior Injunctive Order and allowed Coastal Nejapa to pay $803,980.00 into the registry of the New York Court as ordered by the trial court in that state. Thus, the issue raised in the interlocutory appeal is now moot. See Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642 (Tex. 2005) (AA case becomes moot if a controversy ceases to exist or the parties lack a legally cognizable interest in the outcome.@). When a case becomes moot, the parties lose standing to maintain their claims. Williams v. Lara, 52 S.W.3d 171, 184 (Tex. 2000). Because the absence of a live controversy deprives us of subject-matter jurisdiction, we dismiss Coastal Nejapa=s interlocutory appeal.
B. Petition for Writ of Mandamus
Coastal Nejapa also filed a petition for writ of mandamus in which it asserted that the district court abused its discretion and left Coastal Nejapa with no adequate remedy on appeal when it denied Coastal Nejapa=s motion to stay the Texas proceedings with regard to Aall claims related to payments or distributions based on Crystal=s interest in Coastal Nejapa . . . until the New York proceeding has concluded.@ But Crystal and the Banks subsequently reached a settlement agreement, and the New York trial court entered final judgment in the interpleader action. Crystal accordingly filed a letter brief in this court stating that no controversy now exists between any of the parties regarding the claims at issue in the New York interpleader action and asking us to dismiss Coastal Nejapa=s claims before this court as moot. We requested a response from Coastal Nejapa to Crystal=s letter brief, and Coastal Nejapa wrote back, conceding that the Afinal judgment from the New York court might have mooted some aspects of these proceedings,@ but pointing out that Crystal has filed an appeal in New York, and thus, A[u]ntil the New York case is concluded, it is premature to respond to Crystal=s arguments regarding mootness.@ We disagree.
It is undisputed that as a result of the settlement agreement, there is no longer a live controversy between Crystal and the Banks regarding payment of the interpleaded funds or payment of future distributions. This fact is not changed by the pendency of Crystal=s New York appeal, because the controversy was extinguished by settlement, not by the New York trial court=s order, and in any event, Crystal seeks no substantive change in the lower court=s order.[2]
Inasmuch as Coastal Nejapa identifies no remaining live controversy that properly can be addressed by the requested writ of mandamus, it has not shown itself entitled to the extraordinary remedy it seeks. We therefore deny Coastal Nejapa=s petition for writ of mandamus.
/s/ Eva M. Guzman
Justice
Panel consists of Justices Anderson, Guzman, and Seymore.
[1] At a disputed date in 2008, Coastal Nejapa issued additional stock, increasing Crystal=s holding to 38,292 class A shares and 20,000 class C shares. The Banks do not claim a right to distributions tied to the later-acquired shares
[2] Crystal contends that Coastal Nejapa has taken the position that the New York court=s order covers funds that were not the subject of the interpleader; thus, Crystal seeks clarification that the order addresses only those matters actually raised in the interpleader proceeding. Second, Crystal asks that a misstated reference to a cause number be corrected.