Shareholder Cannot Bring Individual Conversion Claim for Corporate Property Without Derivative Pleading
Read the Court's Opinion (PDF)
Judge Stacy Sharp
In Stratton v. Hogan, the Business Court of Texas granted a Rule 91a motion to dismiss a shareholder's individual conversion claim for physical-therapy equipment that the shareholder's own pleading described as belonging to the jointly owned corporation. The court held that injuries to corporate property must be brought by the corporation or derivatively on its behalf, and that the shareholder failed to plead either derivative standing or facts showing personal ownership of the allegedly converted equipment.
Court Staff Summary
Under Rule 91a, the Court dismisses a claim brought by an owner of a closely held corporation, individually, for conversion of the corporation’s property. The owner did not sue derivatively and did not plead facts to support individual harm from the alleged conversion. Moreover, the property at issue is to be divided between the parties through an ongoing wind-up process by the court-appointed wind-up supervisor.
Background: Dissolution and Wind-Up of Joint Healthcare Ventures
Brik Stratton and Kenneth Hogan jointly owned two entities: Stratton Hogan Clinics, Inc. ("SH Inc."), a physical-therapy business, and Stratton Hogan Real Estate, LLC ("SHRE"), which held the business's real estate. After their business relationship broke down and separation negotiations failed, Stratton sued for judicial dissolution of both entities. By joint request, the court appointed a wind-up supervisor in June 2025. The parties have asserted competing claims for breach of fiduciary duty and breach of operating agreements, with Hogan also bringing claims against third parties including Stratton's separately owned Stratton Rehabilitation Clinic, Inc.
In an amended pleading, the Stratton parties added new counterclaims against Hogan, including Stratton's individual claim for conversion of physical-therapy equipment. Hogan moved to dismiss the new claims under Texas Rule of Civil Procedure 91a. The Stratton parties responded by seeking leave to amend their counterclaims, adding factual allegations and withdrawing their disparagement claims within Rule 91a's deadline. The court granted the Stratton parties' unopposed motion to amend by separate order.
The Rule 91a Motion and Corporate Property
The court's memorandum opinion addressed Hogan's Rule 91a partial motion to dismiss counterclaims, filed June 9, 2026. The court heard argument on the motion at a hearing held July 7, 2026 and issued its ruling on July 15, 2026. The procedural background establishes that Stratton brought his conversion claim individually rather than derivatively on behalf of SH Inc., seeking recovery for alleged conversion of physical-therapy equipment that Stratton's pleading described as belonging to the corporation.
The case presents the question of whether a shareholder in a closely held corporation undergoing court-supervised dissolution and wind-up may bring an individual conversion claim for property that the shareholder's own pleading identifies as corporate property, without pleading derivative standing or facts establishing personal ownership or injury separate from the corporation's interests.