Valuing Stock - Important Texas Supreme Court decision
by Michael Fox
In Miga v. Jensen (Tex. 10/31/02), handed down one year and one week after it was argued, the Texas Supreme Court waded into territory that was of paramount interest during the internet bubble. Plaintiff had been promised an option to purchase stock. When he attempted to exercize the option, the defendant breached the obligation and refused to sell. The question was simple, but important: when do you value the stock? In this case, if valued at the time that the contract was breached, the value was approximately $1,000,000. If valued at the time of trial, it would have been almost $18,000,000. Instead of allowing the plaintiff a risk free investment, the Court limited the damages to the value at the time of breach, plus pre-judgment interest. Before reaching the bottom line question, the Court dealt with the question of mootness following an unusual procedural step by the appellant. For those representing employers involved in disputes over stock options, this has to be considered good news; unless of course the market has gone down.