Piercing the veilLevantar el velo
A Texas supplier sues the sole shareholder of a corporation for an unpaid invoice, arguing the corporation was his alter ego. What must the supplier prove in addition to domination?
For obligations arising from contract, the Texas statute demands actual fraud for the owner's direct benefit; constructive fraud or unfairness will not do.Para obligaciones contractuales, la ley de Texas exige fraude real en beneficio directo del dueño; no basta el fraude constructivo ni la injusticia.
TBOC § 21.223(b)
In Texas, how does a corporation's failure to observe corporate formalities (meetings, minutes, elected officers) affect a veil-piercing claim?
The legislature removed formalities from the Texas analysis; the fight is about commingling, fraud and capitalization.El legislador sacó las formalidades del análisis texano; la pelea es por confusión de patrimonios, fraude y capitalización.
TBOC §§ 21.223(a)(3), 101.002
Which fact is the strongest evidence that an entity is its owner's alter ego?
Commingling and undocumented transfers show the line between owner and entity has disappeared; that is the heart of the domination inquiry.La confusión de patrimonios y las transferencias sin documentar muestran que la línea entre dueño y entidad desapareció; ese es el núcleo del análisis de dominación.
Class slides, ch. 4 (domination factors)
Why do courts tend to pierce the veil more readily for tort creditors than for contract creditors?
Choice is the policy: a voluntary creditor can price the risk or protect itself; an involuntary one bears a risk the owners shifted onto the public.La política es la elección: el acreedor voluntario puede valorar el riesgo o protegerse; el involuntario carga un riesgo que los dueños trasladaron al público.
Class slides, ch. 4
Five affiliated Texas LLCs share offices, employees and a brand and pursue one business purpose. A creditor of one asks the court to hold all five liable as a single business enterprise, without proving the usual piercing factors. Result?
Texas treats single business enterprise as a description, not a doctrine; the plaintiff still needs the piercing analysis.Texas trata la empresa única como una descripción, no como doctrina; el actor sigue necesitando el análisis de levantamiento del velo.
SSP Partners v. Gladstrong Investments (Tex. 2008)
A parent corporation owns 100% of a subsidiary that caused an environmental spill. Which combination best supports reaching the parent?
Domination plus an equitable reason: the parent treated the subsidiary as a department and parked a known risk behind trivial coverage.Dominación más una razón de equidad: la matriz trató a la subsidiaria como un departamento y escondió un riesgo conocido detrás de una cobertura mínima.
United States v. Jon-T Chemicals; Minton v. Cavaney
Veil piercing generally requires two showings: that the owners treated the entity as their , and that an equitable ground such as fraud, misrepresentation or justifies disregarding the form.
Domination alone rarely suffices; the injustice is the second half.La dominación sola rara vez basta; la injusticia es la segunda mitad.
List four practices that reduce the risk of veil piercing.
AnswerRespuesta: Keep separate bank accounts and never commingle; document transactions, resolutions and intercompany dealings; capitalize and insure the entity adequately for its foreseeable risks; sign only in the entity's name and never mislead creditors about who they are dealing with; observe formalities where they matter.
- separate accounts, no commingling
- documentation of transactions and resolutions
- adequate capital and insurance
- sign in the entity's name; no misrepresentation
A shareholder, driving the company truck on company business, negligently injures a cyclist. The cyclist sues the shareholder personally. Must the cyclist pierce the veil?
Limited liability shields owners from the entity's obligations; it never shields anyone from liability for their own wrongful act. The company may also be liable under respondeat superior.La responsabilidad limitada protege a los dueños de las obligaciones de la entidad; nunca protege a nadie de su propio acto ilícito. La empresa también puede responder por respondeat superior.
Class slides, ch. 4 (exceptions to limited liability)
How often do courts pierce the veil to reach the dispersed public shareholders of a listed corporation?
Public shareholders do not dominate anything; reporting rules and separation of ownership and control make the theory inapplicable.Los accionistas del público no dominan nada; las reglas de revelación y la separación entre propiedad y control hacen inaplicable la teoría.
Class slides, ch. 4