PJC Business 2024

PJC 108.3

P IERCING THE C ORPORATE V EIL

2. the amount of financial interest, ownership, and control Don Davis maintained over [ name of corporation ]; and 3. whether [ name of corporation ] had been used for personal pur poses of Don Davis .

[or]

COMMENT

When to use. PJC 108.3 should be used as an instruction accompanying the ques tion in PJC 108.1 if it is alleged that a defendant used a corporation as an alter ego. Use PJC 108.3A in those contract-related matters governed by Tex. Bus. Orgs. Code §21.223(a)(2) and PJC 108.3B in other matters. For additional discussion on section 21.223(a)(2), see PJC 108.2. Use of “or.” If used with other instructions (see PJC 108.4–108.8), PJC 108.3 must be followed by the word or , because a finding of any one of the theories for dis regarding the corporate fiction defined in the instructions would support an affirmative answer to the question. Source of instruction. The instruction on alter ego is drawn from the supreme court’s discussion of the indicia of corporate unity in Castleberry v. Branscum , 721 S.W.2d 270, 271–73 (Tex. 1986). “Actual fraud,” “direct personal benefit,” and “injustice.” See PJC 108.2 for cases discussing these terms. Failure to observe corporate formalities. Tex. Bus. Orgs. Code § 21.223(a)(3) provides that a defendant may not be liable to the corporation or its obligees for the failure of the corporation to observe any corporate formality, including the failure to “(A) comply with this code or the certificate of formation or bylaws of the corpora tion; or (B) observe any requirement prescribed by this code or the certificate of for mation or bylaws of the corporation for acts to be taken by the corporation or its directors or shareholders.” Where the court admits evidence that the corporation failed to observe corporate formalities, it may be appropriate to include an instruction as follows: In answering this question, do not consider the failure of the cor poration to observe corporate formalities. [Insert specific failures.]

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