pjc-family-2024-lib

PJC 205.1

D ISREGARDING C ORPORATE F ORM

When to use. The foregoing instruction should be used with the question in PJC 205.3 (disregarding corporate identity of corporation owned entirely by spouses) if a party claims that the corporate form should be disregarded on the basis of alter ego. See the comments below entitled “Other bases for disregarding corporate identity” and “Caveat” and the comment in PJC 205.3 entitled “Not for corporations with third party owners or to affect creditors’ claims.” Rewording instruction. In an appropriate case, the phrase the shareholders should be substituted for the phrase a shareholder in the foregoing instruction, the word shareholders should be substituted for the word shareholder , the word share holders’ should be substituted for the word shareholder’s , and the phrase shareholders maintain should be substituted for the phrase shareholder maintains . Other bases for disregarding corporate identity. The Supreme Court of Texas in Castleberry , 721 S.W.2d at 272, listed six circumstances under which the corporate fiction has historically been disregarded. The basis used in the foregoing instruction, alter ego, “is only one of the bases for disregarding the corporate fiction: ‘where a cor poration is organized and operated as a mere tool or business conduit of another corporation.’” Castleberry , 721 S.W.2d at 272. The other bases, which are separate from alter ego, are reflected in PJC 205.2 (other unfair device) in this chapter. Caveat. There are differences between the instructions and basic question found in chapter 108 (Piercing the Corporate Veil) in the current edition of Texas Pattern Jury Charges—Business, Consumer, Insurance & Employment and those found in this chapter 205 (Disregarding Corporate Form). In the context of marital dissolution, “reverse piercing” is sought to allow the trial court to move assets out of the corpora tion and divide them between the spouses as a part of the community estate. See Lif shutz , 61 S.W.3d at 516. The Committee believes that this instruction may also be used in the context of a probate proceeding. The Committee expresses no opinion on whether this instruction could be adapted for use in a non–family or non–probate law case.

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