pjc-family-2024-lib

PJC 205.2

D ISREGARDING C ORPORATE F ORM

the comment in PJC 205.3 entitled “Not for corporations with third-party owners or to affect creditors’ claims.” This instruction should not be used to assert alter ego as the basis for disregarding the corporate form. The court in Castleberry listed six circumstances under which the corporate fiction has historically been disregarded. Alter ego “is only one of the bases for disregarding the corporate fiction: ‘where a corporation is organized and operated as a mere tool or business conduit of another corporation.’” Castleberry , 721 S.W.2d at 272. The alter ego basis for disregarding the corporate form is reflected in PJC 205.1 (mere tool or business conduit (alter ego)) in this chapter, and the other five bases are reflected in this PJC 205.2. Use of “or.” The items in the list above are separated by the word or because a finding that any of the listed items has occurred with regard to a particular corporation (together with the requisite harm to the community estate) would support an affirma tive answer to Question 1 in PJC 205.3 as to that corporation. Rewording instruction. Include only those of the listed items that are appropri ate in the particular case. If only one item is appropriate for inclusion, the following form may be used, substituting the wording from the relevant item for the words the corporate form has been used as a sham to perpetrate a fraud in the instruction below: A corporation is an entity distinct from its shareholders. However, the distinct corporate identity of the corporation may be disregarded even though the corporate formalities have been observed and even though corporate assets have been kept separated from individual property if the corporate form has been used as a sham to perpetrate a fraud and if recognizing the distinct corporate identity would dam age the community estate. Additional instruction. If use of the corporate form as a sham to perpetrate a fraud is included in the charge, the following instruction should be included: “Fraud” is the breach of some legal or equitable duty that, irre spective of moral guilt, the law declares fraudulent because of its ten dency to deceive others, to violate confidence, or to injure public interests. This definition is based on Castleberry , 721 S.W.2d at 273. 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-

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