The supreme court provided guidance about the limits of “alter ego” liability in JNM Express, LLC v. Lozano, holding:

     The “injustice” prong requires more than a judge’s or juror’s “subjective perception of unfairness.”  Instead, it references “the kinds of abuse . . . that the corporate structure should not shield,” like “fraud, evasion of existing obligations, circumvention of statutes, monopolization, criminal conduct, and the like.” “Such abuse is necessary before disregarding the existence of a corporation as a separate entity.” A “plaintiff must prove that he has fallen victim to a basically unfair device by which a corporate entity has been used to achieve an inequitable result.”
    The court of appeals erred because it did not address the injustice prong. Had it done so, it would have recognized that the evidence here does not satisfy that prong’s standard. The Lozanos point to nothing in the record showing that the Marins abused the corporate form such that failing to pierce the corporate veil would result in “injustice” in the sense that our alter ego cases describe that concept. One relevant consideration in the tort context is whether the corporation was “reasonably capitalized in light of the nature and risk of its business.” Yet the Lozanos produced evidence at trial to demonstrate that the companies did have the resources to protect their drivers.

No. 21-0853 (April 19, 2024) (per curiam) (citations and footnotes omitted, emphasis added). (In the graphic, DALL-E illustrates “piercing the corporate veil”).

Stover v. ADM Milling Co. involved several issues about corporate veil-piercing arising from a failed real estate deal. Two points in particular are worth noting:

• Standing. “Individuals found liable when the corporate veil is pierced do not have standing to appeal the findings of liability against a corporation if the corporation does not appeal. . . .  The individual shareholders are only injured when the corporate veil is pierced and whether the corporate veil is pierced is the only issue about which they have standing to complain with respect to the findings against the corporation.”
• Legal standard. While TBOC § 21.223 does not define the key phrase “primarily for the direct benefit” – “courts have concluded that evidence showing that funds derived from the corporation’s fraudulent conduct were ‘pocketed by or diverted to’ the individual defendant is sufficient to demonstrate the requirement of a direct personal benefit. On the other hand, evidence showing that the fraudulently procured funds were used for the corporation’s financial obligations refutes the notion that the fraud was perpetrated primarily for the direct personal benefit of an individual.” (citations omitted).

No. 05-17-00778-CV (Dec. 28, 2018) (mem. op.)

Majestic Cast, Inc. entered into a contract with ProCon Paving to serve as a subcontractor on the construction of a Montessori school. Citing numerous complaints, Majestic Cast terminated the contract and filed suit against “Majed Khalef d/b/a ProCon Paving and Construction, Inc.” for theft, conversion, breach of contract, and fraud. Majestic Cast’s posited that Khalaf was using ProCon’s corporate form as an empty shell to avoid liability, and that he should therefore be held personally liable as an alter ego of ProCon. The trial court granted traditional and no-evidence motions for summary judgment, and Majestic Cast appealed. The Court of Appeals reversed as to the claims for theft, conversion and fraud. Whereas Majestic Case had pleaded those tort claims against Khalaf individually, Khalaf had sought summary judgment only by arguing that Majestic Cast could not pierce the veil to hold him liable on ProCon’s contract.  Because a corporate agent can be held liable for his own fraudulent or tortious acts even while acting within the scope of the agency, Khalaf was not entitled to summary judgment on the tort claims. As to Majestic Cast’s breach of contract claim, however, the Court held that there was no evidence to raise a fact issue on any theory for disregarding the corporate fiction in order to make Khalaf individually liable for breach of the Majestic Cast-ProCon contract. Thus, summary judgment was affirmed only as to the contract claim, with the tort claims remanded for further proceedings.

Majestic Cast, Inc. v. Khalaf, No. 05-12-00112-CV