Piercing the Corporate Veil?

Seidler also argues that there is some evidence to suggest that it would be appropriate to pierce the
corporate veil, and thereby show that Morgan, an officer and shareholder in Kelley Enterprises and a
limited partner in Morgan Land, was a proper party. Various theories exist for "piercing the corporate
veil" or disregarding the corporate form. These theories must be specifically pleaded or they are waived,
unless they are tried by consent. See Mapco, Inc. v. Carter, 817 S.W.2d 686, 688 (Tex. 1991); Town
Hall Estates-Whitney, Inc. v. Winters, 220 S.W.3d 71, 86 (Tex. App.--Waco 2007, no pet.).

In Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex. 1986), the Texas Supreme Court enumerated
theories under which a corporate veil can be pierced: (4)

(1) when the fiction is used as a means of perpetrating fraud;

(2) where a corporation is organized and operated as a mere tool or business conduit of another
corporation ("alter ego");

(3) where the corporate fiction is resorted to as a means of evading an existing legal obligation;

(4) where the corporate fiction is employed to achieve or perpetrate monopoly;

(5) where the corporate fiction is used to circumvent a statute;

(6) where the corporate fiction is relied upon as a protection of crime or to justify wrong; and

(7) inadequate capitalization so as to work an injustice; (Id. at 272 n.3) and two or more businesses were
operated as a single business enterprise.

Paramount Petroleum Corp. v. Taylor Rental Ctr., 712 S.W.2d 534, 536 (Tex. App.--Houston [14th Dist.]
1986, writ ref'd n.r.e.); Allright Tex., Inc. v. Simons, 501 S.W.2d 145, 149-50 (Tex. App.--Houston [1st
Dist.] 1973, writ ref'd n.r.e.).

Under Willis v. Donnelly, 199 S.W.3d 262 (Tex. 2006), which applies recent changes in the Texas
Business Organizations Code, it is also apparent that any shareholder liability for wrongs done by a
corporation exists only in extremely limited and statutorily defined circumstances, such as when a
shareholder caused the corporation to be used for the purpose of perpetrating--and did perpetrate--an
actual fraud on the obligee primarily for the direct personal benefit of the shareholder. See Tex. Bus.
Orgs. Code Ann. § 21.223(a). There was no evidence provided by Seidler to show that Morgan
committed an act or followed a course of conduct which would make him liable for the acts of the entities
involved.

In this case, Seidler argues that the corporate fiction should be disregarded and that Morgan is, thus, a
proper party. The reason we should so conclude, Seidler argues, is because Morgan and his wife had
full ownership of Kelley Enterprises and partial ownership (but complete control) over Morgan Land
(because they owned and controlled its general partner, Morgan, Inc.). Thus, Morgan and his wife did
not treat the ranch as a separate corporate asset, but acquired it and its contents for their personal use.
(5) As to a claim that Kelley Enterprises and Morgan Land are alter egos of one another, "The burden to
prove alter ego rests upon the party who is arguing that the two parties are actually one entity." See
BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 798 (Tex. 2002). There is simply no proof
proffered by Seidler to that effect and there is ample summary judgment evidence to rebut it.

The personal use or benefit claims are not proper reasons to apply the alter ego concept. In a plea
directed more to emotion than reason, Seidler goes on to argue that the veil should be pierced because
otherwise she, an injured person, will not be recompensed and the negligent party will avoid liability.
Even if this is true, subjecting just anyone having any connection with an entity is not a reason to pierce
the corporate veil. One reason for the existence of the legal veil is to insulate parties from liability.
Further, there is no implication from the summary judgment proof that the sale had any linkage to the
injury, or that any other act occurred for the purpose of improperly avoiding liability or to defraud any
party. If Seidler had valid claims against another person or entity for the injuries which she suffered, she
could seek redress against the person or entity which could have liability; she opted to bring suit against
others.

We affirm the judgment of the trial court.