For every benevolent CEO in the world, there’s another trying to avoid taking on liability for the work their business does. That’s why many corporate entities create secondary businesses to collaborate with their primary outlet. In other words, CEOs and other parties may create subsidiaries that take on liability for another business’s faults.
Should you ever want to take up a claim against the party truly responsible for your personal injury losses after a corporate accident, you need to “pierce the corporate veil.” What, however, does “piercing the corporate veil” mean, and how do you go about it?
Piercing the Corporate Veil
Under most circumstances, corporations enjoy limited liability in the face of product liability or personal injury cases. This means that there is only a certain degree to which these parties can be held responsible for negligence-based injuries in court, even if it is their alleged negligence resulting in those accidents.
“Piercing the corporate veil” allows parties undertaking business litigation to navigate around this limited liability. Specifically, the phrase details the actions afforded to certain individuals should a business representative create a subsidiary to otherwise take on liability for consumer losses.
You cannot pierce the corporate veil on casual occasions. Instead, cases that see an injured party pierce the veil tend to bear evidence of some severe negligence. Wrongful death cases, for example, resulting from product liability may see a court help you navigate the corporate veil.
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Texas-Specific Veil-Piercing Standards
There are specific strands, or standards, that allow individuals in Texas to pierce the corporate veil. The prosecution may meet any of these strands if they want to advocate for the right to pierce. Additionally, courts can choose to pierce the corporate veil upon agreeing with the prosecution to elaborate on fraud allegedly perpetuated by the defendant.
The strands by which Texas prosecutors must stand include:
- The prosecution must submit evidence indicating that the corporation in question serves as its own alter ego or shareholder
- Interested parties must indicate that a subsidiary has been used to avoid legal limitations otherwise placed on Texan corporations
- Parties were injured due to fraud that was subsequently covered up or perpetuated by a shell company
Fraud in Veil-Piercing Cases
Should a court move to try and hold a corporation accountable for fraud, you and your team must elaborate on the nature of the fraud in question. Specifically, “fraud,” according to Texas courts, describes
- The deliberate omission of knowledge from one party to another
- The inability of the injured party to discern the truth of the aforementioned omission
- Manipulation by the aforementioned omission
- Injury by the aforementioned manipulation
You must present evidence of all the above if you want to convince a court to pursue an instance of fraud in addition to your personal injuries.
When to Pierce the Corporate Veil
Gross negligence resulting in your or another party’s serious injury may entitle you to pierce the corporate veil alongside an applicable lawyer. Other opportunities to approach the party liable more directly for your losses can include:
- Evidence of corporate fraud
- Evidence of a corporation’s inability to separate its identity from that of a subsidiary
- The intertwinement of a company’s owner, shareholders, and/or the company itself
- Instances of undercapitalization
- Refusal or failure to abide by the formalities of the veil
If you’re unsure as to whether or not you have the right to pursue a pierced-veil effort, you can meet with one of our attorneys. We can assess the circumstances leading to your losses and help you secure the means to act.
How to Pierce the Corporate Veil
If you want to pierce the corporate veil in the face of a personal injury, it’s in your best interest to seek out the guidance of an attorney. Our team can facilitate a collaboration between you and the local court system that better enables you to contend with a corporation’s limited liability.
Moreover, you must make a point to present evidence of fraud or the misuse of a subsidiary for a corporation’s unlawful benefit. This evidence can range from documentation of misconduct to elaboration on injuries sustained due to the corporation’s actions.
You can learn more about the practice of piercing the corporate veil alongside one of the attorneys from our office.
The Benefits of Piercing the Corporate Veil
The process of piercing the corporate veil allows you to hold the parties truly responsible for your losses liable for their actions in civil court. These parties will no longer have the option to hide behind subsidiaries made to deflect responsibility and attention from their misbehavior.
Piercing the corporate veil may also make it easier for you and other injured parties to pursue a class action against the offending individuals. You can work together to address your concerns to the individual at the helm of a particular corporation and, in turn, possibly benefit from the liquid resources that party has available to them.
Moreover, this spanning reveal of fraud can prevent the named party from having the same opportunities to engage in illegal negligent behavior again. Once precedent regarding your case makes it into the common legal knowledge, other attorneys can use your case to protect parties who might suffer similar losses.
Let’s Address Your Corporate-Based Losses Together
An attorney’s effort to pierce the corporate veil can help you hold a company’s overseers directly responsible for any negligence resulting in your personal injury. If you want help holding these parties liable for their negligence, you can collaborate with a personal injury lawyer in your area.
Buzbee Law Firm can connect you with representatives who can fight to have your case brought before the appropriate parties. For more information on what it means to pierce the corporate veil, you can schedule an appointment over the phone or courtesy of our website. Contact us today.