Flores v. Bodden

Case No. 11-40557 (5th Cir. June 15, 2012) (Not for Publication)
AFFIRMED the decision of the District Court for Southern District of Texas which found that (1) Bodden exercised complete control over Debtor RJMW Corporation so that he was the Debtor corporation's alter ego and liable for Flores's injuries and entered final judgment in the amount of $123,622 plus interest; (2) rejected Bodden's argument and reliance on Bridas S.A.P.I.C. v. Gov't of Turkmenistan, 447 F.3d 411 (5th Cir. 2006) that Flores was required to show exercise of complete control over day to day operation and that control was used to commit fraud or wrong; and (3). rejected the argument that Castle v. Branscum, 721 S.W.2d 270, 277 (Tex. 1986) was abrogated by statute with respect to tort claims.
Procedural context:
Flores previously obtained a judgment against RJMV Corporation based on an accident that occurred on a shrimping trawler owned by RJMV. During RJMV's bankruptcy, Flores filed his lawsuit against Bodden claiming that under Texas law that Bodden was RJMV's alter ego. Bodden failed to answer and a default judgment was entered. After attempts to collect were made, Bodden filed an emergency motion to overturn the default judgment which was granted. After a bench trial, the District Court entered judgment for Flores. On appeal, Bodden challenged the legal standard as well as sufficiency of evidence to support the District Court's claim that Bodden was the alter ego of RJMV. Relying on Texas law, the Court of Appeals reiterated that the District Court correctly set out the six situations in which a court may disregard the corporate form including the one used by the District Court where a corporation is organized and operated as a mere tool or business conduit of another corporation.
Flores was employed by RJMV and injured on RJMV's shrimping trawler. RJMV was in turn owned by Bodden . As the owner of RJMV, Bodden avoided service for some time but eventually Bodden was served and a default judgment taken against RJMV. RJMV filed post-default motions and had the damages set aside and before a new final judgment could be entered RJMV filed for bankruptcy. Eventually the District Court case was reopened and a final judgment entered.While RJMV's bankruptcy was ongoing, Flores filed suit against Bodden, in his personal capacity, under 28 U.S.C. 1333, arguing Bodden should be liable for Flores' personal injuries because he was the alter ego of RJMV. The evidence used to support the alter ego claim included depositions taken four years previously which supported that Bodden made all the decisions for RJMV, including whether the trawler would be sent out, who would captain her, and what repairs the trawler would undergo. There was no insurance on the trawler and proceeds from the trawler's shrimping would be placed in a defunct corporations bank account owned by Bodden. Further, funds were intermingled, RJMV was severely under capitalized, and RJMV's corporate structure was "organized deceptively."
King, Jolly and Graves, Circuit Judges

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