Hargrave v. Fibreboard Corporation

United States Court of Appeals for the Fifth Circuit · 1983 · Corporations

710 F.2d 1154 (1983)

Updated August 22, 2026

CorporationsParent-subsidiary liabilityPersonal jurisdictionSummary judgmentAlter egoparent subsidiaryTexas long-arm statutecorporate separateness

Facts

Turner & Newall, Ltd. (T & N), an English corporation, owned all of the stock of Keasbey & Mattison Co. (K & M), a Pennsylvania asbestos company, from 1938 to 1962. K & M and T & N maintained separate headquarters, shared no common officers and no more than one common director, and observed corporate formalities through separate accounts, records, taxes, budgets, and assets. T & N controlled K & M's general policy decisions, but K & M handled day-to-day operations, plant management, research and development, marketing, sales, and its own supply requirements. Nicolet, which had purchased certain K & M asbestos-related assets, filed third-party complaints against T & N seeking to hold it liable for asbestos injuries on alter ego, successor, and contribution or indemnity theories.

Issue

Whether Texas courts could exercise personal jurisdiction over T & N in Fults based on K & M's Texas activities under an alter ego theory. Whether summary judgment for T & N in Hargrave was proper where the record showed no genuine factual dispute on alter ego liability and Nicolet failed to support its alternative theories of successor liability and contribution or indemnity.

Rule

For jurisdictional purposes, a parent's ownership of all of a subsidiary's stock, common ownership, and policymaking authority are not enough by themselves to impute the subsidiary's forum contacts to the parent; the parent must exercise control over the subsidiary's internal business operations and affairs beyond that normally incident to ownership so that the two are not truly separate corporate entities. For alter ego liability under Pennsylvania and Texas law, corporate separateness is disregarded only in unusual circumstances such as misuse of the corporate form, and mere domination is insufficient. Under Rule 56(e), once summary judgment is properly supported, the nonmovant must set forth specific facts showing a genuine issue for trial and cannot preserve theories by leaving them only in the pleadings.

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North Coast Minerals, Ltd., a corporation headquartered in London, owns 100% of Red Mesa Industrial, Inc., a corporation headquartered in Tulsa. Red Mesa sells products throughout Texas. The two companies keep separate books, payrolls, bank accounts, insurance, budgets, and tax returns, and Red Mesa's managers run production, marketing, and sales without day-to-day direction from North Coast, although North Coast approves major capital expenditures and sets broad policy.

If a Texas plaintiff sues North Coast in Houston and seeks to attribute Red Mesa's Texas contacts to North Coast, what is the best argument for North Coast's motion to dismiss for lack of personal jurisdiction?

Explanation. The controlling rule is that a foreign parent is not subject to forum jurisdiction merely because its subsidiary does business there. The parent must exercise control over the subsidiary's internal business operations and affairs to a degree greater than normally incident to ownership. Separate books, accounts, taxes, and independent day-to-day operations weigh strongly against imputing the subsidiary's contacts to the parent.