Single Business Enterprise Theory
The "single business enterprise" theory "applies whenever two corporations coordinate operations and combine resources in pursuit of the same business purpose." SSP Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444, 452 (Tex. 2008).
Proof of a single business enterprise is not enough, however, to impose joint liability on separate entities. Id. "The corporate form normally insulates shareholders, officers, and directors from liability for corporate obligations . . . ." Castleberry v. Branscum, 721 S.W.2d 270, 271 (Tex. 1986).
However, the corporate veil may be pierced and one entity held liable for the debts of another when, among other circumstances, "a corporation is organized and operated as a mere tool or business conduit of another." Id. at 272.
"Alter ego applies when there is such unity between corporation and individual that the separateness of the corporation has ceased and holding only the corporation liable would result in injustice." Id.
Alter ego "is shown from the total dealings of the corporation and the individual, including the degree to which corporate formalities have been followed and corporate and individual property have been kept separately, the amount of financial interest, ownership and control the individual maintains over the corporation, and whether the corporation has been used for personal purposes." Id.
Parties are not jointly liable for a corporation's obligations "merely because they were part of a single business enterprise," i.e., "merely because of centralized control, mutual purposes, and shared finances." SSP Partners, 275 S.W.3d. at 452, 455.
Rather, "disregarding the corporate structure involves two considerations": (1) "the relationship between the two entities" and (2) "whether the entities' use of limited liability was illegitimate." Id. at 455. Parties are jointly liable when the corporate structure is shown to be a fraud. See id.