Corporate Entities and Personal Jurisdiction

The Texas Supreme Court issued a per curiam opinion this morning reversing the Fourteenth Court of Appeals and a trial court, both of which had previously denied a special appearance in a suit involving the alleged wrongful denial of insurance claims.

The Court held that the district court could not properly exercise specific personal jurisdiction over Commonwealth General Corporation (“CNC”) just because CNC was the sole shareholder of a Texas insurance company. “Stock ownership and the related right of control that stock ownership gives to stockholders are insufficient to destroy the distinctness of corporate entities for jurisdictional purposes.” According to the Supreme Court, since no evidence existed that CNC did anything other than wholly own the Texas insurance company whose denial of claims was the subject of the lawsuit, denial of CNC’s special appearance was inappropriate, at least on specific jurisdictional grounds. The Court remanded the question of whether or not general jurisdiction over CNC exists in Texas to the Court of Appeals.

Cause No. 04-0829, CNC v. York and Roberson

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