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Radaszewski v. Telecom Corp. - 981 F.2d 305 (8th Cir. 1992)

Rule:

To "pierce the corporate veil," one must show: (1) control, not mere majority or complete stock control, but complete domination, not only of finances, but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; and (2) such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or dishonest and unjust act in contravention of plaintiff's legal rights; and (3) the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.

Facts:

On August 21, 1984, Konrad Radaszewski, who was on a motorcycle, was struck by a truck driven by an employee of Contrux, Inc. In a suit to claim damages for the personal injuries Konrad Radaszewski sustained during the accident, Konrad’s duly appointed guardian of the person and estate, Cecilia, attempted to pierce the corporate veil to hold Telecom Corporation, the corporate parent of Contrux, Inc., financially liable for the actions of the latter’s employee. The parties acknowledged that Telecom Corporation’s only contact with the state of Missouri, where the accident occurred, was through Contrux Inc.  The lower court held that it did not have personal jurisdiction over Telecom Corporation, and dismissed without prejudice.

Issue:

Was the trial court correct in holding that it did not have personal jurisdiction over Telecom Corporation by piercing the corporate veil, thus, justifying its decision to dismiss the case?

Answer:

Yes.

Conclusion:

The Court affirmed the trial court’s dismissal of the case, but held that the case against Telecom Corporation was dismissed with prejudice because Radaszewski made no showing of material fact that Telecom fraudulently or wrongly undercapitalized Contrux. According to the Court, the purchase of insurance demonstrated the financial responsibility necessary to defeat that claim. Because Radaszewski was unable to pierce the corporate veil, the Court did not have personal jurisdiction over defendant parent, and the defect was not curable.

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