IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-20619

ALBERTO JUSTO RODRIGUEZ LICEA; FERNANDO ALONSO 

HERNANDEZ; LUIS ALBERTO CASANOVA TOLEDO, 

 Plaintiffs - Appellees

v.

CURACAO DRYDOCK COMPANY, INCORPORATED, also known as 

Curacaose Dokmaatschappij NV, also known as CDMNV,

 Defendant

v.

FORMOSA PLASTICS MARINE CORPORATION; FORMOSA BRICK 

MARINE CORPORATION, 

 Garnishees - Appellants

------------------------------------------------------------------------------------------------------------

consolidated with No. 14-20693

ALBERTO JUSTO RODRIGUEZ LICEA; FERNANDO ALONSO 

HERNANDEZ; LUIS ALBERTO CASANOV TOLEDO

 Plaintiffs - Appellees

v.

CURACAO DRYDOCK COMPANY, INCORPORATED, 

also known as Curacaose Dokmaatschappij NV, 

also known as CDMNV

 Defendant

United States Court of Appeals

Fifth Circuit

FILED

November 23, 2015

Lyle W. Cayce

Clerk

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2

v. 

FORMOSA PLASTICS CORPORATION AMERICA,

 Garnishee - Appellant

Appeals from the United States District Court

for the Southern District of Texas

Before JONES, SMITH, and SOUTHWICK, Circuit Judges.

EDITH H. JONES, Circuit Judge:

These are appeals from a garnishment action. Appellees – Alberto Justo 

Rodriguez Licea, Fernando Alonso Hernandez, and Luis Alberto Casanova 

(together “Plaintiffs”) – were successful plaintiffs in an underlying action 

against the Curacao Drydock Company (“Curacao”). The garnishees’ appeals 

raise numerous questions. We hold that the court lacked personal jurisdiction 

over two garnishees, improperly exercised quasi in rem jurisdiction over a debt 

owed by one of them, and erroneously failed to follow Texas procedure as to the 

third garnishee.

BACKGROUND

The underlying action was filed in 2006 under the Alien Tort Statute and 

RICO in the Southern District of Florida. Licea v. Curacao Drydock Co., 

584 F. Supp. 2d 1355 (S.D. Fla. 2008). It alleged that Plaintiff-Appellees 

endured human trafficking, false imprisonment, and forced labor in a modernday slavery conspiracy between Curacao and the Cuban government. Id. at 

1356-63. After initially appearing and filing several motions, Curacao 

“repeatedly flouted [the] Court’s authority and refused to defend the matter.” 

Id. at 1357. The court entered default judgment against Curacao on the issue 

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of liability and held a separate trial to set damages, at which Curacao did not 

appear. Id. at 1357-58. The plaintiffs won an $80 million judgment: 

$50 million in compensatory damages and $30 million in punitive damages. 

Id. at 1366. There was no appeal from that action. The plaintiffs registered 

their judgment in the Southern District of Texas pursuant to 28 U.S.C. § 1963 

on May 7, 2013. 

Three garnishees are Appellants in these cases: Formosa Brick Marine 

Corporation (“FBMC”), Formosa Plastics Marine Corporation (“FPMC”), and 

Formosa Plastics Corporation, America (“FPCA”) (together “Garnishees”). 

Though it is not entirely clear from the record, FPCA may be the parent 

company of both FBMC and FPMC, FBMC and FPMC might be brother-sister 

corporations, and/or FPMC might own FBMC. In any case, the entities are 

related in a corporate family. FBMC and FPMC are Liberian corporations with 

their principal place of business in Taiwan but no apparent contacts with 

Texas. FPCA, however, is registered to do business in Texas, has a registered 

agent, and operates a large processing plant in the state. 

Pursuant to FED. R. CIV. P. 64, TEX. R. CIV. P. 657-79, and the TEX. CIV.

PRAC. & REM. CODE Ch. 63, the plaintiffs sought writs of garnishment against 

FBMC, FPMC, and FPCA in partial satisfaction of their judgment against 

Curacao. FPCA was served with process through its statutory agent for 

service.

FPMC and FBMC were both “served” by United States Marshals 

through the masters of vessels. Putative service upon FPMC was made on the 

master of M/V FPMC 30 while it was docked in Corpus Christi, Texas and,

again on the master of M/V FPMC 19 when that vessel was conducting cargo 

operations in Texas City, Texas. FBMC was also putatively served through 

the master of M/V FPMC 19 when it was conducting cargo operations in Texas 

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City. At the time of service, each vessel was owned by other entities, and 

FPMC operated the vessels under contract with the owners. Consequently, 

neither FBMC nor FPMC was directly served with process. The record 

indicates no other connection between Texas and either FBMC or FPMC.

FPMC and FBMC nevertheless answered the writs of garnishment and 

moved to dismiss. Both garnishees objected that the court lacked personal 

jurisdiction and that service was improper. FPMC denied that it was indebted 

to Curacao, while FBMC admitted it owed $2,639,000 to Curacao. The district 

court initially denied these motions without prejudice, and both parties later 

filed amended motions to dismiss raising the same issues. 

FPCA filed a verified answer that denied any indebtedness to Curacao 

or that it knew any person who was so indebted. After receiving no 

controverting response or affidavit, FPCA moved for discharge from the 

proceedings, which was denied. 

Responding to plaintiffs’ motion to interplead funds, FBMC deposited 

$2,639,000 with the clerk for the Southern District of Texas, subject to its 

amended motion to dismiss. FBMC and FPMC again objected to personal 

jurisdiction and service of process in their objection to the district court’s 

proposed final judgment. 

The district court issued a final judgment on September 19, 2014, 

awarding the $2,639,000 to Plaintiffs and discharging Garnishees’ liability to 

Curacao for that amount. 

In its opinion, the district court found that “Plaintiffs provided the court 

with uncontroverted evidence showing that FPMC Brick Marine Corporation 

[the owner of the M/V FPMC 19] and FBMC are alter egos of FPMC and 

thereby each other.” The district court also found that FPCA, FBMC, and 

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FPMC were all alter egos of each other. Serving the masters therefore 

effectuated service on all Garnishees.1

The district court noted that because Garnishees were served with writs 

while in Texas, the funds they owe Curacao are subject to garnishment under 

the court’s quasi in rem jurisdiction. It cited United States Rubber v. Poage, 

297 F.2d 670 (5th Cir. 1962)). The court rejected Garnishees’ argument that 

Poage was overruled by subsequent Supreme Court decisions. 

The district court also found that it would be fair to exercise jurisdiction 

over the Garnishees because this proceeding imposes a slight burden on them 

compared to normal litigation and because of the alter egos’ extensive activities 

in Texas. Further, because FPCA did not object to personal jurisdiction and is 

the alter ego of FPMC and FBMC, its amenability can be imputed to the two 

other corporations.

Following this judgment, this court granted FPMC’s and FBMC’s motion 

to stay enforcement of the judgment pending appeal and to accept the 

previously deposited amount as security in lieu of a supersedeas bond.

STANDARDS OF REVIEW

Questions of jurisdiction, service of process, and the denial of the motion 

to discharge are issues of law reviewed de novo. Herman v. Cataphora, Inc., 

730 F.3d 460, 465 (5th Cir. 2013); Af-Cap, Inc. v. Republic of Congo, 462 F.3d 

417, 423 (5th Cir. 2006); Bullion v. Gillespie, 895 F2d 213, 216 (5th Cir. 1990). 

The district court’s finding of alter ego is a fact that is reviewed for clear error. 

United States v. Jon-T Chems., Inc., 768 F.2d 686, 694 (5th Cir. 1985).

 

1 The district court cited Witham v. The James E. McAlpine, 96 F.Supp. 723 (E.D. 

Mich. 1951) for the proposition that “[s]ervice on a captain of a ship . . . has long been the 

equivalent of service on the corporation.”

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DISCUSSION

As a preliminary matter, FED. R. CIV. P. 64 and 69 provide that the law, 

both substantive and procedural, of the state where the federal court sits 

governs writs of garnishment unless a federal statute provides otherwise. The 

parties have briefed Texas law and have not called attention to any applicable 

federal statute. Texas law also governs the alter ego determinations, which 

bear on the exercise of jurisdiction over and proper service on FPMC and 

FBMC. See Jackson v. Tanfoglio Giuseppe, S.R.L., 615 F.3d 579, 586-88 (5th 

Cir. 2010) (applying state alter ego law to find lack of personal jurisdiction over 

a non-resident); Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 

1983) (noting that state law of the forum controls whether a defendant is 

amendable to service through its alter egos under a long-arm statute). The 

principal error by the district court in addressing the issues was its failure to 

apply Texas law. 

Separate appeals were filed by FPCA, on one hand, and FBMC and 

FPMC on the other. The common issue raised by the Garnishees is whether 

the district court erred in finding that they are all alter egos of each other. 

Jurisdiction and service of process on FPMC and FBMC depend on the alter 

ego findings. Other issues concern the district court’s failure to apply 

substantive Texas law to the garnishment and its failure to dismiss FPCA as 

required by Texas law when a garnishee files an uncontroverted affidavit

denying possession of any account subject to garnishment. We address these 

points in turn. 

I. Corporate Alter Ego 

The district court found that “FPMC Brick Marine Corporation [the 

owner of the M/V FPMC 19] and FBMC are alter egos of FPMC and thereby 

of each other.” It also found that FPMC, FBMC, and FPCA are all alter egos 

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of each other. As a result, the court held that service on the vessel masters 

was sufficient to serve all of the entities, and that FPCA’s failure to challenge 

personal jurisdiction could be imputed to FPMC and FBMC. These findings of 

alter ego, which did not cite a single supporting case, were erroneous.

Texas law recognizes that the corporate form can be disregarded in 

certain circumstances. See Castleberry v. Branscum, 721 S.W.2d 270, 272-73 

(Tex. 1986). One of the bases for doing so is the alter ego doctrine, whereby “a 

corporation is organized and operated as a mere tool or business conduit of 

another corporation.” Id. at 272. Proof of imputed contacts or an alter ego 

relationship may be the basis for exercising jurisdiction over a non-resident 

defendant. See BMC Software Belg., N.V. v. Marchand, 83 S.W. 3d 789, 798 

(Tex. 2002); see also Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1160 (5th 

Cir. 1983). 

The Texas Supreme Court has “acknowledged that jurisdictional veilpiercing and substantive veil-piercing involve different elements of proof” 

given that jurisdiction implicates due process considerations that cannot be 

overridden by statutes or common law. PHC-Minden, L.P. v. Kimberly-Clark 

Corp., 235 S.W.3d 163, 174-75 (Tex. 2007).2 The court outlined the following 

factors relevant for jurisdictional veil-piercing:3

 

2 For this reason, some alter ego cases cited by the parties are inapposite because they

recite factors to consider in substantive veil piercing rather than jurisdictional veil piercing. 

E.g. United States v. Jon-T Chems., Inc., 768 F.2d 686, 691-92 (5th Cir. 1985) (the “laundry 

list” factors).

3 The law in this area addresses parent-subsidiary corporations, but it is applicable to 

other intracorporate relationships as well. The parties discuss the relationships among the 

entities in this case as if FPCA is the parent of both FBMC and FPMC, and the district court 

found that FPMC is the parent of FBMC and FPMC Brick Marine Corporation. It is unclear 

from the record what the actual relationships are.

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To “fuse” the parent company and its subsidiary for jurisdictional 

purposes, the plaintiffs must prove the parent controls the internal 

business operations and affairs of the subsidiary. But the degree 

of control the parent exercises must be greater than that normally 

associated with common ownership and directorship; the evidence 

must show that the two entities cease to be separate so that the 

corporate fiction should be disregarded to prevent fraud or 

injustice.

PHC-Minden, 235 S.W.3d at 175 (quoting BMC Software, 83 S.W.3d at 799). 

Other factors to consider are “the amount of the subsidiary's stock owned by 

the parent corporation, the existence of separate headquarters, the observance 

of corporate formalities, and the degree of the parent's control over the general 

policy and administration of the subsidiary.” Id. (citing 4A WRIGHT & MILLER,

FEDERAL PRACTICE & PROCEDURE § 1069.4). However, “[a] subsidiary 

corporation will not be regarded as the alter ego of its parent merely because 

of stock ownership, a duplication of some or all of the directors or officers, or 

an exercise of the control that stock ownership gives to stockholders.” Id.

(quoting Gentry v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 573 (Tex. 

1975)). There must be a “plus factor, something beyond the subsidiary’s mere 

presence within the bosom of the corporate family.” Id. at 176 (quoting Dickson 

Marine, Inc. v. Panalpina, Inc., 179 F.3d 331, 338 (5th Cir. 1999)). Not 

pertinent to jurisdictional veil piercing analysis, however, are allegations of

fraud4 and a common name among the entities. Id. at 175.

 

4 Garnishees are thus incorrect to stress that fraud is necessary in order to find alter 

ego for jurisdictional purposes.

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In this case, the district court found an alter ego5 relationship among

FPMC Brick Marine Corporation (the owner of the M/V FPMC 19), FBMC, 

and FPMC because: (1) FPMC operated the MV FPMC 19; (2) FPMC Brick 

Marine Corporation and FBMC are both owned by FPMC;6 (3) ship operations 

are performed out of FPMC’s office; (4) FPMC lists the vessels on its website 

even though “nominally owned” by other entities; and (5) FPMC’s 

organizational chart indicates that the master of each vessel reports to FPMC. 

It also found that FPCA, FBMC, and FPMC (all of the Garnishees) are alter 

egos of each other because: (1) all of the entities report to and are run by the 

same founder; (2) they share a group administrative office that combines 

several functions together; and (3) management of the entities is controlled at 

the “Formosa Plastics Group level.”7 Plaintiffs repeat these conclusions on 

appeal and cite portions of the record that consist of their own statements as 

to these “facts.”

The court relied almost exclusively on two “organizational charts” 

submitted by Plaintiffs (taken from Garnishees’ website) in finding alter ego. 

 

5 The district court actually seemed to apply the single business entity theory for 

piercing the jurisdictional veil, not the alter ego theory. See Castleberry, 721 S.W.2d at 272 

(“Many Texas cases have blurred the distinction between alter ego and the other bases for 

disregarding the corporate fiction and treated alter ego as a synonym for the entire doctrine 

of disregarding the corporate fiction.”); see also Goodyear Dunlop Tires Ops., S.A. v. Brown, 

131 S. Ct. 2846, 2857 (2011) (declining to address single business entity argument). The 

single business entity theory would pierce the veil “when two or more corporations associate 

together and, rather than operate as separate entities, integrate their resources to achieve a 

common business purpose.” S. Union Co. v. City of Edinburg, 129 S.W.3d 74, 86 (Tex. 2003) 

(internal quotation and citation omitted). The Texas Supreme Court has never endorsed this 

theory in any context. PHC-Minden, 235 S.W.3d at 173.

6 It is unclear how the district court found this, as the page in the record it cites to for 

this proposition does not so indicate. 

7 It is unclear what this level is as there is no entity called “Formosa Plastics Group.”

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The first chart apparently shows the internal reporting structure of FPMC and 

the second purports to show the various levels of ownership of the entities. The 

charts are not probative.

First, the charts do not actually depict corporate structure. There is no 

indication of ownership; they do not indicate which entity owns what, which 

entities are parents, or subsidiaries, or brother/sister. Nor is it even clear that 

the “entities” on the chart are formal entities, because they have no corporate 

form designations. Normal organizational charts make distinctions for, e.g.,

corporations, LLC’s, disregarded entities, or foreign entities. Further, 

Garnishees FPCA and FBMC are not even represented on the charts. 

Second, the charts do not show the functional relationship among the 

entities. “In determining whether an alter ego relationship exists, the court 

should focus on the relationship between the corporation and the entity or 

individual that allegedly abused corporate formalities.” Zahra Spiritual Trust 

v. United States, 910 F.2d 240, 245 (5th Cir. 1990) (citing Castleberry, 

721 S.W.2d at 272). As Garnishees correctly put it, the organizational charts 

are “irrelevant because they are not probative of the issue of alter ego. They 

show only the structure, but not the relationships between the Formosa 

entities.” They do not indicate any “plus factor” that entails “something beyond 

the subsidiary’s mere presence within the bosom of the corporate family.” 

PHC-Minden, 235 S.W.3d at 176. At best, they demonstrate mere affiliation, 

which is insufficient to pierce the veil, or common names, which are irrelevant 

to jurisdictional veil piercing. They do not even appear to show that the 

entities share common functions; the “Group Administration” boxes report to 

the Execupive [sic] Board, but there is no indication that these functions are 

performed for the entities listed on the chart. In no way do these descriptions 

suggest control “greater than that normally associated with common 

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ownership and directorship” or that the “entities cease to be separate so that 

the corporate fiction should be disregarded to prevent fraud or injustice.” PHCMinden, 235 S.W.3d at 175.

In sum, the charts are not evidence that satisfies the tests endorsed by 

the Texas Supreme Court for jurisdictional veil piercing. The district court’s 

findings of alter ego were clearly erroneous. Because this means that neither 

FBMC nor FPMC was effectually served with process, nor can personal 

jurisdiction be asserted over these entities based on an alter ego relationship 

with FPCA, we must remand with instructions to dismiss the garnishment 

proceeding against FBMC and FPMC.

II. District Court’s Exercise of Quasi in Rem Jurisdiction

"Quasi in rem actions are based on a claim for money begun by 

attachment or other seizure of property when the district court has no 

jurisdiction over the person of the [judgment] defendant, but has jurisdiction 

over either property that the court can apply to the satisfaction of the 

defendant's debt or persons who themselves owe an obligation to the defendant 

that the court can apply to the satisfaction of the debt." Stena Rederei AB v. 

Comision de Contratos del Comite Ejecutivo General del Sindicato 

Revolucionario de Trabajadores Petroleros de la Republica Mexicana, S.C., 

923 F.2d 380, 391 (5th Cir. 1991) (citation omitted). The district court here 

relied several times on its finding that "[t]he Formosa Entities were served 

with writs of garnishment while in the state" to support its exercise of quasi in 

rem jurisdiction over the debt owed to Curacao. It is unclear on which basis 

the court predicated quasi in rem jurisdiction: whether it emanated from 

service of process or personal jurisdiction based on alleged alter ego status of 

FBMC or FPMC, or on the debt itself being "found" in Texas. For good reason, 

the Garnishees challenge any quasi in rem jurisdiction.

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To the extent that the court believed it could exercise jurisdiction over 

the debt via the persons of the Garnishees, it was misguided. Our previous 

discussion eliminates quasi in rem jurisdiction on this basis.

Alternatively, the "presence" of the debt in Texas might provide a basis 

for the exercise of jurisdiction over it for the Plaintiffs' benefit. See Shaffer v. 

Heitner, 433 U.S. 186, 207, 97 S. Ct. 2569, 2581 (1977) ("[P]resence of property 

in a State may bear on the existence of jurisdiction by providing contacts 

among the forum State, the defendant, and the litigation."). Setting aside due 

process minimum contacts concerns, the prerequisite to this theory is a 

determination under state law that the debt (or other property) is actually 

found in the state. Rush v. Savchuk, 444 U.S. 320, 328 n.14, 100 S. Ct. 571, 

577 n.14 (1980); see also United States Rubber v. Poage, 297 F.2d 670, 674 (5th 

Cir. 1962). Texas allows attachment or garnishment only of a debt whose situs 

is within the jurisdiction of the court. T.&H. Smith & Co. v. Taber, 40 S.W. 

156, 157 (Tex. Civ. App. 1897); see also Wirt Franklin Petrol. Co. v. Gruen, 

139 F.2d 659, 660 (5th Cir. 1944) ("Garnishment is in the nature of a 

proceeding in rem, as to which the situs of the res is generally determinative 

for purposes of jurisdiction."). The situs of the debt under Texas law is either 

the domicile of the creditor, Gerlach Merc. Co. v. Hughes-Bozarth-Anderson 

Co., 189 S.W. 784, 788 (Tex. Civ. App. Amarillo 1916), or wherever the debtor 

may be found. T&H.Smith, 40 S.W. at 157. The first condition is inapplicable 

here, and the second is a reprise of the failed attempts to serve or find personal 

jurisdiction over FBMC or FPMC in Texas. Consequently, the debt to Curacao 

was not "found" in Texas.

III. Discharge of FPCA as Garnishee

At the outset, we noted that federal courts must follow state procedural 

and substantive law relating to garnishments. In Texas, a putative garnishee 

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may file an answer to the writ of garnishment served on him. See TEX. R. CIV.

P. 665. The garnishee’s answer “shall be under oath, in writing and signed by 

him, and shall make true answers to the several matters inquired of in the writ 

of garnishment.” Id. If either the plaintiff or the defendant is not satisfied 

with the garnishee’s answer, “he may controvert the same by his affidavit 

stating that he has good reason to believe, and does believe, that the answer of 

the garnishee is incorrect.” TEX R. CIV. P. 673. In the absence of a 

controverting affidavit, it is presumed that the garnishee’s answer is true. 

Snyder Nat. Bank v. Pinkston, 219 S.W.2d 606, 607 (Tex. Civ. App. Dallas 

1949). 

If the garnishee’s answer goes uncontroverted, the court must enter 

judgment discharging the garnishee when it appears from the answer that: 

(1) the garnishee is not indebted to the defendant and was not so indebted 

when served with the writ of garnishment; (2) the garnishee does not possess 

any effects of the defendant and had not possessed any when the writ was 

served; and (3) the garnishee has either denied knowledge of any other persons 

indebted to the defendant or possessing effects belonging to the defendant or 

else has named such persons. TEX R. CIV. P. 666. This rule is jurisdictional; 

the trial court has no authority to proceed against the garnishee other than to 

discharge him on his answer. Goodson v. Carr, 428 S.W.2d 875, 879 (Tex. Civ. 

App. Houston 1968). Thus, if the garnishee’s answer denies indebtedness and 

is uncontroverted, the garnishee must be dismissed from the action. Gray v. 

Armour & Co., 104 S.W.2d 486, 487 (Tex. Comm’n App. 1937, opinion adopted); 

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J.C. Hadsell & Co., Inc. v. Allstate Ins. Co., 516 S.W.2d 211, 213-14 (Tex. Civ. 

App. Texarkana 1974); Snyder, 219 S.W.2d at 607.8 

In this case, FPCA filed a verified answer to the writ of garnishment that 

was under oath, in writing, and (1) denied indebtedness to Curacao, (2) denied

possession of Curacao’s effects, and (3) denied knowledge of other persons so 

indebted. FPCA subsequently moved for discharge after its answer went 

uncontroverted. Plaintiffs’ unsworn response to this motion cannot be 

construed as controverting the answer as required by Texas law; the response 

merely restated plaintiffs’ contentions that the Garnishees are alter egos of 

each other without controverting that FPCA was not indebted to Curacao. 

FPCA should have been discharged.

CONCLUSION

For the foregoing reasons, the final judgment of garnishment against 

FBMC, FPMC, and FPCA is REVERSED and the case is REMANDED with 

instructions to DISMISS. The funds in the registry of court, together with 

interest thereon, must be DISBURSED to FBMC.

 

8 Further, “[w]here the garnishee is discharged upon his answer, the costs of the 

proceeding, including a reasonable compensation to the garnishee, shall be taxed against the 

plaintiff.” TEX. R. CIV. P. 677. Costs include attorney fees, J.C. Hadsell, 104 S.W.2d at 213-

14, but FPCA waived any such claim by failing to assert it.

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