Opinion ID: 2635336
Heading Depth: 1
Heading Rank: 7

Heading: alter-ego liability

Text: ¶ 22 SFC-S argues that the trial court erred in submitting the issue of alter-ego liability to the jury. Corporations are distinct legal entities, and generally one corporation will not be held responsible for the acts of another. [26] One corporation may be held liable for the acts of another under the theory of alter-ego liability if (1) the separate existence is a design or scheme to perpetuate a fraud, or (2) one corporation is merely an instrumentality or agent of the other. [27] If the Oklahoma defendants were mere instrumentalities or agents of SFC-S, the legal distinction between these corporations may be disregarded, and they may be treated as one entity for purposes of liability. [28] ¶ 23 The factors for determining if one corporation may be held liable for the acts of another hinge primarily on control. [29] They include: (1) whether the dominant corporation owns or subscribes to all the subservient corporation's stock, (2) whether the dominant and subservient corporations have common directors and officers, (3) whether the dominant corporation provides financing to the subservient corporation, (4) whether the subservient corporation is grossly undercapitalized, (5) whether the dominant corporation pays the salaries, expenses or losses of the subservient corporation, (6) whether most of the subservient corporation's business is with the dominant corporation or the subservient corporation's assets were conveyed from the dominant corporation, (7) whether the dominant corporation refers to the subservient corporation as a division or department, (8) whether the subservient corporation's officers or directors follow the dominant corporation's directions, and (9) whether the corporations observe the legal formalities for keeping the entities separate. [30] ¶ 24 The record is replete with evidence from which a jury could find that SFC-S exercised the control over the Oklahoma defendants necessary to impose derivative liability. SFC-S owns all of SFC-OK's stock. In addition to Susan Bridges' membership on the board of directors, the companies have other directors in common. Kent Younce, an employee of SFC-S, is a director and vice-president of SFC-OK and the executive director of Maverick. Ray Biggs is the President of SFC-S and of SFC-OK. There is evidence that SFC-OK and Maverick are undercapitalized. There is evidence that SFC-S holds the Oklahoma defendants out as part of its corporation. From the evidence, a jury could reasonably find that the Oklahoma defendants were controlled by SFC-S, acting through the supervisors, such that SFC-S could be held liable for their acts. A trial court is justified in removing a question from the jury when only one inference can be drawn from competent evidence. [31] It was not error for the trial court to submit the alter-ego liability issue to the jury and to instruct the jury on alter-ego liability. ¶ 25 As a collorary, SFC-S argues that the trial court erred by refusing its proposed instruction on sham corporations, by failing to give separate instructions for each of the Spartanburg defendants on alter-ego liability, and by failing to give an instruction on undercapitalization. We find the argument to be without merit. The court instructed: Whether or not one corporation is the mere instrumentality or agent of another hinges primarily on control. This determination must be made separately as to each Spartanburg defendant. Separate verdict forms are provided to assist you in this determination. In the instruction on alter-ego liability, the trial court specifically listed as a consideration whether the subordinate corporation [was] grossly undercapitalized. It is the duty of the trial court to instruct on the applicable law under the evidence. [32] The trial court accurately instructed the jury on alter-ego liability. SFC-S presents no reversible error in the instructions.