Abraham Flores v. Lorance Bodden , 488 F. App'x 770 ( 2012 )

Case: 11-40557 Document: 00511888613 Page: 1 Date Filed: 06/15/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 15, 2012
No. 11-40557 Lyle W. Cayce
Summary Calendar Clerk
ABRAHAM FLORES,
Plaintiff-Appellee
v.
LORANCE W. BODDEN,
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 3:07-cv-00088
Before KING, JOLLY, and GRAVES, Circuit Judges.
PER CURIAM:*
Defendant-Appellant Lorance Bodden appeals the district court’s judgment
in favor of Plaintiff-Appellee Abraham Flores. Flores had previously secured a
judgment against RJMW Corporation, a corporation owned and managed by
Bodden, based on an accident that occurred on a shrimping trawler owned by
RJMW. Following RJMW’s bankruptcy, Flores filed the instant suit against
Bodden, claiming under Texas law that Bodden was RJMW’s alter ego and
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
Case: 11-40557 Document: 00511888613 Page: 2 Date Filed: 06/15/2012
No. 11-40557
should be liable for the judgment against RJMW. Following a bench trial, the
district court entered judgment for Flores. Bodden now appeals that judgment
on a range of evidentiary and substantive grounds. We AFFIRM.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff-Appellee Abraham Flores (“Flores”) was employed by RJMW
Corporation (“RJMW”) aboard a shrimping trawler owned by RJMW. RJMW was
itself owned by Defendant-Appellant Lorance W. Bodden (“Bodden”). Following
an on-the-job injury abroad the trawler, Flores sued RJMW in district court
under the Jones Act, 46 U.S.C. § 688. Bodden, in his capacity as the owner of
RJMW, avoided service for some time, but Flores eventually did manage to serve
RJMW. However, RJMW failed to answer Flores’s complaint and so the district
court entered a default judgment in favor of Flores.
RJMW subsequently filed several post-default motions. The district court
set aside the damages portion of the default judgment but left intact the finding
that RJMW was liable, and scheduled a hearing to determine damages. At the
damages hearing, the court awarded Flores $ 123,622.00 plus interest. However,
before a final judgment could be entered, RJMW filed for bankruptcy. Flores’s
case against RJMW was administratively closed for a period of time pending the
resolution of the bankruptcy proceeding. Eventually, though, the case was re-
opened and Flores filed a motion for a default judgment. The motion was granted
and the district court entered a final judgment, ultimately agreed to by RJMW’s
trustee, in the amount of $ 123,622.00 plus interest in favor of Flores.
2
Case: 11-40557 Document: 00511888613 Page: 3 Date Filed: 06/15/2012
No. 11-40557
While RJMW’s bankruptcy proceedings were ongoing, Flores filed the
present action under 28 U.S.C. § 13331 against Bodden in his personal capacity,
arguing that as the alter ego of RJMW, Bodden should be held liable for Flores’s
on-the-job injuries. Bodden once again failed to answer and Flores secured a
default judgment against him in the amount of $ 123,622.00. Flores made
substantial efforts to collect on his judgment, but before Flores secured any
payment, Bodden filed an emergency motion to vacate the default judgment,
which the district court granted. Following the setting-aside of the default
judgment against Bodden, the case proceeded through discovery.
The parties presented their cases in a paper bench trial. The district court
concluded that Bodden exercised complete control over RJMW so that he was the
corporation’s alter ego and liable for Flores’s injuries. The court then entered a
final judgment in favor of Flores in the amount of $ 123,622.00 plus interest.
Bodden now appeals the district court’s judgment on several grounds.
II. DISCUSSION
1. Admission of Exhibits
Bodden first appeals the district court’s decision to allow into evidence
several exhibits, consisting of some of Flores’s medical and income records,
under Federal Rule of Evidence 807. “We review a district court’s evidentiary
rulings for abuse of discretion.” Jowers v. Lincoln Elec. Co., 617 F.3d 346, 355
(5th Cir. 2010). “The district court is given wide latitude in admitting evidence
under [Rule 807], and we ‘will not disturb the district court’s application of the
exception absent a definite and firm conviction that the court made a clear error
1
The district court later concluded that subject matter jurisdiction was instead
established by diversity jurisdiction. See 28 U.S.C. § 1332.
3
Case: 11-40557 Document: 00511888613 Page: 4 Date Filed: 06/15/2012
No. 11-40557
of judgment in the conclusion it reached based upon a weighing of the relevant
factors.’” United States v. El–Mezain, 664 F.3d 467, 497–98 (5th Cir. 2011)
(quoting United States v. Phillips, 219 F.3d 404, 419 n.23 (5th Cir. 2000)
(citation and internal quotation marks omitted)). We need not address whether
there was any error in admitting the medical and income records, because any
error would have been harmless. All that was required here to establish RJMW’s
liability was a certified copy of the default judgment, which was entered into the
record without objection.2
2. Admission of Deposition Testimony
Bodden next appeals the district court’s decision to admit into evidence the
depositions of two witnesses taken in connection with the initial RJMW
litigation. “We review a district court’s decision to admit or exclude evidence for
abuse of discretion.” MCI Commc’ns Servs., Inc. v. Hagan, 641 F.3d 112, 117 (5th
Cir. 2011) (citation omitted). “A district court abuses its discretion if it: (1) relies
on clearly erroneous factual findings; (2) relies on erroneous conclusions of law;
or (3) misapplies the law to the facts.” McClure v. Ashcroft, 335 F.3d 404, 408
(5th Cir. 2003). “If we find an abuse of discretion in admitting or excluding
evidence, we next review the error under the harmless error doctrine, affirming
the judgment, unless the ruling affected substantial rights of the complaining
party.” Bocanegra v. Vicmar Servs., Inc., 320 F.3d 581, 584 (5th Cir. 2003). We
consider each contested deposition in turn.
2
Bodden also objects to the admission of two additional exhibits consisting of some
corporate records and a report from the Coast Guard’s website. At trial, Bodden withdrew his
objections to these pieces of evidence once their significance was explained. Bodden’s decision
at trial to withdraw his objections to these exhibits, and effectively consent to their admission,
terminates his claims on appeal. See FED. R. EVID. 103(a).
4
Case: 11-40557 Document: 00511888613 Page: 5 Date Filed: 06/15/2012
No. 11-40557
A. Flores’s Deposition
The district court permitted the introduction of previous, transcribed
deposition testimony from Flores. Flores—a Mexican national who was in the
United States illegally when he was injured aboard the trawler—was living in
Mexico during the time of the instant trial following his deportation from the
United States. The deposition was taken roughly four years prior to the trial as
part of Flores’s initial suit against RJMW. The deposition was apparently
introduced to explain how Flores was injured and the nature of his injuries.
Given that the sole issue before the district court was whether Bodden was the
alter ego of RJMW, we remain unclear as to why it was necessary to introduce
Flores’s deposition into evidence, but we proceed anyway.
In admitting the deposition, the court relied on the magistrate judge’s
report and recommendation, which concluded that “Flores claims to be
unavailable and the Court believes he is.” The magistrate judge reasoned that
because Flores had been deported from the United States, his reentry into the
United States to testify could result in his prosecution for illegal reentry. The
magistrate judge saw no basis for a temporary parole that would allow Flores to
reenter and testify. The magistrate judge also found that while Flores had been
deposed in connection with his claim against RJMW, this was “exactly the same
claim” as against Bodden such that both Bodden and RJMW would have had
identical incentives to develop Flores’s testimony, notwithstanding a change in
counsel. The magistrate judge also distinguished Garcia–Martinez v. City and
County of Denver, 392 F.3d 1187 (10th Cir. 2004), a case offered by Bodden
against allowing the deposition into evidence, as “too harsh” of a decision to
apply in the present case, especially given Bodden’s “outrageous behavior”
5
Case: 11-40557 Document: 00511888613 Page: 6 Date Filed: 06/15/2012
No. 11-40557
throughout the litigation. The magistrate judge allowed Bodden the opportunity
to take Flores’s deposition by telephone, but Bodden apparently declined to do
so.
Bodden argues on appeal that Flores failed to show that he was
unavailable to testify, as required by Federal Rule of Evidence 804(a)(5) and
Federal Rule of Civil Procedure 32(a)(4)(B) and (E). He also argues that the
district court erred in concluding that RJMW had a similar motive to Bodden
when developing Flores’s testimony. Finally, he asserts that Garcia–Martinez
should control our decision, given its holding that a district court did not abuse
its discretion in excluding deposition testimony from a similarly unavailable
witness.
We reject all of Bodden’s arguments. First, Flores complied with all the
relevant formalities entailed by the applicable Federal Rules. Moreover, we see
no abuse of discretion in the district court’s, and magistrate judge’s,
determination that Flores’s situation was exceptional, involving multiple
deportations from the United States and a serious risk of incarceration were he
to return. The court, on the basis of the evidence presented, could have easily
concluded that Flores was outside of the United States. See FED. R. CIV. P.
32(a)(4)(B). Given these challenging circumstances, the magistrate judge
endeavored to accommodate Bodden by allowing a telephonic deposition, an
accommodation that Bodden declined.
Second, we are unpersuaded by Bodden’s contention that RJMW’s counsel
faced different incentives in developing Flores’s testimony from his own. To
make this argument, Bodden observes that Flores’s deposition also covered the
issue of contributory negligence, a relevant issue in his case against RJMW that
6
Case: 11-40557 Document: 00511888613 Page: 7 Date Filed: 06/15/2012
No. 11-40557
was not disputed in the Bodden case, as opposed to solely the question of
liability. “[S]imilar motive does not mean identical motive,” and “the
similar-motive inquiry appropriately reflects narrow concerns of ensuring the
reliability of evidence admitted at trial.” Battle ex rel. Battle v. Mem’l Hosp. at
Gulfport, 228 F.3d 544, 552 (5th Cir. 2000). Bodden does not actually assert that
liability was left unexamined in Flores’s deposition or even clearly explain how
RJMW’s counsel, as opposed to his own, would have differed in developing
Flores’s testimony on that issue. Flores apparently utilized his deposition to
establish the underlying facts motivating his alter ego claim against Bodden. As
such, the deposition served a virtually identical purpose in both litigations. See
United States v. Mann, 161 F.3d 840, 861 (5th Cir. 1998).
Finally, Garcia–Martinez does not affect our conclusion. In that case, the
district court, in excluding the deposition testimony of a similarly unavailable
party, noted that it “ha[d] not been presented with any authority for the
proposition that there is actually no way for [the plaintiff] to obtain a temporary
visa in order to come into this country for purposes of attending this hearing.”
Garcia–Martinez, 392 F.3d at 1190–91. Here, in contrast, the magistrate judge
specifically considered whether Flores might be able to obtain a temporary
parole to enter the United States and concluded that he could not. Furthermore,
the conclusion in Garcia–Martinez that the district court did not abuse its
discretion in excluding deposition testimony does not entail a conclusion in the
instant case that the district court in this case did abuse its discretion in
admitting deposition testimony.
We conclude that the district court did not abuse its discretion in
admitting Flores’s deposition testimony.
7
Case: 11-40557 Document: 00511888613 Page: 8 Date Filed: 06/15/2012
No. 11-40557
B. Colley’s Deposition
Bodden also appeals the district court’s decision to admit into evidence the
transcribed deposition of Margaret Colley (“Colley”), an employee of Bodden who
handled payments to the crew of the trawler. This deposition, like Flores’s, was
taken roughly four years earlier, during Flores’s initial suit against RJMW.
Colley’s deposition focused on the finances and payment practices of the
shrimping operation. In its Memorandum and Order, the district court did not
make clear its ground for admitting Colley’s deposition testimony. However, it
appears to us, as well as both parties, that in rejecting the objections that
Bodden lodged before it, the district court concluded that Colley was unavailable
pursuant to Federal Rule of Civil Procedure 32(a)(4)(B) because in her deposition
Colley explained that she lived in Port Lavaca, Texas, which is more than 100
miles from the courthouse. Bodden now argues that the district court erred in
admitting Colley’s testimony because Flores failed to show that Colley was not
present within 100 miles of the courthouse at the time of his trial, as opposed to
the time of the deposition.
Bodden’s point is at least arguable. But we need not decide whether he is
correct. Any error in admitting Colley’s deposition would have to be evaluated
under the harmless error doctrine, specifically to determine whether Bodden’s
substantial rights were affected. See Bocanegra, 320 F.3d at 584. If the
remainder of evidence, excluding Colley’s deposition, was sufficient to prove
Flores’s alter ego claim, then any abuse of discretion by the district court would
have been harmless. As we explain in the next section, the evidence before the
district court, excluding Colley’s deposition, was sufficient to support its
8
Case: 11-40557 Document: 00511888613 Page: 9 Date Filed: 06/15/2012
No. 11-40557
conclusion that Bodden was RJMW’s alter ego. Accordingly, if error, the
introduction of her deposition into evidence was harmless.
3. Alter Ego Standard and Evidence
Bodden next appeals the legal standard that the district court applied to
his alter ego claim, as well as the court’s conclusion that the evidence was
sufficient to support Flores’s claim. “When a district court’s final judgment
following a bench trial is appealed, we review the district court’s findings of fact
for clear error, and conclusions of law and mixed questions of law and fact de
novo.” See French v. Allstate Indem. Co., 637 F.3d 571, 577 (5th Cir. 2011). The
presence of an alter ego relationship is a question of fact. See Castleberry v.
Branscum, 721 S.W.2d 270, 277 (Tex. 1986). “Under the clearly erroneous
standard, we will reverse only if we have a definite and firm conviction that a
mistake has been committed.” Canal Barge Co. v. Torco Oil Co., 220 F.3d 370,
375 (5th Cir. 2000); see also Becker v. Tidewater, Inc., 586 F.3d 358, 365 (5th Cir.
2009) (“A finding is clearly erroneous if it is without substantial evidence to
support it [or] the court misinterpreted the effect of the evidence . . . .”) (citation
and internal quotation marks omitted).
Bodden first argues that the district court misstated Texas’s law regarding
alter ego. Bodden’s argument appears to be that the district court should have
concluded that Flores was required to “show that Mr. Bodden exercised complete
control over the day to day operation of the boat in question and ‘that control
was used to commit a fraud or wrong’ that caused APPELLEE FLORES to be
injured.” Appellant’s Br. at 38 (citing Bridas S.A.P.I.C. v. Gov’t of Turkmenistan,
447 F.3d 411 (5th Cir. 2006)).
9
Case: 11-40557 Document: 00511888613 Page: 10 Date Filed: 06/15/2012
No. 11-40557
In fact, the district court properly explained that, under Texas law, there
are six situations in which a court may disregard the corporate form:
(1) when the fiction is used as a means of perpetrating fraud;
(2) where a corporation is organized and operated as a mere tool or
business conduit of another corporation;
(3) where the corporate fiction is resorted to as a means of evading
an existing legal obligation;
(4) where the corporate fiction is employed to achieve or perpetrate
monopoly;
(5) where the corporate fiction is used to circumvent a statute; and
(6) where the corporate fiction is relied upon as a protection of crime
or to justify wrong.
Castleberry, 721 S.W.2d at 272 (footnotes omitted). It is the second
situation—alter ego—that is at issue here. SSP Partners v. Gladstrong Invs.
(USA) Corp., 275 S.W.3d 444, 454 (Tex. 2008) (“Each example [of the six listed
above] involve[s] an element of abuse of the corporate structure, including
example (2), alter ego.”).
“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.” Castleberry, 721 S.W.2d at 272.
The alter ego inquiry is meant to be flexible and fact-specific, id., and an “alter
ego relationship may be shown from the total dealings of the corporation and the
individual.” Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 228 (Tex. 1990)
(emphasis in original). “This showing may include evidence of 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
10
Case: 11-40557 Document: 00511888613 Page: 11 Date Filed: 06/15/2012
No. 11-40557
corporation has been used for personal purposes.” Id. (citation and internal
quotation marks omitted).3 Texas “‘[c]ourts have generally been less reluctant
to disregard the corporate entity in tort cases than in breach of contract cases.’”
Wilson v. Davis, 305 S.W.3d 57, 69 (Tex. App.—Houston [1st Dist.] 2009)
(quoting Lucas v. Tex. Indus., Inc., 696 S.W.2d 372, 375 (Tex. 1984)). The district
court properly explained all of these components of the alter ego inquiry. It is
Bodden who has focused on the wrong legal standard.4 We see no error in the
district court’s understanding of Texas’s alter ego law.
We must then consider whether the district court properly applied this law
to the facts before it. In assessing the district court’s determination, we consider
the evidence offered by Flores other than Colley’s deposition. As we stated above,
Flores produced a certified copy of the default judgment and so, in assessing this
3
Bodden attempts to suggest that these factors, as originally laid out in Castleberry v.
Branscum, 721 S.W.2d 270, 271–72 (Tex. 1986), have been superseded by a statute making it
more difficult to hold a shareholder liable under an alter ego theory for failing to observe
corporate formalities. See TEX. BUS. ORGS. CODE § 21.223(a)(3). But as we have observed, “[t]he
amendments overruled Castleberry to the extent that a failure to observe corporate formalities
is no longer a factor in proving the alter ego theory in contract claims. . . . Thus, to pierce the
corporate veil using the alter ego theory in a contract claim, the claimant must look to the
remaining factors outlined in Castleberry.” W. Horizontal Drilling, Inc. v. Jonnet Energy Corp.,
11 F.3d 65, 68 (5th Cir. 1994) (emphases added) (citations omitted). Texas courts have
embraced this same view. See, e.g., Wilson v. Davis, 305 S.W.3d 57, 68 n.5 (Tex.
App.—Houston [1st Dist.] 2009). As Flores’s claim against Bodden is a tort claim, the
amendments he cites do not control.
4
Bodden cites to Bridas for the legal standard he quotes. See Bridas, 447 F.3d at 416.
That case was part of an ongoing dispute and quoted from an earlier Fifth Circuit decision in
the dispute. See Bridas S.A.P.I.C. v. Gov’t of Turkmenistan, 345 F.3d 347, 359 (5th Cir. 2003)
(previous decision). That earlier decision drew its formulation of the alter ego standard from
a Second Circuit decision reciting New York’s alter ego law. See id. (citing Am. Fuel Corp. v.
Utah Energy Dev. Co., Inc., 122 F.3d 130, 134 (2d Cir. 1997)). In this case, no one disputes that
Texas law governs. Accordingly, Bridas and its legal standard are not on point.
11
Case: 11-40557 Document: 00511888613 Page: 12 Date Filed: 06/15/2012
No. 11-40557
remaining evidence, the district court had only to determine whether Bodden
acted as RJMW’s alter ego.
Flores relied on several pieces of evidence to make his case: Flores’s
deposition; the deposition of John Partridge (“Partridge”), an attorney who
represented RJMW; the deposition of Bodden himself; and various corporate,
tax, and other documents concerning RJMW. Flores’s deposition was apparently
introduced to describe the details of his accident and subsequent injuries. As
such, it does not provide compelling evidence that Bodden acted as RJMW’s alter
ego. The other evidence is more probative, however.
Partridge testified that he had been retained to represent RJMW and
another of Bodden’s businesses, the Bodden Shrimp Company (“BSC”), in
ongoing litigation. Partridge explained that he did not represent Bodden
personally in the litigation, only the corporation, but that it was Bodden’s son
who had procured his firm’s engagement with both companies and made
payments to the firm on their behalf. During Flores’s litigation against RJMW,
Partridge filed a suggestion of bankruptcy when it appeared that a settlement
would not be reached between the parties. Partridge stated that the trawler
owned by RJMW was not worth the legal fees that would have been incurred in
defending Flores’s claim. Partridge also testified that Bodden told him that he
was planning on taking out a mortgage on his house to finance these legal costs.
Partridge advised him not to do so and instead suggested that the corporations
file for bankruptcy, which they eventually did. Partridge’s testimony reveals that
RJMW was severely undercapitalized relative to the risks it faced. In the alter
ego analysis, “[t]he financial strength or weakness of [a corporation] is . . . an
important consideration in determining whether the [corporation] is merely a
12
Case: 11-40557 Document: 00511888613 Page: 13 Date Filed: 06/15/2012
No. 11-40557
shell through which the [alleged alter ego] is conducting its business without
taking any of the risks for liabilities incurred.” Lucas, 696 S.W.2d at 375;
O’Berry v. McDermott, Inc., 712 S.W.2d 206, 207–08 (Tex. App.—Houston [14th
Dist.] 1986) (“If the corporation sued is not reasonably capitalized in light of the
nature and risk of its business, the need might arise to attempt to pierce the
corporate veil and hold the parent corporation liable.”).
Bodden’s own testimony further supplements Partridge’s account. At his
deposition, Bodden confirmed that he was the owner of RJMW, that he served
as the president and as a director, and that his wife served as vice president and
as the sole other living director. Of course, it is insufficient that the corporation
and its alleged alter ego are “closely tied through stock ownership, shared
officers, financing arrangements, and the like.” Gardemal v. Westin Hotel Co.,
186 F.3d 588, 593 (5th Cir. 1999); see also PHC–Minden, L.P. v. Kimberly–Clark
Corp., 235 S.W.3d 163, 175 (Tex. 2007). Instead, “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.” BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 799 (Tex.
2002). In this regard, Bodden admitted that he made “all of the major business
decisions for RJMW,” including whether the trawler would fish or not, who
would captain the vessel, and whether repairs would be made. He mentioned no
other individuals who made any significant decisions regarding the corporation,
the trawler, or how RJMW’s operations would be conducted.
Bodden’s deposition also revealed that the finances of RJMW were suspect.
Bodden stated that the trawler had no insurance to cover damages to the trawler
13
Case: 11-40557 Document: 00511888613 Page: 14 Date Filed: 06/15/2012
No. 11-40557
or to pay for injuries to crew members.5 Bodden also admitted that he had
previously been sued “probably six times.” The deposition further revealed that
the proceeds from the trawler’s shrimping would actually be placed into an IBC
Bank account under the name of W&G Trawlers, a defunct corporation owned
by Bodden that had no involvement with the trawler’s activities. This bank
account was used in turn to cover expenses associated with the trawler’s
operations. Bodden’s testimony, then, reveals not only that RJMW was
undercapitalized relative to the risks it faced, Lucas, 696 S.W.2d at 375, but also
the commingling of corporate funds with other sources of income. See Hoffmann
v. Dandurand, 180 S.W.3d 340, 347 (Tex. App.—Dallas 2005) (“The types of
evidence a court will consider as proof of an alter ego include: (1) the payment
of alleged corporate debts with personal checks or other commingling of funds;
(2) representations that the individual will financially back the corporation; (3)
the diversion of company profits to the individual for his personal use; (4)
inadequate capitalization; and (5) other failure[s] to keep corporate and personal
assets separate.”).
Moreover, there was substantial evidence that RJMW’s corporate
structure was organized deceptively. See SSP Partners, 275 S.W.3d at 454
(explaining that alter ego involves “an element of abuse of the corporate
structure”). Bodden himself recognized that the documentation for RJMW was
often incorrect. For example, Bodden admitted that while the shrimping trawler
was owned by RJMW, it was Colley’s address, not RJMW’s or Bodden’s, that was
given to the Coast Guard as the owner’s address for the boat. The documentary
5
Apparently, Bodden had secured insurance on the trawler at some point in the past,
but it was “canceled out” and Bodden never renewed it.
14
Case: 11-40557 Document: 00511888613 Page: 15 Date Filed: 06/15/2012
No. 11-40557
evidence before the district court revealed still further discrepancies. For
example, Martin Tower, a former business partner who Bodden bought out and
who had died about ten or twelve years prior to Bodden’s deposition, was listed
as the registered agent for RJMW on recent franchise tax forms.
Misrepresentations and inaccuracies of this kind, coupled with Bodden’s
attempts to evade service of process, point to the abuses of the corporate form
that the alter ego theory was meant to address.
Even excluding Colley’s deposition, we lack any “definite and firm
conviction that a mistake has been committed” by the district court and see no
clear error in its factual findings. Canal Barge Co., 220 F.3d at 375. As the Texas
Supreme Court has explained, the touchstone of the alter ego analysis is
whether “holding only the corporation liable would result in injustice.”
Castleberry, 721 S.W.2d at 272; see also SSP Partners, 275 S.W.3d at 454 (“We
disregard the corporate fiction, even though corporate formalities have been
observed and corporate and individual property have been kept separately, when
the corporate form has been used as part of a basically unfair device to achieve
an inequitable result.”). Our review of the evidence persuades us that Bodden
used RJMW to unfairly and inequitably shield himself from the risks he knew
would arising in running an undercapitalized shrimping business. The
remaining evidence was sufficient to support a finding that Bodden was the alter
ego of RJMW. We, therefore, reject Bodden’s appeal on this point.
4. Claim Preclusion
Finally, Bodden contends that district court erred in imposing liability on
him on account of the judgment against RJMW. Bodden appears to argue that
because neither he nor his current counsel participated in the proceedings
15
Case: 11-40557 Document: 00511888613 Page: 16 Date Filed: 06/15/2012
No. 11-40557
against RJMW, the res judicata requirement of identical parties is not met. For
res judicata to bar the relitigation of a claim, four requirements must be met:
“(1) the parties are identical or in privity; (2) the judgment in the prior action
was rendered by a court of competent jurisdiction; (3) the prior action was
concluded by a final judgment on the merits; and (4) the same claim or cause of
action was involved in both actions.” Petro–Hunt, L.L.C. v. United States, 365
F.3d 385, 395 (5th Cir. 2004) (footnote omitted). Bodden contests only the first
requirement, but his argument is unpersuasive. The entire purpose of the alter
ego theory of liability would be undermined if the alter ego of a corporation could
force parties to relitigate otherwise precluded claims against the corporation.
Courts of appeals have routinely declined to accept arguments like Bodden’s.
See, e.g., Robinson v. Volkswagenwerk AG, 56 F.3d 1268, 1275 (10th Cir. 1995)
(holding that an adverse party’s own allegations of a controlling, “near alter ego”
relationship between parent and subsidiary were sufficient to establish privity
between the two corporations for the purposes of claim preclusion); cf. Torrain
v. AT&T Mgmt. Servs., LP, 353 F. App’x 37, 38 (7th Cir. 2009). Accordingly, we
reject Bodden’s argument.
III. CONCLUSION
For all of the foregoing reasons, we AFFIRM the district court’s judgment
in favor of Flores.
16