Hall v. Timmons

• Decision Date: 15 April 1999
• Docket Number: No. 09-97-228CV,09-97-228CV
• Parties: Robert J. HALL and Sibon Beverage, Inc., Appellants, v. Kenny TIMMONS, Appellee.
• Court: Texas Court of Appeals

Page 248

987 S.W.2d 248

Robert J. HALL and Sibon Beverage, Inc., Appellants, v. Kenny TIMMONS, Appellee.

No. 09-97-228CV.

Court of Appeals of Texas,

Beaumont.

Submitted Jan. 21, 1999.

Decided March 25, 1999.

Rehearing Overruled April 15, 1999.

David E. Bernsen, Zona Jones, H. Scott Alexander, Bernsen, Jamail and Goodson, Beaumont, B. Thomas McElroy, Johnson & McElroy, Dallas, Robert Jackson, Jasper, for appellants.

Mike Jacobellis, Tonahill, Hile, Leister & Jacobellis, Beaumont, J. Kevin Dutton, Tonahill, Hile, Leister & Jacobellis, Jasper, for appellee.

Before WALKER, C.J., BURGESS and STOVER, JJ.

OPINION

DON BURGESS, Justice.

Kenny Timmons filed suit against his employer, SiBon Beverage Corporation, for personal injuries. (SiBon does not subscribe to Texas Workers' Compensation.) Timmons' suit also named Robert Hall, chairman of SiBon, claiming alter ego and single business enterprise. Timmons fell from the ceiling at SiBon while attempting to fix a leaky pipe, suffering a herniated disk in his neck. Following surgery for the neck, Timmons was placed in a full body cast. While in that cast, he fell down the steps at his home and incurred a fracture dislocation to his right elbow and a back vertebra. The jury found in favor of Timmons and the trial court entered judgment in accordance with the verdict. Hall and SiBon appeal on numerous issues. We first address Hall and SiBon's no evidence points.

ISSUES OF NO EVIDENCE

Alter Ego

Hall and SiBon claim the trial court erred in overruling the motion for judgment notwithstanding the verdict and in submitting Question 2 ¹ to the jury because there was no evidence Hall is SiBon's alter ego. Alter ego is a basis for disregarding the corporate fiction "where a corporation is organized and operated as a mere tool or business conduit of another corporation." Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex.1986)(quoting Pacific American Gasoline Co. of Texas v. Miller, 76 S.W.2d 833, 851 (Tex.Civ.App.--Amarillo 1934, writ ref'd)). It 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." Id. (citing First Nat. Bank in Canyon v. Gamble, 134 Tex. 112, 132 S.W.2d 100, 103 (1939)). Alter ego "is shown from the total dealings of the corporation and the individual, including the degree to which ... 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 corporation has been used for personal purposes." Id. (citing Lucas v. Texas Industries, Inc., 696 S.W.2d 372, 374 (Tex.1984); Gentry v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 573 (Tex.1975)). ²

Timmons introduced evidence that all funds for SiBon had been forwarded from Hall's personal operating account. Hall personally approved or denied funds for SiBon. According to SiBon's president, Kenneth Cornett, SiBon's only means of acquiring funds for operation or purchases was to request them from Hall under his line of credit. Hall admitted Cornett was a "passive" president. Cornett testified SiBon was undercapitalized. According to Hall, if he chose not to loan SiBon more money, it had none.

Hall countermanded decisions made by SiBon personnel. Hall admitted that Timmons worked directly for Bill Foster, an employee of Hall, not SiBon. SiBon's registered address is Hall's personal office. SiBon's board meetings were held at Hall's personal office. Hall had a lien on all of SiBon's assets. SiBon wrote checks totaling $75,000 to Dogwood Partners; Hall's partnership in Dogwood entitled him to receive 99% of that amount.

Considering the evidence and inferences tending to support the jury's finding and disregarding all contrary evidence and inferences, we conclude there is some evidence to disregard the corporate fiction on the basis of alter ego. See Wal-Mart Stores, Inc. v. Gonzalez, 968 S.W.2d 934, 936 (Tex.1998)(citing Continental Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex.1996)). The evidence, as a whole, rises to the level that would enable reasonable and fair-minded people to differ in their conclusions and permits the jury's inference that SiBon is Hall's alter ego. See Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex.1994). Hall's first issue and that portion of SiBon's second point of error claiming no evidence are overruled.

Negligence

Hall and SiBon further contend the trial court erred in overruling the motion for judgment notwithstanding the verdict and in submitting Question 1 ³ because there is no evidence that SiBon, and Hall (as SiBon's alleged alter ego), negligently injured Timmons. "For decades," the Texas Supreme Court has recognized that an implied part of the employer-employee relationship is the duty to use ordinary care in providing a safe work place. Leitch v. Hornsby, 935 S.W.2d 114, 117(Tex.1996) (citing Missouri, Kan. & Tex. Ry. v. Hannig, 91 Tex. 347, 43 S.W. 508, 510 (1897); I.M. Werner v. Colwell, 909 S.W.2d 866, 869 (Tex.1995)).

Phillip Nessler, an expert witness for Timmons, testified the injury was caused by the employer's failure to provide Timmons with an adequate place to stand to perform the work. According to Nessler, OSHA ⁴ regulations specifically applied to this worksite and required the employer to provide a scaffold or ladder. Nessler also criticized the design of the building because the pipes and joints were installed above the false ceiling and it was foreseeable that an employee would have to work on the pipes. It was Nessler's opinion that either solid flooring should have been installed under the pipes or a staircase or permanent ladder should have provided access to the pipes. Timmons' advice to SiBon and Hall that the pipes should be run around the walls so they could be anchored to the walls, providing workers access for repairs, had been ignored. Instead, the plant was designed so that all the pipes had to be routed over the breakrooms, bathrooms and mixing room.

Timmons testified he had no experience in safety training and safety issues were never discussed with Hall. No safety training or instructions were given to employees and Hall was aware Timmons was unable to provide training. No safety meetings were held and Hall and SiBon refused to authorize a contractor to conduct safety meetings. Nessler found SiBon's safety program deficient under minimum industry requirements and federal regulations.

According to Timmons, he was chastised for spending funds on warning signs. Timmons further testified that upon first visiting the plant, he pointed out obvious workplace hazards which were never properly addressed and that Hall and SiBon had actual knowledge of many hazards. Timmons was given a limited budget and limited authority to purchase tools and equipment. SiBon had only one 28-foot ladder and one-half of a broken extension ladder. Timmons' request to purchase a ten-foot stepladder was never approved. After Timmons' fall, two stepladders were purchased and were thereafter used daily. Both Timmons and a co-worker, Al Cordova, testified no ladder was available. According to both Timmons and Nessler, the availability of a ladder could have prevented the injury.

Fifteen to twenty percent of Timmons' work was on the pipes above the false ceiling. When a ladder could not be borrowed from a subcontractor, he had to climb up into the ceiling and walk across planks and the beams on top of the walls to reach the spot where repairs were needed. SiBon was aware of this procedure.

Viewing this evidence in the light most favorable to the jury's finding, and disregarding all evidence and inferences to the contrary, we conclude there is some evidence that SiBon and Hall (as SiBon's alter ego), negligently injured Timmons. See Gonzalez, 968 S.W.2d at 936. Hall's third issue and that part of SiBon's first point of error raising the same argument are overruled.

Sole Proximate Cause

In a related point, Hall and SiBon argue the trial court erred in overruling the motion for judgment notwithstanding the verdict and in submitting Question 1 because the evidence proves conclusively as a matter of law that Timmons' negligence was the sole proximate cause of his injuries. The evidence set forth in the above discussion of negligence negates that claim. The evidence, as a whole, permits an inference that Timmons' negligence was not the sole proximate cause of his injuries. See Moriel, 879 S.W.2d at 25. Hall's fifth issue and the relevant portion of SiBon's first point of error are overruled.

Single Business Enterprise

Hall and SiBon contend the trial court erred in overruling the motion for judgment notwithstanding the verdict and in submitting Question 4 ⁵ because there is no evidence that SiBon and Hall operated as a single business enterprise. Hall first contends that to impose liability under the single business enterprise doctrine, both enterprises must be corporations. We find no authority in support of this contention. Hall cites Beneficial Personnel Serv. of Texas v. Rey, 927 S.W.2d 157, 165 (Tex.App.--El Paso 1996), pet. granted, judgm't vacated w.r.m., 938 S.W.2d 717 (Tex.1997), wherein the court stated the doctrine of single business enterprise applies when two or more business entities act as one. The court did not, however, hold that an "entity" can only be a corporation or that the doctrine does not apply in other circumstances.

Hall then argues that there is no evidence of any of the required elements. We look at a variety of factors to determine whether Hall and SiBon should be treated as one business: (1) common employees, (2) common offices, (3) centralized accounting, (4) payment of wages by one business to another business's employees, (5) common business name, (6) services rendered by employees of one business on behalf of another business, (7) undocumented transfers of funds...