Kissun v. Humana, Inc.

• Decision Date: 21 January 1997
• Docket Number: No. S96G1225,S96G1225
• Citation: 267 Ga. 419,479 S.E.2d 751
• Court: Georgia Supreme Court
• Parties: , 97 FCDR 194 KISSUN et al. v. HUMANA, INC.

Page 751

479 S.E.2d 751

267 Ga. 419, 97 FCDR 194

KISSUN et al. v. HUMANA, INC.

No. S96G1225.

Supreme Court of Georgia.

Jan. 21, 1997.

Joel O. Wooten, Jr., Jason Lance Crawford, Butler, Wooten, Overby & Cheeley, Columbus, Jackson C. Floyd, Jr., Floyd & Stanford, Atlanta, for Kissun et al.

David M. Brown, S. David McLean, Jr., Smith, Gambrell & Russell, Judson Graves, Alston & Bird, Roberts Clay Milling, II, Biederman & Milling, P.C., Atlanta, for Humana, Inc.

Charles Madden Cork, III, Reynolds & McArthur, Macon, amicus Appellant.

HUNSTEIN, Justice.

The widower and co-administrators of the estate of Amala Thomas brought suit for wrongful death and medical malpractice against parent corporation Humana, Inc.; Humana's wholly-owned subsidiary which does business as Humana Hospital-Newnan; and an individual physician. Humana moved for summary judgment as to all claims against it and appealed the denial of its motion to the Court of Appeals. That court reversed, finding that there was no evidence with which to pierce the corporate veil between Humana and its subsidiary, Humana, Inc. v. Kissun, 221 Ga.App. 64(1), 471 S.E.2d 514 (1996), and thus concluding as a matter of law that there could be no claim against Humana under either an apparent agency or a joint venturer theory. Id. at (2). We granted certiorari in this case to address whether a parent corporation can be held liable for the acts or omissions of a wholly-owned subsidiary corporation under theories of apparent or ostensible agency or joint venturer where the evidence is insufficient to pierce the corporate veil. Because the parent/subsidiary relationship alone does not, as a matter of law, preclude such corporations from establishing the legal relationships of principal and apparent agent or joint venturers, we reverse the Court of Appeals.

Three separate legal theories are in issue here: alter ego; apparent or ostensible agency; and joint venture. Under the alter ego doctrine, equitable principles are used to disregard the separate and distinct legal existence possessed by a corporation where it is established that the corporation served as a mere alter ego or business conduit of another. See, e.g., Farmers Warehouse v. Collins, 220 Ga. 141, 150, 137 S.E.2d 619 (1964); Amason v. Whitehead, 186 Ga.App. 320, 367 S.E.2d 107 (1988). The theory of apparent or ostensible agency is the legal doctrine whereby a plaintiff may subject an alleged principal to liability if the plaintiff can establish (1) that the alleged principal held out another as its agent; (2) that the plaintiff justifiably relied on the care or skill of the alleged agent based upon the alleged principal's representation; and (3) that this justifiable reliance led to the injury. Richmond County Hosp. Auth. v. Brown, 257 Ga. 507, 508, 361 S.E.2d 164 (1987). The theory of joint venturers arises where two or more parties combine their property or labor, or both, in a joint undertaking for profit, with rights of mutual control (provided the arrangement does not establish a partnership), so as to render all joint venturers liable for the negligence of the other. Boatman v. George Hyman Constr. Co., 157 Ga.App. 120, 123, 276 S.E.2d 272 (1981).

These three theories are closely intertwined with one another. In discussing the alter ego doctrine, the courts frequently invoke the term "agency" in the context of the subsidiary corporation having been " 'so organized and controlled and its business conducted in such a manner as to make it merely an agency, instrumentality, adjunct, or alter ego of another corporation.' " (Emphasis supplied.) Triple "C" Recreation Assn. v. Cash, 124 Ga.App. 754, 756, 186 S.E.2d 145 (1971). See also Fidenas AG v. Honeywell, Inc., 501 F.Supp. 1029, 1037 (S.D.N.Y.1980) (tests for finding agency so as to hold parent corporation liable for obligations of its subsidiary are "virtually the same" as those for piercing the corporate veil). The general principles of agency law apply where defendants are joint venturers. Boatman, supra at 123, 276 S.E.2d 272; Bowman v. Fuller, 84 Ga.App. 421, 426, 66 S.E.2d 249 (1951).

However, while there may be instances where evidence to pierce the corporate veil also serves to establish an agency relationship between the corporate parties, it cannot be held as a matter of law that evidence insufficient to pierce the corporate veil automatically serves to negate the existence of an agency relationship between the corporations. The Court of Appeals has recognized that even where a parent and wholly-owned subsidiary have remained separate corporate entities so that the acts of one are not chargeable to the other under the alter ego doctrine, both corporations may nonetheless be subject to liability where one corporation acted as the agent for the other. Midland Properties Co. v. Farmer, 100 Ga.App. 8, 29(18), 110 S.E.2d 100 (1959). Accord Triple "C" Recreation Assn., supra (held: subsidiary corporation was agent of parent thus rendering it unnecessary to...