In re First Reserve Management, No.22-0227, 2023 WL 414054 (Tex. June 23, 2023), the Texas Supreme Court discusses when a parent corporation’s actions cross the line of “control” of the subsidiary, making the parent potentially liable for the subsidiary’s torts. This case resulted from a series of explosions at the TPC petrochemical processing plant.
The issue in this original proceeding is whether Plaintiffs could sufficiently plead claims that investors in the plant’s owner are directly liable for the damages. The Texas Supreme Court ruled Plaintiffs could not and that the MDL court should have dismissed the claims against the investors. A summary of the Court’s opinion is that parents do not take potential liability as long as they act in a manner consistent with “norms of corporate behavior” for parent’s oversight of a subsidiary. Although the Texas Supreme Court indicates parents are safe when acting within “industry standard,” the Texas Supreme Court does not identify the limits of those norms. However, a few of the Court’s pronouncements in the opinion indicate acts that are within those norms and will not create potential liability. Excerpts from the case which may clarify what clients can safely do are attached below.
No information in this communication is intended to constitute specific legal advice. For specific legal advice, please contact an attorney, and if you have any such questions or would like more information about this issue, please contact William “Pat” Huttenbach at 713.752.8616, or email at firstname.lastname@example.org.
William “Pat” Huttenbach | Shareholder | Banking Litigation
Crain Caton & James | Attorneys & Counselors
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