## Facts

- John W. Gardemal and his wife traveled to Cabo San Lucas, Mexico, to attend a medical seminar at the Westin Regina Resort Los Cabos.
- A resort concierge directed Gardemal and other guests to snorkel at “Lovers Beach,” which was alleged to be known for rough surf and strong undercurrents, without providing warnings.
- A wave swept several men into the ocean; John Gardemal and another man drowned.
- Lisa Cerza Gardemal, as administrator of John Gardemal’s estate, sued under Texas wrongful death and survival theories, alleging negligence in directing guests to the beach and failing to warn of hazards.
- The resort was managed by Westin Mexico, S.A. de C.V., a Mexican subsidiary of Westin Hotel Company; the resort was owned by a separate Mexican entity.
- Westin and Westin Mexico maintained corporate separateness; corporate formalities were followed and Westin Mexico was adequately capitalized.

## Issues

1. Whether the parent company (Westin) could be held liable under Texas veil-piercing theories (alter ego or single business enterprise) for alleged torts committed in Mexico by its subsidiary managing the resort.
2. Whether a Texas federal court could exercise personal jurisdiction over the Mexican subsidiary (Westin Mexico) under either general or specific jurisdiction consistent with due process.

## Decision

- The Fifth Circuit affirmed summary judgment for Westin.
- The court held the evidence did not justify disregarding corporate separateness under Texas alter-ego or single-business-enterprise theories.
- The Fifth Circuit affirmed dismissal of Westin Mexico for lack of personal jurisdiction.
- The court held Westin Mexico lacked “continuous and systematic” contacts with Texas (no general jurisdiction) and did not purposefully direct Texas-related conduct giving rise to the claims (no specific jurisdiction).

## Legal Principles

- A parent corporation is not liable for a subsidiary’s torts absent grounds to disregard the corporate form; stock ownership, shared officers, and coordinated operations alone do not establish alter ego.
- Veil-piercing under Texas law generally requires proof of misuse of the corporate form, such as domination that negates separateness, failure to observe formalities, or undercapitalization.
- When a state long-arm statute extends to due process limits, personal jurisdiction turns on minimum contacts and, if contacts exist, whether exercising jurisdiction is consistent with traditional notions of fair play and substantial justice.
- General jurisdiction requires contacts that are continuous and systematic; specific jurisdiction requires purposeful direction toward the forum and a claim that arises out of or relates to those forum-directed contacts.
- The occurrence of an injury abroad and the plaintiff’s forum residence, without forum-directed conduct tied to the claim, is insufficient to establish specific jurisdiction over a foreign defendant.

## Conclusion

The Fifth Circuit held that Texas veil-piercing doctrines did not permit imposing tort liability on the U.S. parent for alleged negligence at a Mexican resort managed by its subsidiary, and that the subsidiary’s limited Texas connections did not support general or specific personal jurisdiction in Texas.


Gardemal v. Westin Hotel Co., 186 F.3d 588 (5th Cir. 1999)