## Facts

- Konrad Radaszewski was seriously injured on August 21, 1984, when his motorcycle was struck by a truck driven by an employee of Contrux, Inc.
- Contrux was a wholly owned subsidiary of Telecom Corporation; the plaintiff sued Telecom seeking to hold it liable for Contrux’s tort under a veil-piercing theory governed by Missouri law.
- Telecom financed Contrux largely through loans and did not pay for all shares issued to it, which the plaintiff characterized as undercapitalization.
- Contrux carried $1,000,000 in primary liability insurance and $10,000,000 in excess coverage; the excess insurer later became insolvent and entered receivership.
- The plaintiff’s jurisdictional theory depended on piercing the corporate veil so that Contrux’s Missouri contacts and conduct could be attributed to Telecom for personal-jurisdiction purposes.
- After a prior remand for additional discovery, the district court again dismissed Telecom, concluding the veil-piercing showing was legally insufficient; the dismissal was certified for interlocutory appeal.

## Issues

1. Whether the plaintiff satisfied Missouri’s three-part veil-piercing test requiring (a) complete domination and control, (b) use of that control to commit a fraud or other wrongful or unjust act in contravention of the plaintiff’s rights, and (c) proximate causation of the plaintiff’s injury.
2. Whether, if veil-piercing was not established, the court lacked personal jurisdiction over the nonresident parent because the subsidiary’s forum contacts could not be imputed to the parent.

## Decision

- The court affirmed the dismissal of Telecom for lack of personal jurisdiction because the plaintiff did not establish veil-piercing under Missouri law.
- Assuming substantial evidence of Telecom’s control over Contrux, the court held the plaintiff failed to raise a triable issue on the “improper use” and “proximate cause” elements.
- The court treated Contrux’s substantial liability insurance as showing financial responsibility and as defeating an undercapitalization-based claim of wrongful use of the corporate form.
- The post-accident insolvency of the excess insurer did not establish wrongful structuring or a causal link to Telecom’s control absent evidence Telecom knew or should have known insolvency was likely.
- The judgment was modified to specify the dismissal was with prejudice as to the plaintiff’s claims against Telecom.

## Legal Principles

- Under Missouri law, veil-piercing requires proof of (1) complete domination of the subsidiary with respect to the transaction at issue, (2) use of that control to commit a fraud or other wrongful act in contravention of the plaintiff’s rights, and (3) proximate causation of the complained-of injury.
- Balance-sheet “undercapitalization,” without more, does not satisfy the wrongful-use requirement when the subsidiary is financially responsible through substantial liability insurance or comparable means.
- A later insurer insolvency does not, by itself, convert an otherwise adequate insurance program into evidence of wrongful use or establish proximate cause, absent proof of foreseeability or improper motive.
- When veil-piercing fails, a plaintiff cannot impute a subsidiary’s forum contacts to a parent to establish personal jurisdiction over the parent.

## Conclusion

The court held that Missouri veil-piercing was not supported where the subsidiary maintained substantial liability insurance and there was no evidence the parent used control to commit a wrong or caused the plaintiff’s loss; without veil-piercing, the forum lacked personal jurisdiction over the parent, and the parent’s dismissal was entered with prejudice.


Radaszewski v. Telecom Corp., 981 F.2d 305 (8th Cir. 1992)