Radaszewski v. Telecom Corp.
Eighth Circuit Court of Appeals
981 F.2d 305 (1992)
Radaszewski (plaintiff) was injured in an automobile accident when the motorcycle he was driving was struck by a truck driven by an employee of Contrux, Inc. Contrux, Inc. is a wholly owned subsidiary of Telecom Corporation (defendant). When Telecom formed Contrux, it contributed loans, not equity, and did not pay for all of the stock that was issued. Telecom did provide Contrux with $1 million in basic liability coverage, and $10 million in excess coverage. Contrux’s excess liability insurance carrier became insolvent two years after Radaszewski’s accident. Telecom argued that the district court lacked personal jurisdiction over it. The question of jurisdiction turned on whether Radaszewski could pierce the corporate veil and hold Telecom liable for the conduct of its subsidiary, Contrux. Telecom argued that the corporate veil could not be pierced on the basis of undercapitalization, because of the insurance it had provided to Contrux. The district court rejected Telecom’s argument that insurance could determine a subsidiary’s financial responsibility. The district court nonetheless held that it lacked jurisdiction over Telecom on other grounds.
Rule of Law
Holding and Reasoning (Arnold, C.J.)
Dissent (Heaney, C.J.)
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