One of, if not the most, popular McTexLaw Email Alerts I ever wrote was the one for November, 2002, because of the “Cocktail Party Talk from a Lawyer” article. This year, I’ve again given you some choice, albeit different, food for the cocktail party gristmill.

And for you business owners, Santa’s gift came early this year in the form of a Texas Supremes decision making it even more difficult for others to pierce corporate veils. So read on, Texas.

New on The McTexLaw Business Owner’s Resource Center:

Piercing the Veil 4: The Law Means What it Says

The “single business enterprise” theory allows plaintiffs to impose one business’s debts on another entity if some “factors” are present. How many factors have to be present? Depends; it changes from case to case. We have some general guidelines, but that’s about all. Feeling queasy yet? Here’s a brief philosophy behind this theory: when multiple corporations are not operated as separate entities, but rather integrate their resources to achieve a “common business purpose,” each constituent corporation may be held liable for the debts incurred by the other component entities in pursuit of that business purpose. Sounds like a corporate conspiracy, doesn’t it? Well, last year, a Texas Court of Appeals moved about $775,000 from one entity to several affiliated entities. Even worse, over $3 million in legal fees followed as well. Now that’s an amount that likely needed more than one entity in order to collect. But upon further review, the Texas Supremes reversed that holding and basically said “Article 2.21 of the Texas Business Corporation Act means what it says.” Click the headline to read about this wonderful early Christmas present for business owners, and sleep more peaceably tonight. S. Union Co., et al. v. City of Edinburg, Case No. 01-0785, Texas Supreme Court, October 31, 2003.

New on The McTexLaw Commercial Real Estate Resource Center:

Houston's Travails with the SOBs hits the 5th Circuit

Seems Dallas isn’t the only city battling those mean ol’ SOBs for control of land use regulations. Houston got into it with 105 individuals and 88 adult entertainment establishments, a/k/a sexually oriented businesses (hence SOB), over its 1997 functional zoning ordinance amendments (I know, any sentence with “Houston” and “zoning” in the same sentence jeopardizes its credibility). In any event, click the headline for the 5th Circuit’s most recent statements and analysis of the limits to which the government can regulate the use of your land. To those of you who don’t operate SOBs, read this article and consider that if the government can do it to an SOB, you can be fairly sure they can do it to any other type of business, including yours. Or, just read the article to get a load of the creative names used by some of these establishments. At the end are some practical suggestions for how to deal with land use disputes and negotiations. N.W. Enterprises, Inc., et al. v. City of Houston, Case No. 98-20255, U.S. Court of Appeals for the 5th Circuit, November 25, 2003.

2003's HOLIDAY COCKTAIL PARTY TALK

We all know the cardinal rules about what passes for “polite” conversation at parties–something interestingly bland, certainly no religion and no politics. And you need something recent. With that in mind, I give you the case of Thomas Van Orden, who sued Governor Rick Perry, to remove a granite monument from the grounds of the Texas State Capitol. So much for no politics. Did I mention the “alleged” problem was that the Ten Commandments were etched in the monument (see the Bible, Exodus 20, Page 83 in mine; let’s call them the “Big 10")? Oops, I did it again. So much for no religion. Why this case now? Because the decision was just rendered November 12, 2003. Van Orden v. Perry, et al., Case No. 02-51148, U.S. Court of Appeals for the 5th Circuit, November 12, 2003. Oh well, one out of three ‘aint bad.

Sound like the recent flap in Alabama? It is. In fact Van Orden a/k/a the Grinch based his case on the Alabama case. But here we ended up with very different results. Apparently we Texans think differently. Bottom line, the Grinch lost, the Big 10 stays, and here’s why.

The First Amendment to the U.S. Constitution says our government will “make no law respecting an establishment of religion.” The U.S. Supremes have developed this three part test to explain what that means:

1. Whether the government has a secular (as in non-religious) purpose;
2. Whether the primary effect advances or inhibits religion; and
3. Whether there is an “excessive entanglement” with religion.

Glad to see the court keeps things simple and straightforward, right? Basically, this sort of murky test is the exact opposite of the old “KISS” maxim. Thanks for these sorts of tests go out primarily to the late Justice Lewis Powell (an alum of my law school, Washington & Lee), and Justice Sandra Day O’Connor. But if you think this 3 part test is less than clear, just keep on reading.

In this particular case, the Grinch gave up on question no. 3, leaving only the first two. In question no. 1, the legal issue is whether a display conveys, or attempts to convey, that the government is favoring a religion or a particular religious belief. The challenged Big 10 statue was a gift to Texas by the Fraternal Order of Eagles (the “FOE”), a private organization dedicated to reducing juvenile delinquency. Texas accepted the monument in 1961 to recognize and commend the FOE for its efforts in that regard. Reducing juvenile delinquency is a valid secular purpose. Next.

“Not so fast,” said the Grinch, “this is all just a smokescreen. The real purpose of the statue, any statue for that matter, is to pay tribute to and honor the subject or ideal depicted.” Wrong. Texas, said the court, has a long history of honoring the contributions of donors and those they represent.

For question no. 2, the issue is what a reasonable viewer may fairly understand to be the purpose of the display. A “reasonable observer” is not uninformed, not a casual passerby, a heckler or any particular single individual. Said the Court, “The Ten Commandments have both a religious and secular message....Even those who would see the [statue] as divinely inspired religious teaching cannot deny its influence upon the civil and criminal laws of this country.” Amen.

And then the best part of the written decision. You have to love courts willing to call a spade a spade:

History matters here. For forty-two years, the monument has stood in Austin without the filing of any legal complaint. This quiescence is remarkable for Travis County, the seat of state government and the home of the University of Texas, whose campus is a stone’s throw away from the Capitol grounds. This Court is well aware that Travis County is not lacking in persons willing and able to seek judicial relief from perceived interferences with constitutional rights.

Basically, the court called the entirety of Travis County, in general terms, a “litigious” county. Imagine that.

So now Texas has an even more legitimate claim to being the one “true” buckle of the Bible belt (no pun intended). And now you now have a story to run off cocktail conversation-mongers. I suggest using this story to begin discussions on:

1. Activist judges appointed by [fill in the blank]–we’re only one year away from a general election, you know;
2. The role of religion in politics, and vise versa;
3. How many of our laws are based on the Ten Commandments, and how many more should be;
4. A reason to go for another round of hors d’oeuvres or, better yet, send someone else there for some ear relief.

Happy Holidays, y’all.

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McTexLaw Email Alerts are original writings of Mark McPherson,
principal attorney of the firm. ©2003, J. Mark McPherson.
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