§ 98.0025.Shareholder and Member Liability

A piercing provision, and it operates notwithstanding the Business Organizations Code.

The section applies to a legal entity governed by Title 2, 3, or 7 of the Business Organizations Code — corporations, partnerships, limited liability companies, and the other principal forms.

Notwithstanding any provision of that code, where such an entity is liable for trafficking, a shareholder or member is jointly and severally liable with the entity to the person trafficked, if the person demonstrates that the shareholder or member caused the entity to be used for the purpose of trafficking.

The "notwithstanding" clause is the whole provision. The Business Organizations Code sets demanding limits on holding owners personally liable for entity obligations — Texas generally requires actual fraud for direct personal benefit. This section displaces those limits for this claim.

The showing required is causal and purposive: that the owner caused the entity to be used for the purpose of trafficking. Ownership alone is not enough, and neither is knowledge — the owner must have directed the entity to that use.

Liability is joint and several with the entity, so a claimant may recover the whole award from the owner.

The provision addresses the obvious structure: a trafficking operation run through a shell entity with no assets, whose owner is beyond reach under ordinary corporate law. The 2015 amendment removed that protection.