Alter Ego Theory

ByMichael P. Sampson (part 6 of 8) This section discusses the alter ego basis for jurisdiction in a Florida family law action. Alter Ego Basis for Jurisdiction: Piercing the Corporate Veil The two-step process for establishing long arm jurisdiction does not apply when a spouse is traveling under a different theory: the alter ego basis for jurisdiction. The spouse may allege the entity is the other spouse’s alter ego and the Florida court should pierce the corporate veil of the entity. In a family court action, a court may pierce the corporate veil if a spouse can prove both that the entity is a “mere instrumentality” or alter ego of the other spouse and that the other spouse engaged in “improper conduct” in the formation or use of the entity.  A corporation is a separate legal entity, distinct from the persons comprising them. Gasparini v. Pordomingo, 972 So. 2d 1053 (Fla. 3d DCA 2008); BD Catering Bars SL v. Rosado, Case No. 25-cv-21553-BLOOM/Elfenbein (SD Fla. Sept 5, 2025). Those who seek to pierce the corporate veil carry a heavy burden. Eagle v. Benefield-Chappell, Inc., 476 So. 2d 716 (Fla. 4th DCA 1985). It’s not enough to establish alter-ego that companies use the same logo and intellectual property under a licensing agreement. See, e.g., Schumacher Group of Delaware, Inc. v. Dictan, 327 So. 3d 404 (Fla. 3d DCA 2021). In Schumacher, a Delaware holding company wasn’t the alter ego of affiliated entities. The companies kept separate books and records. They had separate boards of directors. The holding company didn’t control the affiliates’ business operations. So…what facts establish a nonresident entity is the alter ego of a Florida resident? When Have Courts Found Nonresident Alter Egos Are Subject to Florida’s Jurisdiction? Florida courts have permitted a nonresident shareholder of a resident corporation to be subjected to jurisdiction, when the claimant alleges that basis and evidence establishes the nonresident entity has operated as the mere instrumentality (or “alter ego”) of the resident shareholder or entity and the other party engaged in improper conduct in the formation of the entity. See Bellairs v. Mohrmann, 716 So. 2d 320 (Fla. 2d DCA 1998); Dania Jai-Alai Palace, Inc. v. Sykes, 450 So. 2d 1114 (Fla. 1984). See also Abdo v. Abdo, 263 So. 3d 141 (Fla. 2d DCA 2018) (trial court lacked personal jurisdiction over two business entities to whom siblings transferred websites, where plaintiffs failed to make any specific allegations the entities breached a fiduciary duty, aided and abetted such a breach, or conspired to facilitate one). Sufficient Allegations Required to Pursue Piercing the Corporate Veil Under the Alter Ego Basis for Jurisdiction To establish an alter ego basis for jurisdiction, a suing spouse must allege facts sufficient to “pierce the corporate veil” of the entity. See Parisi v. Quadri de Kingston, 314 So. 3d 656 (Fla. 3d DCA 2021). In Parisi, in an ancillary probate action, the decedent’s sister and personal representative of her estate attempted to allege civil conspiracy by (i) an Argentine man, (ii) his alleged “alter-ego” Delaware limited liability company, and (iii) a Miami cohort. The PR alleged they conspired to steal her dying sister’s Miami Condo. The court discussed the requirements for specifically pleading alter-ego, then dismissed the PR’s complaint against the nonresident with leave to amend. Garcia v. Character Technologies in Garcia v. Character Technologies, Inc., Case No. 6:24-cv-1903-ACC-UAM, 785 F. Supp. 3d 1157 (MD Fla. May 21, 2025), the court denied the individual defendants’ motion to dismiss for lack of personal jurisdiction and allowed the plaintiff to engage in jurisdictional discovery. Without ever using the magic words “alter ego,” the plaintiff had alleged in the complaint facts that could “conceivably” support jurisdiction under an alter ego theory. The plaintiff alleged individual defendants “formulated, directed, controlled, had the authority to control, or participated in the acts and practices of” an artificial intelligence software company, “personally coded and designed a substantial portion of” the company’s AI Large Language Model, and directed the other company employees with regards to the conduct alleged in the complaint. Further, the plaintiff alleged the individual defendants formed the company to get around Google’s safety protocols and protect Google’s brand before they returned to Google in a deal that left behind “a shell of a company.” The court dismissed the individual defendants ‘ motion to dismiss without prejudice, so the could refile in three months, to allow the plaintiff time to take jurisdictional discovery. Conclusory Allegations Don’t Establish a Basis for Alter Ego Jurisdiction Conclusory allegations a company is the alter ego of a person aren’t sufficient to pierce the veil. Purple Innovation, LLC v. Waykar, Inc., Case No. 8:25-cv-00266-CEH-SPF (MD Fla. August 29, 2025); Duran v. Joekel, Case No. 2:23-cv-558-JES-NPM (MD Fla. May 23, 2024). See also WH Smith, PLC v. Benages & Associates, Inc., 51 So. 3d 577 (Fla. 3d DCA 2010) (reversing denial of motion to dismiss because the plaintiff failed to establish personal jurisdiction under the alter ego theory); Woods v. Jorgensen, 522 So. 2d 935 (Fla. 1st DCA 1988). See also Hobbs v. Don Mealey Chevrolet, Inc., 642 So. 2d 1149 (Fla. 5th DCA 1994); Qualley v. International Air Serv. Co., 595 So. 2d 194 (Fla. 3d DCA 1992). Elements for Piercing the Corporate Veil To “pierce the corporate veil,” a spouse should specifically plead and must prove three factors: (1) the shareholder dominated and controlled the corporation to such an extent that the corporation’s independent existence, was in fact non-existent and the shareholders were in fact alter egos of the corporation; (2) the corporate form must have been used fraudulently or for an improper purpose; and (3) the fraudulent or improper use of the corporate form caused injury to the claimant. In re Hillsborough Holdings Corp., 166 B.R. 461 (Bankr.M.D.Fla.1994). See also Seminole Boatyard, Inc. v. Christoph, 715 So. 2d 987 (Fla. 4th DCA 1998); South Dade Dealership, LLC v. Line 5 LLC, Case No. 4D2024-2150 (Fla. 4th DCA Apr. 22, 2026). Outsider Reverse Corporate Piercing Theory When a corporation’s controlling shareholder has formed or used an entity to defraud creditors, by evading liability for pre-existing