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Click here for the full text of this decision FACTS:The trial court denied nonresident defendant Commonwealth General Corp.’s special appearance. The court of appeals affirmed the denial on the basis of specific jurisdiction. Marguerite York and James Roberson purchased accidental death and dismemberment insurance policies from J.C. Penney Life Insurance Co. They were each injured and were denied benefits under their policies. On June 18, 2001, Commonwealth, a Delaware corporation headquartered in Kentucky, purchased all the stock of JCP Life, a Vermont corporation headquartered in Texas. On June 28, 2001, York and Roberson filed suit against JCP Life and other entities as a result of their claims being denied. In July 2001, York and Roberson added Commonwealth as a defendant. Commonwealth entered a special appearance, which the trial court denied. The court of appeals affirmed the denial on the basis that there was sufficient evidence to support the exercise of specific jurisdiction by the trial court. HOLDING:The court of appeals erred in holding that the trial court had specific jurisdiction over Commonwealth as to York and Roberson’s causes of action. The court reverses the court of appeals’ judgment. The case is remanded to the court of appeals for determination of whether Commonwealth’s contacts with Texas give rise to general jurisdiction. Separate corporations are presumed to be distinct entities. Stock ownership and the related right of control that stock ownership gives to stockholders are insufficient to destroy the distinctness of corporate entities for jurisdictional purposes. In order to fuse the parent company and its subsidiary for jurisdictional purposes, it must be proved that the parent is the alter ego of the subsidiary. That is, the parent must be shown to control the internal business operations and affairs of the subsidiary to the extent that the two entities effectively cease to be separate. There is no evidence in this record that Commonwealth did more than function as a shareholder of JCP life, albeit the sole shareholder. There is no evidence that Commonwealth controlled the internal business operations of JCP Life and thereby became the alter ego of JCP Life. There is no evidence that York’s or Roberson’s claims arise from contacts with Texas that Commonwealth made during its purchase of the stock. Nor is there evidence Commonwealth was involved in JCP Life’s claims evaluation process at the time the claims of York and Roberson were denied. York and Roberson do not assert that their claims are related to Commonwealth’s employees coming to Texas to negotiate for and purchase JCP Life or to Commonwealth’s other contacts with Texas during the process of its purchasing JCP Life stock. OPINION:Per curiam.

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