TransPecos Banks v. Jodi Strobach, 487 S.W.3d 722

Background

TransPecos Banks arranged a plan (proposed by bank reps) in 2003 to refinance Roger Jones’s indebtedness by having his daughter, Jodi Strobach, form Jones‑Strobach Farms, Inc. (JSF) and transfer three tracts of land to JSF as collateral.
JSF was a close corporation with Strobach as president and 100% shareholder; the bank prepared the documents and JSF assigned USDA farm subsidy (CRP and counter‑cyclical) payments to the bank to service the loans.
The Bank made parallel $160,000 loans in March 2003: one to JSF (signed by Strobach as president) and one to Roger Jones. The bank knew the land was encumbered and that the 2003 deed was junior to earlier deeds.
JSF’s charter was forfeited in 2005 for failure to pay franchise taxes; JSF retained the land until the bank’s foreclosure sale in 2008 on senior liens, at which point the bank bought the land and the CRP assignments, leaving JSF insolvent.
The Bank sued Strobach in 2012 seeking to hold her personally liable for JSF’s loan, alleging she used a sham corporation to perpetrate actual fraud for personal benefit; trial court granted Strobach’s motion for directed verdict and entered a take‑nothing judgment.
On appeal, the court considered whether the Bank produced more than a scintilla of evidence that Strobach committed "actual fraud" for her direct personal benefit as required by Tex. Bus. Orgs. Code §21.223(b).

Issues

Issue	Plaintiff's Argument (Bank)	Defendant's Argument (Strobach)	Held
Whether Strobach can be held personally liable for JSF’s contractual debt under Tex. Bus. Orgs. Code §21.223(b)	Strobach formed a sham corporation, transferred “valueless” encumbered land, failed to observe corporate formalities, and intended JSF to be unable to repay the loan, i.e., perpetrated actual fraud to avoid liability	Bank knew of encumbrances and junior deed; no evidence Strobach made misrepresentations or diverted assets; failure to follow formalities alone cannot establish liability; she signed as president only	Affirmed: Bank failed to produce more than a scintilla of evidence of actual fraud for Strobach’s direct personal benefit; directed verdict proper
Whether failure to follow corporate formalities and charter forfeiture supports imposing personal liability	These facts show JSF was a sham and Strobach intended to defeat creditors	Statutory scheme precludes use of alter‑ego/formality failures to impose liability; charter forfeiture is not dissolution and assets were not diverted	Held: Formality failures and forfeiture insufficient; only actual fraud with direct personal benefit suffices
Whether any misrepresentation or fraudulent conduct induced the Bank to make the 2003 loan	Implied that Strobach misled bank about collateral value and intent to maintain JSF	Evidence shows bank prepared documents, knew encumbrances, accepted junior lien and CRP assignments, and received subsidy payments for years	Held: No evidence Strobach made false statements or concealed material facts; bank had full knowledge of risks
Whether a third party’s (Jones’s) alleged fraud can be imputed to Strobach to establish liability	Jones participated in scheme with Strobach; his fraud should be imputed	No evidence Jones committed misrepresentations; even if he had, no evidence tying his fraud to Strobach’s personal benefit	Held: No evidence of Jones’s fraud to impute; imputation not shown or relied upon

Key Cases Cited

Castleberry v. Branscum, 721 S.W.2d 270 (Tex. 1986) (contrast of actual fraud vs. constructive fraud; foundational alter‑ego/actual fraud discussion)
SSP Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444 (Tex. 2008) (legislative recodification/background on §21.223 and limits on alter‑ego)
Willis v. Donnelly, 199 S.W.3d 262 (Tex. 2006) (statutory scheme narrowly prescribes when shareholder may be liable for corporate debts)
Penhollow Custom Homes, LLC v. Kim, 320 S.W.3d 366 (Tex. App.—El Paso 2010) (recognition that failure to observe formalities is no longer a factor post‑§21.223)
Dick’s Last Resort of W. End, Inc. v. Mkt./Ross, Ltd., 273 S.W.3d 905 (Tex. App.—Dallas 2008) (example where owner admitted intent to use corporations to defraud and avoid liability)
Latham v. Burgher, 320 S.W.3d 602 (Tex. App.—Dallas 2010) (dissolution and distribution to avoid a known claim can support actual fraud)
Menetti v. Chavers, 974 S.W.2d 168 (Tex. App.—San Antonio 1998) (benefit must be direct personal benefit tied to fraudulent transaction)
Metroplex Mailing Services, LLC v. RR Donnelley & Sons Co., 410 S.W.3d 889 (Tex. App.—Dallas 2013) (no misrepresentation or fraudulent asset diversion—no personal liability)