OPINION
Boccard USA Corporation sued Ray-theon Company seeking to hold it liable for a breach of contract by Raytheon Company’s former third-tier subsidiary, United *629 Engineers International, Inc. (“United Engineers”) based on the theory of alter ego. A jury found United Engineers had breached its contract with Boccard and made an affirmative finding on Boccard’s alter ego claim against Raytheon Company. Based on the jury’s verdict, the trial court rendered judgment against Ray-theon Company in favor of Boccard.
Of the four issues raised by Raytheon Company on appeal, the dispositive issue we address is whether Boccard had standing to pursue its alter ego claim. Because we hold that Boccard did not have standing to pursue the claim, we vacate the trial court’s judgment and dismiss the case.
Background Summary
In May 1998, United Engineers entered into a turnkey agreement with Atlantic Methanol Production Company LLC (“AMPCO”) in which United Engineers agreed to provide “all design, engineering, procurement, construction, ... [and] other work necessary to build a methanol production facility” for AMPCO in Equatorial Guinea. To build the plant, United Engineers needed fabricated piping spool, and Boccard agreed to supply such material to United Engineers. In June 1999, the two companies entered into a contract, in the form of a purchase order, setting out the terms of the agreement by which Boccard would supply piping spool to United Engineers. The contract stated that the total price of the order was not to exceed $5.5 million.
Over the next year, disputes arose between the two companies regarding the order. Each side accused the other of not sufficiently performing its obligations under the agreement. For example, Boccard asserted that United Engineers failed to timely supply Boccard with drawings and other information necessary for it to complete the order, and United Engineers contended that Boccard was causing unnecessary delays. Over time, the scope and the cost of order incrementally increased. After the last of the product was shipped by Boccard to United Engineers in May 2000, Boccard claimed that United Engineers still owed it over $3.9 million. United Engineers claimed that Boccard had deviated from the agreement and, as a result, owed money to United Engineers.
Around this same time, United Engineers and its parent company, Raytheon Engineers & Constructors, Inc. (“RE & C”), were sold to Morrison Knudsen, a construction company. Before the sale, United Engineers was a wholly-owned subsidiary of RE & C, and RE & C was a wholly-owned subsidiary of Raytheon Engineers and Constructors International, Inc. (“RECI”), which is in turn, was a wholly owned subsidiary of Raytheon Company (“Raytheon”). Following the sale, Raytheon and RECI remained as parent and subsidiary. After purchasing RE & C and its subsidiaries, including United Engineers, Morrison Knudsen and RE & C merged to form Washington Group International, Inc. (“Washington Group”). At that point, United Engineers became a wholly-owned subsidiary of Washington Group.
About a year after the corporate merger, Washington Group and its subsidiaries, including United Engineers, filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in Reno, Nevada. As a creditor, Boccard filed a proof of claim in the bankruptcy court for the monies it claimed were owed by United Engineers on the AMPCO methanol plant project.
When the bankruptcy petition was filed, Washington Group became the debtor-in-possession, acting in the capacity of a *630 bankruptcy trustee. 1 As debtor-in-possession, Washington Group filed an adversary proceeding in the bankruptcy court against Raytheon and RECI. Among its claims, Washington Group alleged that, before Morrison Knudsen purchased RE & C, Raytheon had depleted RE & C of its working capital rendering it insolvent. It further alleged that Raytheon had misrepresented to Morrison Knudsen the true financial condition of RE & C, failing to disclose a number of RE & C’s liabilities. In January 2002, Raytheon and Washington Group entered into a settlement agreement whereby each party mutually released the other from all claims.
In July 2003, Boccard filed an adversary proceeding seeking to resolve its claim against Washington Group. On January 27, 2004, the bankruptcy court signed a stipulated order dismissing Boccard’s adversary proceeding with prejudice but allowing Boccard a claim in the bankruptcy proceeding in the amount of $3.1 million. The order expressly provided that it had no res judicata or other preclusive effect.
On April 8, 2004, Boccard filed the instant suit against Raytheon. Boccard asserted, inter alia, that United Engineers breached its contract by failing to pay all amounts owed to Boccard for supplying the fabricated piping spool for the construction of the AMPCO methanol plant. Boccard sought to hold Raytheon liable for United Engineers’s breach of contract based on the theory of alter ego. Boccard alleged that, prior to selling RE & C and United Engineers to Morrison Knudsen, Raytheon, and its linear subsidiaries, had disregarded the corporate form to the point that each wholly-owned subsidiary and its respective parent company were the alter egos of one another. In other words, United Engineers and its parent, RE & C, were alter egos of each other; RE & C and RECI were alter egos; and RECI and Raytheon were alter egos. Boccard claimed that Raytheon, as the ultimate parent corporation in the chain, was liable for United Engineers’s breach of contract.
Raytheon filed a motion for partial summary judgment in which it challenged Boc-card’s alter ego claim. Raytheon asserted, inter alia, that Boccard did not have standing to assert an alter ego claim because the claim belonged exclusively to the bankruptcy estate. Raytheon argued that, pursuant to the Bankruptcy Code, only the bankruptcy trustee, or as in this case, the debtor-in-possession, has standing to assert a claim owned by the bankruptcy estate.
The trial court denied Raytheon’s motion for partial summary judgment. The case proceeded to trial before a jury. The jury found in favor of Boccard on its breach of contract and alter ego claims. The trial court rendered judgment on the jury’s verdict, awarding Boccard $3,444,513.62 in damages. 2 This appeal followed.
Standing
In its first issue, Raytheon asserts that Boccard lacked standing to assert its alter ego claim. Without the alter ego claim, Boccard cannot recover against Raytheon for breach of contract.
*631 A. General Legal Principles Regarding Standing
Standing focuses on the question of who may bring an action.
See Patterson v. Planned Parenthood,
B. Exclusive Standing of Debtor-in-Possession to File Alter Ego Claim
Raytheon asserts that, before the bankruptcy action was filed, the alter ego claim belonged to United Engineers and RE & C; however, on the filing of the bankruptcy action, the alter ego claims passed into the bankruptcy estate. Raytheon contends that Washington Group, as debtor-in-possession, is the only party with standing to prosecute a claim belonging to the bankruptcy estate, including the alter ego claim. 3
The property of a bankruptcy estate includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1). “The phrase ‘all legal or equitable interests of the debtor in property
1
has been construed broadly, and includes ‘rights of action’ such as claims based on state or federal law.”
Highland Capital Mgmt. LP v. Chesapeake Energy Corp.,
To determine if a cause of action is property of the estate, a court must consider whether, under state law, the debtor could have asserted the action at the commencement of the bankruptcy proceeding. See Highland Capital Mgmt., 212 5.W.3d at 530. United Engineers is a Pennsylvania corporation while RE & C, *633 RE Cl, and Raytheon are Delaware corporations. The parties agree that Delaware and Pennsylvania law governs the determination of whether the alter ego claim belongs to the bankruptcy estate.
The parties also agree that the relevant inquiry here is whether Delaware and Pennsylvania law permit a wholly-owned subsidiary to pierce its own corporate veil to reach the assets of its parent corporation. No Delaware or Pennsylvania state court has answered this question.
Federal courts have held that Delaware law allows a debtor corporation to pierce its own corporate veil, thereby giving a bankruptcy trustee or debtor-in-possession exclusive standing to assert an alter ego claim on behalf of the bankruptcy estate.
See, e.g., In re Alper Holdings USA, Inc.,
Boccard asserts that these federal decisions lack analysis and ignore established Delaware and Pennsylvania corporate law. Boccard points out that the subsidiaries involved here — RECI, RE & C, and United Engineers — are each 100 percent owned by its respective parent corporation. Boccard contends that, under Delaware law, a wholly-owned subsidiary cannot pierce its own corporate veil to reach its parent. It bases this assertion on Delaware law indicating that, while a wholly-owned subsidiary owes a duty to act in its parent’s best interest, the parent company does not owe the subsidiary a reciprocal duty to act in its best interest.
See, e.g., Trenwick Amer. Litig. Trust v. Ernst & Young, LLP,
In support of its position, Boccard relies on
Anadarko Petroleum Corp. v. Panhandle Eastern Corp.,
Usually, the fiduciary duties of the directors of a wholly-owned subsidiary corporation run to the parent corporation, not to the subsidiary itself.
See Trenwick,
Here, central to Boccard’s alter ego claims were its allegations — and ultimately Boccard’s proof at trial — that the subsidiaries were, at all relevant times, operated as insolvent entities. Thus, the corporate legal principles cited by Boccard, regarding the duties owed between a subsidiary and its parent, are inapposite to a determination of whether a wholly-owned
insolvent
subsidiary can pierce its own corporate veil to reach its parent’s assets.
See In re Mirant Corp.,
Boccard also cites
Caplin v. Marine Midland Grace Trust Co. of New York
for the proposition that a debtor estate, and therefore the trustee, has no claim against a party or an entity that was
in pari delicto
with the debtor.
See
Under Pennsylvania law, the legal fiction that a corporation is a legal entity separate and distinct from its shareholder may be disregarded, and the corporate veil “pierced,” “whenever one in control of a corporation uses that control, or uses the corporate assets, to further [its] own personal interests.... ”
Village at Camelback Prop. Owners
Assoc,
v. Carr,
In Delaware, a plaintiff must produce evidence that demonstrates the parent corporation’s complete domination and control of the subsidiary.
See Wallace v. Wood,
As explained by the Second Circuit Court of Appeals, “[W]here the parties do not stand on equal terms and one party controls the other, the
in pari delicto
doctrine does not apply.”
Kalb, Voorhis & Co. v. Am. Fin. Corp.,
At this point, we are still left to determine whether Delaware and Pennsylvania *636 law permits a corporation to pierce its own veil. The decisions on this issue, in the context of whether a trustee has standing to assert an alter ego claim on behalf of the bankruptcy estate, vary widely from state to state.
Courts in some states, including Michigan, Arkansas, Alabama, Tennessee, Missouri, and Maryland have held that a corporation may not pierce its own veil to permit a trustee to pursue an alter ego theory on behalf of a bankruptcy estate.
See, e.g., In re RCS Engineered Prods. Co., Inc.,
States in which courts have allowed an alter ego action to be brought by a corporation include Virginia, North Carolina, Nevada, Florida, Georgia, New York, and Utah.
9
See, e.g., Steyr-Daimler-Puch of Am. Corp. v. Pappas,
A similar holding was reached by the Court of Appeals for the Fifth Circuit in
S.I. Acquisition, Inc.,
In line with S.I. Acquisition, the Court of Appeals for the Third Circuit explained the rationale for allowing a corporation to pierce its own veil, as follows:
It may seem strange to allow a corporation to pierce its own veil, since it cannot claim to be either a creditor that was deceived or defrauded by the corporate fiction, or an involuntary tort creditor. In some states, however, piercing the corporate veil and alter ego actions are allowed to prevent unjust or inequitable results; they are not based solely on a policy of protecting creditors. Because piercing the corporate veil or alter ego causes of action are based upon preventing inequity or unfairness, it is not incompatible with the purposes of the doctrines to allow a debtor corporation to pursue a claim based upon such a theory.
Phar-Mor, Inc. v. Coopers & Lybrand,
Delaware law and Pennsylvania law, governing alter ego claims, is based on the equitable concerns discussed in
S.I. Acquistion.
“Delaware law permits a court to pierce the corporate veil ‘where there is fraud or where [the corporation] is in fact a mere instrumentality or alter ego of its owner.’ ”
NetJets Aviation, Inc. v. LHC Commc’ns LLC,
whether the corporation was adequately capitalized for the corporate undertaking; whether the corporation was solvent; whether dividends were paid, corporate records kept, officers and directors functioned properly, and other corporate formalities were observed; whether the dominant shareholder siphoned corporate funds; and whether, in general, the corporation simply functioned as a facade for the dominant shareholder.
Id. at 176-77.
Pennsylvania courts applying the equitable remedy of alter ego liability will allow the corporate veil to be pierced to “prevent fraud, illegality, or injustice, or when recognition of the corporate entity would defeat the public purpose or shield someone from a liability for a crime.”
Village at Camelback Prop. Owners Assn. Inc.,
This legal fiction of a separate corporate entity was designed to serve convenience and justice and will be disregarded whenever justice or public policy demand and when the rights of innocent parties are not prejudiced nor the theory of the corporate entity rendered useless. We have said that whenever one *638 in control of a corporation uses that control, or uses the corporate assets, to further his or her own personal interests, the fiction of the separate corporate identity may properly be disregarded.
Id. at 641 (citations omitted).
The focus of Delaware and Pennsylvania law is on the conduct of the corporation rather than on the relationship between the corporation and its creditors. The law of those states emphasizes equitable concerns, directed at holding the control entity accountable and addressing unjust enrichment to that company. We are convinced that the policies that persuaded the Fifth Circuit that alter ego claims against a debtor’s parent corporation may be brought by the bankruptcy estate representative, rather than individual creditors, support the same conclusion in this case.
See S.I. Acquisition,
Moreover, we recognize that the alter ego doctrine is an equitable remedy.
See Peacock v. Thomas,
We conclude that, under Delaware and Pennsylvania law, a corporation, particularly an insolvent one, has standing to pierce its own corporate veil under an alter ego theory to reach the assets of its parent.
See S.I. Acquisition,
We sustain Raytheon’s first issue. 10
Conclusion
Because we hold that Boccard did not have standing to pursue its alter ego claim against Raytheon, we vacate the trial court’s judgment and dismiss the case.
Notes
. Rather than a trustee, the debtor ordinarily manages the bankruptcy estate in a Chapter 11 proceeding, acting as the "debtor-in-possession." 11 U.S.C. §§ 1101(1), 1107.
. The jury found that Boccard was entitled to $3,588,121.22 in breach of contract damages. The trial court subtracted $143,607.60, representing the amount Boccard had received through the bankruptcy court proceedings.
. A debtor-in-possession has many of the powers of a bankruptcy trustee.
See
11 U.S.C. § 1107. Relevant to this case, section 323(b) of the Bankruptcy Code gives trustees the right to prosecute any action belonging to the bankruptcy estate, and debtors-in-possession have the same rights to sue and be sued as does a trustee.
See id.; see also
11 U.S.C. § 323(b);
ASARCO LLC v. Americas Mining Corp.,
. "[A]ny act to obtain possession of property of the estate or of property from the estate” is subject to an automatic stay. 11 U.S.C. § 362(a)(3). The automatic stay is "self-executing, effective upon the filing of the bankruptcy petition,” and it acts as "an injunction issuing from the authority of the bankruptcy court.”
In re Gruntz,
. Boccard contends that Bankruptcy Code section 544 does not provide authority for a trustee to pursue an alter ego claim on behalf of the bankruptcy estate. We agree. Generally, when courts allow a trustee to bring an alter ego claim, they permit it under section 541 rather than under section 544 because "[t]he purpose of [section] 544 is to give a trustee the power of a hypothetical lien creditor to avoid transfers of and liens on the debtor's property when the trustee cannot prevent them under other sections of the bankruptcy code_Many courts have completely rejected [section] 544’s use as a means for debtor corporations to bring alter ego actions.”
In re Icarus Holding, LLC,
. Boccard asserts in its brief that Raytheon’s challenge to Boccard's ability to assert the alter ego claim is not a challenge to its standing to assert that claim; rather, it is a challenge to Boccard’s capacity to bring the claim. Boccard points out that a challenge to a party’s capacity must be raised by a verified denial.
See
Tex.R. Civ. P. 93. It contends that Raytheon has waived its challenge to Boccard’s right to bring the alter ego claim because Raytheon did not file a verified denial. We disagree with Boccard’s characterization of Raytheon’s challenge. The case law is clear that a trustee has exclusive
standing
to assert a claim that is property of the bankruptcy estate.
See Tow v. Pagano,
. It is noteworthy that, in
Trenwick America Litigation Trust v. Ernst & Young, L.L.P.,
the Delaware Chancery Court concluded that a subsidiary corporation’s board was "free to take action in aid of its parent’s business strategy” ”[i]n the absence of any indication that they would be causing [the subsidiary corporation] to violate legal obligations owed to others.”
. The Supreme Court of Louisiana made the following observation regarding Anadarko:
The Anadarko ruling has been criticized as having been extended beyond its original intent. In First American Corp. v. Al-Nah-yan,17 F.Supp.2d 10 , 26 (D.D.C.1998), the federal district court restricted Anadarko’s statement to its narrow factual confines and rejected an interpretation which would result in a subsidiary’s directors owing no duties to the subsidiary itself. First American held, instead, that "the directors of a wholly-owned subsidiary owe the corporation fiduciary duties, just as they would any other corporation.” In accord is Collins v. Kohlberg and Company (In re Southwest Supermarkets, LLC),376 B.R. 281 , 283 (Bankr. D.Ariz.2007), where the federal bankruptcy court agreed Anadarko’s statement in this regard had been interpreted in an overly broad manner. Instead, the court there held Delaware law, at issue in Anadarko, would impose fiduciary duties on the officers and directors of a wholly owned subsidiary that run directly to the subsidiary itself, and not only to its sole shareholder. In fact, the federal bankruptcy court found Anadarko’s extension beyond its facts would yield shocking results in certain circumstances.
Wooley v. Lucksinger,
. In one frequently cited case,
Koch Refining v. Farmers Union Central Exchange, Inc.,
. Because this issue is dispositive, we do not address Raytheon’s remaining three issues. See Tex.R.App. P. 47.1.