In the world of high-stakes litigation, there is a common strategy used to insulate wealth from risk. It’s called corporate decoupling. You place the assets in one entity and the operations in another. If the operation fails, the assets remain behind a wall.
The recent $1.6 billion verdict in Starr County, Texas, suggests that juries are becoming increasingly impatient with that wall.
On October 7, 2023, the Pecos Liquids Handling Facility was the site of a catastrophic explosion. Two men, Reinaldo Garcia Pena and Angel Alaffa, lost their lives. In the aftermath, the legal defense followed a predictable blueprint. The facility was owned by Upton Assets, LLC, but it was operated by Axis Transport, LLC. Both companies were owned by the same individual, Thomas O. Hanks, Jr.
The defense’s position was built on the idea of separation. They argued that Upton Assets was merely a passive owner of the equipment and the land, and therefore, it couldn’t be held responsible for the specific operational errors that led to the blast.
After enough trials, that explanation stops making sense.
The evidence presented to the jury painted a different picture of how these entities actually functioned. Upton Assets, a company holding millions of dollars in industrial infrastructure, was reportedly initially capitalized with only $3,500. There were no written contracts between the owner (Upton) and the operator (Axis). There were no formal agreements defining who was responsible for safety or maintenance.
Corporate structures are designed to manage money, but they are often poor at managing reality.
The breakdown on the ground was even more systemic. The facility handled highly flammable natural gas liquids, a task that falls under federal Process Safety Management (PSM) standards. These aren’t suggestions; they are the baseline for preventing industrial disasters. Yet, during the trial, it was revealed that the owner had never read the PSM standards applicable to his own facility and could not identify a single employee who had.
Safety isn’t a clerical task. It requires presence. On the day of the explosion, “Workers from the Valley” were brought in to expand the tank battery. They were not given the company’s safety manual. They were not given a formal orientation. They were simply directed to work. While welding was actively occurring, a line was allegedly purged, leading to a hydrocarbon spill that found an ignition source.
As Upton Assets has discovered, separate LLC designations don’t replace the duty to know what is happening on your own property.
The jury’s response was a total rejection of the corporate shell game. In their verdict, they found Upton Assets, the entity holding the assets, to be 100% negligent. They assigned zero percent responsibility to the operator, the contractors, or the men who were killed. They also found that Upton Assets was guilty of gross negligence.
The numbers reflect the weight of what was lost. For Elizabeth Garcia, the widow of Reinaldo Pena, the jury awarded over $91 million. This included $35 million for future pecuniary loss and $31 million for mental anguish. The daughters, Maday and Maria, were awarded $17.5 million and $14.5 million, respectively. The family of Angel Alaffa received similar consideration for their loss.
Juries are no longer willing to accept the idea that an owner can be “hands-off” when the risk is this high. They care about who had the duty of care, the power to prevent the tragedy, and chose not to. The plaintiffs were able to demonstrate that Upton Assets had the duty to exercise reasonable care in the selection and use of Axis Transportation to operate the facility and that they were negligent in selecting Axis Transportation despite their lack of qualifications and expertise in operations of this type of facility. Upton Assets had foreseeable risk that selection of an unqualified operator would create unreasonable risk of harm to workers at the high-risk facility.
In this case, the jury sent a message that liability follows control, not the letterhead.
This case is a reminder that when you strip away the layers of corporate filings, you are left with a simple truth: responsibility cannot be avoided through paperwork. If the person holding the checkbook never prioritized the safety manual, the failure starts at the top.
