523 S.W.3d 663
Tenn. Ct. App.2017Background
- F&M obtained a $375,524.29 judgment against Christenberry Trucking & Farm, Inc. (CTF) for breach of contract in February 2012; CTF lacked assets and was administratively dissolved in 2012.
- F&M sued to pierce CTF’s corporate veil and hold sole shareholder Clayton V. Christenberry, Jr. personally liable.
- Trial court originally ruled for Christenberry; this Court vacated and remanded for more detailed findings under Tenn. R. Civ. P. 52.01.
- On remand the trial court made detailed findings: CTF began with paid‑in capital of $136,000, retained substantial earnings through 2007, at times had high revenues and many employees/vehicles, but declined during the Great Recession and ceased operations by 2011–2012.
- The court found limited evidence favoring piercing (some employees did occasional personal work for Christenberry and the family attorney also represented CTF) but no fraud, diversion of assets to the detriment of creditors, or use of CTF for illegal subterfuge; payments to Christenberry’s ex‑wife followed a matrimonial agreement and were not found to be improper transfers.
- The trial court concluded the equities did not favor piercing the corporate veil; this Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CTF’s corporate veil should be pierced to hold Clayton Christenberry personally liable for CTF’s judgment | F&M: corporate form was abused — undercapitalization, diversion of assets (payments to ex‑wife), common employees/office, and use of CTF for Christenberry’s benefit justify piercing | Christenberry: CTF was adequately capitalized during its profitable years, maintained records and separate management; payments to ex‑wife were pursuant to MDA and later alimony; declines due to recession not improper; no fraud | Court: No. Trial court’s findings supported that only 2 of 11 Allen factors slightly favored piercing, no fraud/diversion to creditors proven, and equities do not favor piercing |
Key Cases Cited
- Rogers v. Louisville Land Co., 367 S.W.3d 196 (Tenn. 2012) (adopts and endorses the Allen factors and emphasizes heavy caution before piercing the corporate veil)
- FDIC v. Allen, 584 F. Supp. 386 (E.D. Tenn. 1984) (enumerates eleven factors used to decide veil‑piercing)
- Edmunds v. Delta Partners, Inc., 403 S.W.3d 812 (Tenn. Ct. App. 2012) (single‑shareholder control alone is insufficient; must show control used to commit fraud or wrong)