860 F. Supp. 2d 554
M.D. Tenn.2012Background
- The plaintiff Nippert loaned KCA Enterprises, Inc. $1,696,000 between 2000 and 2003; KCA later obtained a judgment against it but paid nothing.
- KCA was controlled by Jim Jackson, with 51% of shares, while Nippert acquired 30%; Jackson remained the dominant figure.
- KCA grew in sales and prestige, including becoming a Wal-Mart vendor, but made only one $100,000 payment to Nippert in 2001.
- From 2002 onward Nippert obtained a security interest in KCA assets; he sought personal guaranties from Jim and Angela Jackson but failed.
- Jim Jackson controlled JDD (an insurance agency) and Jackson Place (a Nashville-area building) and engaged in related transfers and arrangements.
- Before trial Nippert settled with Jim Jackson; Nippert then pursued JDD and Jackson Place for civil conspiracy and reverse veil-piercing theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether JDD and Jackson Place conspired to defraud Nippert under the UFTA | Conspiracy to fraudulently transfer funds and shares violated UFTA §66-3-305(a)(1) | No underlying fraudulent transfer proven; no actual intent shown | Conspiracy claim failed; no actionable fraudulent transfers proven |
| Whether KCA's funds transfers to JDD and Jackson Place were fraudulent transfers under UFTA | Transfers were part of a master scheme to defraud Nippert | Transfers lacked requisite intent and evidentiary support for fraud | Transfers not fraudulent under §66-3-305(a)(1); conspiracy fails |
| Whether Jim Jackson’s transfer of JDD stock to Angela Jackson supports a conspiracy | Kyle Jackson acted within JDD to facilitate the stock transfer to protect assets | Kyle acted in a personal capacity; JDD not liable for Kyle’s actions | No conspiracy liability against JDD for stock transfer |
| Whether Tennessee law permits reverse piercing of JDD/Jackson Place for Jim Jackson's acts | Reverse piercing should reach assets for Nippert’s claims | No Tennessee authority supports reverse piercing in corporation/shareholder context | Reverse piercing rejected; no viable theory against JDD/Jackson Place |
| Whether Nippert’s claim can proceed as a civil conspiracy without a proven underlying tort | Conspiracy exists with unlawful means yielding Nippert’s damages | Conspiracy requires underlying tort; none proven | Conspiracy claim fails for lack of underlying tort |
Key Cases Cited
- Trau-Med of Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691 (Tenn. 2002) (elements of civil conspiracy; vicarious liability for conspirators)
- Kincaid v. SouthTrust Bank, 221 S.W.3d 32 (Tenn.Ct.App.2006) (civil conspiracy requires common design and unlawful objective)
- Forrester v. Stockstill, 869 S.W.2d 328 (Tenn.1994) (civil conspiracy requires intent to unlawfully injure)
- Continental Bankers Life Ins. Co. v. Bank of Alamo, 578 S.W.2d 625 (Tenn.1979) (veil/piercing and equity in corporate relationships)
- Juhl v. Airington, 936 S.W.2d 640 (Tex.1996) (no conspiracy to be negligent; intentionality required for conspiracy)