Robert Thomas Edmunds v. Delta Partners, L.L.C.
403 S.W.3d 812
Tenn. Ct. App.2012Background
- Edmunds accepted Delta Partners L.L.C.'s offer in 2004, signing a contract including nondisclosure and non-compete, with at-will employment and $65,000 salary.
- Delta faced financial difficulties from 2006 onward; Edmunds was paid sporadically: $3,800 (2006), $21,250 (2007), $42,500 (2008).
- Garrison owned 95% of Delta; by 2006 Delta could not pay, yet Edmunds remained, receiving assurances he would be paid later.
- Edmunds left Delta in October 2008 after nonpayment; he sued on January 22, 2009; bench trial held September 19, 2011; trial court found contract, damages, and alter-ego issues.
- The trial court awarded $116,034.52 for breach of contract, $10,660 in unpaid minimum wages, $10,000 in attorney fees under FLSA, and prejudgment interest at 7%; veil-piercing found but later reversed on appeal; FLSA liability was upheld.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contract validity and breach after 2006 | Edmunds contends a valid contract existed and Delta breached by not paying. | Delta contends there was no enforceable contract after 2006 or it was modified/terminated. | Contract existed and was breached; no valid termination prior to 2008. |
| Pre-judgment interest rate | Edmunds entitled to prejudgment interest for use of funds. | Rate should be lower or not awarded due to lack of willfulness. | Seven percent pre-judgment interest affirmed; not an abuse of discretion. |
| Alter-ego/piercing the corporate veil | Garrison controls Delta and personally guaranteed debts; piercing warranted. | Insufficient facts to show fraud or misuse; corporation and owner distinct. | Evidence insufficient to pierce veil; no personal liability for Delta's debts. |
| FLSA applicability and exemptions | Edmunds, as an employee engaged in commerce, may recover minimum wages under FLSA. | Edmunds may be exempt or not an employee for certain weeks; issues waived for appeal. | Edmunds engaged in commerce; awarded FLSA damages; exemptions not proven on appeal. |
Key Cases Cited
- Continental Bankers Life Ins. Co. v. The Bank of Alamo, 578 S.W.2d 625 (Tenn. 1979) (three-pronged test for piercing corporate veil between parent and subsidiary)
- Pamperin v. Streamline Mfg., Inc., 276 S.W.3d 428 (Tenn.Ct.App. 2008) (pierce veil only in extreme circumstances to prevent injustice)
- VP Buildings, Inc. v. Polygon Group, 2002 WL 15634 (Tenn.Ct.App. 2002) (discusses veil piercing as extreme remedy (authorities cited))
- Oceanics Schools, Inc. v. Barbour, 112 S.W.3d 135 (Tenn.Ct.App. 2003) (piercing veil when shareholder transfers assets to personal use)
- Moody (Money & Tax Help, Inc. v. Moody), 180 S.W.3d 561 (Tenn.Ct.App. 2005) (moody-like reversal of veil piercing when evidence is minimal)