Southern Steel & Concrete, Inc. v. Southern Steel & Construction, LLC
W2020-00475-COA-R3-CV
| Tenn. Ct. App. | Apr 14, 2022Background:
- Parties: Southern Steel & Construction, LLC (SS Construction; Rutledge), Southern Steel & Concrete, Inc. (SS Concrete; Brock), and Quality Iron Fabricators, Inc. (Quality Iron).
- SS Construction (formed 2004) subcontracted steel erection from Quality Iron; SS Concrete was formed by Brock in June 2015 while he remained involved with SS Construction.
- In Jan 2016 SS Construction issued purchase orders assigning remaining FedEx Project work to SS Concrete; SS Concrete performed erection work Feb–Oct 2016 and was not paid.
- SS Concrete sued for payment and enforcement of a mechanic’s lien; trial court found SS Construction and SS Concrete were alter egos, awarded SS Concrete the deposited funds and enforced its lien, and dismissed Quality Iron’s cross-claim.
- Key factual bases for the alter-ego finding: shared management and decisionmaking (Brock performed significant managerial roles for both), overlapping addresses/contact information, shared employees/equipment/insurance/banking, no market competition (SS Construction subcontracted much work to SS Concrete), and SS Construction’s cessation of operations.
- Appellate court affirmed the alter-ego finding but limited the holding to the FedEx Project facts.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SS Construction is the alter ego of SS Concrete | SS Concrete: corporations are separate—distinct ownership, bank accounts, offices, and corporate formalities | Quality Iron: entities operated as a single business conduit—same management (Brock), overlapping address/contacts, shared employees/equipment/insurance, no competition | Court affirmed: evidence (Allen factors) shows SS Concrete was SS Construction’s "other self" for this project; alter-ego found |
| Whether Quality Iron’s cross-claim for breach (assignment without consent) succeeds | Quality Iron: SS Construction materially breached by assigning work to SS Concrete without Quality Iron’s consent, so Quality Iron withheld payment | SS Concrete/SS Construction: assignment ineffective because entities are the same; no damages shown by Quality Iron | Court dismissed cross-claim because entities were identical (a company cannot assign to itself) and Quality Iron failed to prove damages |
Key Cases Cited
- Road Sprinkler Fitters Local Union No. 669 v. Dorn Sprinkler Co., 669 F.3d 790 (6th Cir. 2012) (factors for assessing substantial identity between related companies)
- Oceanics Schools, Inc. v. Barbour, 112 S.W.3d 135 (Tenn. Ct. App. 2003) (blueprint of alter-ego factors under Tennessee law)
- FDIC v. Allen, 584 F. Supp. 386 (E.D. Tenn. 1984) (list of factors for piercing corporate veil used by Tennessee courts)
- Schlater v. Haynie, 833 S.W.2d 919 (Tenn. Ct. App. 1991) (cautionary standard for disregarding corporate separate identity)
- Rogers v. Louisville Land Co., 367 S.W.3d 196 (Tenn. 2012) (standard of review for bench trial findings)
- CAO Holdings, Inc. v. Trost, 333 S.W.3d 73 (Tenn. 2010) (Tennessee’s reliance on Allen factors)
- Electric Power Bd. of Chattanooga v. St. Joseph Valley Structural Steel Corp., 691 S.W.2d 522 (Tenn. 1985) (trial court’s province in veil-piercing factual determinations)