ÿWPCN …# VU:a %› 0(¡b Éw@Õ4 ) 8 0J@ 0TŠ 0^Þ 0h< 0r¤ 0| 0†’ 0 1u¨ U, 0dI U,­ U*Ù B)DC, AMo ¼ BÈv~åvÓc D36 0@i AO©Æø 0D¾ D/ B1˜HP LaserJet 4Si/4SiMX PS 600dpiPSCRIPTÀÌÀääÀÀÌ0 ,†r‰AZ‹"Arial RegularX($¡¡- ù - Ÿ U¡D¢£D¤D¥¦§Ó€±DÒ 3|x±2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)< Œ 9p`(ModernP ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(Monaco< Œ 9p`(Arial% Line 7 d!!!!7Border 1dd€-"Cþÿ << Gÿÿ Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€ÔÔ€ ÔÝ  ÝÔ€ ÔÓ  Óò òÔ YYY ÔFILEDÔ€ XÔÌÌJuly€3,€1996ÌÌCecil€W.€CrowsonÌAppellate€Court€ClerkÔ  Ôó ó dPtPtHHÚ(ÿáÿâùFG(üHHØ(d'`Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑMonacoÑÑ ÑÒ  BA Op Monaco ÒÒ  BA Op Monaco Ò%%%%'ÿÿdxd("ÿÿ$££Ò  ÒÒ  Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€ÔÓ&€X„d&ÓÑ#€Xd#ÑÔ€ ÔÝ  ÝÒ € ÒÒ „ ÒÑ  ÑÑ\R AØ'\ÑÑ€ÑÑ7€§ŒXXdædÈ7ÑÑ  ÑÑ  Ñ›JAMES€R.€TULLY,€JR.,à àà àà à)Ìà àà àà àà àà àà à)Ìà àœPlaintiff/Appellant/›à àà àà à)Ìœà àCross„Appellee,›à àà àà à)à àAppeal€No.Ìà àà àà àà àà àà à)à à01„A„01„9601„CH„00031ÌVS.à àà àà àà àà àà à)Ìà àà àà àà àà àà à)à àDavidson€ChanceryÌœUSA›€WIRELESS,€INC.,à àà àà àœ)à àNo.€93„2020„II(I)›ÌÙ€€ÙœßL€#$";+'h|ÕC` ç `€€Lß›PMT€INVESTMENTS,€INC.,€andà àà à)ÌPATRICK€M.€THOMPSON,€in€bothà à)Ìhis€individual€and€corporate€capacity,à à)Ìà àà àà àà àà àà à)Ìà àDefendants/Appellees/à àà à)Ìà àCross„Appellant€USA€Wireless,à à)Ìà àœInc.à àà àà àà àà à)›ÌÌÌà@ àCOURT€OF€APPEALS€OF€TENNESSEEÌà@ àMIDDLE€SECTION€AT€NASHVILLEÌÌÌAPPEALED€FROM€THE€CHANCERY€COURT€OF€DAVIDSON€COUNTYÌAT€NASHVILLE,€TENNESSEEÌÌTHE€HONORABLE€IRVIN€H.€œKILCREASE›,€JR.,€CHANCELLORÌÌÌÌÌÌLARRY€D.€œASHWORTH›ÌœASHWORTH›€&€HIGHÌ227€Second€Avenue,€NorthÌNashville,€Tennessee€37201„1636Ìà àAttorney€for€Plaintiff/Appellantà àà àà àà àà àà àÌÌHUGH€C.€œHOWSER›,€JR.ÌKENNETH€M.€BRYANTÌœTRABUE›,€œSTURDIVANT›€&€œDEWITT›ÌSuite€2500,€511€Union€StreetÌNashville€City€CenterÌNashville,€Tennessee€37205Ìà àAttorney€for€Defendants/AppelleesÌà àCross„Appellant€USA€Wireless,€Inc.ÌÌÌÌà@ àAFFIRMED€IN€PART;€REVERSED€IN€PART;Ìà@ àAND€REMANDEDÌÌÌÌà àà àà àà àà àà àà àBEN€H.€CANTRELL,€JUDGEÌÌCONCUR:ÌTODD,€P.J.,€M.S.ÌLEWIS,€J.ÌÌÓ  ÓÓÓà@ àò òòòÔ€ „ÔO€P€I€N€I€O€Nó óóóÔ€ XÔÌÌà àà àThe€issues€in€this€appeal€are€(1)€whether€the€chancellor€erred€inÏgranting€a€judgment€against€a€corporation€for€back€wages,€œ(2)›€whether€theÏchancellor€should€have€pierced€the€corporate€veil€and€granted€a€judgmentÏagainst€the€corporationððs€principal€shareholder€and€(3)€whether€the€court€erred€inÏdismissing€the€œfraud€claims›€against€the€principal€œshareholder.›€€We€affirm€theÏchancellorððs€decision€in€part€and€reverse€on€the€œfraud€claims›€made€directlyÏagainst€the€principal€shareholder.ÌÌà@ àò òI.ó óÌÌà àà àœPatrick›€M.€Thompson€was€the€principal€shareholder€and€president€ofÏUSA€Wireless,€œInc.,€a€company€he€incorporated€in€February€of€1990.€€›€James€R.ÏœTully›,€Jr.€worked€for€USA€Wireless,€Inc.€for€ninety„six€weeks€withoutÏcompensation.€On€November€22,€1991€œMr.€Thompson›€sent€œMr.€Tully›€the€followingÏletter:€ÌÌÒ 0 ÒÒ  ÒÓÓà àOn€August€15,€1990,€you€received€your€last€payrollÏcheck€from€USA€Wireless,€Inc.€€At€that€time€we€told€youÏthat€there€would€not€be€any€more€payrolls€because€fundsÏwere€thin€and€prospects€of€financing€were€not€immediate.€ÏHowever,€we€did€say€that€you€could€continue€to€work€atÏUSA€with€the€understanding€that€there€would€be€noÏpayroll€until€the€company€received€funding.€€When€and€ifÏthat€occurs,€you€will€be€paid€for€your€services€at€an€agreedÏupon€rate€per€year€as€an€independent€contractor.ÌÌà àI€am€sorry€to€say€that€we€have€not€been€successfulÏin€securing€the€financing€as€of€this€date.€€As€of€NovemberÏ1,€1991,€you€will€have€completed€96€weeks€of€workÏwithout€a€payroll.€€This€means€that€USA€Wireless€owesÏyou€$158,000.00€for€your€services€less€your€advancesÏplus€any€approved€expenses.€€Today€the€company€hasÏloaned€you€approximately€$12,000.00€leaving€a€balanceÏof€$146,000.00.€€When€and€if€the€company€receives€aÏmajor€funding€of€$2€million€dollars€or€is€sold€or€liquidated,ÏUSA€Wireless€will€pay€you€$146,000.00€within€five€days€ofÏreceipt€of€the€proceeds.€€Until€that€time€you€will€be€paid€onÏan€agreed€upon€commission€schedule€to€be€determined.ÌÌà àNot€only€do€I€look€forward€to€paying€youÏ$158,000.00€less€your€loan;€I€look€forward€to€the€day€youÏresume€your€work€as€a€salaried€employee€as€you€wereÏbefore€August€15,€1990.€€It€will€mean€that€the€company€isÏproperly€capitalized€and€we€are€moving€forward,€makingÍprogress€and€benefiting€all€of€our€customers€and€employees.ÌÌà àRest€assured€that€as€long€as€I€am€in€control€of€USAÏWireless€you€will€always€have€a€position€with€thisÏcompany.ÌÌà àWarm€regards.ÌÌÌÌÒ € ÒÒ „ ÒÓÓà àà àOn€October€7,€1992,€in€an€agreement€signed€by€œThompson›€onÏbehalf€of€the€company,€USA€Wireless,€Inc.€sold€certain€of€its€assets€to€ContinentalÏWireless€Cable€Television,€Inc.€for€$950,000.€€When€the€company€did€not€pay€Mr.ÏTully€he€sued€(among€others)€USA€Wireless,€Inc.€and€Mr.€Thompson.€€Against€Mr.ÏThompson€personally€Mr.€Tully€alleged€that€Thompson€had€falsely€representedÏthat€if€Mr.€Tully€would€continue€to€work€for€USA€Wireless,€Inc.€he€(Thompson)Ïwould€pay€for€the€work€and€give€Mr.€Tully€a€twenty€percent€interest€in€theÏœcompany.€€In€a›€second€amended€complaint€œMr.€Tully€alleged›€that€USA€Wireless,ÏInc.€was€the€alter€ego€of€Thompson,€making€him€liable€for€the€corporate€debts.€€OnÏcross€motions€for€summary€judgment€the€court€granted€Mr.€Tully€a€judgmentÏagainst€USA€Wireless,€Inc.€for€$147,000€but€dismissed€the€œclaims›€against€Mr.ÏThompson€individually.ÌÌà@ àò òII.ó óÌÌà àà àOn€appeal€USA€Wireless,€Inc.€argues€that€the€letter€of€November€22,Ï1991€œpromised€to€pay€Mr.€Tully€only€if€the€company€received€two€million€dollars€inÏfunding€or€was€sold€or€liquidated.€›€The€company€argues€œthat›€the€obligation€to€payÏMr.€Tully€never€œarose€because€neither€of€these€events€happened.›ÌÌà àà àWe€think,€however,€that€the€œcompanyððs€reliance€on€the€conditions€inÏthe€letter€is€misplaced.›€€First,€the€letter€contains€an€unambiguousÏacknowledgment€that€USA€Wireless,€Inc.€owes€Mr.€Tully€$146,000€for€his€pastÏservices.€€Second,€the€language€the€company€œasserts€is›€a€condition€œprecedent,›Ïwe€read€as€Mr.€Thompsonððs€promise€to€pay€the€debt€as€soon€as€the€company€œwas›Ïin€a€position€to€do€œso.€€There›€is€no€indication€in€the€record€that€Mr.€Tully€agreed€toÏforego€payment€œif›€the€conditions€in€the€letter€were€never€met.€€Therefore,€we€thinkÏthe€chancellor€properly€granted€Mr.€Tully€summary€judgment€on€the€claim€againstÏUSA€Wireless,€Inc.ÌÌà@ àò òIII.ó óÌÌà àà àThe€corporate€entity€should€be€disregarded€where€it€is€a€mere€shamÏor€dummy,€where€it€is€being€used€to€justify€wrong€or€where€it€is€used€to€protectÏfraud.€€òòœNeese›€v.€Firemanððs€Fund€Insurance€Companyóó,€53€Tenn.€App.€710,€386ÏS.W.2d€918€(1964).€€Whether€a€corporation€is€œa€mere›€instrumentality€œof›€anÏindividual€is€a€question€of€fact,€and€the€decision€to€disregard€the€corporate€entityÍwill€depend€on€the€circumstances€of€each€case.€€òòElectric€Power€Board€v.€St.ÏJoseph€Valley€Structural€Steel€Corporationóó,€691€S.W.2d€522€(Tenn.€1985).€€TheÏone€seeking€to€hold€shareholders€liable€for€the€debts€of€the€corporation€has€theÏburden€of€proving€facts€œjustifying›€piercing€the€corporate€veil.€€òòœSchlater›€v.€œHaynie›óó,Ï833€S.W.2d€919€(Tenn.€App.€1991).€€In€òòœSchlater›óó,€we€addressed€some€assertionsÏof€particular€misconduct€on€the€part€of€corporate€officers€and€concluded€that€soÏlong€as€the€corporate€officers€did€not€use€their€control€of€the€corporation€forÏfraudulent€purposes€they€had€the€right€to€treat€it€as€their€own€business€enterprise,Ïto€favor€œa€secured›€creditor€over€another€(even€œwhen›€it€meant€reducing€theÏpersonal€liability€of€one€of€the€officers),€and€to€organize€a€successor€corporationÏ(with€the€infusion€of€new€capital€from€one€of€the€corporate€officers)€to€take€up€theÏbusiness€of€the€failed€corporation.€€The€key,€of€course,€is€whether€the€assets€of€theÏfailed€corporation€were€fraudulently€appropriated€for€the€corporate€officersððÏpurposes.€€òòSeeóó€833€S.W.2d€at€926„927.€€òòSee€also€Tennessee€RacquetballÏInvestors,€Ltd.€v.€Bellóó,€709€S.W.2d€616€(Tenn.€App.€1986).ÌÌà àà àWith€these€principles€in€mind,€we€are€satisfied€that€Mr.€Tully€was€notÏentitled€to€summary€judgment€piercing€the€corporate€veil€of€USA€Wireless,€Inc.€ÏThe€facts€in€the€record€reveal€that€the€company€was€organized€by€Mr.€Thompson,Ïwho€procured€a€charter€on€February€27,€1990.€€The€company€had€eight€originalÏshareholders€and€Mr.€Thompson,€his€wife€Rita€Thompson,€and€Nancy€CashÏserved€as€directors.€€œMr.›€Thompson€supplied€the€œstart„up€operating›€œcapital.›€€Ms.ÍThompson€took€no€part€in€the€companyððs€operation€and,€apparently,€did€not€everÏattend€a€meeting€of€the€board€of€directors.€€She€did€receive€some€payments€ofÏcorporate€funds€for€her€personal€use,€but€these€payments€were€accounted€for€onÏMr.€Thompsonððs€ledger€and€the€company€received€credit€for€the€payments€on€theÏamount€owed€to€him.ÌÌà àà àWhen€the€corporation€sold€part€of€its€assets€for€$950,000,€theÏproceeds€of€the€sale€were€applied€to€the€corporate€debts€„„€œadmittedly€including›€aÏpartial€payment€to€Mr.€Thompson.€€We€do€not€œthink,€however,€that€a›€finder€of€factÏcould€infer€that€any€of€the€corporate€funds€were€appropriated€for€fraudulentÏpurposes.ÌÌà àà àThe€remaining€unanswered€question,€of€course,€is€whether€Mr.ÏThompson€was€entitled€to€summary€judgment€on€the€assertion€that€the€corporateÏveil€should€òònotóó€be€pierced.€€While€this€is€a€closer€question,€we€think€the€chancellorÏcorrectly€decided€this€issue€as€well.€€Again,€the€key€issue€is€whether€there€areÏcontroverted€facts€from€which€a€trier€of€fact€could€infer€that€the€corporate€form€wasÏused€to€defraud€creditors€or€that€the€corporationððs€assets€were€fraudulentlyÏdiverted€for€illegal€or€improper€purposes.€€We€find€no€evidence€in€the€record€toÏrebut€the€corporationððs€evidence€that€all€of€its€assets€were€properly€accounted€for.ÌÌà@ àò òIV.ó óÌÌà àà àMr.€Tully€also€asserts€that€the€lower€court€erred€in€dismissing€œthe›Ïclaims€œhe€made›€directly€against€Mr.€Thompson€and€PMT,€Inc.€for€fraud€and€breachÏof€contract.€€The€appellees€did€not€address€œthese›€issues€in€their€brief€and€we€findÏthat€the€evidence€in€the€record€is€in€conflict.€€Therefore,€summary€judgment€onÏthese€claims€was€improper.ÌÌà àà àThe€judgment€of€the€lower€court€is€affirmed€in€part,€reversed€in€part,Ïand€remanded€for€further€proceedings€in€accordance€with€this€opinion.€€Tax€theÏcosts€on€appeal€one„half€to€the€appellant€and€one„half€to€the€appellees.ÌÌÓÓœÌÌÌ›à àà àà àà àà àà à_____________________________Ìà àà àà àà àà àà àBEN€H.€CANTRELL,€JUDGEÌÌÌÌCONCUR:ÌÌÌÌœÌ_______________________________›ÌHENRY€F.€TODD,€PRESIDING€JUDGEÌMIDDLE€SECTIONÌÌÌœÌÌ_______________________________›ÌSAMUEL€L.€LEWIS,€JUDGEÌÌÇÑ  ÑÑ ° ÑÑ ¨ Ñœ›