ÿWPCŸ ýXìá ¡©ÎRˆ ᥡ)™ˆPÈ\VJ@¼ïöØdo¨ÛQÎñT8s!µïv,”[AY\¤V5(Hb}„ĵ»,«·q@ŒTôb©qÞÎ|–9«üÊ]0W•IˆÜ§[m¡ZøOBÈ^_êhbœ‹iv –ZÕðDÏ£6ŸXm)¾u(Ájâp®8Cïô ü‡†Jµ¥Å0MüRìVètsø º×ëmRv}ŸGÀÄ·¯Î8ÈcÓ"Š„Êguë;xKCT{î`7ϦÑÇ’IfÖ¨÷ðË"·~p”WjÇŵ1TSÆjÝ:IïâYRÿ”7;SÓ ¤‚ ôY´íï ÑJ“*)<™¤ìú“ÜiÙ8¯c>‰É]ø·œÓŽš$2ëmž! s³LèEzn«Rò(—U3Xe_óà;ˆŒFuÛßáÍ)B‚ZVÒê¦<׳åYÛ_ÇG³Ev¸k‡´°híÌU“âPø@Êý3™Uaþy - êË^I*?” Lxô):ÀâTŒ¸Ê1@A)×W™j+G¡ï*yo,Ú–™m£ƒsHžÖúfa_'žKí ?µ_Oc7/Ôä%²¨ãÆÎÖô~å«+OÖR›ï·zÃ5%”dØzb#É\ %% ^ + 0ˆ7 UN¿ w 4 z% ÒŸ q € m‚ 0D™ ÆÝ Æ£ ÆiÆ/UNõNCKEEEb’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’ 0ëšššš B…… 0¤¢ D5F D-{ 0K¨¨ ASóÆF 0¤  0D° A«ô˜\\IB01S02\CLERKJACÈÈ,,,,ÈÈ0»¯š1Ï (`£ª$¡¡Ñ€.ÑÑ8€½­»»d»»d8ÑÑ ý ÑÓ  Ó(í€"  Z6Times New Roman Regular6hö001s02 ˜C:\PROGRA~1\COREL\WORDPE~1\TEMPLATE\CUSTOM~1\REVISE~1.WPTC:\Program Files\Corel\WordPerfect Office 2000\Template\Custom WP Templates\revised standard opinion.wpt3|xÿU‹ÿÀÀÀ(#Ã$òòÚ  Ú0Ú  ÚóóLevel 1Level 2Level 3Level 4Level 5‚Level 1Level 2Level 3Level 4Level 5„Level 1Level 2Level 3Level 4Level 5…Level 1Level 2Level 3Level 4Level 5(ÖÃ9 Z‹6Times New Roman Regular AÝ ƒRâÄ$ÝÓ  Óà  àòòÚ  Ú1Ú  ÚóóÔ€ô±Äò»»ÔÝ  ÝÔ_ÔUnder€section€62„37„108,€any€ð ðhome€improvement€contractor,ðð€as€defined€under€section€62„37„103,€inÐ ° Ðapplying€for€a€contractorððs€license,€ð ðshall€file€with€the€commission€a€cash,€surety,€or€property€bond€or€an€irrevocableÐ qÁ Ðletter€of€credit€in€the€amount€of€ten€thousand€dollars€($10,000)€for€the€benefit€of€any€person€who€is€damaged€becauseÐ 2‚ Ðof€the€breach€of€the€home€improvement€contract.ðð€€Tenn.€Code€Ann.€ðð€62„37„108(h)€(1997).€€Section€62„37„108(h)Ð óC Ðfurther€provides€that,€ð ð[Ô_Ôi]fÔ_Ô€the€bond€ceases€to€be€in€effect,€the€contractorððs€license€shall€become€invalid.ðð€€òòIdóó.- ù-(|G2âÄ$¤¤Ý ƒ£ª!ÝÑ€.ÑÑ8€—‘»»dd8ÑÑ ý ÑÓ  ÓÝ  Ýà  àòòÚ  Ú0Ú  ÚóóÔ€ô±Äò»»Ô d(|3ÿ$££Ý ƒ£ª!ÝÑ€.ÑÑ8€—‘»»dd8ÑÑ ý ÑÓ  ÓÝ  ÝVVVV)ÿÿ!dxdx)!ÈÈÈÈdxdx( ±þ$’’ò òFigure€Ú  Ú1Ú  Úó ó^_X`YEþÿ<<CÿÿƒLevel 1Level 2Level 3Level 4Level 5(|3ÿ$¢¢Ý ƒ£ª!ÝÑ€.ÑÑ8€—‘»»dd8ÑÑ ý ÑÓ  ÓÝ  Ý($$””ò òÚ  Ú1Ú  Úó óX[Z&OLE 2.0 Box <=8ÿÿÿÿÿÿÿÿÿÿCÿÿ HKKKKÝ ƒ£ª!ÝÑ€.ÑÑ8€—‘»»ddÈ8ÑÑ ý ÑÓ  ÓÝ  ÝÔ_ÔÑ  ÑÔ€¼—‘»»»ÔÑ8€Ê_XXdé»»d8ÑÑ  Ñà@ò ò ìàÔ‡îcV—‘ÔIN€THE€COURT€OF€APPEALS€OF€TENNESSEEˆÐ ° Ðà@òò%ìàAT€JACKSONÔ#†¼—‘»îîcV #ԈРÓ# ÐÓ  ÓSeptember€24,€2004€SessionÐ öF ÐÔ‡XÊ_X»¼—‘ÔÌò òÔ#†¼—‘»XXÊ_õ#ÔAMANDA€CONSTRUCTION,€INC.òòóó€v.€CHARLES€L.€WHITE,€òòet€alóó.Ô‡XÊ_X»¼—‘Ôó óÐ ï? ÐÌà@@½½ìàò òDirect€Appeal€from€the€Chancery€Court€for€Shelby€CountyÐ é 9 Ðà@@øøìàNo.€110107„1€€€€€€Walter€L.€Evans,€ChancellorÐ Ó # ÐÌÌà@@ìì*ìàßA€V) °°` d€÷E<` AßÐ ‘á  ÐÌà@@TTìàNo.€W2004„00521„COA„R3„CV€„€Filed€December€1,€2004Ð ŠÚ  ÐÌßA€V) °°` dE<]` AßÐ ^®  Ðó óÌÓ  ÓÔ‡XhÂXXXÊ_ÔThis€appeal€involves€a€homeownerððs€attempt€to€pierce€the€corporate€veil€to€reach€the€shareholdersÐ V¦  Ðof€a€construction€company.€€During€the€course€of€the€litigation,€the€construction€company€wasÐ ? Ðadministratively€dissolved,€and€the€homeowner€filed€a€motion€to€join€as€defendants€the€shareholders,Ð (x Ðofficers,€and€directors.€€The€trial€court€granted€judgment€in€favor€of€the€homeowner€against€theÐ a Ðconstruction€company€for€breach€of€contract,€but€denied€the€homeownerððs€motion€to€join€theÐ úJ Ðshareholders,€officers,€and€directors.€€We€affirm.Ð ã3 ÐÔ#†XÊ_XXXh”#ÔÔ#†¼—‘»XXÊ_|#ÔÔ‡XÊ_X»¼—‘ÔÌÓˆÓò òTenn.€R.€App.€P.€3€Appeal€as€of€Right;€Judgment€of€the€Chancery€Court€Affirmed;€andÐ µ ÐRemandedó óÐ Ÿï ÐÌòòÓ  ÓÔ#†¼—‘»àXÊ_‹#ÔÔ‡XÊ_X.¼—‘ÔDavid€R.€Farmer,€J.óó,€delivered€the€opinion€of€the€court,€in€which€òòAlan€E.€Highers,€J.óó€and€òòHollyÐ r ÐM.€Kirby,€J.óó,€joined.Ð [« ÐÌFelix€H.€Bean,€III,€Memphis,€Tennessee,€for€the€appellants,€Charles€L.€White€and€Claudette€E.Ð -} ÐWhite.Ð f ÐÌRandall€N.€Songstad,€Memphis,€Tennessee,€for€the€appellee,€Amanda€Construction,€Inc.Ð è 8  ÐÓJÓÌò òOPINIONó óÔ#†¼—‘»XXÊ_y#ÔÔ‡XÊ_X»¼—‘ÔÐ º" " ÐÌòòóóÔ#†¼—‘»XXÊ_~ #ÔÓ  ÓÔ€XÊ_X»¼—‘ÔÔ‡XhÂXXXÊ_Ôò òó óà@""ìàò òòòÓÓFacts€and€Procedural€Historyóóó óˆÐ $Ý$ ÐÓÓà  àIn€1996,€Amanda€Construction,€Inc.€(ð ðAmandaðð)€and€Charles€and€Claudette€WhiteÐ ]&­!& Ð(collectively€ð ðthe€Whitesðð)€entered€into€a€contract€for€the€construction€of€a€one„room€addition€to€theÐ F'–"' ÐWhitesðð€home.€€Amanda€was€a€closely€held€corporation€in€the€business€of€remodeling€and€renovatingÐ /(#( Ðresidential€homes.€€Amandaððs€sole€shareholders€were€Sam€and€Cheryl€Grisham.€€During€theÐ )h$) Ðconstruction€process,€the€Whites€became€dissatisfied€with€Amandaððs€work,€alleging€a€number€ofÐ *Q%* Ðconstruction€defects,€and€decided€to€withhold€further€payment.€€Soon€thereafter,€Amanda€filed€aÐ ê*:&+ Ðcomplaint€against€the€Whites€for€breach€of€contract,€seeking€money€damages€and€enforcement€ofÐ Ó+#', Ðits€mechanicððs€and€materialmenððs€lien.€€Shortly€thereafter,€the€Whites€filed€a€complaint€for€removalÐ ¼, (- Ðof€Amandaððs€lien€and€for€damages€resulting€from€the€faulty€construction.€€The€trial€court€entered€anÐ ¥-õ(.ý Ðagreed€order€consolidating€the€cases,€treating€the€Whitesðð€complaint€as€an€answer€and€counter„claim.€Ð ° ÐÌà  àThe€parties€agreed€to€the€appointment€of€a€special€master€to€conduct€an€investigation€andÐ ‚Ò Ðprepare€a€report€regarding€the€allegedly€defective€construction.€€The€case€was€tried€before€the€specialÐ k» Ðmaster€who,€after€visually€inspecting€the€premises€and€hearing€the€evidence,€filed€his€report€findingÐ T¤ Ðnumerous€defects€in€the€construction€of€the€addition€to€the€Whitesðð€home.€€Ð =  ÐÌà  àThrough€responses€to€interrogatories,€the€Whites€discovered€that,€during€the€course€ofÐ  _ Ðlitigation,€Amanda€was€administratively€dissolved€for€failure€to€file€an€annual€report.€€In€addition,Ð ø H Ðthe€Whites€discovered€that€Amanda€had€not€maintained€a€bond,€as€required€for€a€licensed€homeÐ á 1  Ðimprovement€contractor€under€section€62„37„108€of€the€Tennessee€Code.׃×Ý ƒ #ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€€Subsequently,€the€WhitesÐ Ê   Ðtwice€filed€motions€to€substitute€the€shareholders€and€officers€of€Amanda€as€proper€party€defendants.€Ð ³  ÐOn€January€30,€2004,€the€trial€court€entered€an€order€(1)€dismissing€Amandaððs€complaint€against€theÐ œì  ÐWhites;€(2)€removing€the€lien€in€favor€of€Amanda€against€the€Whitesðð€property;€(3)€awarding€theÐ …Õ  ÐWhites€a€judgment€in€the€amount€of€$137,844.60;€and€(4)€overruling€the€Whitesðð€second€motion€toÐ n¾  Ðadd€the€officers,€shareholders,€and€directors€of€Amanda.€€Ð W§  ÐÌà  àThe€Whites€appealed€from€the€trial€courtððs€order€and€have€presented€the€following€issue€forÐ )y Ðour€review:€whether€the€trial€court€erred€in€failing€to€permit€the€Whites€to€join€the€officers€andÐ b Ðdirectors€of€Amanda,€when€Amanda€dissolved€during€the€course€of€litigation€without€notice€to€theÐ ûK ÐWhites.Ð ä4 Ðò òòòó óóóÌò òòòÓ  ÓLaw€and€AnalysisÐ ¶ Ðóóó óÓ  ÓÌà  àAs€a€preliminary€matter,€the€Whites€argue€that€Amanda€has€sought€to€avoid€its€liability€inÐ ‡× Ðthis€case€by€dissolving€the€corporation€during€the€course€of€litigation.€€Section€48„24„105€of€theÐ pÀ ÐTennessee€Code,€however,€clearly€provides€that€the€dissolution€of€a€corporation€does€not€abate€orÐ Y© Ðsuspend€a€proceeding€against€the€corporation.€€Tenn.€Code€Ann.€ðð€48„24„105(b)(6)€(2002).€€At€theÐ B’ Ðtime€Amanda€was€administratively€dissolved,€the€present€action€was€pending€in€the€trial€court.€Ð +{ ÐTherefore,€the€judgment€against€Amanda€remains€valid€despite€the€fact€that€the€corporation€hasÐ d Ðdissolved.Ð ýM ÐÌà  àTurning€to€the€trial€courtððs€denial€of€the€Whitesðð€motion€to€join€the€shareholders€and€officersÐ Ï!  Ðof€Amanda,€while€the€Whitesðð€motion€is€titled€Motion€to€Substitute€€the€Shareholders€and€OfficersÐ ¸"! Ðas€Proper€Party€Defendants,€we€perceive€it€to€be€a€motion€to€amend€the€complaint.€€We€note€that€theÐ ¡#ñ" Ðrecord€does€not€contain€a€proposed€amended€complain€nor€is€there€any€indication€in€the€record€thatÐ Š$Ú# Ðâ âone€was€presented€to€the€trial€court.€€However,€the€Whitesðð€Motion€to€Substitute€the€ShareholdersÐ s%à $ Ðand€Officers€as€Proper€Party€Defendants€alleges,€as€a€basis€for€substituting€defendants,€theÐ ° Ðfollowing:Ð ™é Ðâ âÓ PûÓÌÓ PûÓÌà8  àà ` à1.€€To€permit€the€shareholders€and€officers€of€this€corporation€to€neglect€toÐ T¤ Ðfile€an€annual€report€and€permit€them€to€walk€away€from€this€lawsuit€would€createÐ =  Ða€substantial€injustice€to€Charles€and€Claudette€White.Ð& vÐ Ð  ÐÌà8  àà ` à2.€€The€corporation€failed€to€file€an€annual€report€and€its€charter€was€revokedÐ ø H Ðby€the€state€of€Tennessee€while€the€two€officers€of€the€now€de€facto€corporationÐ á 1  Ðcontinue€to€be€in€the€home€construction€business.ÐÊ  Ð Ð  ÐÌà8  àà ` à3.€€The€corporation€was€a€home€contractor€within€the€meaning€of€Chapter€62Ð œì  ÐTitle€36€of€the€Tennessee€Code€and€it€failed€to€post€a€contractorððs€bond€as€it€wasÐ …Õ  Ðrequired€by€law€to€do.Ðn¾ Ð Ð  ÐÌFrom€all€appearances,€the€Whitesðð€motion€to€join€the€shareholders€and€directors€of€Amanda€was,€inÐ @ Ðeffect,€an€effort€to€amend€its€complaint€to€pierce€the€corporate€veil€of€Amanda.Ð )y ÐÌà  àUnder€Tennessee€law,€there€is€a€strong€presumption€that€a€corporation€is€a€distinct€legalÐ ûK Ðentity,€independent€from€its€directors,€officers,€and€shareholders,€and€the€party€seeking€to€imposeÐ ä4 Ðpersonal€liability€on€the€directors,€officers,€and€shareholders€bears€the€burden€of€demonstrating€factsÐ Í Ðsufficient€to€warrant€piercing€the€corporate€veil.€€òòSchlater€v.€Haynieóó,€833€S.W.2d€919,€925€(Tenn.Ð ¶ ÐCt.€App.€1991);€òòEmergicare€Consultants,€Inc.óó€v.€òòWoolbrightóó,€No.€W1998„00659„COA„R3„CV,€2000Ð Ÿï ÐWL€1897350,€at€*2€(Tenn.€Ct.€App.€Dec.€29,€2000)òò€perm.€app.€deniedóó€(Tenn.€2001).€€The€courts€ofÐ ˆØ Ðthis€state€consider€several€factors€when€determining€whether€to€pierce€the€corporate€veil,€including:Ð qÁ ÐÌà8  à(1)€whether€there€was€a€failure€to€collect€paid€in€capital;€(2)€whether€the€corporationÐ C“ Ðwas€grossly€undercapitalized;€(3)€the€nonissuance€of€stock€certificates;€(4)€the€soleÐ ,| Ðownership€of€stock€by€one€individual;€(5)€the€use€of€the€same€office€or€businessÐ e Ðlocation;€(6)€the€employment€of€the€same€employees€or€attorneys;€(7)€the€use€of€theÐ þN Ðcorporation€as€an€instrumentality€or€business€conduit€for€an€individual€or€anotherÐ ç 7 Ðcorporation;€(8)€the€diversion€of€corporate€assets€by€or€to€a€stockholder€or€otherÐ Ð!   Ðentity€to€the€detriment€of€creditors,€or€the€manipulation€of€assets€and€liabilities€inÐ ¹" ! Ðanother;€(9)€the€use€of€the€corporation€as€a€subterfuge€in€illegal€transactions;€(10)€theÐ ¢#ò" Ðformation€and€use€of€the€corporation€to€transfer€to€it€the€existing€liability€of€anotherÐ ‹$Û# Ðperson€or€entity;€and€(11)€the€failure€to€maintain€arms€length€relationships€amongÐ t%Ä $ Ðrelated€entities.Ð]&­!%Ð Ð  ÐÌòòFed.€Deposit€Ins.€Corp.€v.€Allenóó,€584€F.€Supp.€386,€397€(E.D.€Tenn.€1984)€(citations€omitted).€€NoÐ /(#' Ðsingle€factor€listed€above€is€conclusive,€and€each€case€must€be€decided€on€its€own€unique€set€of€facts.€Ð )h$( ÐòòEmergicare€Consultantsóó,€2000€WL€1897350,€at€*2.Ð *Q%) Ðâ âÐ ê*:&* Ðà  àIn€their€brief€to€this€Court,€the€Whites€argue€that€the€trial€court€should€have€allowed€them€toÐ ° Ðâ âpresent€evidence€on€the€issue€of€piercing€the€corporate€veil.€€As€previously€stated,€we€believe€theÐ ™é ÐWhitesðð€motion€to€substitute€defendants€was€in€essence€a€motion€to€amend€their€complaint,€thoughÐ ‚Ò Ðnot€titled€as€such.€€It€appears€to€this€Court,€therefore,€that€the€trial€court€was€in€effect€dismissing€òòsuaÐ k» Ðsponte€óóthe€Whiteððs€motion€for€failure€to€state€a€claim€upon€which€relief€can€be€granted.€€òòSee€óóTenn.Ð T¤ ÐR.€Civ.€P€12.02(6)€(2004).€€Tennessee€€courts€have€recognized€the€authority€of€a€trial€court€to,€on€itsÐ =  Ðown€motion,€dismiss€a€complaint€for€failure€to€state€a€claim€upon€which€relief€can€be€granted.€Ð & v ÐòòHuckeby€v.€Spangleróó,€521€S.W.2d€568,€571€(Tenn.€1975);€òòLackey€v.€Carsonóó,€886€S.W.2d€232,€232Ð  _ Ð(Tenn.€Ct.€App.€1994).€€We€believe€that€a€trial€court€likewise€has€the€authority€to€deny€a€motion€toÐ ø H Ðamend€a€complaint€when€the€proposed€amendment€fails€to€state€a€claim€upon€which€relief€can€beÐ á 1  Ðgranted.Ð Ê   ÐÌà  àIn€òòTrau„Med€of€America,€Inc.€v.€Allstate€Insurance€Co.óó,€71€S.W.3d€691,€696ð!ð97€(Tenn.Ð œì  Ð2002),€the€Tennessee€Supreme€Court€restated€the€standard€of€review€when€a€trial€court€grants€aÐ …Õ  Ðmotion€to€dismiss€under€Rule€12.02(6).€€òòIdóó.€€In€òòTrau„Medóó,€the€supreme€court€explained€as€follows:Ð n¾  ÐÌà8  àA€Rule€12.02(6)€motion€to€dismiss€only€seeks€to€determine€whether€the€pleadingsÐ @ Ðstate€a€claim€upon€which€relief€can€be€granted.€€Such€a€motion€challenges€the€legalÐ )y Ðsufficiency€of€the€complaint,€not€the€strength€of€the€plaintiffððs€proof,€and,€therefore,Ð b Ðmatters€outside€the€pleadings€should€not€be€considered€in€deciding€whether€to€grantÐ ûK Ðthe€motion.€€In€reviewing€a€motion€to€dismiss,€the€appellate€court€must€construe€theÐ ä4 Ðcomplaint€liberally,€presuming€all€factual€allegations€to€be€true€and€giving€theÐ Í Ðplaintiff€the€benefit€of€all€reasonable€inferences.€€It€is€well„settled€that€a€complaintÐ ¶ Ðshould€not€be€dismissed€for€failure€to€state€a€claim€unless€it€appears€that€the€plaintiffÐ Ÿï Ðcan€prove€no€set€of€facts€in€support€of€his€or€her€claim€that€would€support€relief.€Ð ˆØ ÐGreat€specificity€in€the€pleadings€is€ordinarily€not€required€to€survive€a€motion€toÐ qÁ Ðdismiss;€it€is€enough€that€the€complaint€set€forth€ð ða€short€and€plain€statement€of€theÐ Zª Ðclaim€showing€that€the€pleader€is€entitled€to€relief.ðð€€òòWhite€v.€Revco€Disc.€Drug€Ctrs.,Ð C“ ÐInc.óó,€33€S.W.3d€713,€718€(Tenn.€2000)€(citing€Tenn.€R.€Civ.€P.€8.01).€€We€review€theÐ ,| Ðtrial€courtððs€legal€conclusions€òòde€novoóó€without€giving€any€presumption€of€correctnessÐ e Ðto€those€conclusions.ÐþNÐ Ð  ÐÌòòIdóó.€(citations€omitted).Ð Ð!   ÐÌà  àIn€their€motion,€the€Whites€have€alleged€Amandaððs€failure€to€file€an€annual€report€and€failureÐ ¢#ò" Ðto€post€a€contractorððs€bond€as€grounds€for€piercing€the€corporate€veil.€€They€have€not€alleged€thatÐ ‹$Û# ÐAmanda€has€engaged€in€any€conduct€that€would€ordinarily€warrant€disregarding€the€corporate€entity,Ð t%Ä $ Ðsuch€as€€fraudulently€disposing€of€assets,€commingling€funds,€or€undercapitalizing€the€corporation.€Ð ]&­!% ÐIn€fact,€the€Whites€admit€in€their€brief€to€this€Court€that€Amanda€had€committed€no€fraud.€€AÐ F'–"& Ðcorporate€veil€will€be€pierced€only€under€compelling€circumstances,€such€as€ð ðwhere€the€corporationÐ /(#' Ðis€created€or€used€for€an€improper€purpose,€or€where€the€corporate€form€has€been€abused.ðð€€òòSchlaterÐ )h$( Ðv.€Haynieóó,€833€S.W.2d€919,€925€(Tenn€Ct.€App.€1991)(quoting€C.J.S.€òòCorporationsóó,€ðð€9,€pp.€274,Ð *Q%) Ð274).€€Therefore,€accepting€as€true€the€two€allegations€pled€in€the€Whitesðð€motion€to€substituteÐ ê*:&* Ðdefendants,€we€conclude€that€the€facts€alleged€failed€to€state€a€claim€for€piercing€the€corporate€veil.Ð Ó+#'+ ЇÓ  Óò òòòConclusionóóó óÐ ° ÐÓ  ÓÌà  àFor€the€foregoing€reasons,€we€affirm€the€trial€courtððs€denial€of€the€Whitesðð€motion€to€join€theÐ Ñ Ðofficers,€shareholders,€and€directors€of€Amanda.€€Costs€of€this€appeal€are€taxed€against€theÐ jº Ðappellants,€Charles€and€Claudette€White,€and€their€surety,€for€which€execution€may€issue€ifÐ S£ Ðnecessary.Ô#†XÊ_XXXh #ÔÐ < Œ ÐÌÌÌà  àà ` àà ¸ àà  àà h àà À àà  à___________________________________€Ð à 0  Ðà  àà ` àà ¸ àà  àà h àà À àà  àDAVID€R.€FARMER,€JUDGE