Tabatha Pamperin v. Streamline Mfg., Inc., et al.

This appeal involves an attempt to pierce a corporate veil. The plaintiff purchased a hot tub from a corporation, paying $3,000 by check and agreeing to finance the balance of $1,178. Unbeknownst to the plaintiff, the two sole shareholders of the corporation had been deadlocked and involved in litigation for almost two years. After the corporation accepted the plaintiff’s $3,000 check, but before it delivered the hot tub, the litigation ended. A jury determined that one of the shareholders held a perfected security interest in practically all of the corporation’s assets, and the judge entered an order recognizing that shareholder’s right to foreclose on the collateral if necessary. Both shareholders filed post-trial motions, then submitted a proposed “agreed amended final order” that was approved by the trial judge. The agreed order provided that, “in lieu of foreclosure,” the secured party-shareholder would be awarded all the assets of the corporation outright. The corporation was left with no assets and ceased to operate. The plaintiff never received her hot tub or a refund of the $3,000 she paid to the corporation. Plaintiff filed the present lawsuit seeking a judgment against the corporation and against the two shareholders individually. The trial court entered a total judgment against the corporation of $17,663.52, which included treble damages and attorney’s fees pursuant to the Tennessee Consumer Protection Act. However, the court refused to pierce the corporate veil to impose liability on the individual shareholders. The plaintiff appeals. We affirm in part, reverse in part, and remand for further proceedings.