FILED

September 3, 1996

Cecil W. Crowson

Appellate Court Clerk

September 3, 1996

FOR PUBLICATION

IN THE SUPREME COURT OF TENNESSEE

AT NASHVILLE

ELI MIKE, AN INDIVIDUAL; (

JAMES A. SCHRAMPFER, AN (

INDIVIDUAL; AND JANE N. (

FORBES, AS TRUSTEE IN (

BANKRUPTCY FOR THE ESTATE OF (

DAVID L. OSBORN, (

(

Plaintiffs-Appellants, (

(

( Davidson Chancery

(

v. ( Hon. C. Allen High, Chancellor 

(

( Appeal No. 01S01-9508-CH-00137

PO GROUP, INC., A TENNESSEE (

CORPORATION; JAMES W. (BILL) (

ANDERSON III, AN INDIVIDUAL; (

AND THE ESTATE OF HAROLD L. (

JENKINS, (

(

Defendants-Appellees. (

For Plaintiffs-Appellants: For Defendants-Appellees:

Gary M. Brown William L. Harbison

Matthew J. Sweeney, III L. Webb Campbell, II

John C. Tishler Andrew J. Pulliam

Tuke, Yopp & Sweeney Sherrard & Roe, P.L.C.

 Nashville Nashville

Denty Cheatham

Cheatham & Palermo

Nashville

O P I N I O N

JUDGMENTS OF TRIAL COURT

AND COURT OF APPEALS REVERSED;

CASE REMANDED. REID, J.
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This case presents for review the decision of the Court of

Appeals, affirming an award of summary judgment in favor of the

defendants. The Court of Appeals held that the plaintiffs' suit charging the

breach by a majority shareholder of a fiduciary duty owed to minority

shareholders is barred by the one year statute of limitations. This Court

concludes that the applicable period of limitations is three years and 

remands the case to the trial court to determine whether plaintiffs' action

was time-barred.

THE CASE

All the individual and corporate parties in this case were

involved in the operation of Po Folks restaurants. The plaintiffs are Eli Mike,

James A. Schram pfer, and Jane N. Forbes, trustee in bankruptcy for David

Osborn. Mike, Schrampfer, and Osborn were minority shareholders in one

or more of the following corporations: Po Louisville, Inc., which operated 

restaurants in Louisville, Kentucky; Po Memphis, Inc., which operated

restaurants in Memphis; and Po Jackson, Inc., which operated a restaurant

in Jackson, Tennessee. The majority shareholder in each of these three

corporations was the defendant Po Group, Inc. The defendants James W.

(Bill) Anderson and Harold L. Jenkins (now deceased) owned equally all the

shares of stock in Po Group, Inc. Anderson and Jenkins also owned shares

of stock in Po Combination, Inc., which owned all the stock in four other

corporations which operated Po Folks restaurants in other locations. 
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Anderson and Jenkins were officers and directors in Po Louisville, Inc.; Po

Memphis, Inc.; Po Jackson, Inc.; Po Group, Inc.; and Po Combination, Inc.

In 1984, Po Combination, Inc. borrowed $2.3 million from

Nashville City Bank. Anderson and Jenkins personally guaranteed a portion

of the loan. In early 1985, the bank declared the loan in default. Pursuant to

a new financing arrangement, the bank agreed to forebear collection of the

$2.3 million loan and to extend an additional $900,000 line of credit to be

used by Po Combination, Inc., Po Louisville, Inc., Po Memphis, Inc., and Po

Jackson, Inc. as operating capital. Po Group, Inc. was formed in order to

facilitate the new financing arrangement. All of the shares in Po

Combination, Inc. and all the shares in Po Louisville, Inc., Po Memphis, Inc.,

and Po Jackson, Inc. owned by Anderson and Jenkins were transferred to

Po Group, Inc. Unlimited guaranty agreements were executed by all the

subsidiaries of Po Combination, Inc., and Po Louisville, Inc., Po Memphis,

Inc., and Po Jackson, Inc. pledged all of their assets and also executed

unlimited guaranty agreem ents to secure the $900,000 line of credit. 

Anderson and Jenkins also executed guaranty agreem ents for the $2.3

million and the $900,000 loans. 

In December 1985, Po Group, Inc. finalized an agreement to

sell the assets of all its subsidiary corporations, including Po Louisville, Inc.,

Po Memphis, Inc., and Po Jackson, Inc., to DineLite Corporation. The

consideration for the sale was the release of all guaranty agreements made
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to Nashville City Bank, including those executed by Anderson and Jenkins,

and the receipt of stock in DineLite. The shareholder resolutions required

for the approval of the sale were adopted by the vote of Po Group, Inc., the

majority shareholder. The proposal was approved, and the transaction

closed on June 30, 1986. 

In September 1986, the plaintiffs filed suit, pursuant to Tenn.

Code Ann. § 48-1-909 (repealed by Acts 1986, ch. 887, § 17.05 and Acts

1987, ch. 242, § 18.05) to enforce their dissenters' rights as minority

shareholders and obtain payment for the fair market value of their stock. In

that suit, the court determined the fair market value of the shares held by

each to be as follows: Mike $325,865.60, Schrampfer $98,341.76, and

Osborn $260,685.48. No payment was made to the plaintiffs because the

corporations had no assets with which to make the paym ents. There were

no insolvency proceedings, and there was no suit by or on behalf of the

corporations to secure payments to the plaintiffs. 

In the present suit, the plaintiffs allege that Po Group, Inc. as

majority shareholder, breached a fiduciary duty owed to the plaintiffs as

minority shareholders. They contend that the sale of the assets owned by

Po Louisville, Inc., Po Memphis, Inc., and Po Jackson, Inc., approved by the

vote of Po Group, Inc. as the majority shareholder in each of those

corporations, and the disposition of the consideration received, rendered the

corporations unable to pay the plaintiffs the value of their stock as
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determ ined by the court in the 1986 proceeding. They contend that the only

consideration of value received in exchange for the corporations' assets was

the release of Anderson's and Jenkins' guaranty agreements. They allege,

in conclusion, that by their action, Po Group, Inc., as majority shareholder,

breached a fiduciary duty owed to the plaintiffs as minority shareholders. 

The plaintiffs also contend that they should be allowed to pierce the

corporate veil of Po Group, Inc. and collect any judgments rendered in their

favor from Anderson and Jenkins personally. 

After the completion of discovery, the defendants Po Group,

Inc., Anderson, and Jenkins filed motions for summary judgment, on several

grounds: they claimed that the suit was barred by the one year statute of

limitations governing breach of fiduciary duties by directors and officers,

Tenn. Code Ann. § 48-18-601; that, in the alternative, the suit was barred by

the three year statute of limitations governing claims for property damage,

Tenn. Code Ann. § 28-3-105; and that there was no material evidence

justifying the piercing of Po Group, Inc.'s corporate veil. The trial court found

that the plaintiffs' claims were barred by the one year statute of limitations

set forth in Tenn. Code Ann. § 48-18-601 and granted the defendants'

motions for summary judgment on this basis. 

The Court of Appeals affirmed. That court held that the statute

of limitations on all of the claims expired on January 1, 1989, one year after

the effective date of Tenn. Code Ann. § 48-18-601. The Court of Appeals
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rejected the plaintiffs' contention that Tenn. Code Ann. § 48-18-601 does not

apply, with the conclusion: "Regardless of how plaintiffs choose to couch

their claim, they are alleging breach of fiduciary duties by officers and

directors, and their suit is barred by the one-year statute of limitations."

STANDARD OF REVIEW

 In determining whether or not a genuine issue

of material fact exists for purposes of sum mary

judgment, courts in this state have indicated that

the question should be considered in the same

manner as a motion for directed verdict made at

the close of the plaintiff's proof, i.e., the trial court

must take the strongest legitimate view of the

evidence in favor of the non-moving party, allow all

reasonable inferences in favor of that party, and

discard all countervailing evidence. Then, if there

is a dispute as to any material fact or any doubt as

to the conclusions to be drawn from that fact, the

motion must be denied. The court is not to

"weigh" the evidence when evaluating a motion for

summ ary judgm ent. The court is simply to

overrule the motion where a genuine dispute

exists as to any material fact. The phrase

"genuine issue" contained in Rule 56.03 refers to

genuine factual issues and does not include issues

involving legal conclusions to be drawn from the

facts. The critical focus is limited to facts deemed

"material," which is to say those facts that must be

decided in order to resolve the substantive claim

or defense at which the motion is directed.

Byrd v. Hall, 847 S.W .2d 208, 210-11 (Tenn. 1993) (citations omitted). 

ANALYSIS
1

The plead ings do no t put at issue w hether the co mplaint state s a

cause o f action u pon w hich the plaintiffs a re entitled to relief. 

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I

Since summary judgment was granted on the ground that the

plaintiffs' causes of action were barred by the one year statute of limitations,

the Court must determine which statute of limitations applies to the plaintiffs'

suit, which depends upon the nature of the cause of action alleged. The

gravamen of a complaint and the injury alleged determine which statute of

limitations applies. Vance v. Schulder, 547 S.W .2d 927, 931 (Tenn. 1977). 

To ascertain the gravamen of the action, the Court must look to the basis for

which damages are sought. Bland v. Smith, 197 Tenn. 683, 277 S.W.2d

377, 379 (1955). 

The complaint alleges that the majority shareholder, Po Group,

Inc., breached a fiduciary duty owed to them as minority shareholders.1

Tennessee courts have stated that majority shareholders owe a fiduciary

duty to minority shareholders. See Nelms v. Weaver, 681 S.W.2d 547, 549

(Tenn. 1984); Dale v. Thomas H. Temple Co., 186 Tenn. 69, 208 S.W.2d

344, 352 (1948); McCampbell v. Fountain Head R.R. Co., 111 Tenn. 55, 77

S.W. 1070, 1073 (1903); Johns v. Caldwell, 601 S.W .2d 37, 41 (Tenn. Ct.

App. 1980). However, those cases are significantly different from the

present case in the substance of the allegations. In the present case, the

plaintiffs allege that the proceeds from the sale of corporate assets were
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unfairly distributed by the defendant Po Group, Inc. to the defendants

Anderson and Jenkins. The complaint does not otherwise define the duty or

the wrong. The allegations do not indicate clearly the "gravamen of the

action." The legal wrong of which the plaintiffs complain is uncertain. The

complaint does not charge fraud; however, there is found in the complaint

the statement that the breach of fiduciary duty by the defendants included

"the diversion and/or misappropriation" of assets. Even then, the legal duty

that was violated is not entirely clear.

The plaintiffs seek no judgment of liability for wrongdoing

against Anderson and Jenkins. The complaint against Anderson and

Jenkins is that their relationship with the majority shareholder, Po Group,

Inc., was such that the plaintiffs should be allowed to pierce the corporate

veil and collect from the individual defendants the value of their shares of

stock. 

II 

There appears to be no Tennessee statute or decision directly

addressing the period of limitations for the breach of a fiduciary duty by a

majority shareholder. The statute which the trial court and the Court of

Appeals found applicable, Tenn. Code Ann. § 48-18-601, is part of the

Tennessee Business Corporation Act which was enacted in 1986. The Act,
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by its terms, became effective on January 1, 1988. Section 48-18-601

provides:

Any action alleging breach of fiduciary duties

by directors or officers, including alleged violations

of the standards established in § 48-18-301 [for

directors], § 48-18-302 [for directors] or § 48-18-

403 [for officers], must be brought within one (1)

year from the date of such breach or violation;

provided, that in the event the alleged breach or

violation is not discovered nor reasonably should

have been discovered within the one-year period,

the period of limitation shall be one (1) year from

the date such was discovered or reasonably

should have been discovered. In no event shall

any such action be brought more than three (3)

years after the date on which the breach or

violation occurred, except where there is

fraudulent concealment on the part of the

defendant, in which case the action shall be

commenced within one (1) year after the alleged

breach or violation is, or should have been,

discovered.

In American Network Group, Inc. v. Kostyk, 804 S.W.2d 447

(Tenn. Ct. App. 1990), the Court of Appeals applied Section 48-18-601 to a

cause of action against a corporate officer for breach of fiduciary duties that

had arisen prior to the effective date of the statute. The Court of Appeals

held that the application of Section 48-18-601 to a cause of action that arose

prior to January 1, 1988 resulted in the former limitation period of six years

being shortened to one year, beginning on the effective date of the statute,

January 1, 1988, and ending on January 1, 1989. 

Under the rule set forth in Kostyk, any right the plaintiffs may
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have had to recover from Anderson or Jenkins for breach of their fiduciary

duties as officers or directors of any of the three subsidiary corporations or

Po Group, Inc. expired on January 1, 1989, prior to the date on which the

present suit was filed, June 30, 1989. The plaintiffs acknowledge that

Section 48-18-601 bars recovery from Anderson or Jenkins for any breach

of fiduciary duties as officers or directors.

However, the plaintiffs dispute the applicability of Section 48-

18-601 to the corporate defendant Po Group, Inc., the majority shareholder

of each of the three subsidiary corporations in which the plaintiffs owned

stock. When this transaction was consummated on June 30, 1986, Tenn.

Code Ann. § 48-1-907 (1984) (repealed Jan. 1, 1988) provided that any sale

by a corporation of all or substantially all of its property must have the prior

approval of shareholders owning at least two-thirds (2/3) of the stock of the

corporation. Thus, the action of Po Group, as the majority shareholder in

the three subsidiary corporations, was essential to the consummation of the

sale.

In this case, the allegation of wrongdoing is directed at Po

Group, Inc., which was not an officer or director of the subsidiary

corporations. In its interpretation of Section 48-18-601, the Court of Appeals

failed to distinguish between breach of fiduciary duty by officers and

directors and breach of fiduciary duty by majority shareholders. The Court

of Appeals' interpretation of Section 48-18-601 to include shareholders is not
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supported by prior cases dealing with statutes of limitations. In Lawman v.

Barnett, 177 S.W.2d 121, 124 (Tenn. 1944), the Court held that a statute of

limitations which, by its terms, barred recovery under a promissory note did

not prevent the holder of the note from foreclosing on a mortgage that

secured the note. The Court noted that a statute of limitations should not be

applied if a strained construction of the statute is necessary. Id. at 128. In

Resolution Trust Corp. v. Wood, 870 F. Supp. 797 (W.D. Tenn. 1994), a

federal case applying Tennessee law, the amended complaint alleged that

the directors and officers of a failed bank were liable for breach of implied

contract, breach of fiduciary duty, gross negligence, negligence, and

negligence per se. In holding that Tenn. Code Ann. § 48-18-601 applied

only to the cause of action that was covered by the express terms of the

statute, the court stated:

As an initial matter, the Court must note that

the defendants' attempt to lump all five causes of

action under Tenn. Code Ann. § 48-18-601, the

statute regarding breaches of fiduciary duty, is

inappropriate. The statute applies expressly to

breaches of fiduciary duty. Tenn Code Ann. § 48-

18-601. Hence, for the Court to include other

causes of action which were not addressed by the

state legislature, the Court would be operating in a

legislative posture as opposed to its judicial role.

Id. at 806. 

"[I]t is a rule of statutory construction that . . . the mention of

one subject in a statute means the exclusion of other subjects that are not
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mentioned." State v. Harkins, 811 S.W.2d 79, 82 (Tenn. 1991). When a

statute expressly mentions certain categories and not others, the "omission

is significant, and it would be inappropriate for this Court to imply an entirely

new topic into a statute that does not seek to address it in the first instance." 

Id. On this point, it is significant that Tenn. Code Ann. § 48-18-601 appears

in Chapter 18 of Title 48, a chapter dealing exclusively with directors and

officers. There is no corresponding provision in Chapter 17 which relates to

the shareholders. 

Since, by its express terms, Section 48-18-601 applies to the

breach of fiduciary duties by "directors or officers," and not to majority

shareholders, its one year limitations period does not apply to the actions of

Po Group, Inc. in its capacity as majority shareholder of the three subsidiary

corporations.

III

The allegations of the complaint in this case perhaps approach

the common law action of deceit. In Vance v. Schulder, 547 S.W.2d 927,

933 (Tenn. 1977), the Court held that the applicable statute of limitations

was three years in a suit based on the claim that the sale of the plaintiff's

stock for less than its full value was induced by the fraudulent

representations of the defendant. In that case, a minority shareholder sued

the directors of the company alleging that the directors' misrepresentations
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of the value of the plaintiff's stock induced the plaintiff to sell his stock at less

than its fair value. The Court held that the claim was grounded in the tort of

deceit for which the statute of limitations is three years. Id. at 932. In a

federal case interpreting Tennessee law, Cumberland & Ohio Co. of Texas,

Inc. v. First Am. Nat'l Bank, 936 F.2d 846, 848 (6th Cir. 1991), cert. denied,

502 U.S. 1034, 112 S. Ct. 878 (1992), the Sixth Circuit Court of Appeals

held that the three year statute applied in a suit for damages incurred

because the plaintiff was forced by the defendant bank, pursuant to a

financing agreement, to sell property for less than its fair value. The court

found that the substance of the alleged wrong, economic duress, was

indistinguishable from deceit, and that the suit was barred by the three year

statute of limitations. Id. at 849. Other jurisdictions which have considered

the limitations period applicable to actions by minority shareholders against

majority shareholders alleging breach of fiduciary duty have held that such

actions are governed by the statute of limitations for tortious injury to

property. See, e.g., Kirley v. Kirley, 521 N.E.2d 1041, 1042 (Mass. Ct. App.

1988); Crosby v. Beam, 615 N.E.2d 294, 300 (Ohio Ct. App. 1992); Russell

v. Campbell, 725 S.W.2d 739, 744 (Tex. Ct. App. 1987). There is a

"growing common law trend to declare 'that a breach of fiduciary duty is a

tort.'" Kirley, 521 N.E.2d at 1043. The conclusion is that the applicable

limitations period is three years as provided in Tenn. Code Ann. § 28-3-105. 

IV
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The plaintiffs contend that the limitations period started to run

when the sale to DineLite was closed, which was less than three years prior

to the date the suit was filed, and that, therefore, the suit is not barred by the

three year statute. The defendants' position is that the period began when

the plaintiffs were furnished disclosure statements regarding the sale and

that, therefore, the suit is barred by the statute.

The trial court, in ruling on the motion for summary judgm ent,

did not rule on when the limitations period commenced. Consequently, this

issue must be determined on rem and. 

V 

In its order denying the defendants' motion to dismiss, the trial

court held that "there are sufficient allegations in plaintiffs' complaint that, if

proven, would permit them to pierce the corporate veil and sue defendants

in their individual capacities." Because the trial court later concluded, after

the defendants filed motions for summary judgment, that all of the plaintiffs'

claims are barred by the one-year statute of limitations, it did not address

that issue further.

Ordinarily, a determination of whether to pierce the corporate

veil is not appropriate for summary judgment. In Electric Power Bd. of

Chattanooga v. St. Joseph Valley Structural Steel Corp., 691 S.W.2d 522,
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526 (Tenn. 1985), the Court stated:

The conditions under which the corporate

entity will be disregarded vary according to the

circumstances present in each case and the

matter is particularly within the province of the trial

court. Moreover, a determination of whether or not

a corporation is a mere instrumentality of an

individual or a parent corporation is ordinarily a

question of fact for the jury.

In the present case, there are genuine issues of material fact

which preclude summary judgment on the plaintiffs' attempt to pierce the

corporate veil of Po Group and hold Anderson and Jenkins personally liable.

CONCLUSION

 The period of limitations applicable to the allegations stated in

the complaint is three years. Because the record presents genuine issues of

material fact which preclude summ ary judgm ent on whether the plaintiffs

may pierce the corporate veil of Po Group, Inc., Anderson and Jenkins shall

remain as defendants.

The judgment of the Court of Appeals affirming the trial court's

grant of summary judgment in favor of the defendants is reversed, and the

case is remanded to the trial court for further proceedings. 

Because the case is reversed and remanded for trial, the
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discretionary costs judgment against the plaintiffs is vacated.

Costs of this appeal are taxed to the appellees.

_________________________

REID, J.

Concur:

Birch, C.J., Drowota, Anderson,

 and White, JJ.