### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE September 6, 2001 Session VP BUILDINGS, INC. v. POLYGON GROUP, INC., ET AL 

### . Appeal from the Chancery Court for Montgomery C ounty No. 99-08-0100 Carol Catalano, Chancellor

No. M2001-00613-COA-R3-CV - Filed January 8, 2002

In this appeal the sole shareholder and director of Polygon appealsthe trial

court’sdecision

to hold her per sonally lia

ble for a debt owe d by Polygon . The cor porate o fficer

contracted to do bu siness in Tenness ee, knowing that Pol ygon was not qualifi ed to do business here and knowing that Polygon had not filed an a n nual report in three years, which made it subject to administrative dissolution. After sui t was filed ag ainst Polyg on, the sha reholde r encumb ered all of the c orporat ion’s ass ets. Further, after she was sued personally, she filed to have Polygon’s charter retroactively reinstated. The trial court held that the shareholder abused the corpor ate form, that the corpora

te entity s hould be disregarded and that the sole shareholder and dire ctor shou

ld be held persona lly liable. We affirm the deci sion of the

trial cou rt. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed and Remanded

P ATRICIA J. C OTTRELL , J., deliver ed the opinion of the

court, in which B EN H. C ANTRELL , P.J., M.S., and W ALTER C. K URTZ , S P

. J., joined. Roger A. Maness, Clarksville, Tennessee, for the appellant, Da wn Schmuck.
Michael K. Williamson, Craig Hargrow, Clarksville, Tennessee, for the a ppellees, First Missionary Baptist Church of Clarksville, Inc., Fred Dale, Trustee.
OPINION
We find it helpful to provide a brief history of how this case, and the remaining par ties, are before us. I. Case History

First Missionary Baptist Church of Clarksville, Inc. (“Church”) and Broady Construction, LLC (“Broad

y”) ente red into a contra ct for Br oady toconstruct a building for Church. Broady hired Polygon Group, Inc. (“Polygon”) as a subcontractor to provide a pre-engineered steel building and-2-

canopy for $154,100. VP Builders (“VP”) sold materials to Polygon for the co mpleti on of this project.

VP filed a complaint against Polygon, Broady, Church and Fred Dale, who was the trustee for Church, in which it a

lleged th at i t had sol d Polygon $95,552 worth of materials that Polygon incorporated

into the bu

il d ing and tha

t Polygon ha

d not paid V

P for those

materia ls. VP also properl y perfected a mate

rialman’ s lien aga

inst the property of the Church and sought to enforce the lien.

Church and Mr. Da le, represented jointly, answered VP’s complaint and asserte d an affirmative defense that Church had paid Polygon $154,092 and that Polygon either wilfully or negligen tly failed to pay VP. Church and Mr. Dale also filed a cross-claim aga inst Polygon, for any amount that Church owed to VP and for punit ive dama ges, in ad dition to a t

hird-pa rty claim aga

inst Dawn W. Schmuck, who is the sole shareholder, director and officer of Polygon, seeking to pierce the corporate veil of Polygon and hold Ms. Schmuck individually liable for her misconduct and that of Polygon. Ms . Schmuck

answer ed the thi rd-par ty compla

int denyin g that she

was indivi dually liable to C hurch asa result o f Polygon’ s non-payment for material

. Polygon answer

ed VP’s c omplaint a

nd admitte d that it had re ceived the materials for the building from VP and als o admitted that it had not paid VP for those materials, but disputed the amount it owed to VP. In answer to the cross-complaint, Polygon admitted it had been pa id in full by Church and Mr. Dale but failed to pay VP for a portion of the mater ials used.

VP voluntar

ily dismissed its claim

against B roady. The parties remaining, VP, Polygon, Church and Mr. Dale, stipulated that VP was entitled to a judgme

nt for the amount of

its lien ag ainst Church and Mr. Dal e and t hat it wasentitled t o the lien amount plu s prejudg ment inter est agai nst Polygon. Church pa

id VP the a

mount in disp

ute and th e other p arties, C hurch and Mr. Dale against Polygon and Ms. Schmuck, went to trial. The trial court found Po lygon liable and Ms. Schmuck persona lly liable in the amount of $88,701 and declined to award Church and Mr. Da le punitive damages

. II. Findings of Fact Regarding Polygon

The trial court in this ca se gave the factual basis for its holding on the record, and the following factua

l stateme nts are ta ken from the cour t’s findings of fact. In January of 1992 Polygon began its existen ce as a Kentuc ky corpo ration. M s. Schmuck

is the sole

stockhold

er, the o nly direc tor and the president of Polygon. At the time of its organization, the first meeting o f th e shareholders was conducted. The n ext meeting was held in January of 1993. All the meetings between January of 1993 through 2000 are documented by a computer-generated r epetition of the minutes of the year before. This generation of minutes cost the c orporation nothing.-3-

In March of 1996 the state of Kentucky administratively dissolved this co rporat ion for failure of Polygon to file annual reports, which required an a nnu al filing fee. The annual reports went unfiled for several years.

At somepoint, Ms. Schmuck p revaile d upon her

husband to

leave a high paying job and to
come to work fo

r Polygon. In 1998, Po ly go n lost money in its business operation, a total of $146,118. In that year Ms. Schmuck paid herself and her husband a total of $106,650.

On Novembe

r 20, 1998 , Ms. Schmuc

k entered into a co ntract o n behalf of Po lygo n with Broady to construct a building for Church, which was located in Tennessee

. Polygon did not, and
never has, qua lified to d o businessin the state of Tennessee, which would have required it to pay a fee. At the time that Ms. Schmuck entered this contract she knew that Polygon was losing money. She also admitted that there was another lawsuit pending against Polygon at the time she entered the contract.
The income tax return for Polygon for 1999 indicated that the corpora tion again lost money in that year in the amount of $141,473. Ms. Schmuck, through Polygon, pa id herse lf and her husband a total $79,708 that year. Polygon finished erecting the steel building fo r Church, an d Church p aid Polygon in full, $154,100. Polygon did not pay VP for the steel that VP provided to Polygon for the building. VP filed a lien on Church’s property, and Church is now subject to foreclosure. O f the monies that Church paid to Poly gon, $50,9 90 was pa id on February 11, 1999, and in the two (2) years prior to trial Polyg on had not

paid VP an

y amount on

the contr act.
Af ter VP filed su

it against Polygon, Pol

ygon borr owed $300 ,000 aga

inst its only

asse t, a building. Ms. Schmuc

k testifie d that this r

eprese nted all o f the equ

ity in the c orporat

ion’s a ssets

. She borro wed all sh

e could. M s. Schmuck

told the cour t that she p aid bills, other than the money that she owed to VP, with this money, but provided the court with no documentary evidence as to wh at she paid. Further, she also did not provide any other documentary evidenc e a s to how th e $300,000 was spent.

The trial cou

rt c haracteri zed her behavior as “I’ve got this corpor ation out there. I don’t have to worry about what happens. It’s been sued. But I don’t have to worry about it.” Church then sued Ms . Schmuck personally on the basis that Polygon had been paid all that it was ow ed b y Church. After Ms. Schmuck was personally sued and rea li zed that she was exposed to personal liability she got her corporate rec ords in c orrect order. M s. Schmuck

then cal led her c orporat

e attorney and was advised to prepare and file the annual reports. Thereafter, she f iled reports for 1996 through 1999, and paid for each of t hem to be filed with the state of Kentucky. As a result, she received a reinstatement notice for the c orporation.

Ms. Schmuck testified that she did not receive notice that Polygonwas being dissolved for failure to file annual reports beca use the c orporate address had changed seve ral times. The court noted that Polygo n had bee n incorpo rated sin ce 1992 a nd that Ms. Schmuck f

iled annu al repor

ts in-4-

1993 and 1994. “It’s not a matter of [the state] sending n otice tha t your cor

poration is administr atively dissol ved as muc h as it is kno wing, like

income ta

x, you’re supposed

to file annually a repor t with the s tate of K

entucky a nd pay a f

ee.” Ms. Schmuck te stified th at sh e had formedother corporations and that these other corpora tions are subject to her management and control. Further, she testified that she was aware that at lea st one other of h er corporations was administr atively dissolved for

failure to file annual reports. Therefore, the cour t found, she is not
someone who is unaware of what is required for a corporationto do business in the practical sense. The court sta

ted that it

thought t hat the on ly reason that Ms. Schmuck did not file the report was because she didn’t want to pay the fee.

As it stood at the time of trial, Polygon owed money to Church, who had paid for the steel in its building twice. The only s harehol der, dir ector, a nd manage

r of Polygo n had enc

umbered all of its assets after suit was filed; therefore, Polygon could not pay Church. Ms. Schmuck was, at the time of trial, working for Polygon, but not being paid, and her husband no longer worked for Po lygon, but for one of the other cor poration s she owned. The court state d that th e managemen t decisions not to pay what monies were received wer e made b y Ms. Schmuc k and were for the personal benefit of herself and her husband al one. Further, the court said that without proof and documentation it was notsatisfie d that Ms. Schmuck should not be personally liable. “If she in good faith made all those decisions, the evidence should be here f or everyone to see.”
Other relevant evidence presented at tria l was that the initial capital contribution to Polygon
was $500. Ms. Schmuck also testified that with the $300,000 borrowed on Polygon’s building, she purchased

the building on a lea se/purchase arrangement, paid other creditors, including VP, thereby releasing liens on the property of other owners, paid

some overdue taxes, and that some of the money went to pay Polyg on’s twen

ty to twent

y-one em ployees. However, at trial she did not provide any documentation to support these cl aims

. In 1998, Polygon provided Ms. Schmuck with a Land Cruiser at a cos t o f about $1800 per month, and in 1999 Polygon and another corporation formed by Ms. Schmuck shared payments to provide her a Lexus, which cost appr oximately $950 per month. Ms. Schmuc

k’s only direct c ontact wi

th the Church was a meeting with the Pastor, but no contractual matters were discussed.

The trial court held Ms. Schmuck personally liable to Church for $88,701, the amoun t of VP’s lien on Church.
III. Pie rcing the Corpora te Veil
The sole issue for our review is whether the actions of the appellant, Ms. Dawn Schmuck,
were sufficient to justify piercing the corporate veil of Polygon and impose personal liability on her.
Conditions under which the corporate entity will be disregarded vary ac cording to the circumstances present in the case, and the matter is particularly within the province of the trialcourt. Muroll Gesellschaft M.B.H. v. Tennessee Tape, Inc. , 908 S.W.2d 211, 213 (Te nn. Ct. App. 1995) (citing Electric Power Bd. of Chattanooga v. St. Joseph Valley Structural Steel Corp. , 691 S.W.2d 522 (Tenn. 1 985)); Piper v. A ndrews , No. 01A01-9612-CV-00570, 1997 WL 772127, at *3 (Tenn.1 M s. Schm uck cites Anderson v. Du rbin , 740 S. W.2d 417 (Tenn. Ct . App. 1987) for t he propos it ion that t

he standard the c ourt must foll ow to pie rce t

he corpor ate veil is to f ind that t he true owners e ngaged i n sku ll duggery or downright

fraud. Although the co urt ann oun ced that stan dard in Anderson, the court did not apply it. Instead, this court affir med the trialcourt’s findi ng ther e was no cor porat e li abil it y. Wit hout cor porat e li abil it y, the is sue of di sregarding the corp orate entity sim ply d oes n ot arise . Thu s, Anderson was not a deci sion on the t est for pierc ing th e cor por ate ve il

. Inst ead, in Anderson , the tri al cou rt fou nd th at the o wn er of th e cor por ation had con tracted with the p laintiff in his individual capa city an d tha t the pla intiff w as no t awa re tha t the ow ner w as affiliate d w ith a cor por ation

. Therefor e, t he (con tinue d...)
-5- Ct. App. Dec. 17, 1997) (Perm. app. denied June 8, 1998). Thus, the question of when an individual should be held liable for corporate obligations is largely a factual one. “Each c ase invol vin g disregard of the co rporate entity must

rest upon its special facts.” Muroll Gesellschaft, 908 S.W.2d at 213; Schlater

v. Hayni e , 833 S.W.2d 919, 925 (Tenn. Ct. App. 1991).

Because this case was trie d by the co

urt sitting without a jury, we review the case de novo upon the record with a presumption of correctness of the trial court’s findings of fact. Tenn. R. App. P. 13(d). In the case before us, the decision of the trial court turns, i n par t, on the trial court’s perceptionof the wit

nesses’ candor a

nd truthf ulness. Th

erefor e, this court will give gre at weight to the credibility accorded each witness by the trial judge. Weaver v. Nelms , 7 50 S.W.2d 158, 160 (Tenn. Ct. App. 1987). As set out above, the trial court made thorough findings of fact. Our review of the record leads us to conclude that the evidence does not preponderate against tho se fact ual findings; r

ather, t he reco rd suppor ts them.
There is a pres umption tha t a corpora tion is a distinct legal entity, wholly separate and apart f romits shareholders, officers, directors, or af filiated corporations. In an appropriate c ase and i n fu rtheranceof the ends of justic e, the se parate identity of

a corpor ation may be disca rded and th e individual or individ

uals owning all its stock and assets will be treated as identical to the corporation. Muroll Gesellsc haft , 908 S.W.2d at 213; Schlater , 833 S.W.2d at 925; see also Fidelity Trust Co.
v. Service Laundry Co., 160 Tenn. 57, 61, 22 S.W.2d 6, 7 -8 (1929) ; see generally E.O Bailey & Co.
v. Union Planters Title Guar. Co. , 33 Tenn. App . 439, 232 S.W.2d 309 (1950). Discarding the fiction of the corpora

te entity, or pierc ing the co rporate veil, is ap

propria te when the

corpora tion is liable for a de bt but is without fu

nds to pay t

he debt, a nd the lac k of fundsis due to so me misconduct
on the part of the officers and directors. Muroll Ge sellscha ft , 90 8 S.W.2d a t 213; S.E.A., Inc. v. Southside Leasing Co., et al., No. E2000 -00631-C OA-R3-CV , 2000 WL 1 449852, a t *9 (Tenn . Ct. App. Sept. 29, 2000) (no Tenn. R. App. P. 11 filed); Emergicare Consultants, Inc. v. Woolbright , No. W1998-00659-COA-R3-CV, 2000 WL 1897350, a

t *2 (Tenn . Ct. App. Dec . 29, 2000) (Perm. app. denied. May 14, 2001).

In those cir

cumstanc es, cour

ts may pier

ce the c orporat

e veil to find the “true owners of the entity” liable, Murroll Ge sellscha ft , 908 S.W.2d at 213, or “to impose liability against a controlling shareholder

who has used the corporate entity to avoid h is legal obligations.” Manufact urers Consolidation Serv., I

nc. v. Ro dell , 42 S.W.3d 846, 866 ( Tenn. Ct. A

pp. 2000) . Our cou

rts will disregard the corp oration a s a separ ate entit y upon a showing tha

t th e corporation is a sham or dummy or such action is necessary to accomplish justice. 1 Muroll Ge sellscha ft , 908 S.W.2d at 213;1 (.. .continued)

suit for damages for breach of contract was against

the owner in his indivi dual cap acity and no t as a surrogate for a corpora ti on. Seco nd, Anderson cites Elect ric Power Board of Chattanooga v. St. Joseph Valley Str uctur al St eel Corp. , 691 S.W.2d 522 (Tenn. 1985) as support for its stat ement fraud an d s kull duggery ar e requi red, and Electr ic Power Boa rd stat es the s tandard as t he corporat ion’s “sepa rate ent ity may be disr egarded upon a showing of special circum stances, such as, that t he corporati on is a s ham or dum my so that fai lure t o disregar d it would res ult i n an injustice .” Id. at 52 6. In a ny e ven t, we do not consider t he term “skulduggery” t o be limit ed to fraud or ot her criminal actions. Finall y, the weight of authori ty on this matter s upports the r ule that a corporate entit

y can be d isrega rded if it is a sha m o r du mm y or if such disreg ard is n ecess ary to accom plish justice. (se e citation s abo ve). T he co rpo rate en tity will be disreg arde d on ly “to prev ent w ron g or injustice to the ‘comp lainant.’” Ten nes se e Co ns ol id at ed C oal

v. Home Ice & Coal Co. , 25 Tenn. A pp. 316, 156 S.W.2d 4 54, 460 (19 41).
-6- Tennessee Racquet

ball Inve stors, Ltd. v. Bell , 709 S.W.2d 617, 619 (Tenn. Ct. App. 1986); Oak Ridge Auto Repa ir

Serv. v. City Fin. Co. , 57 Tenn. App. 707, 711, 425 S.W.2d 620, 622 (1967); Fidelity Trust Co., 160 Tenn. at 61, 22 S. W.2d at 7- 8; Em ergicare Cons ultants, Inc., 2000 WL 1897350, a

t *2; Piper , 1997 WL 772127, at *3.
“The principle

of pierc ing the fiction of the corpora te veil is to be ap

plied with great caution and not prec ipita

t ely, since there is a presumption of corporate re gularity.” Schlater , 833 S.W.2d at 925; Emergicare Consultants, Inc. , 2000 WL 1 897350, a t *2; Lindsey, Bradley & Maloy v. Media Marketing Systems, Inc ., No E200-00678-COA-R3-CV, 2000 WL 1875882, at *4 (Tenn. Ct. App. Dec. 15, 2000) (no T enn. R. Ap p. P. 11 filed). The party wishing to negate the existence of such separa te entityha s the burd

en of pro ving fac ts suffic ient to just ify piercing the co

rporate veil. Schlater , 833 S.W.2d

at 925. Wh

ile each decisio n must rest on its spec ific facts, “[g] enerally no one fa ctoris conclusive in determining whether or not to disregard a corpor ate entity; usually a combination of factors is presen t in a par tic ular case and is relied upon to resolve the issue.” Schlater , 833 S.W.2d at 925; Emergicare Consultants, Inc. , 2000 WL 1 897350, a t *2; Lindsey, Bradley & Maloy , 2000 WL 1875882, at *4.
Some factor s the cour

t consi ders in d etermining whether to pierce the corporate veil are whether the corporation was grossly undercapitalized, the nonissuance of stock ce rtifica tes, the s ole ownersh ip of stock b y one indiv

idual, the use of the

corpora tion as an instrumen

tality or business conduit for an individual or another corporation, the diversion of corpora te assets by or to a stockholder

or other entity to th

e detrime nt of cre ditors, the use of the corporation as a subterfuge in illegal transactions, the formationand use o f the cor poration to transf er to it the existing liabilit

y of another person or entity, and the failure to maintain arms leng t h relatio nships amo ng entitie s. Emergic are Consultants

, Inc. , 2000 WL 1897350, at *2 (citing Federal Deposit Ins. Corp. v. Allen , 584 F. Supp. 386 (E.D. Tenn. 1984)).

In her brie

f, Ms. Schm

uck discu sses sepa

rate ly severa l factors involved in this case. For example, she states that the fact that shefavored one creditor over another is not enough to pierce the corporate veil and cites Schlater as support for this st

atement. She also

states tha t just beca

use she dominates and controls the corporation and she encu

mbered its only ass et, that isnot enough to pierce the corp orate ve

il, citing Tennesse e Racque tball Investors

. Finally, sh e argue s that she

did not specifically violate any statute of Tennessee, and so ca nnot be liable.1 M s. Schmuck ass ert s t hat s uch fai lure to get a cer ti fic ate of authorit y does not

affe ct t he val idi ty of the corp orate acts, citing Ten n. Cod e An n. § 48 -25-1 02(f). Re gardless of t he legal consequences of such failure, we are of the opin ion th at it is a relev ant fa ctor in exam ining the so le shar eho lder’s disreg ard o f corp orate form alities.

2 Again, Ms. Schmuck ass ert s t hat t he ret roactive reinsta tem ent o f the co rpo ration rem ove s any que stion a s to the vali dit y of t he corpor ati on’s a cts during the di ssol uti on. We are of t he opinion, how ever, that the sole shareholder’s disr egard of

the r equir ements t o mainta in a c orporat ion in good s tandi ng is releva nt. See Linds ey, Br adley & Maloy , 2000 WL 1875882, at

*4 ( re versi ng the t

ria l cour t’s deci sion to gra nt s umm ary j udgment to t he sol e shar eholder

and dire cti ng the c ourt to consi der a number of fact s, incl uding “whet her the Defendant

was aware of the adminis tra ti ve diss olut ion of M edia M arke ting b y the Secr etary of Sta te, and if so, when he obtained thi s i nformati on and whether he notifi ed Plaintiff. ” )
-7- Whether or not Ms. Schmuck is correct in her argument that no one of these fa ctors standing alone would justify disregarding the corporate entity, her argument f ails to address the fact that the court must look to the

entirety of the ci rcumstan ces to determin

e whethe r to pierc e the cor

porate v eil and ignores a

number of

factor s presen

t in this case. Considering all of the evidence together, we
are of the opinion the trial court correctly disregarded the corporate entity and imposed liability on its sole shareholder.
There is no rea

l dispute th at Ms. Schm

uck exe rcise d “c omplete dominion over [Polygon], not only of finances, but of policy and business practice in respect to the transaction under attack,
so that the corporate entity, as to that transaction, had no separa te mind, will or existence of its own.” Electric Power Bd. of Chattanooga , 691 S.W. 2d 522, 526 (Tenn. 1985). Polygon was initially capitalized with $500, a gross underc apital ization considering the nature of the business in which Polygon is engaged. Polygon issued stock to Ms. Schmuck alone, butno certificate is in the record. Ms. Schmuck made personal loans to Polygon out of her personal funds. She had complete dominion and control over all corporate decisions and actions.

Ms. Schmuck repeatedly failed to observe corpor ate formalities. Polygon was not qualified to do busines s in Tenne ssee, but Ms. Schmuc

k knowingl

y entered into contract here on behalf of the corporation. 1 Her

failure to file required annual reports resulted in administrative dissolution of Polygon by th e state o f Kentuc ky. The c ontract

with Broa

dy and Chur

ch was e xecuted on behalf of Polygon at a

time when

the corp oration h ad been dissolved . Ms. Schmuck

did not attempt to get Polygon’s charter reinstated until after she was persona lly sued.

M s. Schmuck has created many corporations in which she is the sole shar eholder . Sh e admits that she knows what must be done to keep them in good stand

ing with the

State. She

actively engaged in business knowing that she had not filed annual reports and that she had not paid the filing fee. While Ms. Schumck states she never got notice of the dissolution, we agree with thetrial court that such notic e was not

necessa ry for usto attribu

te to Ms. Schmuck a disregard of thecorpora te entity. 2

We also find additional evidence in the record that supports t

he trial c ourt’s decision to h old Ms. Schmuck p ersonally liable. For instance, Ms. Schmuck pai d herself and her husband large

sums-8-

of money in the years th at Polygon l ost money. Ms. Schmuc k said at trial that she was being sued by anot her company at the time that she entered into the contract with VP to provide steel for Church. Additionally, after Polygon was sued, Ms. Schmuck encumbered its only asset.

It is this encumbrance which, at least in part, prevented Churc h from co lle cting from Polygon. Absent valid corporate reasons for this encumbra nce and use o f its procee ds, it would , in
our opinion, be

unjust to a

llow Ms. Sch

muck to hide behind an insolvent corporation. Oak Ridge Auto Repair Serv. , 57 Tenn. App. at 71 1, 425 S.W. 2d at 621 ( where th e meage r record indicated corporation was a mere instrumentality of shareholder and the shar eho ld er refused to surrender propert y to creditor, “it would be a palpable injustice” to allow share ho lder to “use the c orporat e entityas a shi eld” for thwarting foreclosure). Ms. Schmuck distributed those proceeds and failed to pay VP. Excep t for her t estimony, the $300,000 from the equity in the building that Polygon ownedis unaccounted for. Ms. Schmuck argues that the burden of proving facts sufficient “to justify piercing the corporate veil lies with the party asking the tri al court to disregard the separate legal existence of the corporation” and that Church cannot pr

ove that s he did not p ay off ot her legitimate creditors nor can i t prove th at her ot her cor poration s were u sed to dive rt funds. We find t

his argument unavailing.
The Church has proved that it paid Polygon for the building and Polygon failed to use that money to pay its obl igation to VP. The Church has also proved that Ms. Schmuck encumbered Polygon’s only asset, resulting in Church being unable to attach it to satisfy any judgment, and that the money received was not used to pay VP even though it was more than suff icient to do so. Church also prov ed Ms. Sch muck cau sed Polygo n to pay sa laries to her and her

husband and provide her with e xpensive vehicle s.
In the fac e of this proof, Ms. Schmuck cannot rely on the failure of document

ary proo f of use of the money

from Chur

ch or fr om the loa

n on the co

rporatio n’s asse t, all evidence within her control. This court has considered the “inability to demonstrate” a lawful justification for a diversion of funds from one corporation to another as proof of c orporate abuses sufficie nt to justify piercing the corpora

te veil and holding tw o shareholders pe rsonally liable on the debts of

their corporation. Judd’s Inc. v. Muir, No. 03A01-9801-CH-00002, 1998 WL 338212, at *4 (Tenn. Ct. App. June 26, 1998) (perm. app. denied Dec. 7, 1998). In Mu roll Gesellsc haft , when deciding to pierce the corpora te veil we said, “this record is impressive– not from the facts revealed therein, but from the lack of facts revealed.” There, we noted that the record contained not a single chec k, invoice, book entry regarding the transactions at issue, not a single operating statement, balance sheet or tax retur n. Muroll Ge sellscha

ft , 908 S.W.2d at 214.
As in the aforementioned cases, we, like the trial court, are impressed by the lack of evidenc e regarding the corporation’s financial activities in this case. The only evidence of Polygon’s records is one tax return from 1998. There is no documentation of how the $300,000 was distributed. There
was no eviden

ce of pa yment of o ther cr

editors, and no check evid encing pa yment for

“taxes”or to “employees.” The

re is not e ven a list o f Polygon’ s employe es.-9-

Church ha s met its burden of proof and the factors, as they exist in this case, are sufficient for the trial court to decide to pierce the corporate veil. The evidence supports theconclusion that Polygon was a mer

e instrume

ntality fo r Ms . Schmuck , that she abused the corporate form to the extent that the corporation was a sham, and that disregarding the cor porate en tit y is nece ssary to accompl ish justice. The evidenc e does no t prepond erate a gainst the finding of the trial court, and we agree that Ms. Schmuck should be held personally liable for the mone y owed Church.
The judgment of the trial court is affirmed. Costs of this appeal are taxed aga inst the Appellan t, Dawn Schmuck

. The cause is remanded to the trial court for a ny further necessary procee dings.

____________________________________ PATRICIA J. COTTRELL, JUDGE