Reverse Piercing of Corporate Veil Allowed
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Reverse Piercing of Corporate Veil Allowed

Siblings were equal shareholders in a privately held company. Following judgments against the defendant shareholder on behalf of the other shareholder individually and derivatively, she sought to recover the outstanding amount of the individual judgment. The trial court held, as a matter of first impression in Tennessee, that a shareholder may pierce the corporate veil of the corporation to hold another shareholder personally liable when (1) the plaintiff shareholder has a personal judgment against the corporation and (2) the other shareholder acted as a dominant or controlling shareholder to the detriment of the corporation or its shareholders. The appellate court affirmed in favor of the non-dominant shareholder and assessed costs against the defendant dominant shareholder.

Judd v Guye