                IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                               December 13, 2011 Session

 DELTA DEVELOPMENT CORPORATION, ZOO CONCESSION AND
          GIFT, INC., and SMITH & ROGERS COMPANY
                               v.
F. FANI GULF INTERNATIONAL, GULF INTERNATIONAL, FAROKH
           FANI, and F. FANI/GULF INTERNATIONAL
                               V.
FARIBORZ FERDOWSI; LELA FERDOWSI; FARZIN FERDOWSI; ZIBA
  FERDOWSI; FARSHEED FERDOWSI; TALIEH FERDOWSI; AZAR
  FERDOWSI; CYRUS AZHDARI; HOMAYOUN AMINMADANI; and
                      ZOHRE AMINMADANI

            Direct Appeal from the Chancery Court for Davidson County
                 No. 04-687-I    Claudia C. Bonnyman, Chancellor


                  No. M2010-02437-COA-R3-CV - Filed April 3, 2012


Defendants made a series of loans to Plaintiffs and a dispute arose as to the interest and
principal owed. A judgment was entered in favor of Defendants. However, Defendants
appealed the award, claiming that the trial court erred in admitting evidence, which allegedly
reduced the judgment amount, and in refusing to hold all shareholders of the Plaintiff
companies liable for the judgment. Plaintiffs also claim, on appeal, that the Special Master
and the trial court set an incorrect “starting point” for determining the judgment owed. We
affirm the Special Master and the trial court in all respects.

 Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Affirmed

A LAN E. H IGHERS, P.J., W.S., delivered the opinion of the Court, in which D AVID R. F ARMER,
J., and H OLLY M. K IRBY, J., joined.

Charles K. Grant, Lawrence C. Maxwell, Nashville, Tennessee, for the appellants, F. Fani
Gulf International, et al

William T. Ramsey, Philip D. Irwin, Nashville, Tennessee, for the appellees, Delta
Development Corporation, et al
                                                OPINION

                                I.   F ACTS & P ROCEDURAL H ISTORY

      Fariborz Ferdowsi (“Fariborz”) and Farokh Fani (“Mr. Fani”) are natives of Iran who
moved to the United States in the late-1970s during the Iranian Revolution. The men
apparently enjoyed a close personal and business relationship until this action arose.

        In the late 1980s and early 1990s, Fariborz became involved in a number of business
ventures including Delta Development Corporation (“Delta”) and Zoo Concession and Gift,
Inc. (“Zoo Concession”), of which he claims to be the sole shareholder, and Smith and
Rogers Company (“S & R”) (collectively, “Plaintiff Companies”), of which he claims to be
both a director and president but not a shareholder. According to Fariborz, Delta was formed
to acquire both land and the necessary items to develop a zoo in middle Tennessee. A zoo
facility was opened in the Joelton area, and Zoo Concession was formed to sell food and
concessions there,1 but the facility and its assets were subsequently sold to a non-profit
company which operates the Nashville Zoo at Grassmere. S & R is a “gift and floral shop.”

        Fani owns and controls three entities including F. Fani Gulf International, Gulf
International, and F. Fani/Gulf International, (collectively, with Mr. Fani, “Fani”), which sell
decorative and floral supplies/items. Beginning in the early-1990s and continuing until 2002,
Fani made a series of loans for “substantial sums of money” to Fariborz and Plaintiff
Companies, some evidenced by promissory notes or by checks.2 Fariborz repaid a portion
of the loaned money, but a dispute arose as to the balance owed and to the interest charged.3
On March 5, 2004, Plaintiff Companies–Delta, Zoo Concession and S & R–filed a
declaratory judgment action against Fani claiming that usurious interest had been charged,
and seeking a determination of interest owed.

       Fani filed a counterclaim alleging that Plaintiff Companies had defaulted on the
promissory notes and had attempted repayment with bad checks. Fani also filed a third-party
complaint against Fariborz arguing that he had disregarded the corporate form of Plaintiff
Companies by commingling the assets of each with one another and with his personal assets,
and therefore, that he should be held jointly and severally liable for the debts and obligations
of Plaintiff Companies. Fani subsequently amended its third-party complaint to name as

        1
            According to Fariborz, Zoo Concession has been dissolved.
        2
            Promissory notes, which list a Plaintiff Company as the “Maker,” were executed by Fariborz.
        3
        The chancery court found that the interest charged by Fani was not usurious because no interest was
paid. The interest rate was set at 10%.

                                                     -2-
third-party defendants, alleged “current or former shareholders of one or more of the
[Plaintiff Companies]” Lela Ferdowsi (Fariborz’s wife); Farzin (Fariborz’s brother) and wife
Ziba Ferdowsi; Farsheed Ferdowsi (Fariborz’s brother); Talieh Ferdowsi (wife of Fariborz’s
brother Faran); Azar Ferdowsi (Fariborz’s sister); Cyrus Azhdari;4 and Homayoun “Homey”
and wife Zohre Aminmadani. Fani alleged that each third-party defendant had “approved
of or ratified the actions of Fariborz Ferdowsi in commingling the funds of the [Plaintiff
Companies] with his personal assets and with the assets of other corporations which he owns
or controls” and therefore, that each should be held jointly and severally liable for the debts
and obligations in question.5

        On March 1, 2007, the chancery court entered an order directing that a bench trial be
held based upon the complex accounting issues involved. The order further directed that the
trial of the case would be bifurcated into (1) determining the debt owed and (2) addressing
shareholder liability. On June 7, 2007, the Davidson County Chancery Court appointed a
CPA “to marshal papers and analyze payments to be relied upon in this lawsuit” and to
prepare a spreadsheet of stipulated and disputed loan amounts. Then, on November 13,
2007, the chancery court appointed Ben H. Cantrell as Special Master. The Special Master
heard proof on January 22-25, 2008, and he issued a Report and a Supplemental Report on
July 18, 2008. The Special Master found that “[a]lthough there are transactions involving
Mr. Fani’s companies as well as Mr. Fani personally and transactions involving Mr.
[Fariborz] Ferdowsi’s companies as well as Mr. [Fariborz] Ferdowsi personally, the parties
have treated all the transactions as if they were between Mr. Fani and Mr. [Fariborz]
Ferdowsi individually.” The Special Master found that the appropriate “starting point” for
calculating the debt owed was a schedule, prepared by the parties, showing loan
disbursements and repayments, rather than handwritten letters from Fani which, according
to Fariborz, evidenced a lesser balance owed. He then found that the schedule’s disputed
loans, with the exception of five exhibits, were legitimate and that the schedule’s disputed
payments should be credited to Fariborz.

       Fani moved for entry of a judgment in the amount of $516,032.87, but Plaintiff
Companies proposed judgment in the amount of $145,379.62, alleging errors by the Special
Master. The chancery court referred certain matters, including a review of the spreadsheet
and the proposed opposing orders of judgment, back to the Special Master in a January 16,
2009 order. On February 23, 2009, the Special Master submitted a (second) supplemental


        4
            Cyrus Azhdari is now deceased.
        5
         Fani’s first amended third-party complaint was dismissed without prejudice because it failed to
allege that S & R was currently without funds to pay its debts. However, Fani was allowed to file a second
amended third-party complaint alleging such.

                                                   -3-
report, finding that as of January 31, 2009, Plaintiff Companies owed Fani $509,844.72. On
March 25, 2009, the chancery court confirmed the Special Master’s July 18, 2008 reports,
and on April 14, 2009, it confirmed and adopted the Special Master’s February 23, 2009
(second) supplemental report, including the $509,844.72 judgment.

       The second phase of the trial focused on whether the corporate veil of the Plaintiff
Companies should be pierced so as to hold the third-party defendants personally liable for
the debt owed to Fani. Proof was presented over several days in September 2009 and March
2010. Thereafter, the chancery court issued its lengthy Memorandum and Order on
September 23, 2010. In its order, the chancery court noted that Fariborz had conceded
personal liability for any judgment in favor of Fani, but that he had continued to deny being
an S & R shareholder. Despite his contrary assertions, the chancery court found that Fariborz
was a 35% shareholder in S & R,6 and it held him personally liable for the judgment in favor
of Fani. The chancery court, however, found “no proof that any of the [other] Smith &
Rogers shareholders were involved in wrongdoing” and that Fani “did not carry his burden
to show that the 10 named shareholders engaged in inequitable use of the corporation or
inequitable conduct toward Farokh Fani and his companies.” Thus, it dismissed Lela
Ferdowsi, Farzin and Ziba Ferdowsi, Farsheed Ferdowsi, Talieh Ferdowsi, Azar Ferdowsi,
and Homayoun and Zohre Aminmadani from the third-party complaint.7 Fani timely
appealed.


                                      II.   I SSUES P RESENTED

        Fani presents the following issues for review, as summarized:

1.      Whether the trial court erred in admitting into evidence the “general ledger” and
        certain checks, and in considering such evidence when calculating the judgment
        owed; and

2.      Whether the trial court erred in not holding all third-party defendants individually
        liable.




        6
         The chancery court found that Fariborz was a 35% owner with his wife, Lela, but it could not
“further find how the stock is owned since there was no further proof on the subject of joint ownership.”
        7
         On November 4, 2010, the chancery court entered a [Corrected] Memorandum and Order to reflect
that objections to the Special Master’s reports were heard and to correctly reflect the judgment as
$560,490.72.

                                                  -4-
Additionally, Plaintiff Companies and Third-Party Defendants present the following issue:

3.     Whether the Special Master and the chancery court erred in failing to accept Fani’s
       handwritten statements and sworn testimony as to the appropriate starting point for
       calculating the loan balance.

For the following reasons, we affirm the decisions of the Special Master and the chancery
court.

                                III. S TANDARD OF R EVIEW

       On appeal, a trial court’s factual findings are presumed to be correct, and we will not
overturn those factual findings unless the evidence preponderates against them. Tenn. R.
App. P. 13(d) (2011); Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001). For the evidence
to preponderate against a trial court’s finding of fact, it must support another finding of fact
with greater convincing effect. Watson v. Watson, 196 S.W.3d 695, 701 (Tenn. Ct. App.
2005) (citing Walker v. Sidney Gilreath & Assocs., 40 S.W.3d 66, 71 (Tenn. Ct. App. 2000);
The Realty Shop, Inc. v. RR Westminster Holding, Inc., 7 S.W.3d 581, 596 (Tenn. Ct. App.
1999)). When the trial court makes no specific findings of fact, we review the record to
determine where the preponderance of the evidence lies. Ganzevoort v. Russell, 949 S.W.2d
293, 296 (Tenn. 1997) (citing Kemp v. Thurmond, 521 S.W.2d 806, 808 (Tenn. 1975)). We
review a trial court’s conclusions of law under a de novo standard upon the record with no
presumption of correctness. Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn.
1993) (citing Estate of Adkins v. White Consol. Indus., Inc., 788 S.W.2d 815, 817 (Tenn. Ct.
App. 1989)).

                                       IV. D ISCUSSION

                      A. Admissibility of General Ledger and Checks

       We first address Fani’s argument that the trial court improperly admitted the “general
ledger” and certain checks into evidence. These errors, Fani claims, resulted in Plaintiff
Companies erroneously receiving credit for approximately $1,000,000.00 in loan repayments.

        “Decisions regarding the admission or exclusion of evidence are entrusted to the trial
court’s discretion. Thus, reviewing courts will not disturb these decisions on appeal unless
the trial court has abused its discretion.” State v. Banks, 271 S.W.3d 90, 116 (Tenn. 2008)
(citing State v. Robinson, 146 S.W.3d 469, 490 (Tenn. 2004); State v. James, 81 S.W.3d 751,
760 (Tenn. 2002)). Additionally, trial courts have discretion to determine the applicability
of a hearsay exception. See Arias v. Duro Standard Prods. Co., 303 S.W.3d, 256, 262

                                              -5-
(Tenn. 2010) (citing State v. Stout, 46 S.W.3d 689, 697 (Tenn. 2001); State v. Stinnett, 958
S.W.2d 329, 331 (Tenn. 1997)). An abuse of discretion will be found only where the trial
court “applied incorrect legal standards, reached an illogical conclusion, based its decision
on a clearly erroneous assessment of the evidence, or employed reasoning that causes an
injustice to the complaining party.” Id. (citing Konvalinka v. Chattanooga-Hamilton County
Hosp. Auth., 249 S.W.3d. 346, 358 (Tenn. 2008)).

                                         1.    General Ledger

        Michael Shahsavari (“Shahsavari”), the CFO of Management Resources Company
(“MRC”), a management company owned by Fariborz’s brother Farzin Ferdowsi (“Farzin”)
and Fariborz’s friend, Homayoun Aminmadani (“Homey”), testified that MRC “took over
the financial accounting function for Smith & Rogers” in “[l]ate 2001 and early 2002.” At
that time, MRC began maintaining S & R’s bank account and based upon weekly information
provided by Fariborz, it began maintaining S & R’s accounts payable and producing S & R’s
monthly financial statements. At some point, a single database titled “Delta Trades
International” was created to store data regarding a number of Fariborz’s businesses,
including Plaintiff Companies. The admissibility of the database’s “general ledger” is in
dispute.8

        Before the Special Master, Fariborz’s brother, Faran Ferdowsi (“Faran”), attempted
to testify regarding certain portions of the general ledger. Faran acknowledged that he had
not been involved with S & R prior to its dispute with Fani, but he maintained that once the
instant lawsuit began he was “the person in charge of gathering the information together to
try to discern the payments back and forth.” He stated that his knowledge of the status of
the loans was gained by reviewing documents provided by Fariborz, Fani, and Shahsavari,
and by speaking with each. Fani objected to the general ledger’s admission into evidence,
arguing that the ledger, itself, had not been authenticated:

                [Fani’s counsel]: Your Honor, I have a feeling we’re getting ready to
        start looking at a whole lot of these general ledger pages. And I want to note
        an objection to this witness testifying about those general ledger pages. He’s
        not an employee of Smith & Rogers or any of the other companies, as we’ve
        already determined by reading from his deposition. There hasn’t been anybody
        to testify to authenticate any of these general ledgers or to explain how they
        were prepared or whether they qualify as a business record. So I would object


        8
         Portions of the general ledger were introduced at different times, and thus under different exhibit
numbers, during the proceedings. Fani appears to object, on appeal, to the admission of all general ledger
entries.

                                                    -6-
        to this witness testifying about these records until they have been properly
        qualified.

               [Plaintiff Companies’ counsel]: My response is, number one, we
        produced the general ledgers to them. Number two, Michael Shahsavari said
        people under his employ were the folks that put together the general ledgers.
        Number three, . . . Faran Ferdowsi [] is the company representative here that
        we’ve designated to put this information together.
        ....

               [Fani’s counsel]: I’m noting my objection to this witness testifying to
        records that haven’t been properly authenticated or qualified as reliable
        business records. And Mr. Shahsavari hasn’t testified about how these records
        are generated, but he has testified about their unreliability.

(emphasis added). The Special Master, however, overruled Fani’s objection and the general
ledger was admitted into evidence.9




        9
          The Supplemental Report of the Special Master, which was confirmed by the trial court, provides,
in relevant part:
                  Mr. Fani requested a specific finding as to the admissibility of Mr. Faran Ferdowsi’s
         testimony about what he found in the Smith & Rogers records. The objection to his
         testimony is based on two grounds: (1) that the General Ledger was not properly
         authenticated as a business record, and (2) that the proof shows the General Ledger to be
         untrustworthy.
                  As to the authenticity, it appears that the parties have been working from the
         General Ledger almost from the beginning of this dispute. The [CPA’s] report was based
         in part on the information found in it. Although the General Ledger was not presented with
         all the formality required by Tenn. R. Evid. 803(6), there is no genuine dispute that the
         records Mr. Faran Ferdowsi inspected during the course of his investigation were the
         business records of Smith and Rogers.
                  As to trustworthiness, the proof did show that there were errors in the information
         recorded in the General Ledger. But the errors make up a very small fraction of the entries
         that were made over the eleven years that these parties dealt with each other. Mr. Fani’s
         attorneys found some of the errors; others were found by Mr. Faran Ferdowsi or by the
         attorneys representing Mr. Ferdowsi. With very few exceptions, when the error was
         exposed, the parties were able to agree and they moved the item to the undisputed column.
         I have been impressed with the level of good faith on both sides in trying to present an
         accurate picture of the true state of affairs of these two old friends.
                  I find that the Smith and Rogers records were trustworthy.


                                                   -7-
       On appeal, Fani argues that the ledger was never properly authenticated as required
by Tennessee Rule of Evidence 901, which provides that “[t]he requirement of authentication
or identification as a condition precedent to admissibility is satisfied by evidence sufficient
to the court to support a finding by the trier of fact that the matter in question is what its
proponent claims.” He further maintains that the ledger contains hearsay which does not fall
within the business records exception to the hearsay rule set forth in Tennessee Rule of
Evidence 803(6).

      To qualify as a business record excepted from the hearsay rule, a document, itself,
must satisfy five criteria:

       1. The document must be made at or near the time of the event recorded;

       2. The person providing the information in the document must have firsthand
       knowledge of the recorded events or facts;

       3. The person providing the information in the document must be under a
       business duty to record or transmit the information;

       4. The business involved must have a regular practice of making such
       documents; and

       5. The manner in which the information was provided or the document was
       prepared must not indicate that the document lacks trustworthiness.

Id. Additionally, the “foundation for the admission of a business record must be provided
by ‘the custodian or other qualified witness.’” Id. Consistent with his objection below, Fani
maintains that Plaintiff Companies offered no admissible evidence regarding the creation of
the general ledger to satisfy the five above-cited criteria. Additionally, Fani argues that even
if the ledger is authenticated, that the business records exception is, nonetheless, inapplicable
because (1) Faran was not a “custodian or other qualified witness” to testify regarding the
ledger and (2) because the ledger lacked trustworthiness.

       At the trial level, Fani objected to Faran testifying regarding the general ledger;
however, this objection was based upon the ledger’s alleged lack of authentication and
trustworthiness, not upon Faran’s inability to qualify as a “custodian or other qualified
witness” once the ledger was properly authenticated. Tenn. R. Evid. 803(6). Accordingly,
on appeal, we will address only the general ledger’s authentication and trustworthiness, and
not Faran’s qualifications. See Simpson v. Frontier Cmty. Credit Union, 810 S.W.2d 147,

                                               -8-
153 (Tenn. 1991) (citations omitted).

       In its brief to this Court, Fani argues that the general ledger was not properly
authenticated pursuant to Tennessee Rule of Evidence 901 because “Faran [] had nothing to
do with the preparation of the general ledger and was only regurgitating what someone else
had told him, i.e. that the general ledger was what it was represented to be.” It also contends
that Plaintiff Companies faced a “dilemma” with regard to the ledger: they knew its
admission hinged on reliability, but they were also inclined to disclaim its accuracy in order
to demonstrate that payments recorded for “goods and services” were in reality loan
repayments to Fani. These ledger entry “misrepresentations,” Fani argues, demonstrate that
the ledger is “unreliable and misleading[,]” and therefore, inadmissible.

        To satisfy Rule 901’s authentication requirement, “[t]he testimony of a witness with
knowledge ‘that a matter is what it is claimed to be’ is sufficient.” State v. Braxton, No.
M2010-01998-CCA-R3-CD, 2011 WL 5573357, at *5 (Tenn. Crim. App. Nov. 15, 2011)
(citing Tenn. R. Evid. 901(b)(1)). Moreover, Rule 803(6)’s business records exception “rests
on the premise that records regularly kept in the normal course of business are inherently
trustworthy and reliable.” Alexander v. Inman, 903 S.W.2d 686, 700 (Tenn. Ct. App. 1995)
(citing Hill v. National Life & Accident Ins. Co., 11 Tenn. App. 33, 37-38 (1929); 5 John H.
Wigmore, Evidence in Trials at Common Law § 1522 (James H. Chadbourn rev. 1974); Neil
P. Cohen et al., Tennessee Law of Evidence § 803(6).1 (2d ed. 1990)). In this case, S & R’s
bookkeeper/accountant Shahsavari testified by deposition that he maintains the general
ledger based upon information provided by Fariborz. He acknowledged that Fariborz would,
at times, misreport interest paid to Fani as payments for goods, but he explained that such
mislabeling was “not a big deal” in a privately-held company because it had no effect on the
company’s bottom line. We find that minor misrepresentations do not render the ledger
untrustworthy as a whole, and if anything, misreporting loan interest payments to Fani as
something else worked to Fani’s advantage. Moreover, we agree with the Special Master’s
conclusion that there is “no genuine dispute” that the ledger is what it is claimed to be, as it
appears that both parties relied upon the ledger from the lawsuit’s inception and Fani’s
counsel even introduced portions of the ledger into evidence on multiple occasions without
objection. In sum, we find that the trial court did not abuse its discretion in finding the ledger
qualified as a business record excepted from the hearsay rule, nor in admitting the ledger into
evidence.




                                               -9-
                                         2.   Checks

       Fani also asserts that the trial court erred in admitting into evidence, certain checks
which allegedly evidenced loan repayments to Fani. Fani argues that the checks were
inadmissible hearsay because Faran, who testified regarding the checks, lacked personal
knowledge regarding such and he was unable to testify as to whether Fani actually received
payment. Like the general ledger, Fani claims that the checks are not excepted from the
hearsay rule by the business records exception. However, finding no indication that Fani
objected to the checks’ admission below, we deem the issue waived and we decline to
consider it on appeal. See Simpson, 810 S.W.2d at 153 (citations omitted).


                                B. Piercing Corporate Veil

        As stated above, after entering judgment in favor of Fani, the trial court pierced the
S & R corporate veil, but it found wrongdoing only by Fariborz, and therefore, it held only
him personally liable for the judgment and it dismissed the remaining third-party defendants.
On appeal, Fani claims that the trial court erred in refusing to hold the other third-party
defendants personally liable. Fani maintains that once the S & R corporate veil was pierced,
all shareholders, regardless of individual culpability, should have been found individually
liable. Alternatively, Fani argues that the remaining third-party defendants “acquiesce[d]”
in Fariborz’s disregard of the corporate form, and therefore, that each should be found
personally liable for the judgment owed to Fani.

        “There is a presumption that a corporation is a distinct legal entity, wholly separate
and apart from its shareholders, officers, directors or affiliated corporations.” VP Bldgs.,
Inc. v. Polygon Group, No. M2001-00613-COA-R3-CV, 2002 WL 15634, at *4 (Tenn. Ct.
App. Jan. 8, 2002) However, as our Supreme Court has noted, “The ease with which a
corporate charter may be procured, and the facility with which a corporate entity may be
manipulated by its creators and made a shield for their protection should dispose a court to
look through any such intended veil into the face of the individual or individuals behind.”
T. Towles & Co. v. Miles, 173 S.W. 439, 440 (Tenn. 1915). When a court is convinced that
a corporate entity “‘is a sham or a dummy’ or that disregarding the separate corporate entity
is ‘necessary to accomplish justice[,]” a court may “pierce the corporate veil and attribute the
actions of a corporation to its shareholders.” CAO Holdings, Inc. v. Trost, 333 S.W.3d 73,
88 (Tenn. 2010) (citing Cambio Health Solutions, LLC v. Reardon, 213 S.W.3d 785, 790
(Tenn. 2006); Oceanics Sch., Inc. v. Barbour, 112 S.W.3d 135, 140-42 (Tenn. Ct. App. 2003)
(quoting Shlater v. Haynie, 833 S.W.2d 919, 925 (Tenn. Ct. App. 1991)); see also VP Bldgs.,
2002 WL 15634, at *4 (“Discarding the fiction of the corporate entity, or piercing the
corporate veil, is appropriate when the corporation is liable for a debt but is without funds

                                              -10-
to pay the debt, and the lack of funds is due to some misconduct on the part of the officers
and directors.”) (citations omitted).

       The party seeking to impose individual liability upon shareholders “has the burden of
proving facts sufficient to justify piercing the corporate veil.” VP Buildings, 2002 WL
15634, at *5 (citing Schlater, 833 S.W.2d at 925). To determine whether a corporation’s
separate legal identity should be ignored, the courts of this state have consistently considered
certain factors:

       (1) whether there was a failure to collect paid in capital; (2) whether the
       corporation was grossly undercapitalized; (3) the nonissuance of stock
       certificates; (4) the sole ownership of stock by one individual; (5) the use of
       the same office or business location; (6) the employment of the same
       employees or attorneys; (7) the use of the corporation as an instrumentality or
       business conduit for an individual or another corporation; (8) the diversion of
       corporate assets by or to a stockholder or other entity to the detriment of
       creditors, or the manipulation of assets and liabilities in another; (9) the use of
       the corporation as a subterfuge in illegal transactions; (10) the formation and
       use of the corporation to transfer to it the existing liability of another person
       or entity; and (11) the failure to maintain arms length relationships among
       related entities.


Id. (quoting FDIC v. Allen, 584 F.Supp. 386, 397 (E.D. Tenn. 1984)). It is unnecessary that
all factors weigh in favor of piercing. Id. Instead, it is only necessary that “the equities
substantially favor the party requesting the court to disregard the corporate status.” Id.
(citing Oceanics, 112 S.W.3d at 140-41). However, piercing should occur only in “extreme
circumstances” and “[a] corporation’s separate identity should be disregarded ‘with great
caution and not precipitately.’” Pamperin v. Streamline Mfg., Inc., 276 S.W.3d 428, 437
(Tenn. Ct. App. 2008) (citing Nepp v. Hart, No. M2005-2024-COA-R3-CV, 2006 WL
2582503, at *7 (Tenn. Ct. App. Sept. 7, 2006); Canter v. Ebersole, No. E2005-02388-COA-
R3-CV, 2006 WL 1627288, at *1 (Tenn. Ct. App. May 13, 2006); Oceanics, 112 S.W.3d at
135 (quoting Schlater, 833 S.W.2d at 925)).


        At the outset, we note that Fariborz’s personal liability for the judgment is not
disputed on appeal. Moreover, the parties do not argue that the trial court erred in piercing
S & R’s corporate veil. The dispute focuses only on whether the trial court erred in refusing
to hold the other third-party defendants–Lela Ferdowsi, Farzin and Ziba Ferdowsi, Farsheed
Ferdowsi, Talieh Ferdowsi, Azar Ferdowsi, and Homey and Zohre Aminmadani–personally
liable for the judgment.

                                              -11-
                                 1.   Liability Upon Piercing


        First, we address Fani’s contention that all shareholders become personally liable
when a corporate veil is pierced, notwithstanding the absence of active culpability by each.
As support for this argument, Fani quotes general case law stating that once a corporate veil
is pierced, the corporation’s “owners” become personally liable. See Fidelity Trust Co. v.
Service Laundry Co., 22 S.W.2d 6, 8 (Tenn. 1929) (“‘[I]n an appropriate case, and in
furtherance of the ends of justice, a corporation and the individual or individuals owning all
its stock and assets will be treated as identical.’”) (quoting 7 Ruling Case Law, p.27); Muroll
Gesellschaft M.B.H. v. Tenn. Tape, Inc., 908 S.W.2d 211, 213 (Tenn. Ct. App. 1995)
(“Corporate veils are pierced–that is–the legal entity is disregarded and the true owners of
the entity are held liable when the corporation is liable for a debt but is without funds due to
some misconduct on the part of the officers and directors.”) (citing Anderson v. Durbin, 720
S.W.2d 417 (Tenn. Ct. App. 1987)). Both of the cases, however, cited by Fani to support his
position involve a single stockholder. Moreover, Tennessee Code Annotated section 48-16-
203(b), discussing corporate shareholder liability, directly contradicts Fani’s assertion by
providing that “[a] shareholder of a corporation is not personally liable for the acts or debts
of the corporation except that the shareholder may become personally liable by reason of the
shareholder’s own acts or conduct.” (emphasis added); see also U.S. v. Westley, 7 Fed.Appx.
393, 398 (6th Cir. (Tenn.) 2001) (“The shareholders of a corporation are generally not liable
for the debts of a properly formed corporation unless the shareholders’ own actions create
a basis for liability, e.g., conduct that allows a court to pierce the corporate veil.”).
Accordingly, we find that Fariborz’s wrongdoing and disregard of the corporate form, alone,
is insufficient to impose liability against the other third-party defendants. Thus, we must now
consider Fani’s argument that the actions of the other third-party defendants, themselves,
justified imposing personal liability against each.

                      1.   Lela, Ziba, Farsheed, Talieh, Azar & Zohre

        First, we consider the personal liability of admitted S & R shareholders Lela Ferdowsi,
Ziba Ferdowsi, Farsheed Ferdowsi, Talieh Ferdowsi, Azar Ferdowsi, and Zohre
Aminmadani. Again, Fani argues that these third-party defendants “acquiesce[d]” in
Fariborz’s disregard of the corporate form. Specifically, Fani cites the trial court’s finding
that “[t]he Ferdowsi family was aware of [S & R’s] insolvency” and it claims, without
citation to the record, that “the shareholders were aware that Fariborz was using corporate
funds for personal family reasons.” Fani also points to S & R shareholder minutes, executed
by the third-party defendant shareholders, which acknowledged that they “ratified, approved
and adopted as valid, binding, proper and appropriate action[s,]” “all actions taken by the
directors, officers, and other agents of the Corporation on behalf of the Corporation[.]”


                                              -12-
       In its [Corrected] Memorandum and Order, the trial court found that “Fariborz
Ferdowsi was using corporate funds for personal family reasons.” Specifically, he caused
S & R to pay $85,000.00 to his daughter and he used S & R funds to purchase a car for his
son. However, the trial court noted that “[a]lthough the shareholders of Smith & Rogers
named in this lawsuit are related to Fariborz Ferdowsi, and may have indirectly benefit[t]ed
from his business activities, he alone operated and controlled Smith & Rogers.” It then
further noted that “[t]he Ferdowsi son and daughter who received Smith & Rogers’ assets
are not shareholders.” We find no evidence to support Fani’s assertion that Lela, Ziba,
Farsheed, Talieh, Azar and Zohre were apprised of, and acquiesced in, Fariborz’s use of S
& R funds for personal reasons in disregard of the S & R corporate form. We decline, under
these circumstances, to impose personal liability upon each simply based upon their signing
of boilerplate language in the shareholder minutes.


                                   2.   Farzin & Homey

                                 I. Shareholders of S & R

        Next, we consider the personal liability of Farzin Ferdowsi and Homey Aminmadani.
At the outset, we address the parties’ dispute regarding whether Farzin and Homey are S &
R shareholders. At trial, both Farzin and Homey denied being shareholders of S & R.
However, in its [Corrected] Memorandum and Order, the trial court seemed to find that
Farzin and Homey are S & R shareholders. Throughout its order, the trial court referred to
the third-party defendants as “shareholders[.]” However, it also once referenced them as
“third-party defendants who are said to be shareholders” and in describing the “Parties and
Witnesses[,]” it stated:

       Fariborz Ferdowsi is the sole shareholder and owner of Delta Development
       and Zoo Concessions. He is the President and a 35% shareholder of Smith &
       Rogers with his wife Lela. Other third-party defendants/shareholders include
       his brothers Farzin and Farsheed Ferdowsi and their wives Ziba Ferdowsi and
       Talieh Ferdowsi. Cyrus Azhdari, also a third-party defendant because he was
       a Smith & Rogers shareholder, is deceased. Karen Ramsey, a minority Smith
       & Rogers shareholder, is not a party in the case. Azar Ferdowsi is a brother.
       Homayoun Aminmadani is a business colleague. His wife is also a
       shareholder.

(emphasis added). Ultimately, though, the trial court decreed that Fariborz, “as a Smith &
Rogers shareholder” should be held personally liable for the judgment to Fani and that “[t]he
other shareholders, Lela Ferdowsi, Farzin Ferdowsi, Ziba Ferdowsi, Farsheed Ferdowsi,

                                            -13-
Talieh Ferdowsi, Azar Ferdowsi, Homayoun Aminmadan, and Zohre Aminmadani are
dismissed from the third-party complaint.” (emphasis added). Based upon our resolution of
the veil-piercing issue below, we find it appropriate to assume, for purposes of this appeal,
that Farzin and Homey are S & R shareholders.

                         ii.   Personal Liability of Farzin & Homey

        Fani suggests four primary bases for holding Farzin and Homey personally liable for
the judgment owed to it. First, Fani argues that Farzin and Homey “knew [both] that S & R
was insolvent” and “that Fariborz was disregarding the corporate form and was using the
funds for family and personal use[,]” “yet they[, through MRC,] continued to divert money
to the business.” However, like the other third-party defendants, we find no evidence that
Farzin and Homey knew of Fariborz’s personal use of S & R funds. In the proceedings
below, Farzin and Homey explained that MRC continued to loan money to a failing S & R
based upon their longstanding friendships with Fariborz and in an effort to “turn the company
around.” Importantly, Fani has failed to explain how MRC’s loans, which were allegedly
used to repay S & R’s creditors, evidenced a disregard of the S & R corporate form or how
such conduct was detrimental to S & R’s creditors. VP Bldgs., 2002 WL 15634, at *4.

       Fani also points out that Farzin and Homey “were paid hundreds of thousands of
dollars from Smith & Rogers” and that such payments were recorded by Fariborz as
“operating supplies” although Farzin and Homey both conceded that they had never sold such
to S & R. Curiously, Fani claims that Farzin and Homey have no justification for the
payments to them, and that these “corporate abuses” justify piercing the S & R corporate veil.
However, given Fani’s own argument regarding the substantial loans by MRC to S & R, and
the explanation that Fariborz mislabeled loan interest repayments as “operating supplies”
“[b]ecause he was embarrassed to show [Farzin and Homey] that was the shape his business
was in[,]” we find this issue without merit.

       Fani next argues that Farzin and Homey should be personally liable for S & R’s debts
based upon their alleged creation of “sham debt” to shield S & R from its creditors. In 2003,
MRC’s CFO Shahsavari sent a letter notifying an S & R creditor that MRC had a UCC
Financing Agreement covering S & R inventory and proceeds from S & R inventory.
Attached to the financing agreement was a promissory note evidencing a $1,500,000.00 line
of credit from MRC to S & R. Fani points out that when the promissory note was written,
S & R owed MRC only $20,000.00, and that when the letter to S & R’s creditor was written,
MRC actually owed money to S & R. Thus, Fani maintains that the financing agreement was
intended, not to secure a loan from MRC, but to shield S & R from its creditors. In its
[Corrected] Memorandum and Order, the trial court found, in relevant part:



                                             -14-
       The Court finds that Farokh Fani was able to show that Fariborz Ferdowsi and
       his business colleagues created sham debt so that Smith & Rogers would be
       protected from other creditors.

              There is however, no proof that any of the Smith & Rogers shareholders
       were involved in wrongdoing. The only Smith & Rogers shareholder proven
       to be involved in inequitable conduct as regards the Farokh Fani loans, was
       Fariborz Ferdowsi.


        On appeal, the parties dispute whom the trial court intended to reference as “business
colleagues.” Of course, Fani argues that Farzin and Homey were included in the term, and
Farzin and Homey deny such intention. Based upon the trial court’s statement that Farzin
and Homey are S & R shareholders, and its immediate acknowledgment following the
discussion of the “sham debt” that no “shareholders were involved in wrongdoing[,]” we
cannot conclude that the trial court found that Farzin and Homey wrongfully created a “sham
debt” for the benefit of S & R. Thus, we reject Fani’s argument that the trial court’s alleged
finding of wrongdoing by Farzin and Homey necessitates the imposition of individual
liability against each. Furthermore, although the line of credit had not yet been fully
extended when the promissory note was executed or when the letter to an S & R creditor was
sent, Shahsavari testified at trial that over $3,270,000.00 has been advanced to S & R
pursuant to its line of credit with MRC.10

        Next, Fani makes arguments regarding a so-called “Zoo Note.” As stated above,
Delta was formed in order to develop a zoo in middle Tennessee through capital provided
by Farzin and Homey. A zoo facility was opened, but the facility and its assets were later
sold to a non-profit company. In exchange for the sale, Delta received a $4,992,106.73
Nonrecourse Promissory Note (the “Zoo Note”). Fani claims that although Delta “was
supposed to be wholly owned by Fariborz Ferdowsi and his wife, Lela[,]” in 1997, Farzin and
Homey “forgave” $750,000.00 in Zoo Note interest owed to Delta. Delta had no assets aside
from the Zoo Note, and therefore, Fani claims that this “forgiveness” of accrued interest was
detrimental to Delta’s creditors, including himself. Delta subsequently transferred the Zoo
Note to Hospitality Group of Oklahoma, Inc. (“HGO”) and MRC, both owned by Farzin and
Homey, allegedly in exchange for the release of a debt owed to HGO and MRC. Fani seems
to argue that upon transfer, Farzin and Homey became individually liable to Delta’s creditors,
either as Delta or S & R shareholders.



       10
         Additionally, Fani’s counsel stated that Fani made no allegation that funds were not actually
advanced pursuant to the line of credit.

                                                -15-
        Even if we were to assume, arguendo, that liability attached upon transfer, the record
before us indicates that HGO and MRC ensured that Delta had no unpaid creditors.
Shahsavari testified that Farzin and Homey forgave the interest owed on the Zoo Note in “an
effort to induce the Nashville Zoo to . . . raise funds to pay the note off.” Although this
action reduced the value of Delta’s only asset, Farzin and Homey, through MRC, paid off
each of Delta’s creditors. Accordingly, we find their conduct does not merit the imposition
of personal liability.

        Finally, Fani contends that Farzin and Homey “through MRC and related companies”
essentially controlled S & R and “facilitated S & R’s fraud through their bookkeeping at
MRC.” Fani correctly points out that MRC CFO Shahsavari maintained the Delta Trades
International database which contained S & R’s financial accounting records and that he
possessed check-writing authority for S & R. Fani maintains, without citation to the record,
that the shared database “allowed the entities to record transactions and obligations among
each other without creating the paperwork that would normally be generated by separate
companies. Obligations of one company would be paid by another because its bank account
had some money in it, and the transaction would simply be recorded with a ledger entry.”
Fani points out that MRC handled S & R’s “taxes, the sales taxes, [and its] corporate
papers[,]” and it correctly notes that Paymaxx, controlled by Farzin and Homey, previously
performed the payroll processing for S & R and that Melrose, LLC, owned in part by Farzin
and Homey, was previously S & R’s landlord.

         On appeal, we are considering only whether Farzin and Homey may be reached
through Plaintiff Companies, not whether the corporate veils of non-parties MRC, Paymaxx,
or Melrose, LLC should be pierced. Fani attempts to depict a situation in which funds were
transferred among numerous entities without documentation, but the record simply does not
support this suggestion. Shahsavari did testify that MRC loaned money to S & R without the
formality of promissory notes; however, we find no evidence that S & R’s funds were
similarly depleted. In sum, we find the fact that companies owned by Farzin and Homey
enjoyed a business relationship with S & R does not evidence a disregard of the corporate
form, and therefore, this relationship provides an insufficient basis for imposing personal
liability against each.


                   C. “Starting Point” for Calculating Loan Balance

         As stated above, the Special Master found that the appropriate “starting point” for
calculating the debt owed to Fani was a schedule of loan disbursements and repayments,
which evidenced a balance of $179,268.84 as of January 1, 1994, rather than handwritten
letters from Fani, which evidenced a balance of $105,251.58 as of that same date. On appeal,

                                             -16-
Plaintiff Companies and third-party defendants argue that the trial court erred in accepting
the Special Master’s determination, offering three reasons why Fani’s handwritten notes
should be used to establish the “starting point” for calculating the judgment owed: (1) the
notes are admissions against interest; (2) the first note was written prior to a time when
banking records were available; and (3) the note amounts are corroborated by monthly
interest payments made to Fani.

      Our standard for reviewing the findings of a special master is set forth in Tennessee
Code Annotated section 27-1-113, which provides that

       Where there has been a concurrent finding of the master and chancellor, which
       under the principles now obtaining is binding on the appellate courts, the court
       of appeals shall not have the right to disturb such finding.

Our case law has more-fully explained this principle:
       The trial court’s order referring certain matters to the Special Master, the
       Special Master's report, and the trial court's order on the report affect our
       standard of review on appeal. See Manis v. Manis, 49 S.W.3d 295, 301 (Tenn.
       Ct. App. 2001); Archer v. Archer, 907 S.W.2d 412, 415 (Tenn. Ct. App. 1995).
       Generally, concurrent findings of fact by a special master and a trial court are
       conclusive and cannot be overturned on appeal. Manis, 49 S.W.3d at 301.
       However, a concurrent finding is not conclusive where it is upon an issue not
       properly referred to a special master, where it is based upon an error of law or
       a mixed question of fact and law, or where it is not supported by any material
       evidence. Id.

Bradley v. Bradley, No. M2009-01234-COA-R3-CV, 2010 WL 2712533, at *6-7 (Tenn. Ct.
App. July 8, 2010 (citing Pruett v. Pruett, No. E2007-00349-COA-R3-CV, 2008 WL
182236, at *4 (Tenn. Ct. App. Jan. 22, 2008) (quoting Dalton v. Dalton, No. W2006-00118-
COA-R3-CV, 2006 WL 3804415, at *3 (Tenn. Ct. App. Dec. 28, 2006)). Thus, our standard
of review, regarding findings made by both the special master and the chancery court, is
similar to that applied in a jury trial, “‘we must affirm if there is any material evidence to
support the trial court’s concurrence.’” Id. (quoting In re Estate of Ladd, 247 S.W.3d 628,
636-37 (Tenn. Ct. App. 2007)).

       In his July 18, 2008 report, the Special Master carefully explained the evidence
supporting his finding. He considered Fani’s testimony that a January 6, 1994 note showing
a balance of “$105,251.28” “as of 1-1-94” represented an “arrangement” with Farzin rather
than the total owed to him, and he highlighted the fact that Fariborz lacked records from that
time period to support his assertion that the note evidenced the total debt owed by him.

                                             -17-
Believing that the note could have represented an unaccepted offer to settle, the Special
Master refused to find that the note was an admission that, as of January 1, 1994, the total
debt owed to Fani by Farzin was $100,000.00 plus interest. Based upon the foregoing, we
find material evidence to support the concurrent findings of the Special Master and the
chancery court regarding the appropriate “starting point” for determining the debt owed to
Fani.

                                     V.   C ONCLUSION

        For the aforementioned reasons, we affirm the decision of the chancery court. Costs
of this appeal are taxed to Appellants, F. Fani Gulf International, Gulf International, Farokh
Fani, and F. Fani/Gulf International, and their surety, for which execution may issue if
necessary.

                                                    _________________________________
                                                    ALAN E. HIGHERS, P.J., W.S.




                                             -18-
