Not what you're
looking for? Try an advanced search.
Buy This Entire Record For
ARIES VENTURES LTD. v. AXA FINANCE S.A.
January 18, 1990
ARIES VENTURES LIMITED AND RAYMOND T. MUNDY, PLAINTIFFS,
AXA FINANCE S.A. AND OLIVER ROUSSEL, DEFENDANTS.
The opinion of the court was delivered by: William C. Conner, District Judge.
This diversity action is presently before the Court on
defendants' motion for summary judgment pursuant to
Fed.R.Civ.P. 56(c) and defendants' motion to dismiss the claim
against Axa Finance S.A. ("Axa Finance") pursuant to
Fed.R.Civ.P. 12(b)(5) for improper service of process. For the
reasons stated below, defendants' motion for summary judgment
is granted in part and denied in part. Defendants' motion to
dismiss for improper service is denied.
Plaintiff Raymond T. Mundy is an attorney as well as
president and joint owner of plaintiff Aries Ventures Limited
("Aries"). Defendant Axa Finance is a Swiss corporation with
its principal place of business in Geneva, Switzerland;
defendant Olivier Roussel is a French citizen residing in
The present action initially stems from Mundy's involvement
with Acor Capital Corporation ("Acor"). Roussel and his family
were Acor's principal shareholders and directors. In November
1980, Mundy met with Olivier Roussel, his brother Alain
Roussel, and Efrim Pandeff, the president
of Axa Capital Corporation ("Axa Capital"),*fn1 to discuss
the proposed acquisition by Acor of property located in
DeQueen, Arkansas (the "Property"). The Property, consisting
of a shoe manufacturing facility, was leased at the time to
Tred-2, Inc. ("Tred-2"), a corporation of which Axa Finance
was the major shareholder. Jean-Louis Fatio was Axa Finance's
sole officer and director as of January 1, 1980 and Roussel
was a shareholder until at least 1980.
At the November 1980 meeting, Roussel allegedly proposed
that Acor would purchase the Property. Mundy was elected
Acor's president by Roussel and his brother shortly after the
November meeting, purportedly to carry out the transaction. An
agreement was reached with the Economic Development
Administration ("EDA") in February 1981, whereby Acor
purchased liens and other security positions in the Property
held by EDA.*fn2 The purchase was financed by Olivier Roussel
and his brother, sister and mother, each of whom contributed
25% of the purchase price. Mundy allegedly performed various
legal services in connection with the purchase from EDA.
Shortly after the agreement was reached with EDA, Roussel
allegedly directed Mundy to dissolve Acor and sell Acor's
interest in the Property to Axa Finance in exchange for Axa
Finance's assumption of the debt incurred in the purchase. For
reasons which are not entirely clear, the record owner of the
Property interests following the sale was Axa Capital.*fn3
The parties have stipulated that Axa Finance held the Property
for the benefit of the Roussel family.
After Acor's dissolution, Aries loaned various sums of money
to Axa Capital, allegedly in reliance on Axa Capital's
authority to act as Axa Finance's agent. In a letter dated
January 11, 1984, Mundy wrote to Fatio detailing the amount of
various loans Aries had made to Axa Capital. On April 30,
1985, plaintiffs requested reimbursement for moneys loaned and
services rendered, which defendants refused to pay. In this
action, plaintiffs seek payment of $147,500 in legal fees and
approximately $64,000 in loans, plus interest, based on a
variety of legal theories.
I. Standard for Summary Judgment
Defendants maintain that they are entitled to summary
judgment on plaintiffs' claims against the defendants for
legal services rendered by Mundy between December 1980 and
April 1985 and for loans advanced by Aries during the same
A party seeking summary judgment must demonstrate that
"there is no genuine issue as to any material fact."
Fed.R.Civ.P. 56(c); Knight v. U.S. Fire Ins. Co., 804 F.2d 9,
11 (2d Cir. 1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570,
94 L.Ed.2d 762 (1987); see Celotex Corp. v. Catrett,
477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "When the moving
party has carried its burden under Rule 56(c), its opponent
must do more than simply show that there is some metaphysical
doubt as to the material facts." Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89
L.Ed.2d 538 (1986). It must establish that there is a "genuine
issue for trial." Id. at 587, 106 S.Ct. at 1356. "In
considering the motion, the court's responsibility is not to
disputed issues of fact but to assess whether there are any
factual issues to be tried, while resolving ambiguities and
drawing reasonable inferences against the moving party."
Knight 804 F.2d at 11. The inquiry under a motion for summary
judgment is thus the same as that under a motion for a directed
verdict: "whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is
so one-sided that one party must prevail as a matter of law."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106
S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).
II. First and Second Causes of Action
In two identical causes of action, the first on behalf of
Aries and the second on behalf of Mundy, two separate legal
theories are alleged. Plaintiffs first allege a contract claim
wherein defendants, either directly or through their agent,
Axa Capital, contracted and agreed to pay Mundy for legal
services rendered and to repay Aries the moneys loaned.*fn4
Second, plaintiffs claim that Roussel, through Axa Finance,
controlled the activities and affairs of Axa Capital and Acor
and is liable for their debts under the theory of piercing the
Mundy alleges that he performed various legal services on
behalf of defendants in connection with the Property. There is
no written evidence, such as a retainer agreement, to show
that Mundy was asked to perform legal services on behalf of
either defendant. Mundy claims that he did not request a
retainer agreement because he "knew and trusted" Roussel.
Plaintiffs' Brief in Opposition to Defendants' Motion
("Plaintiffs' Brief") at 5.
Mundy nevertheless asserts that there is ample evidence of
an agreement between Mundy and Roussel concerning legal
services.*fn6 As evidence, Mundy points to Roussel's request
that Mundy become president of Acor. Mundy Affidavit ¶¶ 6, 7.
Mundy claims that he was not hired by Acor, which he alleges
had insufficient funds to pay him, but by Roussel for Roussel's
personal benefit. Mundy Affidavit ¶¶ 9, 10. Mundy maintains
that he became Acor's president to assist Roussel in acquiring
the Property in Acor's name.*fn7 Mundy also claims that
Roussel or his brother asked him to perform legal work in
connection with the dissolution of Acor. Mundy argues that
Roussel is thus liable under an implied contract for payment
which was formed by the rendition and acceptance of services,
as one is not expected to "labor without hire." See Fox v.
Arctic Placer Mining & Mill Co., 229 N.Y. 124, 128,
128 N.E. 154 (1920).
However, there are no disputed material facts concerning a
contract directly between Mundy and defendants for legal
services performed after Acor's dissolution.*fn9 In both his
affidavit and brief, Mundy states that he was requested to act
as attorney for Axa Capital and Pandeff in connection with a
March 1984 action, brought by Security National Bank ("SNB")
against Axa Capital and Pandeff personally, as guarantor of
the loan, to foreclose its lien on the Property. Mundy states
that he was requested to act as attorney by Pandeff, not by
either defendant. Mundy Affidavit ¶ 22; Plaintiffs' Brief at
10. No evidence is provided that either Roussel or Axa Finance
directly contracted with Mundy for legal representation in the
SNB action and therefore, whether defendants are liable for
contracts entered into by Axa Capital is more appropriately
addressed in connection with the agency theories of the seventh
and eighth causes of action.
The same rationale applies to Aries' allegations that
defendants, either directly or indirectly, agreed to pay Aries
for sums loaned to Axa Capital. There are no written loan
agreements between Aries and either Roussel, Axa Finance or
Axa Capital. Aries admits that Roussel and Axa Finance did not
request that Aries loan the money and were not aware of the
loans at the time they were made. Mundy Deposition at 138,
302. The evidence is clear that the loans were requested by
Pandeff, president of Axa Capital, and used in connection with
the Property. Like Mundy's claim for legal services after
Acor's dissolution, Aries' contract claims are more
appropriately addressed in connection with plaintiffs' seventh
and eighth causes of action, which maintain that Roussel and
Axa Finance are liable for the contracts entered into by Axa
Capital by virtue of its agency relationship with Axa Finance.
B. Piercing the Corporate Veil*fn10
Plaintiffs argue that Roussel controlled both Acor and Axa
Capital to the extent that their corporate veils should be
pierced. It is a basic principle of corporate law that a
shareholder is only liable to the extent of his investment. It
is also well
settled that New York courts*fn11 are reluctant to disregard
the corporate entity and pierce the corporate veil.
William Wrigley Jr. Co. v. Waters, 890 F.2d 594 (2d Cir. 1989);
Puma Indus. Consulting, Inc. v. Daal Assoc., Inc., 808 F.2d 982
(2d Cir. 1987).
Courts will disregard the corporate form and impose
liability on a shareholder when a shareholder has used control
of a corporation to further his own, rather than the
corporation's, business. Dow Chemical Pacific, Ltd. v. Rascator
Maritime S/A, 782 F.2d 329, 342 (2d Cir. 1986); England
Strohl/Denigris, Inc. v. Weiner, 538 F. Supp. 612, 613 (S.D.N Y
1982), aff'd without opinion, 740 F.2d 954 (2d Cir. 1984).
Courts have established certain criteria to be considered in
determining whether piercing the corporate veil is appropriate.
These include: (1) the absence of corporate formalities which
are part of normal corporate existence, i.e., the election of
directors, keeping of corporate records; (2) inadequate
capitalization; (3) personal use of corporate funds; and (4)
perpetration of fraud through the corporate vehicle. See Walter
E. Heller & Co. v. Video Innovations, Inc., 730 F.2d 50 ...