The opinion of the court was delivered by: Sweet, District Judge.
This action, brought by M. Prusman, Ltd. and Sahar Insurance
Company, Ltd. (collectively "Prusman" or the "Plaintiffs")
against Ariel Maritime Group, Inc. ("Ariel"), Charles Klaus &
Co., Ltd. ("Klaus"), d/b/a Javelin Lines, Martyn C. Merritt
("Merritt"), Mary Anne Merritt, a/k/a Mary Ann Pawlowski ("Mrs.
Merritt"), Joshua Dean & Co. Ltd. ("Dean"), Florence Wlezen,
a/k/a Florence Pawlowski, and Florence Pawlowski (collectively
"the Defendants"), was tried before the Court on October 22,
1991. Upon the findings and conclusions set forth below,
judgment will be enforced against the Defendants jointly and
On April 25, 1988, judgment was entered for $28,682.08 with
interest and costs arising out of the loss of goods shipped on
board the M/V NATHANEL (85 Civ. 9485 (RWS)).
The instant action was filed on November 18, 1988, to enforce
that judgment. Discovery was had, and the Defendants' motion to
dismiss for lack of jurisdiction and failure of service was
denied on August 10, 1988. Prusman's motion for summary
judgment was granted in part and denied in part on July 11,
The principal issue remaining to be tried was the personal
liability of the Merritts and whether or not the Defendants
other than Ariel were the alter ego of Ariel or the Merritts.
The Plaintiffs are Israeli corporations with offices in
Merritt was a resident of New Rochelle, New York, and was the
president and a shareholder of Ariel. Mrs. Merritt is Merritt's
wife. She lived with him in New Rochelle and was an officer and
director of Ariel. The Merritts maintained offices in the same
space as Ariel on West Street and/or West 39th Street in New
Ariel was organized as an Illinois corporation, with its
principal place of business at 90 West Street and/or 323 West
39th Street, New York, New York, and was doing business under
the name of Javelin Lines ("Javelin"). On June 1, 1988, Ariel
changed its name to AMG Services, Inc. ("AMG"), but did not
change its corporate form.
Klaus was organized as a Hong Kong corporation and was
likewise doing business under the name of Javelin. It was
incorporated in 1978 upon the written instructions of Merritt.
Klaus's name derives from an amalgam of Merritt's middle name,
"Charles," and the middle name of his former partner, Peter
Schauer. Merritt and Schauer formed Klaus as 50/50 partners,
but their business association ended in about 1980. Javelin was
a division of Klaus and a trade name of Ariel.
Dean was organized as an English corporation. The sole
shareholders of Dean are Broadview Developments, Ltd., with one
share, and Klaus, with 999 shares.
The sole shareholders of Klaus are Dean, with 999 shares, and
Merritt, with one share. The Merritts consider Klaus the
ultimate holding company of Dean. The Merritts also controlled
Broadview and were officers of and controlled Ariel.
In October and November 1984, Javelin issued two negotiable
bills of lading for the carriage of Prusman's cargo on board
the M/V NATHANEL from Germany to Israel. Javelin issued its
bills of lading as a division of Klaus. The bills of lading
were negotiated and transferred to plaintiff M. Prusman Ltd.
During the voyage, the shipment suffered damage. The present
action seeks to enforce the prior judgment arising out of this
On May 31, 1991, Merritt agreed to plead guilty to a
conspiracy to commit fraud that involved the submission of
false bills of lading. Merritt reaped $936,000 from the
conspiracy. "The payment was made pursuant to an Agency for
International Development program to supply needed foodstuffs
to the country of Sudan. In return for the $936,000, the
defendant [Merritt] and his associates were supposed to ship
and deliver high-quality powdered non-fat milk." Trial Exhibit
5 at 1.
In sentencing Merritt, the Honorable John S. Martin found
that Merritt "engaged in obstruction of justice when he
submitted a false document to the government," to wit, a
fabricated fax allegedly confirming a payment and "official
looking stationery with the title 'Maritime Bureau of
Investigations' . . . — which 'obviously was designed to
mislead the recipient of the letter into believing that they
were responding to some official government inquiry" — with "a
false statement that the payment had been made." Judge Martin
further found that "Merritt continues to have control over
$670,000 of the proceeds, which he is attempting to hide ...