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STROJMATERIALINTORG v. RUSSIAN AMERICAN COMMER. CO

March 11, 1993

STROJMATERIALINTORG, Plaintiff,
v.
RUSSIAN AMERICAN COMMERCIAL CORP., AMERICAN CUT CRYSTAL CORP. and MARVIN WOLF, individually and d/b/a RUSSIAN AMERICAN COMMERCIAL CORP., and AMERICAN CUT CRYSTAL CORP., Defendants.



The opinion of the court was delivered by: LEONARD D. WEXLER

 WEXLER, District Judge

 Strojmaterialintorg ("STROM"), plaintiff in the above-referenced action, brought suit against Russian American Commercial Corporation ("RACC"), American Cut Crystal Corporation ("ACC") and Marvin Wolf ("Wolf") individually and d/b/a/ RACC and ACC alleging breach of contract, indebtedness, unjust enrichment, conversion and fraud. Presently before the Court is defendants' motion to dismiss all claims against Wolf individually and all claims against the corporate defendants save the breach of contract claim. For the reasons stated below, the claims against the corporate defendants for indebtedness, unjust enrichment, conversion and fraud are hereby dismissed. The claims against Wolf individually will not at this time be dismissed. Rather, STROM is hereby given leave to amend its complaint within thirty days of entry of this order to allege facts sufficient to support piercing the corporate veil and holding Wolf individually liable. Failure to timely amend the complaint will result in the dismissal of all claims against Wolf individually.

 I. BACKGROUND

 The underlying facts of this case are not complex. According to the complaint, RACC and ACC, both closely held corporations, entered into separate agreements with STROM to buy $ 420,197.22 worth of Russian crystal. Wolf, who is the chief executive officer of both corporations and their sole or controlling shareholder, executed the agreements on behalf of RACC and ACC. The complaint alleges that although STROM met its contractual obligations and delivered the crystal, neither RACC nor ACC paid for the goods and have sold and profited from their resale.

 As a result of this course of events, STROM brought a nine count complaint against RACC, ACC, and Wolf. The first five causes of action are brought against RACC, ACC, and Wolf d/b/a RACC and ACC. The five claims are for breach of contract, indebtedness, unjust enrichment, conversion and fraud. In support of its fraud claim, STROM alleges that in accepting delivery of the crystal the defendants represented by their conduct that they would abide by the terms of the contract. STROM further alleges that when defendants made said representation they knew that they had no intention ever to pay STROM for the crystal. According to STROM, defendants' sole purpose in making the false representation was to induce STROM to rely on the misrepresentation. Finally, STROM alleges that it reasonably relied on defendants' misrepresentation to its detriment. STROM seeks punitive damages with respect to the conversion and fraud claims. The next four causes of action are brought against Wolf individually and d/b/a RACC and ACC. These claims are identical to the first five claims except that no breach of contract is alleged.

 Strewn throughout the complaint are allegations that Wolf used RACC and ACC as alter egos for his own personal benefit. Upon information and belief, STROM alleges that Wolf formed RACC and ACC as corporate entities for the purpose of attempting to avoid personal liability for tortious and criminal acts committed in the corporate names for his exclusive benefit and gain. STROM also claims upon information and belief that the acts of RACC and ACC were undertaken at the order and under the direction and control of Wolf, in disregard of the corporate entity and to further Wolf's own rather than the corporations' interest. Beyond these bald assertions, however, the complaint contains no facts supporting STROM's position that FCC and ACC are Wolf's alter egos.

 II. DISCUSSION

 Presently before the Court is defendants' motion to dismiss the complaint for failure to state a claim upon which relief can be granted. Defendants allege that all nine causes of actions stated against Wolf individually and d/b/a RACC and ACC must be dismissed because plaintiff failed to allege facts sufficient to pierce the corporate veil of the corporate defendants RACC and ACC. Under New York law,

 
Where one individual appears to exercise complete dominion and control, the factors to be examined in determining whether to pierce the corporate veil are:
 
(1) domination and control over corporation by those held liable which is so complete that the corporation has no separate mind, will, or existence of its own;
 
(2) use of this domination and control to commit fraud or wrong or any other dishonest or unjust act; and
 
(3) injury or unjust loss resulting to plaintiff from said ...

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