fact with respect to the intent of Richman and Giacoia to defraud Local 32B out of the required pension fund contributions.
B. Piercing the Corporate Veil
Trustees argues alternatively that the Court should pierce the corporate veil of Citywide and Hudson and hold Richman and Giacoia personally liable for the Local 32B Funds deficiencies. Again, the Court finds that, while there may be merit to Trustees' claim, summary judgment is inappropriate in the present case.
In certain circumstances, the court may determine that the corporate veil should be pierced and the principals held accountable for the ERISA violations of the defaulting corporation. Sasso v. Cervoni, 985 F.2d at 51; see also McGuinness v. Marvin Hammerman, Inc., 1994 U.S. Dist. LEXIS at *8 (stating that "disregarding the corporate form" is a "special circumstance" that may warrant imposing individual liability). To determine whether the corporate veil insulates a corporate officer from liability under ERISA, the court should look to federal substantive law, although the court may consult state law for guidance. Trustees of UIU Health and Welfare Fund v. New York Flame Proofing Co., 649 F. Supp. 843, 847 (S.D.N.Y. 1986) (citing Seymour v. Hull & Moreland Eng'g, 605 F.2d 1105, 1109 (9th Cir. 1979)), rev'd on other grounds, 828 F.2d 79 (2d Cir. 1987). Under New York law, a court may pierce the corporate veil and subject a principal to personal liability either when the corporation has been used as an alter ego or where the principal has engaged in fraudulent conduct. Itel Containers Int'l Corp. v. Atlanttrafik Express Serv. Ltd., 909 F.2d 698, 703 (2d Cir. 1990) (emphasis omitted); see also Wm. Passalacqua Builders, Inc. v. Resnick Developers S., Inc., 933 F.2d 131, 138 (2d Cir. 199l) (stating that "liability therefore may be predicated either upon a showing of fraud or upon complete control by the dominating [entity] that leads to a wrong against third parties").
In determining whether a corporation is merely an alter ego of an individual, the court should consider a number of factors, including: (1) the absence of formalities that are part and parcel of the corporate existence; (2) inadequate capitalization; and (3) the use of corporate funds for personal rather than corporate purposes. Wm. Passalacqua Builders, Inc. v. Resnick Developers S., Inc., 933 F.2d at 139; see also Directors Guild of Am., Inc. v. Garrison Prods., Inc., 733 F. Supp. 755, 760 (S.D.N.Y. 1990) (citing William Wrigley Jr. Co. v. Waters, 890 F.2d 594, 600 (2d Cir. 1989)).
Trustees has not presented sufficient evidence from which the Court could conclude that Citywide and Hudson are the alter egos of Richman and Giacoia. There is no evidence that Citywide and Hudson failed to observe the formalities of corporate existence such as maintaining the corporate books and observing corporate procedures. Nor is there sufficient evidence that the corporations were inadequately capitalized or that Richman and Giacoia diverted corporate funds for personal use. Although Trustees strenuously argues that Hudson and Citywide are alter egos of each other, it fails to present evidence that the corporate entities are the alter egos of Richman and Giacoia. Accordingly, absent further evidence at trial, there is no basis for piercing the corporate veils of Citywide and Hudson and holding the principals liable on an alter ego theory.
Nonetheless, as discussed above, the Court finds a question of fact as to whether Richman and Giacoia engaged in a fraudulent scheme designed to evade Citywide's ERISA obligations. If Trustees proves the elements of fraud at trial, the corporate veils of Citywide and Hudson could be pierced and Richman and Giacoia could be held liable as corporate officers. This would provide an independent basis for holding Richman and Giacoia personally liable for Citywide's failure to make the required contributions to the Local 32B Funds. Accordingly, as the fraud allegations raise an issue of fact, Trustees' motion for summary judgment based on the corporate veil theory is denied.
For the reasons set forth above, Richman and Giacoia's motion, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for summary judgment dismissing the complaint against them is denied. Trustees' motion, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for summary judgment is also denied. The parties are directed to appear at a pre-trial conference on January 25, 1995 at 2:00 P.M.
SHIRLEY WOHL KRAM
United States District Judge
Dated: New York, New York
December 16, 1994