The opinion of the court was delivered by: KAPLAN
LEWIS A. KAPLAN, District Judge.
This is an action by Air India against the principal of a now insolvent carpet supplier to recover for goods ordered and paid for but never delivered. The matter is before the Court on cross motions for summary judgment.
On or about December 21, 1994, Air India placed purchase order number AI 2199 with Pennsylvania Woven Carpet Mills, Inc. ("PWCM") for 15,000 square meters of blue carpet. It paid invoices for the goods totaling $ 481,028.92. It claims never to have received the merchandise, and certainly there is no admissible evidence to the contrary. It brought this action against PWCM and its sole shareholder, president and chief executive officer, Frank J. Pisano, to recover the funds. PWCM is insolvent, and a default judgment has been entered against it, so Pisano is the sole remaining defendant.
While the parties do not agree as to all the facts, the broad outlines are essentially undisputed, at least in the sense that one side or the other has come forward with admissible evidence to support its contention and the other has no admissible evidence to the contrary.
The carpeting ordered by Air India in fact was produced for PWCM, arrived at its facility in Pennsylvania, was processed further, and was wrapped and weighed.
It appears never to have been shipped to, and in any case was not received by, Air India.
Pisano assumes that the goods were in PWCM's facility at least as late as September 1, 1995.
PWCM, however, was in financial difficulty and under pressure from creditors at the time.
Finoco, one of PWCM's creditors, seized at least some of PWCM's assets at the end of September 1995.
In any case, in January or February 1996, PWCM's facility was shut down, and Pisano at that point lost any remaining control of the facility and its contents.
Finoco has submitted an affidavit denying that it seized or received any of the Air India goods.
But the very same affidavit acknowledges that 6,000 square meters of the Air India goods are presently located in the former PWCM facility and goes on to say that "Finoco, Inc. will permit Air-India to take possession of the aforementioned carpets . . ."
Thus, Finoco concededly controls the facility and its contents. Its affidavit denies only that Finoco now claims an interest in the Air India goods that remain on the premises.
What then happened to the other 9,000 square meters of carpeting? Pisano says he does not know and points to the fact that he was not in control of the facility after the beginning of 1996.
Although he believes that the carpeting was in the facility when Finoco took over, his belief is simply a deduction from the fact that the goods were produced and his lack of any reason to suppose that they went anywhere else. Nevertheless. Pisano admits that the carpeting might not have been on the premises when Finoco entered.
The Complaint and the Motions
The complaint contains two counts against Pisano, one for conversion and the other for fraud. The former charges in conclusory terms that "PWCM and/or Pisano wrongfully and unlawfully took the" Air India goods "and converted the same to their own use . . ."
The latter asserts that PWCM and Pisano represented to Air India that the goods would be shipped upon payment of PWCM's invoices, that these statements were known to be false when made, and that Air India relied upon them to its detriment.
In moving for summary judgment, Air India has ignored its fraud claim and seeks recovery against Pisano for conversion on the theory that the absence of the goods from PWCM's former facility can be attributable only to Pisano having sold or delivered them to third parties. In addition, it asserts two new claims which do not appear in the complaint, i.e., that Pisano is liable to Air India (1) under New York Business Corporation Law Section 720
for negligence in his capacity as the sole director and president of PWCM, and (2) because the corporate veil should be pierced to impose liability for PWCM's obligation on Pisano.
Pisano cross-moves for summary judgment. He contends that the Business Corporation Law provision relied upon by Air India is inapplicable because PWCM is a Pennsylvania corporation, that there is no evidence of conversion or fraud, and that there is no basis for piercing the corporate veil..
There are two preliminary matters that warrant mention before proceeding to the ...