de facto amendment of the complaint. In the interest of disposing of the matter as promptly as possible, the Court will do likewise. In future, however, this Court will strictly enforce the provisions of Rule 56.1.
Air India's Motion
The Directorial Negligence Claim
Section 720 of the New York Business Corporation Law permits judgment creditors of a "corporation" to bring actions against officers and directors for, inter alia, negligence in the management and disposition of corporate assets committed to their charge. Section 102(a)(4) defines "corporation," insofar as is relevant here, as "a corporation for profit formed under this chapter . . ."
-- in other words, a New York corporation. While Section 1317 broadens the ambit of Section 720, it subjects to that provision only "directors and officers of a foreign corporation doing business in this state . . ."
There is no evidence sufficient to warrant an inference that PWCM is or was doing business in New York, much less that Air India has made a showing sufficient to warrant summary judgment in its favor on the point.
Air India's fall back position is that Pisano is liable under Pennsylvania law, contending that directors of a Pennsylvania corporation may be sued by creditors for negligence in their capacities as directors. It certainly is not entitled to summary judgment on that theory.
As a general matter, the right of action for breach of a director's duty with respect to the management of a corporation belongs to the corporation. Absent a statute such as Section 720 of the New York Business Corporation Law, individual creditors therefore ordinarily cannot sue directors for mismanagement.
While Air India claims that the Pennsylvania rule is different,
there is no need to determine the issue on this motion. Even if the law is as Air India claims, its motion must be denied unless it has established as a matter of law that Pisano was negligent under the appropriate standard and that his negligence caused Air India's alleged loss. It has not done so.
Air India's conversion claim warrants little discussion. Pisano manifestly did not convert 6,000 square meters of the goods in question because undisputed evidence establishes that it still is in the former PWCM facility in Philadelphia, and Finoco has undertaken to release it to Air India. Nor is there a shred of evidence that Pisano converted any of the other 9,000 square meters. While its present whereabouts, as far as the record discloses, are unknown, there is no evidence that Pisano ever exercised dominion or control over it.
Air India's contention is that Pisano -- who was the sole stockholder, sole director, president and chief executive officer of PWCM -- dominated and controlled PWCM and used that power to convert the Air India carpeting to his own use.
While Pisano's positions are strong evidence of domination and control, it is debatable whether his positions alone establish domination and control sufficiently for summary judgment purposes without evidence that he actually used those positions to make PWCM act "robot- or puppet-like in mechanical response to the controller's tugs on its strings or pressure on its buttons," as Pennsylvania law seems to require.
More basically, however, the lack of proof of any conversion by Pisano that requires denial of summary judgment on that claim requires similar treatment of this.
Pisano's Cross Motion
The Directorial Negligence Claim
Pisano's only response to Air India's contention that it is entitled to recover on the theory that he was negligent in his capacity as a director -- essentially by failing to take appropriate steps to keep track of and safeguard the goods -- is the argument that Section 720 of the New York Business Corporation Law does not apply to him.
As indicated above, the statute applies only to foreign corporations doing business in New York. Air India has failed to make out a prima facie case that PWCM is or was doing business in this state. As that is an issue on which Air India would have the burden of proof at trial, and as the time for discovery has expired, Pisano is entitled to summary judgment dismissing the claim under that statute.
Pisano, however, has failed to respond to Air India's contention that Pisano is liable to it for negligence under Pennsylvania law.
This aspect of the claim presents a closer question. Given Air India's unrefuted denial of receipt, there are only two possibilities as to how the goods were lost. Either they were taken by someone not entitled to them or they were lost in shipment. If they were lost in shipment, it is impossible to see how Pisano could be liable, whether for negligence or on any other theory. If they were taken while the facility still was under PWCM's control, the disappearance may or may not have been the product of a failure by Pisano to exercise the requisite degree care in safeguarding the property. If they disappeared after Finoco took over, it would be hard to see how the disappearance could have been a product of negligence by Pisano. So the first question is whether there is any evidence to suggest that the goods disappeared while under PWCM's control, a subsidiary issue on which Air India would bear the burden of persuasion at trial.
On the one hand, we have the Finoco affidavit denying that it seized or received any of the Air India goods. As noted, however, the affidavit in the same breath acknowledges that Finoco still has control of 6,000 square meters of Air India's carpeting. The Finoco affidavit therefore does not negate the possibility that the goods were in the facility when Finoco took over.
On the other hand, Pisano's testimony falls short of establishing that the missing 9,000 square meters actually did pass into Finoco's hands. While he believes that it did, he gave the following testimony:
"Q Let me ask it this way. Do you know that it was there or are we just guessing?