The opinion of the court was delivered by: McMAHON, District Judge.
MEMORANDUM DECISION AND ORDER GRANTING MOTION OF DEFENDANT FRANK
ADAMO FOR SUMMARY JUDGMENT
Plaintiff is an elderly widow who entrusted her household
furnishings to an unspecified moving company known as Moving
America when she moved from Orange County to Alabama. The truck
and its contents never made it to plaintiff's new home, and
everything she had was lost. Plaintiff, in a Complaint that can
hardly be called "well pleaded," has sued every company known as
"Moving America" that she can locate in the Southern or Northern
District of New York, together with persons whom she identifies,
on information and belief, as their shareholders — Robert H.
Freedman, Sandra Freedman and Frank Adamo. The various companies,
as frequently happens with small, thinly-capitalized enterprises,
are no longer in business, the Freedmans are divorced, Robert
Freedman has moved to Florida and Sandra Freedman cannot be
located so as to be served with process.
This leaves Frank Adamo, who is alleged to be one of the
principals in a group of closely-held corporations that are
operating some sort of shell game to avoid liability to
dissatisfied customers like Mrs. Triemer. The complaint contains
two references to Mr. Adamo. The first states, on information and
belief, that Adamo is "an officer and/or shareholder of one or
more of the above entities." Complaint ¶ 4. The Complaint does
not identify which entity or entities were owned by Adamo, or
whether that entity or those entities had been in contact with
her concerning her move. The second, a purely conclusory
allegation, states that Adamo (as well as the Freedmans) "engaged
in complete domination of the corporate Defendants, misused the
corporate form for the express purpose of committing and
facilitating the fraud and wrongful acts set forth above, and
abused the privilege of doing business in the corporate form such
that equity should intervene and pierce the corporate veil of the
corporate Defendants, holding all Defendants personally liable."
Complaint ¶ 44. There is no allegation in the instant Complaint
that Mr. Adamo had any dealings with plaintiff; that he, acting
either personally or on behalf of any corporation, entered into
any contract to move her belongings; or that he or any company in
which he had an interest ever had custody of her goods and
chattels. Indeed, the only person identified in the Complaint as
having dealt with plaintiff is someone named John Angel, and
there is no allegation about what the relationship is between Mr.
Angel and Mr. Adamo if, indeed, there is any relationship between
them at all.
After submission of the letter and the complaints, Justice
Schwartz transferred the case to White Plains, and I was assigned
to hear it. Subsequently, Adamo moved for judgment on the
pleadings or, in the alternative, for summary judgment pursuant
to Federal Rule of Civil Procedure 56, dismissing the claim on
the ground that it states no complaint against him.
Whether considered on the pleadings alone or as a motion for
summary judgment, the motion must be granted.
The law is well settled that when a complainant seeks to pierce
the corporate veil, she must prove both that the individual
defendant "exercised complete domination of the corporation in
respect to the transaction attacked" and also that "such
domination was used to commit a fraud or wrong against the
plaintiff which resulted in plaintiff's injury." Morris v. New
York State Dep't of Taxation and Finance, 82 N.Y.2d 135,
603 N.Y.S.2d 807, 623 N.E.2d 1157 (1993). As a matter of pure
pleading, the instant Complaint does neither.
Insofar as the exercise of complete domination is concerned,
the critical element of ownership over something is alleged on
information and belief, which is insufficient to withstand a
motion to dismiss. "In order to allege properly a cause of action
against a shareholder or officer, a plaintiff must do more than
conclusorily state the shareholder or officer exercises dominion
and control over the corporation." See, e.g.,
Strojmaterialintorg v. Russian Am. Commercial Corp., 815 F. Supp. 103,
105 (E.D.N.Y. 1993) (citations omitted); Cresser v.
American Tobacco Co., 174 Misc.2d 1, 5, 662 N.Y.S.2d 374, 377
(N.Y.Sup.Ct. 1997) ("Recasting the . . . criteria for piercing
the corporate veil and framing them as allegations in the
complaint does not, without more, sustain a cause of action. . .
."). Moreover, it is not even alleged what corporation Mr. Adamo
had ownership of. More important, the Complaint says nothing
about how Mr. Adamo exercised domination and control over any
corporation with respect to Mrs. Triemer's move. It does not
contain a single non-conclusory allegation about his connection
to Mrs. Triemer. And the one and only allegation against Mr.
Adamo concerning the transaction attacked — the contention in the
Ninth Count that the three individual defendants "misused the
corporate form for the express purpose of committing and
facilitating the fraud and wrongful acts set forth above" — does
not include a single specific allegation of how plaintiff misused
the corporate form. Disregard of the corporate form is highly
disfavored under New York law, see, e.g., William Wrigley Jr.,
Co. v. Waters, 890 F.2d 594, 600 (2d Cir. 1989), and depends on
a showing of fraud, which is subject to the strict pleading
requirements of Federal Rule of Civil Procedure 9(b) (requiring
the pleading of fraud with particularity). This skimpy pleading
cannot be sustained.
The failure to plead fraud with particularity, as required by
Federal Rule 9(b), means that plaintiff has failed to plead
adequately the second of the two requirements for piercing the
corporate veil. The closest reading of this Complaint fails to
disclose a single thing that Mr. Adamo allegedly did to deceive
or defraud the plaintiff in connection with her move.
Mrs. Triemer has suffered a tremendous loss, and it is more
than unfortunate that she will apparently have no redress for it.
But the fact that whatever corporation entered into a contract
with her has gone out of existence does not give her recourse
against Mr. Adamo.
This constitutes the decision and order of the Court.
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