party to the Agreement. Consequently, unless there is an
equitable reason to reform the Agreement to treat Lofredo himself
as a party to it, the Agreement is void from its inception for
want of two contracting parties.
An individual who does business as a nonexistent corporation is
personally liable in suits brought against the "corporation."
Poritzky v. Wachtel, 176 Misc. 633, 634, 27 N.Y.S.2d 316, 317
(Sup.Ct. 1941); Brandes Meat Corp. v. Cromer, 146 A.D.2d 666,
537 N.Y.S.2d 177 (2d Dep't 1989); Annicet Associates, Inc. v.
Rapid Access Consulting, Inc., 171 Misc.2d 861, 864-65,
656 N.Y.S.2d 152, 154 (Sup.Ct. 1997); Worldcom, Inc. v. Sandoval,
701 N.Y.S.2d 834, 1999 WL 1325974, at *3 (Sup.Ct. Nov. 24, 1999);
2A N.Y.Jur.2d, Agency § 326. Lofredo asserts that because he
would ultimately be personally liable for any judgment obtained
by plaintiffs on their breach of contract claims if plaintiffs
were suing for damages, it follows that he can assert
counterclaims based on that same contract.
Equity does not require that Lofredo be allowed to assert
claims under the Agreement. The cases cited above impose
liability on the ground that it would be inequitable to allow
individuals who form contracts on behalf of nonexistent
corporations to avoid liability because their misrepresentations
resulted in a contractual defect. Poritzky, 176 Misc. at
634-35, 27 N.Y.S.2d at 317-18; Annicet, 171 Misc.2d at 864-65,
656 N.Y.S.2d at 154. See also D & W Central Station Alarm Co. v.
Copymasters, Inc., 471 N.Y.S.2d 464, 467, 122 Misc.2d 453, 457
(Civ.Ct. 1983) ("A court cannot allow a litigant to take
advantage of its own wrong — the nonpayment of its own franchise
taxes."). The plaintiffs in those cases believed that they had
entered into valid contracts with corporations and, since those
corporations did not exist, had no remedy except against the
individuals who acted as agents of those purported corporations.
However, Durkin Hayes has never sued defendants. Durkin Hayes
was brought into this action as a third party on defendants'
counterclaim. Thus, defendants' reasoning does not apply to
Durkin Hayes. Even as to plaintiffs, this case presents a far
different question. Here, plaintiffs are not seeking damages.
Moreover, they have agreed to withdraw all of their claims.
Lofredo is not faced with the prospect of personal liability.
Nevertheless, Lofredo wishes to enforce the Agreement for his
personal benefit by asserting claims against Durkin Hayes and
plaintiffs. Lofredo offers no reason, and cites no authority, for
reforming a defective contract for his benefit when his own
misrepresentation is responsible for the defect. Lofredo drafted
the Agreement himself and signed it on behalf of LL Associates,
not himself personally. The Agreement defines "Salesperson" as LL
Associates, not Louis Lofredo. Except for his signature and the
use of his name in the name of the purported corporation, there
is no mention of Louis Lofredo in the Agreement. Lofredo concedes
that he knew LL Associates had been defunct for nineteen years at
the time he drafted and signed the Agreement. He thus knew, or
should have known, that the Agreement was invalid, and cannot now
complain that it should be enforced for his benefit. See
International Sport Divers, 25 F. Supp.2d at 112 (individual who
signs contract as president of nonexistent corporation "is not a
party to the contract and therefore does not have the capacity to
sue on it.").
Furthermore, this misrepresentation created an impression that
Lofredo's business was more substantial than it actually was.
Frank Florio states that "[w]hen Florio Entertainment, Inc.
entered into an agreement with Louis Lofredo Associates, Inc., it
was important to me that Louis Lofredo Associates, Inc. was a
corporation." (Florio Aff. ¶ 2.) Lofredo offers nothing to
contradict the assertion that plaintiffs relied on LL Associates'
corporate status when entering the Agreement. Indeed, since
Lofredo knew his corporation was defunct, the only explanation
his misrepresentation is that he believed that he gained some
advantage from using corporate letterhead and portraying himself
as a corporation. Reforming the contract for Lofredo's benefit
would not only fail to protect any legitimate interest of Lofredo
but would also prejudice plaintiffs' interest in being bound only
to parties which are what they claim to be. It would thus be
inequitable to construe the Agreement as a contract with Lofredo
For the foregoing reasons, Durkin Hayes' motion for summary
judgment and plaintiffs' motion for summary judgment dismissing
all of defendants' counterclaims against them are granted. In
accordance with plaintiffs' agreement, the complaint is also
dismissed. This case is closed.