The opinion of the court was delivered by: Charles J. Siragusa United States District Judge
This third-party action arises from a dispute over a construction contract between Plaintiff Secured Systems Technology, Inc. ("Secured") and Defendant Frank Lill & Son, Inc. ("Lill"). Plaintiff and Third-Party Defendant Shared Systems Technology, Inc. ("Shared") are related companies. After Secured sued Lill in this action for breach of contract, Lill asserted a counterclaim against Secured, and a cross-claim against Shared, on the theory that Secured and Shared are alter-egos. Now before the Court is Shared's motion for summary judgment (Docket No. [#89]), seeking a ruling that, as a matter of law, Lill cannot pierce Shared's corporate veil. Lill opposes the application, but has not cross-moved for summary judgment on the "veil piercing" issue. Shared's application is denied.
The reader is presumed to be familiar with the Court's prior Decisions and Orders in this action. See, Docket Nos. [#30], [#73], [#85]. Unless otherwise noted, the following are the undisputed facts of this case, viewed in the light most-favorable to Lill, the non-moving party. The subject construction work was part of the Bridgeport Harbor Station Project in Connecticut. Stone & Webster Construction, Inc. ("Stone & Webster") was the prime contractor, Lill was a subcontractor, and Secured was a sub-subcontractor.
At all relevant times, Shared was owned by Mrs. Donna DeMartino. Her husband, Frank DeMartino, Sr., was one of Shared's corporate officers. In 1993, Shared was incorporated, and then began to perform construction work, including concrete restoration and fireproofing. See, [#89-3] Canino Aff. ¶ ¶ 2-3. In 1997, Secured was incorporated. Secured was entirely owned by Frank DeMartino, Sr. After it was incorporated, Secured never actually did business for approximately nine years. In 2006, shortly before the events at issue in this case, Mr. DeMartino "activated" Secured, with the intent that Secured would begin performing insulation work that had previously been performed by Shared. See, [#89-3] Canino Aff. ¶ 10.
At some point prior to September 2006, Shared, not Secured, submitted a bid to Lill, to perform work on the Bridgeport Harbor Station Project. However, Shared later decided to structure the bid such that Secured would subcontract with Lill to perform the insulation work, and Secured would sub-contract with Shared to perform any refractory, grouting and concrete work that would be required. Affidavit of Scott Love ("Love Aff.") ¶ ¶ 13-14. The record does not clearly establish whether that decision coincided with the decision to "activate" Secured, which had been dormant since 1997. In September 2006, Secured submitted a revised bid to replace the bid submitted by Shared, although the revised bid contained a reference to Shared, which Secured maintains was a typographical error. Id.
On or about January 9, 2007, Lill and Secured executed a purchase order agreement, pursuant to which Secured agreed to install insulation at the project, in exchange for $3,101,725.00. The type-written purchase order, which was prepared by Lill, originally referenced "Shared Systems Technology, Inc.," but Scott Love, who was Secured's Project Manager, and who also worked for Shared, directed that the name "Shared" by replaced by "Secured," so that the purchase order, as executed, was addressed to "Secured Systems Technology, Inc." Answer [#3-2], Ex. 1; Bold Aff. [#100], Ex. SS, Interrogatory 4.
Secured subsequently asked Lill to remove Shared's original bid from the contract documents. In that regard, on January 8, 2007, Love wrote to Lill's employee, Jeffrey Payton, and stated, in pertinent part, "Please remove SST proposal from contract documents and put in place *SECURED SYSTEMS* four page proposal #IN-111 rev2 including clarifications." Love Aff., Ex. A. Shared and Secured both used the initials SST, but in this instance, Love's reference to SST was intended to mean Shared. Payton responded, "The P.O. [purchase order] was written to Secured Systems Technologies so you should be fine." Id.
Secured was capitalized primarily with a bank line of credit obtained in 2007, which was initially in the amount of $170,000., and which by the end of 2007 had been temporarily increased to $1.25 million, to allow Secured to complete the project. Bank of America justified the the temporary increase in Secured's line of credit, based upon Shared's creditworthiness:
We recommend approval for the temporary increase based on the acceptable credit profile of Shared Systems Technology, Inc. and Subsidiaries (SST), which includes Secured Systems Technology (Secured). SST recorded an ORR/FRR [Obligor Risk Rating/Facility Risk Rating] of 6 as of 6/30/07. The ORR/FRR for Secured Systems Technology (Secured) is also a 6 and is based on the consolidated SST given the common ownership and management of the two companies.
Canino Aff. [#89-3] Ex. J. Frank DeMartino Sr. and Donna DeMartino also personally guaranteed the increased line of credit for Secured. Id. [#89-7] at p. 13.
During 2007, financial disputes arose between Lill and Secured, and in January 2008 Secured left the job site. Lill maintains that Shared breached the agreement by walking off the job before completing its work, and that it incurred damages, as a result of both having to finish Secured's work, and having to correct problems with Secured's already-completed work. Secured counters that all of its work was complete and correct when it left the job, and that Lill breached the agreement by failing to pay monies owed under the agreement.
On June 12, 2008, Secured commenced this action against Lill. On February 5, 2010, Lill amended its Answer [#60] to include a third-party claim against Shared, designated as a counterclaim. Lill alleges that Secured "was operating under the complete dominion and control of [Shared,] an affiliated company, and that [Secured] was otherwise the alter ego of [Shared]." Braggins Aff. [#38] at ¶ 3. In support of this claim, Lill relies on the following facts, of which proof exists in the record: 1) Secured's bid proposal to Lill was on Secured's letterhead, but indicated, at one point in the document, that it was being submitted by Shared, see [#38-8] at p. 2 (see also, id. at p. 7, referring to Shared in connection with insurance); 2) Secured submitted a change order request to Lill for materials and labor provided by Shared, see [#38-9]; 3) Secured used Shared's pre-printed forms to report information concerning the job, see [#38-11] & [#38-18]; 4) key employees of Shared, such as Michael Munyon ("Munyon"), Robert Canino ("Canino") and Betsy Holler ("Holler"), performed work for Secured on the project, such as preparing bids and handling accounts receivable, see, [#38-12]; 5) Shared and Secured are both controlled by Mr. and Mrs. Frank DeMartino, Sr., and they, along with other companies controlled by DeMartinos, jointly borrowed $3 million together under a promissory note in which they were all designated as a single "contractor," and in which Shared and Secured guaranteed each other's payment [#38-12]; 6) Secured began as a "division" of Shared, and after a year became a separate corporation designed to act as a subcontractor to Shared on jobs requiring insulation and asbestos, for the purpose of protecting Shared from liability, though there was really "no separation" between the two companies, see, [#38-14 ] at pp. 11, 25-27, 33-34,87-88, 106; 7) employees were moved or "transitioned" between the two companies as needed, see, [#38-14 ] at pp. 11, 25-27, 33-34,87-88, 106; 8) although Secured's project manager, Scott Love, no longer works for either Shared or Secured, he is being paid by Shared to assist Secured in this lawsuit, ...