L&T Fuel Oil, Inc. v Saljo Bakery Corp.
Annotate this CaseDecided on June 9, 2006
Supreme Court, Kings County
L&T Fuel Oil, Inc., Plaintiff,
against
Saljo Bakery Corp. et al., Defendants.
47005/03
Bert A. Bunyan, J.
Upon the foregoing papers, defendant John Imparato a/k/a Giovanni Imparato (Imparato) moves, pursuant to CPLR 3212, for an order granting summary judgment dismissing the complaint as asserted against him.
BACKGROUND
Plaintiff L & T Fuel Oil, Inc. (L&T), a business located in Brooklyn and a supplier of oil and fuel to defendant Saljo Bakery Corp. d/b/a Modern Bakery (Saljo or Modern Bakery), commenced the instant lawsuit seeking damages in excess of $38,000 for breach of contract for unpaid deliveries of fuel oil.
In his motion papers, Imparato, who is sued in his individual capacity, alleges that Saljo was a corporation, now defunct, duly organized and incorporated in New York, which had maintained its principal place of business at 3905 13th Avenue in Brooklyn, and that he was a principal and officer in said corporation. He further asserts that L&T entered into a contract with Modern Bakery, wherein the plaintiff agreed to provide fuel [*2]oil to said corporate defendant. Imparato argues that he never contracted with L&T in his individual capacity, and notes that bills for fuel oil were addressed to Modern Bakery. Additionally, he avers that although he, as an officer, was responsible for paying bills for the corporation, he never agreed to be personally bound for any of the corporation's debts. Thus, he avers that he cannot be held liable as an individual for any debts claimed to be owed by the corporation.[FN1]
In opposition, L&T, through its principal, Gary Allen (Allen), maintains that L&T and Modern Bakery had a working relationship, based upon an oral agreement, that extended for approximately 19 years, whereby L&T would regularly provide fuel to Modern Bakery as needed, and Modern Bakery would remit payment at irregular intervals during the course of the year. He alleges that he began dealing exclusively with Imparato when the latter advised him that he (Imperato) had taken over the operation of the business. At some subsequent point, L&T ceased receiving payments for past deliveries. L & T, through Allen, disavows any knowledge that it had been dealing with a corporation, and thus seeks to recover the monies allegedly owed L&T from Imparato, contending that Imparato should be estopped from now asserting that he was only an officer in a corporation that had incurred the debt, or, alternatively, that the corporate veil should be pierced so as to allow for recovery from Imparato as an individual.
DISCUSSION
The burden on a motion for summary judgment rests initially upon the moving party to come forward with sufficient proof in admissible form to enable a court to determine that it is entitled to judgment as a matter of law. If this burden cannot be met, the court must deny the relief sought (CPLR 3212; Zuckerman v City of New York, 49 NY2d 557 [1980]). However, once a moving party has made a prima facie showing of its entitlement to summary judgment, "the burden shifts to the opposing party to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" (Garnham & Han Real Estate Brokers v Oppenheimer, 148 AD2d 493 [1989]; see also Zuckerman, 49 NY2d at 562). Mere conclusory statements, expressions of hope, or unsubstantiated allegations are insufficient to defeat the motion (Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966 [1988]).
In addressing the issues presented in the instant motion, it must be recognized, as argued by Imparato, that "[i]t is settled that a corporation exists independently of its owners, as a separate legal entity [and] that the owners are normally not liable for the debts of the corporation . . .'" (Joan Hansen & Co. v Everlast World's Boxing Headquarters, 296 AD2d 103, 109 [2002], quoting Morris v Dept. of Taxation, 82 NY2d [*3]135, 140 [1993]). Even an individual's status as president and sole shareholder of a corporation is insufficient to pierce the corporate veil absent a showing that corporate formalities were not observed (see P.A. Bldg. Co. v Elwyn D. Lieberman, Inc., 227 AD2d 277 [1996]). Moreover, it has even been held that the law permits incorporation for the very purpose of escaping personal liability (Walkovszky v Carlton, 18 NY2d 414 [1996]; Joan Hansen & Co., 296 AD2d at 109; Seuter v Lieberman, 229 AD2d 386 [1996]; Herman v Siegmund, 102 AD2d 810 [1984], appeal dismissed 49 NY2d 917 [1980]).
Generally, a corporate form will be disregarded only to prevent fraud, illegality or to achieve equity (Bowles v Errico, 163 AD2d 771 [1990]). " The determinative factor is whether the corporation is a "dummy" for its individual stockholders who are in reality carrying on the business in their personal capacities for purely personal rather than corporate ends''" (Herman, 102 AD2d at 810, quoting Port Chester Elec. Constr. v Atlas, 40 NY2d 652, 657 [1976], quoting Walkovszky, 18 NY2d at 418). " The party seeking to pierce the corporate veil must establish that the owners, through their domination, abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against that party such that a court in equity will intervene'" (Ravens Metal Prods. v McGann, 267 AD2d 527, 529 [1999], quoting Morris, 82 NY2d at 141-142; see also Maggio v Becca Constr. Co., Inc., 229 AD2d 426, 427 [party seeking to pierce the corporate veil has the burden of establishing that there is a basis to do so]). Further, the decision to pierce the corporate veil is fact-laden and thus is not well-suited for summary judgment resolution (Giarguaro S.p.A. v Amko Intern. Trading, 300 AD2d 349 [2002]).
Plaintiff, in opposition to defendant's motion, improperly attempts to shift the burden of establishing the existence of a corporate entity, and has failed to support its allegation disputing the fact that a corporation existed (see Maggio, 229 AD2d at 427-428 ["the plaintiffs have not provided any evidence that there were no corporate minutes, no board of directors, no shareholders, and no corporate books, records, or bank accounts"]). Moreover, it has failed to meet its burden of establishing that the corporate veil should be pierced, even though plaintiff seeks to exploit Imparato's role as the sole spokesperson and representative of the corporation in order to impute personal liability for the debt. In this regard, "[w]here one individual appears to exercise complete dominion and control, the factors to be examined in determining whether to pierce the corporate veil are: * * * (1) domination and control over corporation by those held liable which is so complete that the corporation has no separate mind, will, or existence of its own; (2) use of this domination and control to commit fraud or wrong or any other dishonest or unjust act; and (3) injury or unjust loss resulting to plaintiff from said control and wrong" (Bowles, 163 AD2d at 773, citing 13 NY Jur 2d Business Relationships, § 26, at 289, and Matter of Guptill Holding Corp. v State of New York, 33 AD2d 362, 365 [1970]).
Significantly, plaintiff did not allege any fraudulent or illegal activity with respect to the conduct of the corporation (see Bowles,163 AD2d at 773). Moreover, when deposed, Allen was unable to identify any written agreement or document whereby [*4]Imparato became personally liable for debts incurred by Saljo or Modern Bakery. Indeed, when asked why he amended his pleadings in order to name Imparato individually as a defendant, Allen testified that such action was taken solely as a result of a telephone conversation he had with Imparato in 1998, wherein he learned that "John had come back into the picture and had told me that he was in charge now and the brothers were out . . . [and] whatever friction was going on between the brothers, L&T or myself [he] was not a part of and had no knowledge of. . . .We had to name John Imparato ... because supposedly from a certain point in time . . . he was responsible for the bills."
In view of the foregoing, defendant has established his entitlement to summary judgment and accordingly, the defendant's motion for summary judgment is granted and the complaint is dismissed as against him. The action is severed accordingly.
The foregoing constitutes the decision, order and judgment of the court.E N T E R,
J. S. C.
Footnotes
Footnote 1:Imparato also notes that on December 5, 2003, plaintiff filed a mechanic's lien which only named Saljo Bakery Corp. d/b/a Modern Bakery as the company with whom the contract was made.
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