Monchinski v Joseph Caserta
Annotate this CaseDecided on August 10, 2004
Supreme Court, Nassau County
MARIE MONCHINSKI and PATRICIA SOLAN, Plaintiff(s)
against
JOSEPH CASERTA, J. CASERTA & SON CONTRACTING CORP., MICHAEL MARTIN and NARROWS ELECTRICAL CONTRACTORS, INC., Defendant(s)
16733/01
John P. Dunne, J.
Upon the foregoing papers, it is hereby ordered that the motion by defendants' for an order pursuant to CPLR 3212 awarding summary judgment to defendants Joseph Caserta and Michael Martin on the First Cause of Action for breach of contract and awarding summary judgment to all defendants on the remaining causes of action is granted in part, and only to the extent that the Second through Fifth Causes of Action for fraudulent inducement, fraud, legal fees and harassment are dismissed, and the motion is denied in all other respects. The cross-motion by plaintiffs to strike defendants' answer for failure to provide court ordered disclosure is granted in part and the Fifth, Sixth, Seventh and Eighth Affirmative Defenses, which contend that Joseph Caserta and Michael Martin acted solely as corporate officers and in a corporate capacity, are stricken , and they are precluded from contesting plaintiffs' claim that the corporate veil be pierced and the individual defendants held personally liable.
Plaintiffs' Marie Monchinski and Patricia Solan are owners of premises located at 34 Drake Street, Malverne, New York. They entered into contracts for home improvement and remodeling with defendants' J. Caserta & Sons Contracting Corp. and Narrows Electrical Contractors, Inc., corporations which are owned solely by the named individual defendants', Joseph Caserta and Michael Martin, respectively. Plaintiffs' allege that defendants' did not [*2]possess the necessary skills to complete the contracted work and that they caused extensive damage to the premises, including structural damage. During the pendency of this action the two corporate defendants' were dissolved and corporate records disposed of.
The causes of action for fraud are dismissed as they amount to no more than an allegation that defendants' did not intend to perform under the remodeling contracts. "[A] contract action cannot be converted to one for fraud merely by alleging that the contracting party did not intend to meet its contractual obligations" (Rocanova v. Equitable Life Assur. Soc. of U.S., 83 NY2d 603, 614[1994]; Cavalry Investments, LLC v. Household Automotive Finance Corp., AD3d , 777 NYS2d 719 [2004]). Plaintiffs have presented no evidence from which it can be inferred that defendants harbored an "undisclosed intention not to perform" at the time they agreed to do the work, as they did perform although, allegedly, without any skill or competence (Wagner Trading Co., v. Tony Walker Retail Management Co., 307 AD2d 701, 705 [2003]).
The cause of action for attorneys' fee is also dismissed. "Under the general rule, attorneys' fees and disbursements are incidents of litigation and the prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties or by statute or court rule" (Matter of A.G. Ship Maint. Corp. v Lezak, 69 NY2d 1, 5 [1986]).
With respect to defendant Joseph Caserta and defendant Michael Martin's application for summary judgment on the grounds that they are not liable for breach of contract in their personal capacities, they aver that they acted only as officers of the corporate defendants. Plaintiffs' aver that the individual defendants' operated the defendant corporations as alter-egos, did not adhere to corporate formalities and intermingled funds. They also aver that defendants have failed to provide the disclosure with regard to corporate records, including, inter-alia, minute books, payroll records, vehicle registrations, licensing and insurance records, and certain checks, as well as certain bank statements.
In opposition to plaintiffs' motion, defendants' aver that the dissolution of their corporations was lawful. With respect to the failure to disclose corporate documents, by affidavit dated 6/14/04, defendant Caserta states, "I provided whatever documents are still in my possession. When the Corporation closed, many of the documents were lost and not retrievable." Defendant Martin echoes this statement, word for word. As defendants disposed of documents while this action was pending, and while they were on notice that plaintiffs were required to pierce the corporate veil to hold them personally liable, a question of spoliation of evidence is raised.
"Sanctions may be imposed where critical items of evidence are negligently disposed of by a litigant before the opposing party has an opportunity to properly review and inspect them" ( Miller v. Weyerhaeuser Co., 3 AD3d 627 [2004]). A negligent loss of evidence may be "inexcusable" to the extent that it causes prejudice to a party (Kirkland v. New York City Housing Authority, 236 AD2d 170, 175 [1997]). While "reluctant" to dismiss a pleading absent willful or contumacious conduct, courts will consider the extent of prejudice to determine "whether dismissal is necessary as a 'matter of elementary fairness' " (Favish v. Tepler, 294 AD2d 396 [2002], quoting Puccia v Farley, 261 AD2d 83, 85 [1999]). The reasonableness of the non preserving party's conduct will be evaluated as against the resulting prejudice to the adversary, and whether the defense is "fatally" compromised and the offended party "bereft of appropriate means to confront a claim with incisive evidence" (Favish v. Tepler, 294 AD2d 396, [*3]397 [2002]; Kirkland, supra at p 174). When there is "extreme prejudice" dismissal is warranted (Squitieri v. City of New York, 248 AD2d 201, 204 [1998]).
Under New York law, the corporate veil can be pierced where there has been, inter-alia, a failure to adhere to corporate formalities, inadequate capitalization, [and] use of corporate funds for personal purpose . . . " (Forum Ins. Co. v. Texarkoma Transp. Co., 229 AD2d 341 [1996]). The J. Caserta & Son Contracting Corp. checks submitted indicate that defendant Caserta freely used corporate checks to pay personal obligations, while defendant Martin and Narrows Electrical Contractors, Inc. have failed completely to provide corporate disclosure.
Plaintiffs "are entitled to obtain necessary discovery to ascertain whether there are grounds to pierce the corporate veil" (Dromgoole v. T-Foots, 309 AD2d 1186, 1187 [ 2003]). The destruction or loss of the records during the pendency of this action which would evidence compliance with the corporate form and formalities have left plaintiffs "bereft of appropriate means" to prove that the individual defendants used their corporations as alter egos. The loss to plaintiffs' constitutes extreme prejudice, as the dissolution of the corporate defendants have left plaintiffs without the ability to collect upon any judgment which may be rendered against them in this proceeding. Accordingly, defendants Joseph Caserta and Michael Martin's affirmative defenses which claim that the contracts at issue were solely corporate obligations are stricken, and they are precluded from contesting plaintiffs' claim that the corporate veil should be pierced.
In light of the above-mentioned, the motion and cross-motion are decided according to the foregoing rulings of this Court.
It is so Ordered.
Dated: August 10, 2004
Hon. John P. Dunne
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