Citicorp Vendor Fin., Inc. v Thierno

[*1] Citicorp Vendor Fin., Inc. v Thierno 2007 NY Slip Op 51146(U) [15 Misc 3d 1145(A)] Decided on June 4, 2007 Supreme Court, Nassau County Austin, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 4, 2007
Supreme Court, Nassau County

Citicorp Vendor Finance, Inc., Plaintiff,

against

Barry Thierno d/b/a The Deluca Organization, Defendant.



008825/05



COUNSEL FOR PLAINTIFF

Moritt Hock Hamroff & Horowitz LLP

Garden City, New York 11530

Counsel for Defendant

Peter E. Torres, Esq.

112 East 23rd Street, Suite 500

New York, New York 10010

Leonard B. Austin, J.

Plaintiff Citicorp Vendor Finance Corp. ("Citicorp") moves for summary judgment against the Defendant Barry Thierno doing business as The DeLuca Organization ("Thierno").

BACKGROUND

By lease dated December 30, 2003 Konica Minolta Business Solutions leased a copier and controller ("Lease 1"). Lease 1 identifies the lessee as "The DeLuca Organization." The lease was signed by Thierno as "Controller". The lease provided for monthly payments of $1,190 over a term of 60 months.

By lease dated June 21, 2004, Konica Minolta Business Solutions leased two color copiers ("Lease 2"). Lease 2 also identifies the lessee as "The DeLuca Organization." The lease was signed by Thierno who again indicated his title was "Controller."

Konica Minolta assigned its rights in the leases to Citicorp. Citicorp alleges that only $14,280 was paid on Lease 1. Citicorp alleges that no payments were made on Lease 2. Citicorp seeks to recover the balance due on both leases.

Even though the lessee defaulted in payment, Citicorp did not repossess the equipment, even though it had the right to do so under the terms of the leases. The equipment remained at the business premises until it was seized by the federal authorities because one of the other tenants in the premises was making illegal music CDs.

The lessee is undeniably in default on the leases. The only issue in this case relates to liability whether Thierno can be held personally liable for the amounts due on the leases. Thierno asserts he signed the leases in his capacity as the Controller of The DeLuca Organization. He asserts that since he signed on behalf of The DeLuca Organization, he cannot be held personally responsible for the balance due on the leases.

The real issue revolves around the existence of The DeLuca Organization and whether Thierno knew that the DeLuca Organization never existed.

The records of the Secretary of State indicate:

1. The DeLuca Organization is not and has never been a domestic corporation or a foreign corporation authorized to do business in New York. See, Business Corporation Law §§403, 1301, 1305.

2. The DeLuca Organization is not and has never been a domestic limited liability company or a foreign limited liability company authorized to do business in New York. See, Limited Liability Company Law §§203, 209, 801, 805.

3. The DeLuca Organization is not a domestic or foreign limited partnership. See, Partnership Law §§121-201, 121-206, 121-902, 121-904..

The parties have not provided the Court with a certificate indicating that The [*2]DeLuca Organization is either a partnership or an individual doing business under an assumed name. See, General Business Law §§130, 132.

DISCUSSION

A person who enters into a contract on behalf of a non-existent business entity or non-existent principal is personally liable on that contract. Metro Kitchenworks Sales, LLC v. Continental Cabinets, LLC, 31 AD3d 722 (2nd Dept. 2006); Grutman v. Katz, 202 AD2d 293 (1st Dept. 1994); Bay Ridge Lumber Co., Inc. v. Groenendaal, 175 AD2d 94 (2nd Dept. 1991); Brandes Meat Corp. v. Cromer, 146 AD2d 666 (2nd Dept., 1989); and Puro Filter Corporation of America v. Trembley, 266 App. Div. 750 (2nd Dept. 1943). See, 14 NY Jur.2d, Business Relationships § 96.

However, a person who signs a contract on behalf of a non-existent business entity and who has no actual knowledge that he or she works for a non-existent business entity will not be held personally liable. Lodato v. Greyhawk North America, LLC, 39 AD3d 496 (2nd Dept. 2007); and Bedford Hills Supply, Inc. v. Hubert, 251 AD2d 438 (2nd Dept. 1998).

Questions of fact exist regarding whether Thierno knew that The DeLuca Organization never had legal existence. Thierno has consistently asserted that he was hired by one Alpha Barry, who described himself as the President of The DeLuca Organization.

Although Thierno had the title of "Controller", he asserts his job was more in the nature of a bookkeeper/administrative assistant. Thierno denies having any management role or control of The DeLuca Organization. He asserts that, the Konica-Minolta salesperson with whom he dealt, knew that Thierno was signing the agreement on behalf of The DeLuca Organization in solely and agency capacity.

Plaintiff's reliance upon Thierno's W-2, which indicates he was employed by Magic Sound, is not dispositive. Magic Sound and The DeLuca Organization shared space in the same premises. Thierno apparently worked for both Magic Sound and The DeLuca Organization.

Since questions of fact exist regarding whether Thierno knew that The DeLuca Organization did not exist, summary judgment must be denied. See, Zuckerman v. City of New York, 49 NY2d 557 (1980).

Questions of fact also exist about damages . In the event of lessee's default, the leases give the lessor several contractual options regarding damages. Additionally, the lessor retained the right to seek damages in accordance with the applicable law, which, in this case, is Uniform Commercial Code Article 2-A.

The lessor has not chosen any of the remedies provided by the lease or the Uniform Commercial Code. The lessor has sued for the full balance due on the lease. This is not one of the damage remedies provided by the leases or the statue. Lessor must elect its remedy and seek damages in accordance with the remedy selected.

Accordingly, it is,

ORDERED, that Plaintiff's motion for summary judgment is denied; and it is

further,

ORDERED, that counsel for the parties are directed to appear for a conference to schedule a trial date on June 21, 2007 at 9:30 a.m.

This constitutes the decision and order of this Court. [*3]

Dated: Mineola, NY_____________________________

June 4, 2007Hon. LEONARD B. AUSTIN, J.S.C.