Sensitive Touch v Halaas Med. Servs., PLLC
Annotate this CaseDecided on December 11, 2009
Supreme Court, New York County
Sensitive Touch, Plaintiff,
against
Halaas Medical Services, PLLC and YAEL HALAAS, Defendants.
600553/2009
For Plaintiff:
Cliff S. Schneider, Esq.
Cohen Schneider LLP
275 Madison Avenue, Suite 617
New York, NY 10016
(212) 878-6659
For Defendants
Colleen M. Tarpey, Esq. and Daniel Meier, Esq.
Garfunkel, Wild & Travis, P.C.
111 Great Neck Road
Great Neck, New York 11021
(516) 393-2200
Michael D. Stallman, J.
In this action, plaintiff seeks to recover, among other things, management fees
allegedly owed for the months of October 2008 and November 2008, pursuant to the terms of a
"Services Agreement" made as of September 6, 2008 between plaintiff and defendant Halaas
Associates, [*2]PLLC. The complaint alleges five causes of
action, two for breach of contract against Halass Medical Services, PLLC and Yael Halaas,
respectively, two for slander, and one for tortious interference with business relations.
Defendants move to dismiss the second, third, fourth, and fifth causes of action. Plaintiff
cross-moves for leave to amend the complaint. The proposed amended complaint drops the third
and fourth causes of action for slander, and fifth cause of action for tortious interference and
proposes instead a third cause of action for piercing the corporate veil.
DISCUSSION
"Leave to amend a pleading should be freely given as a matter of discretion in the absence of prejudice or surprise, although to conserve judicial resources, examination of the underlying merit of the proposed amendment is mandated." Zaid Theatre Corp. v Sona Realty Co., 18 AD3d 352, 355 (1st Dept 2005) (internal citations and quotation marks omitted).
The doctrine of piercing the corporate veil applies to limited liability companies. Retropolis, Inc. v. 14th St. Dev. LLC, 17 AD3d 209, 210 (1st Dept 2005). Defendants argue that there is no separate cause of action in New York for piercing the corporate veil, citing Morris v New York State Dept. of Taxation and Finance (82 NY2d 135 [1993]). In Morris, the Court of Appeals stated, "an attempt of a third party to pierce the corporate veil does not constitute a cause of action independent of that against the corporation." Id at 141. However, in this context, "independent" does not mean "separate"; rather, the Court of Appeals emphasized that the cause of action is not independent because it "assumes that the corporation itself is liable for the obligation sought to be imposed." Id.The proposed amended complaint alleges that Yael Halaas failed to observe basic corporate formalities, failed to provide adequate capitalization, and that she maintained total dominion and control of Halaas Medical Services, PLLC. As defendants indicate, plaintiff did not plead that the corporate form was used to defraud plaintiff.However, such allegation bears to some degree on the Halaas's intent, which is most likely within the sole knowledge of Halaas and least amenable to direct proof for purposes of pleading. To the extent that the proposed cause of action places Halaas on notice of an anticipated theory of liability, it is appropriately included in the complaint and provides a framework for discovery.
As to the second cause of action, for breach of contract against Halaas, defendants argue (as in their motion to dismiss) that plaintiff knew that the Services Agreement was only with Halass Medical Services, PLLC. In support of this argument, defendants cite paragraph 4 (a) of the Services Agreement, which provides, in pertinent part: "The Company agrees that it shall not look to the PLLC's shareholders personally for the payment of any portion of the Fee contemplated by this agreement." Tarpey Opp. Affirm., Ex 1 at 3.
However, it is undisputed that the articles of organization of Halaas Medical Services, PLLC
were filed with the Department of State on September 17, 2008, after the Services Agreement
was made. Tarpey Affirm., Ex 4. Halaas Medical Services, PLLC did not come into existence
until the articles of organization were filed with the Department of State. Limited Liability
Company Law § 203 (d).
"When individuals purporting to act on behalf of a non-existent principal enter into
a contract with a third party, . . . under well-settled principles of agency law, the contract
generally remains valid and enforceable as between the third party and the individuals who
executed the contract on behalf of the non-existent principal. As a [*3]general rule, [l]iability is based on the rule that one who assumes
to act as agent for a nonexistent principal is himself [or herself] liable on the contract in the
absence of an agreement to the contrary and on the theory of a breach of an implied warranty of
authority.'"
Metro Kitchenworks Sales, LLC v Continental Cabinets, LLC, 31
AD3d 722, 723 (2d Dept 2006)(citation omitted). Defendants' reliance upon paragraph 4 (a)
of the Services Agreement is not persuasive. Paragraph 5 (e) of the Services Agreement states
that "The PLLC is duly organized under the laws of the State of New York and authorized and
qualified to do all things required of it under the Agreement." Tarpey Opp. Affirm., Ex 1 at 4.
This was apparently not true when the Services Agreement was made. Paragraph 4 (a), does not,
by its terms, release Halaas from any individual liability; Halaas Medical Services, PLLC had
not yet come into existence at the time of contract execution. At this time, prior to discovery of
the way Halaas and the PLLC operated, and absent any proof of ratification of the
pre-organization contract and business transactions, it is premature to speculate about individual
liability.
Because defendants have not demonstrated that the proposed amended pleading is plainly
lacking in merit, plaintiff's cross motion for leave to amend the complaint is granted. Defendants'
motion to dismiss is denied the original complaint is denied. The proposed amended complaint
dropped those causes of action which defendants moved to dismiss. Defendants' remaining
argument to dismiss the second cause of action for breach of contract was raised in opposition to
plaintiff's cross motion, which this Court rejected.
CONCLUSION
Upon the
foregoing papers, it is
ORDERED that defendants' motion to dismiss the complaint is denied; and it is further
ORDERED that plaintiff's cross motion for leave to amend is granted, and the amended complaint in the proposed form annexed to the moving papers shall be deemed served upon service of a copy of this order with notice of entry thereof; and it is further
ORDERED that the defendants have 20 days from the date of said service to serve an answer to the amended complaint.
Once defendants have answered the amended complaint, counsel should contact the Trial
Support Office (646-386-3155) for assistance in making arrangements with the justice to be
assigned to this case to schedule a preliminary conference.
Dated: December 11, 2009
New York, New York
ENTER:
/s/
J.S.C.
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