Agai v Diontech Consulting, Inc.
Annotate this CaseDecided on August 19, 2013
Supreme Court, Richmond County
Jacob Agai, Plaintiff/, Petitioner,
against
Diontech Consulting, Inc., and DENNIS MIHALATOS, Defendants/, Respondents, STYLIANOS ANTONIOU, SOKRATES ANTONIOU DMM CONSTRUCTION, INC. and DM MIHALATOS ASSOCIATES, INC., Additional Respondents.
DIONTECH CONSULTING, INC., Plaintiff/Respondents,
against
JACOB AGAI, 291 AVENUE P, LLC and SUMMERFIELD DEVELOPERS, INC., Defendant/Petitioners,
DENNIS MIHALATOS, STYLIANOS ANTONIOU, SOKRATES ANTONIOU, DMM CONSTRUCTION, INC., and DM MIHALATOS ASSOCIATES, INC., Respondents.
102968/07
MICHAEL P BOWEN, ESQ
KASOWITZ, BENSON, TORRES & FRIEDMAN 1633 Broadway
NY, NY 10019
Attorney for Plaintiff
PETER M KUTIL, ESQ
KING & KING
27-12 37TH AVE
LIC, NY 11101
Attorney for Defendant
Kim Dollard, J.
Petitioner moves for an Order pursuant to CPLR §3212 for summary judgment against all respondents. The Antoniou Respondents oppose the motion and cross-move for summary judgment in their favor. After consideration of the moving papers, the opposition, cross-motion, reply, and all attached exhibits, affidavits and transcripts, the Petitioner's motion for summary judgment is granted and the Antoniou Respondents' cross-motion is denied for the reasons stated below.
Petitioner contends that the three principals of the Diontech Consulting, Inc., Dennis Mihalatos, Stylianos Antoniou and Sokrates Antoniou were operating the corporation without corporate formalities for their own unjust enrichment and to avoid the judgments obtained by the Petitioner after a bench trial before this Court in April and May of 2011. Petitioner seeks to pierce the corporate veil in order to enforce the judgment pursuant to CPLR Article 52.
A motion for summary judgment is granted only if no material issues of fact exist (see Alvarez v. Prospect Hosp., 68 NY2d 320, 325). The moving party must make a prima facie showing that there are no material issues of fact to be tried (Id. at 324) . Failure to make such a showing requires denial of the summary judgment motion, regardless of the sufficiency of the opposing party's evidence (see Ayotte v. Gervasio, 81 NY2d 1062, 1063; see also, Bray v. Rosas, 29 AD3d 422). However, once the movant meets the initial burden, the party opposing the motion must establish, through admissible evidence, that there are disputed material issues of fact to be resolved at a trial ( see CPLR 3212[b]; Zuckerman v. City of New York, 49 NY2d 557, 562). The court examines the evidence submitted by the parties in the light most favorable to the party opposing the motion ( see Martin v. Briggs, 235 AD2d 192). The court must deny the motion if it has any doubt as to the existence of a material issue of fact (see Rotuba Extruders, Inc. v. Ceppos, 46 NY2d 223, 231).
The general rule is that a corporation exists independently of its owners, who are not personally liable for its obligations, and that individuals may incorporate for the express purpose of limiting their liability (see Bartle v. Home Owners Coop., 309 NY 103, 106; Seuter v. Lieberman, 229 AD2d 386, 387). The concept of piercing the corporate veil is an exception to this general rule, permitting, in certain circumstances, the imposition of personal liability on owners for the obligations of their corporation ( see Matter of Morris v. New York State Dept. of Taxation & Fin., 82 NY2d 135, 140—141). A plaintiff seeking to pierce the corporate veil must demonstrate that a court in equity should intervene because the owners of the corporation [*2]exercised complete domination over it in the transactions at issue and, in doing so, abused the privilege of doing business in the corporate form, thereby perpetrating a wrong that resulted in injury to the plaintiff ( see Millennium Constr., LLC v. Loupolover, 44 AD3d 1016).
"Factors to be considered by a court in determining whether to pierce the corporate veil include failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, and use of corporate funds for personal use" ( Millennium Constr., LLC v. Loupolover, 44 AD3d at 1016—1017; see East Hampton Union Free School Dist. v. Sandpebble Bldrs., Inc., 66 AD3d at 126; John John LLC v. Exit 63 Dev., LLC, 35 AD3d 540, 541). Alternatively, "the corporate veil will be pierced even absent fraud, when a corporation has been so dominated by an individual and its separate entity so ignored that it primarily transacts the dominator's business instead of its own and can be called the other's alter ego," ( see Matter of Island Seafood Co. v. Golub Corp., 303 AD2d 892, quoting Austin Powder Co. v. McCullough, 216 AD2d 825, 827).
A reading of the deposition transcripts attached to the Petitioner's moving papers of the Antoniou principals, clearly establish that they failed to adhere to any corporate formalities in running Diontech Consulting. Both testified that they were unaware of any books or records that documented the operation of the corporation. Neither brother could produce any documentation of the corporation's separate existence such as board meeting minutes, pay stubs or bank statements (Petitioner's Exhibit D 100:23- 103:18, Exhibit E, Tr. 13:11 to 15:13). In addition, there is evidence that the two used corporate accounts for personal expenses, commingled corporate and personal assets and maintained Diontech as a sham entity for the purpose of avoiding creditors and legal liability (Petitioner's Exhibit D, Tr. 58:06 to 59:12, 70:14 to 88:06, Exhibit E, Tr. 40:02 to 49:03, 74:14 to 74:15, 79:19 to 79:22).
Sokrates Antoniou testified that at no point during the operation of Diontech was he ever given a formal title in the corporation, nor did he ever carry out any of the official duties of a corporate officer, despite the fact that Sokrates was listed as the President and Stylianos as the Secretary of Diontech on a Chase Bank Business Credit Application. (Petitioner's Exhibit E, Tr:13:11 to 15:21, Tr. 17:16 to 26:25, Exhibit F). Further, both Antoniou brothers testified that they had no knowledge as to what became of any of Diontech's assets including computers, office furniture, and company vehicles, despite receiving compensation for their work in settling company affairs. (Petitioner's Exhibit D, Tr. 36:14 to 56:20, Exhibit E, Tr. 84:13 to 84:24).
Mr. Skevas, who worked as an outside accountant for the firm, testified that he refused to prepare corporate tax returns due to Diontech's failure to provide appropriate paperwork or to account for certain unspecified disbursements. He testified that in his review of the bank records, all three respondents routinely took significant amounts of money from the bank account but failed to pay it back to the corporation (Petitioner's Exhibit G, Tr: 55:2 - 55:23, 71:15- 71:23, Tr: 74:15 to 76:15.
Plaintiff is not required to plead or prove fraud in order to pierce the corporate defendant's corporate veil, but only that the individual defendant's control of the corporate defendant was [*3]used to perpetrate a wrongful or unjust act toward plaintiff (see, Lederer v. King, 214 AD2d 354).
The evidence makes it clear that Diontech was indeed used to unlawfully avoid creditors and to injure the plaintiff personally. Throughout the course of working with the plaintiff, the three principals of Diontech repeatedly used payments made by the plaintiff and materials purchased for plaintiff's projects for other jobs which they were involved in at the time (see, Petitioner's Exhibit A, p. 7). In addition, both Antoniou brothers continued receiving payments from a supposedly insolvent Diontech despite the fact that other laborers and subcontractors remained unpaid. (See, Petitioner's Exhibit A, p. 9). nt for various expenses. sed to prepare corporate tax returns due to Doint
Accordingly, Petitioner's motion for summary judgment is granted. The weight of evidence supports plaintiff's claim that Diontech was a sham entity which never kept accurate records or minutes of meetings, did not observe any traditional corporate formalities, and diverted funds for the principals' own personal gains. Respondents have failed to raise triable issues of fact in their opposition papers. Even viewing the evidence in the light most favorable to respondents and affording them the benefit of all reasonable inferences, the conclusory and self-serving affidavits of the Antoniou respondents are insufficient to support their motion ( see Montero v. McFarland, 70 AD3d 1282, 1284; see generally Alvarez v. Prospect Hosp., 68 NY2d at 324; Zuckerman v. City of New York, 49 NY2d at 562; Quinn v. Depew, 63 AD3d 1425, 1428).
The remaining Defendants/Respondents, Dennis Mihalatos, Diontech Consulting, DMM Construction and DM Mihalatos Associates have failed to appear for any of the Court ordered depositions nor have they submitted opposition papers to this motion. Therefore, by default, summary judgment is granted as to those Defendants/Respondents.
The court has considered all other arguments made by defendants and finds them to be without merit.
The foregoing Constitutes the Decision and Order of the Court.
__________________________
KIM DOLLARD,
Acting Justice Supreme Court
[*4]
Dated: August 19, 2013
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