Open Door Foods LLC v Pasta Machs. Inc.

[*1] Open Door Foods LLC v Pasta Machs. Inc. 2018 NY Slip Op 50967(U) Decided on June 14, 2018 District Court Of Nassau County, First District Pipia, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 14, 2018
District Court of Nassau County, First District

Open Door Foods LLC, Plaintiff,

against

Pasta Machines Inc., PHASE II PASTA MACHINES INC., and MICHAEL S. WILSON, Defendants



CV-6697-16



The attorneys on the case are Paul Eisenstein and Edward A. Palzik.
Robert E. Pipia, J.

This action was commenced on March 23, 2013, in Supreme Court, Nassau County by plaintiff Open Door Foods, LLC (hereinafter Open Door), a Minnesota limited liability company against Pasta Machine's Inc. (hereinafter PMI), Phase II Pasta Machine's Inc., and Michael S. Wilson concerning an agreement between the parties for the delivery of a refurbished pierogi machine to the plaintiff for its use in its development of a frozen appetizer, consisting of stuffed pretzels, to be served in restaurants. The plaintiffs sought in its claim rescission of the agreement, or in the alternative damages for breach, including lost profits.

By the order of the Hon. Stephen A Bucaria, dated August 12, 2014, the plaintiff was granted summary judgment to the extent of liability against all defendants for the return of the $30,000 purchase price, with interest from March 15, 2013. A trial then was held by Justice Bucaria as to the balance of the plaintiff's claims. On March 19, 2015, Justice Bucaria denied the plaintiff's claim for lost profits and attorneys fees and settled judgment for the plaintiff against all defendants in the amount of $30,000 with statutory interest from March 15, 2013, as in his previous decision on summary judgment.

On appeal, the Appellate Division, 2nd Department on February 24, 2016, overruled Justice Bucaria's decision granting the plaintiff's motion for summary judgment as to the issue of the individual liability of defendant Michael S. Wilson under the doctrine of piercing the corporate veil for the breach of contract claim [*2]awarded by Justice Bucaria against the corporate defendants and remanded the case back to the supreme court for a determination on this issue. Justice Bucaria, pursuant to CPLR Section 325 (d), transferred this action to the Nassau County District Court.

The doctrine of piercing the corporate veil permits the imposition of personal liability on owners for the wrongs of their corporation. Morris v. State Dep't of Taxation & Fin., 82 NY2d 135 (1993). As developed in New York State, the doctrine requires that the party seeking to invoke it "demonstrate that a court in equity should intervene because the owners of the corporation exercised complete domination over it in the transaction 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". AZTE, Inc. v. Auto Collection, Inc., 124 AD3d 811 (2d Dept 2015); See, E. Hampton Union Free Sch. Dist. v. Sandpebble Builders, Inc., 66 AD3d 122 (2d Dept 2009); See also, Morris v. State Dep't of Taxation & Fin., 82 NY2d 135 (1993).

At trial, the following was established through the credible testimony of witnesses and evidence submitted to the court:

•Michael S Wilson was the sole shareholder of PMI and frequently charged personal expenses, such as dinners, to the corporation•Wilson dominated the subject transaction as the sole representative of the corporation that created the agreement with the plaintiff for the development and the delivery of a refurbished pierogi machine and although Wilson's secretarial staff communicated with the plaintiff by email on many occasions, all communications were approved by Wilson•the invoice, dated February 10, 2012, which was submitted into evidence reflects a purchase price of $30,000 with an initial down payment of $10,000 and the remainder upon delivery which was scheduled for approximately 8 weeks from that time•Open Door made its initial down payment of $10,000 by check after over year of numerous inquiries from Open Door concerning the delivery of the machine and various delays which were communicated by the defendant delivery was promised by February 15, 2013•in reliance upon the promise of Wilson that the construction of the pierogi machine was complete and would be delivered upon receipt of the final payment, Open Door remitted a check for $20,000•after said check cleared payment, all correspondence between the parties ceased, the machine was never delivered, and no money was returned to Open Door•both corporate entities are insolvent and Open Door has only collected $3,269.03 from the defendants pursuant to the $30,000 judgment granted [*3]by Justice Bucaria

This Court finds, as in AZTE Inc., Michael S. Wilson individually liable pursuant to the doctrine of piercing the corporate veil, after concluding that he completely dominated the transaction at issue and perpetrated a wrong through his conduct in said transaction as the sole shareholder of the corporate entity which led to the plaintiff's injury.

Accordingly, judgment is rendered for the plaintiff against defendant Michael S. Wilson, individually, in the amount of $30,000 together with statutory interest running from March 15, 2013, costs, and disbursements less the amount which has been collected to date from the corporate defendants. Submit judgment.

So Ordered.