Summary
In Cornwall Mgt, the allegations were held insufficient because the plaintiff failed to allege actions taken by the alleged alter ego entities in connection with the specific loans at issue and the injury to the plaintiff, or a lack of corporate formalities or undercapitalization (id. at 507).
Summary of this case from Suverant LLC v. Brainchild, Inc.Opinion
06-14-2016
CORNWALL MANAGEMENT LTD., et al., Plaintiffs–Respondents, v. Peter KAMBOLIN, et al., Defendants–Appellants, Oleg Batrachenko, et al., Defendants.
Tannenbaum Helpern Syracuse & Hirschtritt LLP, New York (Paul D. Sarkozi of counsel), for appellants. Moses & Singer LLP, New York (Robert D. Lillienstein of counsel), for respondents.
Tannenbaum Helpern Syracuse & Hirschtritt LLP, New York (Paul D. Sarkozi of counsel), for appellants.
Moses & Singer LLP, New York (Robert D. Lillienstein of counsel), for respondents.
FRIEDMAN, J.P., ANDRIAS, MOSKOWITZ, KAPNICK, WEBBER, JJ.
Opinion Order, Supreme Court, New York County (Melvin L. Schweitzer, J.), entered August 11, 2014, which, to the extent appealed from, denied defendants Peter Kambolin and Atlant Capital Holdings, LLC's motion to dismiss the cause of action for suit on judgment as against them, unanimously reversed, on the law, without costs, and the motion granted. The Clerk is directed to enter judgment dismissing the complaint as against said defendants.
The allegations that defendants Kambolin and Atlant Capital Holdings controlled and dominated defendant Thor United are insufficient to state a cause of action for alter ego liability (see e.g. 501 Fifth Ave. Co. LLC v. Alvona LLC., 110 A.D.3d 494, 973 N.Y.S.2d 137 [1st Dept.2013] ; Morpheus Capital Advisors LLC v. UBS AG, 105 A.D.3d 145, 153–154, 962 N.Y.S.2d 82 [1st Dept.2013], revd. on other grounds 23 N.Y.3d 528, 992 N.Y.S.2d 178, 15 N.E.3d 1187 [2014] ; Andejo Corp. v. South St. Seaport Ltd. Partnership, 40 A.D.3d 407, 407, 836 N.Y.S.2d 571 [1st Dept.2007] ). The complaint alleges, upon information and belief, only that Kambolin, after relinquishing his interest in Thor United, continued to dominate it by controlling its bank account and decision making, and that Thor United and other entities controlled by Kambolin, including Atlant Capital, commingled funds and shared a business address. It alleges no specific facts to establish actions taken by Thor United or its owners in connection with the loans and the alleged scheme to avoid their repayment or that Kambolin's control of Thor United encompassed any such actions.
Nor does it allege any of the other factors that support a veil-piercing claim, such as a lack of corporate formalities or undercapitalization. Contrary to plaintiffs' argument, Tap Holdings, LLC v. Orix Fin. Corp. , 109 A.D.3d 167, 970 N.Y.S.2d 178 (1st Dept.2013) does not compel a different result. The operative pleading in Tap Holdings, unlike here, alleged that the owners of the entity whose veil the plaintiff sought to pierce abused the corporate form for the purpose of harming noteholders (id. at 175, 970 N.Y.S.2d 178 ).