Summary
veil-piercing is appropriate only when the company has "abused the privilege of doing business in the corporate form"
Summary of this case from Savage v. Galaxy Media & Mktg. Corp.Opinion
2011-12-20
EAST HAMPTON UNION FREE SCHOOL DISTRICT, appellant, v. SANDPEBBLE BUILDERS, INC., et al., respondents.
Pinks, Arbeit & Nemeth, Hauppauge, N.Y. (Jonathan Lipshie of counsel and Morgan, Lewis & Bockius LLP [Bernard J. Garbutt III and Shana R. Cappell], former of counsel on the brief), for appellant. Esseks, Hefter & Angel, LLP, Riverhead, N.Y. (Theodore D. Sklar, Stephen R. Angel, and Nancy Silverman of counsel), for respondents.
Pinks, Arbeit & Nemeth, Hauppauge, N.Y. (Jonathan Lipshie of counsel and Morgan, Lewis & Bockius LLP [Bernard J. Garbutt III and Shana R. Cappell], former of counsel on the brief), for appellant. Esseks, Hefter & Angel, LLP, Riverhead, N.Y. (Theodore D. Sklar, Stephen R. Angel, and Nancy Silverman of counsel), for respondents.
PETER B. SKELOS, J.P., L. PRISCILLA HALL, PLUMMER E. LOTT, and SHERI S. ROMAN, JJ.
In an action, inter alia, for a judgment declaring that a contract dated April 2002 is void and unenforceable, the plaintiff appeals from so much of an order of the Supreme Court, Suffolk County (Pines, J.), dated November 19, 2009, as denied its motion for leave to amend the complaint pursuant to CPLR 3025(b).
ORDERED that the order is affirmed insofar as appealed from, with costs.
The plaintiff sought leave to amend the complaint to add allegations against the defendant Victor Canseco so as to impose personal liability against him under a theory of piercing the corporate veil. “In the absence of significant prejudice or surprise to the opposing party, leave to amend a pleading should be freely given, unless the proposed amendment is palpably insufficient or patently devoid of merit” ( Russo v. Lapeer Contr. Co., Inc., 84 A.D.3d 1344, 1344, 923 N.Y.S.2d 906 [citations omitted]; see CPLR 3025[b] ). “A [party] seeking to pierce the corporate veil must 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” ( East Hampton Union Free School Dist. v. Sandpebble Bldrs., Inc., 66 A.D.3d 122, 126, 884 N.Y.S.2d 94, affd. 16 N.Y.3d 775, 919 N.Y.S.2d 496, 944 N.E.2d 1135; see Superior Transcribing Serv., LLC v. Paul, 72 A.D.3d 675, 676, 898 N.Y.S.2d 234).
Here, the plaintiff's proposed amendments were palpably insufficient to state a cause of action against Canseco under a theory of piercing the corporate veil, since the proposed amendments failed to adequately allege that Canseco abused the privilege of doing business in the corporate form relative to the transactions at issue, and in such a manner as to cause injury to the plaintiff ( see Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135, 140–141, 603 N.Y.S.2d 807, 623 N.E.2d 1157; Matter of Town of Southampton v. Chiodi, 75 A.D.3d 604, 606, 907 N.Y.S.2d 25). Thus, the Supreme Court providently exercised its discretion in denying the plaintiff's motion for leave to amend the complaint ( see CPLR 3025[b]; Russo v. Lapeer Contr. Co., Inc., 84 A.D.3d 1344, 923 N.Y.S.2d 906).
The parties' remaining contentions are without merit.