Summary
interlocking directors and officers, in and of themselves, are insufficient to allege alter ego liability
Summary of this case from In re Parmalat Securities LitigationOpinion
September 11, 1989
Appeal from the Supreme Court, Nassau County (DiNoto, J.).
Ordered that the order and judgment is affirmed; and it is further,
Ordered that the appeal from the order is dismissed, as no appeal lies from an order denying reargument; and it is further,
Ordered that the respondents are awarded one bill of costs.
It is well settled that: "The corporate veil will be pierced (1) to achieve equity, even absent fraud, where the officers and employees of a parent corporation exercise control over the daily operations of a subsidiary corporation and act as the true prime movers behind the subsidiary's actions (see Van Valkenburgh, Nooger Neville v. Hayden Pub. Co., 30 N.Y.2d 34, mot for rearg den 30 N.Y.2d 880, cert den 409 U.S. 875; Fiur Co. v. Ataka Co., 71 A.D.2d 370; Astrocom Electronics v. Lafayette Radio Electronics Corp., 63 A.D.2d 765; 13 N.Y. Jur 2d, Business Relationships, § 30), and/or (2) where a parent corporation conducts business through a subsidiary which exists solely to serve the parent (see Port Chester Elec. Constr. Corp. v. Atlas, 40 N.Y.2d 652; Educational Beneficial v. Reynolds, 67 Misc.2d 739)." (Matter of Sbarro Holding, 91 A.D.2d 613, 614.)
To pierce the corporate veil between a parent corporation and subsidiary, the parent corporation must exercise complete domination and control in the matter (see, Gulf W. Corp. v. New York Times Co., 81 A.D.2d 772, 773). Stock control, interlocking directors and interlocking officers are in and of themselves insufficient facts to justify the imposition of such liability on the parent corporation (see, Musman v. Modern Deb, 50 A.D.2d 761, 762). Control by the parent over the subsidiary's everyday operations will, however, render the parent liable for the subsidiary's acts (see, Fiur Co. v. Ataka Co., 71 A.D.2d 370, supra).
Generally, whether a principal-agent relationship exists between two corporations is a question of fact to be decided at trial, rather than on a motion for summary judgment (see, Key Intl. Mfg. v. Morse/Diesel Inc., 142 A.D.2d 448, 455). Where, however, as in this case, the ground for granting summary judgment is the failure of the amended complaint to adequately allege the means by which the parent, the defendant Fidelity New York FSB, controlled its wholly owned subsidiary, Shoratlantic Development Co., Inc., and documentation submitted in opposition to the motion was devoid of evidentiary facts in support of the plaintiffs' contentions that the parent totally controlled the everyday operation of the subsidiary, disposing of the matter on a motion for summary judgment was proper (cf., Astrocom Elecs. v Lafayette Radio Elecs. Corp., supra).
We have considered the plaintiffs' remaining contentions and find them to be without merit. Bracken, J.P., Kunzeman, Sullivan and Balletta, JJ., concur.