Opinion
Appeal No. 15173 Index No. 158086/19Case No. 2020-04562
02-24-2022
Radium2 Capital, LLC, Formerly Known as Radium2 Capital, Inc., Plaintiff-Respondent, v. Xtreme National Maintenance Corp., et al., Defendants-Appellants, All About Maintenance Inc., et al., Defendants. Appeal No. 15173 Case No. 2020-04562
Joseph J. Haspel, PLLC, Middletown (Joseph J. Haspel of counsel), for appellants. Stein Adler Dabah & Zelkowitz, LLP, New York (Christopher R. Murray of counsel), for respondent.
Joseph J. Haspel, PLLC, Middletown (Joseph J. Haspel of counsel), for appellants.
Stein Adler Dabah & Zelkowitz, LLP, New York (Christopher R. Murray of counsel), for respondent.
Before: Kapnick, J.P., Gesmer, González, Kennedy, Shulman, JJ.
Order, Supreme Court, New York County (Arthur F. Engoron, J.), entered on or about June 5, 2020, which denied the motion by defendants Xtreme National Maintenance Corp. and Doreen DeSilva to dismiss the complaint as against them, unanimously modified, on the law, to mark the motion as denied without prejudice as to those defendants, and with leave to renew after the conclusion of jurisdictional discovery, which is hereby ordered, and otherwise affirmed, without costs.
Plaintiff sufficiently alleged that All About Maintenance Inc. (AAM) and Xtreme completed a de facto merger by alleging that AAM transferred its assets to Xtreme, without adequate consideration, after which Xtreme continued AAM's business, in the same form and at the same address (see Fitzgerald v Fahnestock & Co., 286 A.D.2d 573, 574 [1st Dept 2001]; Herlihy v A.F. Supply Corp., 2013 NY Slip Op 30010[U], *9 [Sup Ct, NY County 2013], affd sub nom. Matter of New York City Asbestos Litig., 112 A.D.3d 529 [1st Dept 2013]). That AAM's status was still listed as "active" in a Florida Department of State report is not dispositive because "[s]o long as the acquired corporation is shorn of its assets and has become, in essence, a shell, legal dissolution is not necessary before a finding of a de facto merger will be made" (see Fitzgerald, 286 A.D.2d at 575).
Although ownership technically changed from Joseph DeSilva to Doreen DeSilva, plaintiff's allegations that Joseph and Doreen were married and operated Xtreme out of their shared home, and that both effectively owned and managed both companies, support the inference that this change was in name only. The same allegations are also sufficient to support an inference that AAM and Xtreme were alter egos (see Avilon Auto. Group v Leontiev, 168 A.D.3d 78, 89 [1st Dept 2019]; see also Tap Holdings, LLC v Orix Fin. Corp., 109 A.D.3d 167, 174 [1st Dept 2013]). However, the allegations are insufficient to definitively prove successor or alter ego jurisdiction. As a result, the relationship between AAM and Xtreme will need to be further explored in jurisdictional discovery. Based on the allegations, facts may also exist justifying the exercise of personal jurisdiction over Doreen DeSilva on a successor or alter ego theory, thereby warranting jurisdictional discovery as to both defendants (see Peterson v Spartan Indus., Inc., 33 N.Y.2d 463, 466-467 [1974]; Avilon Auto. Group, 168 A.D.3d at 89).