Opinion
177 651137/10.
02-09-2016
EDWARD TYLER NAHEM FINE ART, L.L.C., Plaintiff–Appellant, v. Alberto BARRAL, Defendant–Respondent.
Cahill Partners LLP, New York (John R. Cahill of counsel), for appellant. Trachtenberg Rodes & Friedberg LLP, New York (Stephen Arena of counsel), for respondent.
Cahill Partners LLP, New York (John R. Cahill of counsel), for appellant.
Trachtenberg Rodes & Friedberg LLP, New York (Stephen Arena of counsel), for respondent.
Opinion
Order, Supreme Court, New York County (Eileen Bransten, J.), entered August 4, 2014, which, insofar as appealed from as limited by the briefs, after a nonjury trial, denied the causes of action for piercing the corporate veil and fraud, unanimously affirmed, without costs.
The record amply supports the trial court's findings, based in part on credibility determinations (see 300 E. 34th St. Co. v. Habeeb, 248 A.D.2d 50, 54, 683 N.Y.S.2d 175 1st Dept.1997 ), that defendant did not improperly use company funds for personal expenses, did not fail to adhere to corporate formalities, and did not significantly undercapitalize the company during its operation. Even if defendant's multiple ATM cash withdrawals from the company's bank account amounted to undercapitalization for the purpose of avoiding payment on a prior default judgment against the company, as plaintiff argues, it alone would be insufficient to justify piercing the corporate veil (see Fantazia Intl. Corp. v. CPL Furs N.Y., Inc., 67 A.D.3d 511, 889 N.Y.S.2d 28 1st Dept.2009 ). Further, the evidence does not compel a finding that defendant made the withdrawals for the purpose of leaving the corporation judgment proof or to perpetrate a wrong against plaintiff (see James v. Loran Realty V Corp., 85 A.D.3d 619, 925 N.Y.S.2d 492 1st Dept.2011, affd. 20 N.Y.3d 918, 956 N.Y.S.2d 482, 980 N.E.2d 532 2012 ).
The record also supports the court's findings, which rest largely on credibility determinations, with respect to the fraud claim. Although defendant's representations as to good title to the artwork all proved to be false, and the evidence supports a finding that plaintiff reasonably relied on them, to its detriment, in purchasing the artwork, the record does not sufficiently establish the requisite scienter (see Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 559, 883 N.Y.S.2d 147, 910 N.E.2d 976 2009 ). The evidence does not show that defendant had reason to doubt the veracity of its representation that the artwork was imported lawfully but failed to investigate before making it (see State St. Trust Co. v. Ernst, 278 N.Y. 104, 112, 15 N.E.2d 416 1938; Serio v. PricewaterhouseCoopers LLP, 9 A.D.3d 330, 331, 781 N.Y.S.2d 7 1st Dept.2004 ).