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East Hamp. Union Free Sch. Dist. v. Sandpebble Build.

Court of Appeals of the State of New York
Feb 22, 2011
2011 N.Y. Slip Op. 1319 (N.Y. 2011)

Summary

piercing the corporate veil claim properly dismissed where plaintiff failed to allege any harm purportedly resultingfrom an abuse or perversion of the corporate form

Summary of this case from Green Apple Cleaners, LLC v. Legacy Cleaners, Inc.

Opinion

No. 22.

Argued January 12, 2011.

Decided February 22, 2011.

APPEAL from an order of the Appellate Division of the Supreme Court in the Second Judicial Department, entered July 28, 2009. The Appellate Division, with two Justices dissenting, modified, on the law, an order of the Supreme Court, Suffolk County (PAul J. Baisley, Jr., J.; op 2007 NY Slip Op 34427[U]), which had denied a motion by defendants to dismiss the complaint as asserted against Victor Canseco individually. The modification consisted of deleting the provision of the order denying that branch of the defendants' motion to dismiss the complaint as against defendant Victor Canseco individually, and substituting therefor a provision granting that branch of the motion. The Appellate Division affirmed the order as modified.

East Hampton Union Free School Dist. v Sandpebble Bldrs., Inc., 66 AD3d 122, affirmed.

Morgan, Lewis Bockius LLP, New York City ( Bernard J. Garbutt, III, and Marc Shanker of counsel), for appellant.

Esseks, Hefter Angel, LLP, Riverhead ( Theodore D. Sklar, Stephen R. Angel and Nancy Silverman of counsel), for respondent.

Chief Judge LIPPMAN and Judges CIPARICK, GRAFFEO, READ, SMITH, PIGOTT and JONES concur.


OPINION OF THE COURT

MEMORANDUM

The order of the Appellate Division should be affirmed, with costs.

In this litigation brought by a school district against a corporation it had hired to perform construction management services, the school district sought to pierce the corporate veil to hold Victor Canseco, the president and sole shareholder of the corporation, personally liable for alleged breaches of certain corporate obligations. In order for a plaintiff to state a viable claim against a shareholder of a corporation in his or her individual capacity for actions purportedly taken on behalf of the corporation, plaintiff must allege facts that, if proved, indicate that the shareholder exercised complete domination and control over the corporation and "abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice" ( Matter of Morris v New York State Dept. of Taxation Fin., 82 NY2d 135, 142). Since, by definition, a corporation acts through its officers and directors, to hold a shareholder/officer such as Canseco personally liable, a plaintiff must do more than merely allege that the individual engaged in improper acts or acted in "bad faith" while representing the corporation. In this case, plaintiff failed to allege any facts indicating that Canseco engaged in acts amounting to an abuse or perversion of the corporate form, much less that the school district was harmed as a result of such actions. Under the circumstances, the Appellate Division did not err in failing to direct that plaintiff be permitted to file an amended complaint as the record affords no basis to conclude that the deficiency could have been cured by repleading.

Order affirmed, with costs, in a memorandum.


Summaries of

East Hamp. Union Free Sch. Dist. v. Sandpebble Build.

Court of Appeals of the State of New York
Feb 22, 2011
2011 N.Y. Slip Op. 1319 (N.Y. 2011)

piercing the corporate veil claim properly dismissed where plaintiff failed to allege any harm purportedly resultingfrom an abuse or perversion of the corporate form

Summary of this case from Green Apple Cleaners, LLC v. Legacy Cleaners, Inc.

piercing the corporate veil claim properly dismissed where plaintiff failed to allege any harm purportedly resulting from an abuse or perversion of the corporate form

Summary of this case from Lau v. Lazar
Case details for

East Hamp. Union Free Sch. Dist. v. Sandpebble Build.

Case Details

Full title:EAST HAMPTON UNION FREE SCHOOL DISTRICT, Appellant, v. SANDPEBBLE…

Court:Court of Appeals of the State of New York

Date published: Feb 22, 2011

Citations

2011 N.Y. Slip Op. 1319 (N.Y. 2011)
2011 N.Y. Slip Op. 1319
919 N.Y.S.2d 496
944 N.E.2d 1135

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