* The Honorable Jed S. Rakoff, of the United States

District Court for the Southern District of New York,

sitting by designation.

10-3510-cv

Teitelbaum v. Lin & Mochdar

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED

ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE

PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A

DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN

ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST

SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

1 At a stated term of the United States Court of Appeals

2 for the Second Circuit, held at the Daniel Patrick Moynihan

3 United States Courthouse, 500 Pearl Street, in the City of

New York, on the 3rd 4 day of June, two thousand eleven.

5

6 PRESENT: DENNIS JACOBS,

7 Chief Judge,

8 DEBRA ANN LIVINGSTON,

9 Circuit Judge,

10 JED S. RAKOFF,

District Judge.* 11

12

13 - - - - - - - - - - - - - - - - - - - -X

14 WILLIAM A. TEITELBAUM, 

15 Plaintiff-Counter-Defendant16 Appellant,

17

18 -v.- 10-3510-cv

19

20 LAY SIOK LIN, 

21 Cross-Claimant-Counter22 Claimant-Appellee,

23

24 AZIZ MOCHDAR,

25 Cross-Claimant-Appellee,

26

27 BRUCE MABEY, PLATINUM TOO, LLC,

28 Defendants-Cross-Defendants.

29 - - - - - - - - - - - - - - - - - - - -X
2

1

2 FOR APPELLANT: Anton J. Borovina, Melville, New York.

3

4 FOR APPELLEES: Matthew N. Metz, Metz Law Group, PLLC,

5 Seattle, Washington (Levy, Ehrlich &

6 Petriello, P.C., Newark, New Jersey, on

7 the brief).

8

9 Appeal from a judgment of the United States District

10 Court for the Eastern District of New York (Wexler, J.).

11

12 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED

13 AND DECREED that the judgment of the district court be

14 AFFIRMED. 

15

16 William Teitelbaum appeals from portions of the

17 judgment of the United States District Court for the Eastern

18 District of New York (Wexler, J.) finding that Platinum Too,

19 LLC, breached its obligation to repay two investors, Lay

20 Siok Lin and Aziz Mochdar, in connection with promissory

21 notes issued by the company and holding Teitelbaum

22 personally liable for the breach under an alter ego theory

23 of liability. We assume the parties’ familiarity with the

24 underlying facts, the procedural history, and the issues

25 presented for review.

26

27 The district court’s legal conclusion that Platinum Too

28 was the alter ego of Teitelbaum is reviewed de novo, but we

29 defer to factual findings of the district court unless they

30 are clearly erroneous. United States v. Funds Held in the

31 Name or for the Benefit of Wetterer, 210 F.3d 96, 106 (2d

32 Cir. 2000); see also Fed. R. Civ. P. 52(a)(6). The parties’

33 assumption that Utah law controls the alter ego analysis “is

34 sufficient to establish choice of law.” Motorola Credit

35 Corp. v. Uzan, 388 F.3d 39, 61 (2d Cir. 2004) (internal

36 quotation marks omitted).

37

38 Under Utah law, “[o]rdinarily, a corporation is

39 regarded as a separate and distinct legal entity . . . .” 

40 Colman v. Colman, 743 P.2d 782, 786 (Utah Ct. App. 1987)

41 (internal quotation marks omitted). Although “there is

42 little case law discussing veil piercing theories outside

43 the corporate context,” the doctrine has been applied to

44 limited liability companies such as Platinum Too. Ditty v.

45 CheckRite, Ltd., 973 F. Supp. 1320, 1335 (D. Utah 1997); see

46 also d’Elia v. Rice Dev., Inc., 147 P.3d 515, 521 n.5 (Utah
3

1 Ct. App. 2006). In order to disregard the corporate entity

2 under the alter ego doctrine, the court must find:

3

4 (1) [s]uch a unity of interest and ownership that

5 the separate personalities of the corporation and

6 the individual no longer exist, but the

7 corporation is, instead, the alter ego of one or a

8 few individuals; and (2) if observed, the

9 corporate form would sanction a fraud, promote

10 injustice, or result in an inequity. . . . It is

11 not necessary that the plaintiff prove actual

12 fraud, but must only show that failure to pierce

13 the corporate veil would result in an injustice.

14

15 Colman, 743 P.2d at 786. Utah courts look to a list of

16 “factors which are deemed significant, although not

17 conclusive,” id., in evaluating whether the alter ego test

18 is satisfied:

19

20 (1) undercapitalization of a one-man corporation;

21 (2) failure to observe corporate formalities; (3)

22 nonpayment of dividends; (4) siphoning of

23 corporate funds by the dominant stockholder; (5)

24 nonfunctioning of other officers or directors; (6)

25 absence of corporate records; (7) the use of the

26 corporation as a facade for operations of the

27 dominant stockholder or stockholders; and (8) the

28 use of the corporate entity in promoting injustice

29 or fraud.

30

31 Id. (internal footnotes omitted). For substantially the

32 reasons stated by the district court, we affirm the district

33 court’s ruling that Platinum Too was Teitelbaum’s alter ego.

34

35 Teitelbaum invokes Utah Revised Limited Liability

36 Company Act, Utah Code Ann. § 48-2c-605 (the “Revised Act”),

37 which provides that the “failure of a company to maintain

38 records, to hold meetings, or to observe any

39 formalities . . . is not a ground for imposing personal

40 liability on any member, manager, or employee for any debt,

41 obligation, or liability of the company.” Teitelbaum argues

42 that it was therefore legal error to hold him personally

43 liable to Lay Siok Lin and Mochdar. “No Utah state court or

44 federal court has explicitly decided whether the veil of an

45 LLC can be pierced under the Revised Act. In the absence of

46 controlling state authority, we must predict as best we can

47 what the Utah Supreme Court would do in these
4

1 circumstances.” TFH Props., LLC v. MCM Dev., LLC, No. CV2 09-8050-PCT-FJM, 2010 WL 2720843, at *6 (D. Ariz. July 9,

3 2010). 

4

5 Under the Revised Act, it would clearly be error to

6 impose alter ego liability based solely on the failure to

7 observe formalities. “But it does not follow that because

8 formalities cannot be the lone basis for piercing, no LLC

9 member can be held personally liable for an LLC’s debts.” 

10 Id. In addition to disregarding formalities, Teitelbaum

11 “conduct[ed] his private and corporate business on an

12 interchangeable or joint basis as if they were one,” and

13 “failure to pierce the [LLC’s] veil would result in an

14 injustice.” Colman, 743 P.2d at 786.

15

16 Finding no merit in Teitelbaum’s remaining arguments,

17 we hereby AFFIRM the judgment of the district court.

18

19

20 FOR THE COURT:

21 CATHERINE O’HAGAN WOLFE, CLERK

22