Court Opinion

ID: 6023084
Source: CourtListenerOpinion
Date Created: 2022-01-13 12:03:00.220485+00
Date Added: 2024-06-11T08:50:52.282020
License: Public Domain

Santucci, J.,
dissents and votes to affirm the order appealed from, with the following memorandum: I respectfully dissent and vote to affirm the order of the Supreme Court. In pertinent part the majority concludes: “[t]he plaintiff has asserted a valid claim for piercing the corporate veil so that [Jerome] Silver-man could be held jointly and severally liable for the corporate defendant’s rent obligation under the terms of the lease entered into between the plaintiff and the corporate defendant (see, CPLR 1002 [b]). The record reveals that Silverman * * * exercised complete domination of the corporate defendant”. However, assuming arguendo that such “complete domination” has been demonstrated on this record, such factor, in and of itself, is insufficient to justify Silverman’s personal liability for the debt sought herein. As stated by the Court of Appeals: “While complete domination of the corporation is the key to piercing the corporate veil * * * such domination, standing alone, is not enough; some showing of a wrongful or unjust act toward plaintiff is required * * * The party seeking to pierce the corporate veil must establish that the owners, through their domination, abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against that party such that a court in equity will intervene” (Matter of Morris v New York State Dept. of Taxation & Fin., 82 NY2d 135, 141-142 [emphasis supplied]; see also, Gottehrer v Viet-Hoa Co., 170 AD2d 648).
Moreover, contrary to the majority’s conclusion, there is no evidence that Silverman ever used his control of the corporate entity to perpetrate any fraud or injustice against the plaintiff. Indeed, the fact that the corporation duly paid all rent install*349ments for seven years and eight months (out of a total eight-year lease term) belies the plaintiffs contention that Silverman defrauded the plaintiff by entering into a lease without intending to pay the rent (cf., CD Music Co. v Bassline, Inc., 242 AD2d 654). The fact that a landlord and tenant may dispute the obligation to pay rent is not tantamount to fraud in the inducement, especially when the dispute occurs so late in the lease term. Nor is there anything inherently wrong with the establishment of a corporation for the purpose of avoiding personal liability (see, Seuter v Lieberman, 229 AD2d 386).
Accordingly, under the facts of this case, “[the plaintiff] obtained precisely what it bargained for, and it did not bargain for or contemplate the individual liability of [Silverman] which it now seeks to enforce. To pierce the corporate veil here would not * * * accomplish justice or equity but would in fact thwart that end * * * The creation of [a] dummy corporation under these circumstances to [limit] personal responsibility should be respected” (Brunswick Corp. v Waxman, 599 F2d 34, 36; see also, West Side Fed. Sav. & Loan Assn. v Hirschfeld, 101 AD2d 380).