Court Opinion

ID: 3131328
Source: CourtListenerOpinion
Date Created: 2015-10-16 20:00:48.011039+00
Date Added: 2024-06-11T07:38:27.430173
License: Public Domain

NOT PRECEDENTIAL

          UNITED STATES COURT OF APPEALS
               FOR THE THIRD CIRCUIT

                         __________

                         No. 14-4031
                         __________

IN RE: RONALD D. GIGLIOTTI and CAROL A. GIGLIOTTI,

                                        Debtors

           DANIEL R. BLACK; CARYN BLACK,

                                       Appellants

                              v.

     RONALD D. GIGLIOTTI; JOHN C. GIGLIOTTI;
CHRISTOPHER J. GIGLIOTTI; GIGLIOTTI AVIGNON, INC.;
  THE GIGLIOTTI GROUP INC.; JANE OR JOHN DOE,
  personal representatives Christopher J. Gigliotti, Sr. dec'd

                         __________

        On Appeal from the United States District Court
             for the Eastern District of Pennsylvania
   (District Court Civil Nos. 2-14-cv-02733, 2-14-cv-02734)
        District Judge: Honorable Michael M. Baylson

          Submitted Under Third Circuit LAR 34.1(a)
                       July 10, 2015

BEFORE: FUENTES, NYGAARD, and ROTH, Circuit Judges

                  (Filed: October 16, 2015)
                                         __________

                                          OPINION*
                                         __________

NYGAARD, Circuit Judge.

         Daniel and Caryn Black appeal the order of the District Court that affirmed the

Bankruptcy Court’s dismissal of their suit against Ronald and John Gigliotti. The Blacks

contend the District Court erred by failing to reverse the Bankruptcy Court’s ruling that

the Blacks failed to meet their burden of proof to pierce the corporate veil of Gigliotti

Avignon Associates, LLC. They also say the District Court improperly affirmed the

Bankruptcy Court’s denial of a motion to compel, impacting the Bankruptcy Court’s

deliberation of the motions for summary judgment. We will affirm the District Court’s

order.

         This opinion does not have any precedential value. Therefore, our discussion of

the case is limited to covering only what is necessary to explain our decision to the

parties. We reach the same initial conclusion as the Bankruptcy Court and District Court:

the case that is before us turns on whether the corporate veil of Gigliotti Avignon can be

pierced to enable the Blacks to recover from Ronald and John Gigliotti on a state court

judgment against the company.

         The Blacks contend that there is no dispute that, on a number of occasions, large

deposits were made into a Gigliotti Avignon escrow account, and that a short time later a

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.

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withdrawal would be made in a similar amount. However, the Blacks—who hold the

evidentiary burden here—wished the District Court to infer solely from this account

activity that Gigliotti Avignon masked, essentially, a criminal operation.

       The District Court correctly reasoned that the Bankruptcy Court did not err by its

conclusion that averring account activity, alone, falls far short of their burden. The

District Court properly determined that the Bankruptcy Court referenced the correct legal

standard to evaluate the significance of the record presented by the Blacks, and it

correctly decided that they did not provide any evidence of, for instance:

              [G]ross undercapitalization, failure to observe corporate
              formalities, nonpayment of dividends, insolvency of debtor
              corporation, siphoning of funds from the debtor corporation
              by the dominant stockholder, nonfunctioning officers and
              directors, absence of corporate records, and whether the
              corporation is merely a façade for the operations of the
              dominant stockholder.

Pearson v. Component Tech Corp., 247 F.3d 471, 484-85 (3d Cir. 2001); see also Trs of

the Nat’l Elevator Ind. Pension, Health Benefit and Educ. Funds v. Lutyk, 332 F.3d 188,

194 (3d Cir. 2003).

       As a result, the District Court correctly affirmed the Bankruptcy Court ruling that

the Blacks failed to meet their evidentiary burden to pierce the corporate veil.1 This

made it impossible to impose any obligation arising from the state court judgment on

Ronald and John Gigliotti personally. Without such claims, there is no question that the

Blacks’ causes of action for nondischargeability are moot because they do not have any

1
  We do not reach the participation doctrine argument advanced by the Blacks to hold
Ronald and John Gigliotti personally liable for malfeasance and tortious conduct because
they never pleaded the participation doctrine.
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enforceable obligations against Ronald and John Gigliotti that could be non-

dischargeable. (11 U.S.C. §§ 523(a)(2), (a)(4)).

      Finally, the Blacks attempt to use Fed. R. Civ. P. 37 to link their late-filed and

unsupported motion to compel (denied by the Bankruptcy Court) to a proposition that

alleged “withheld materials” should have been removed from the record, gutting support

for the Gigliottis’ motion for summary judgment. We see no error by the District Court

in its conclusion that the Blacks’ own motion for summary judgment signaled their

understanding that discovery was closed. The District Court correctly ruled that the

Bankruptcy Court’s disposition of the late-filed motion to compel was well within its

discretion. Moreover, the record amply supported summary judgment in favor of John

and Ronald Gigliotti.

      For all of these reasons, we will affirm the order of the District Court.

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