SPRINGUT LAW PC v. RATES TECHNOLOGY INC (2018)

Order, Supreme Court, New York County (Debra A. James, J.), entered May 2, 2017, which, to the extent appealed from as limited by the briefs, granted defendants' motion to dismiss the fraud and piercing the corporate veil claims, unanimously affirmed, with costs.

Plaintiff law firm brings this action against its former clients for failure to pay its legal fees.  Plaintiff contends that defendant Gerald Weinberger, now deceased—the president of the corporate defendants—intentionally kept one of his entities judgment proof in a fraudulent effort to obtain legal representation without paying for it.

The IAS court correctly dismissed the veil-piercing claim (fourth cause of action) because the allegations supporting it were wholly conclusory (American Media, Inc. v. Bainbridge & Knight Labs., LLC, 135 A.D.3d 477, 477, 22 N.Y.S.3d 437 [1st Dept. 2016] ).  The nonspecific allegations that Weinberger ignored corporate formalities, “completely dominated and controlled” the corporate defendants, and made the business decisions for the entities were not sufficient to pierce the corporate veil (id.; Sheridan Broadcasting Corp. v. Small, 19 A.D.3d 331, 332, 798 N.Y.S.2d 45 [1st Dept. 2005] ).

Plaintiff's fraud and fraud-related claims in the third cause of action were also insufficient.  A cause of action for fraud is not sufficiently stated where, as here, the only fraud charged relates to a breach of contract (Cole, Schotz, Meisel, Forman & Leonard, P.A. v. Brown, 109 A.D.3d 764, 765, 972 N.Y.S.2d 21 [1st Dept. 2013] ).  Plaintiff's allegations asserting defendants' general promises to meet their payment obligations were duplicative of its breach of contract claim (id.).  Nor has plaintiff alleged any specific misrepresentations of “present fact” that were collateral to the contract (American Media, Inc., 135 A.D.3d at 478, 22 N.Y.S.3d 437).  Defendants' subsequent assurances of performance and alleged misrepresentations were not sufficiently collateral to the parties' contract to render the fraud claim nonduplicative (see e.g. Metropolitan Transp. Auth. v. Triumph Adv. Prods., 116 A.D.2d 526, 527–528, 497 N.Y.S.2d 673 [1st Dept. 1986] ).

We have considered plaintiff's remaining contentions and find them unavailing.