WALSAM 316 LLC v. GRJ LLC (2021)

Order, Supreme Court, New York County (Margaret A. Chan, J.), entered September 11, 2019, which denied as premature defendants GRJ LLC and Gregory P. Jones's (the Jones defendants) motion for summary judgment dismissing the complaint as against them, unanimously reversed, on the law, with costs, and the motion granted.  The Clerk is directed to enter judgment accordingly.

Plaintiffs seek to hold the Jones defendants individually liable by piercing the corporate veil of defendant 4–6 Bleecker Street LLC. However, as the Jones defendants showed in their motion, the complaint fails to allege facts that would establish the elements of such a claim, i.e., that the Jones defendants dominated 4–6 Bleecker and used that domination to commit a fraud or wrong against plaintiffs (see Skanska USA Bldg. Inc. v. Atlantic Yards B2 Owner, LLC, 146 A.D.3d 1, 12, 40 N.Y.S.3d 46 [1st Dept. 2016], affd 31 N.Y.3d 1002, 74 N.Y.S.3d 805, 98 N.E.3d 720 [2018] ).  It does not allege that the Jones defendants took improper actions in their individual capacities or that they abused the privilege of doing business in the corporate or LLC form by failing to adhere to corporate formalities (see East Hampton Union Free School Dist. v. Sandpebble Bldrs., Inc., 16 N.Y.3d 775, 776, 919 N.Y.S.2d 496, 944 N.E.2d 1135 [2011] ).

Nor did plaintiffs' managing agent's affidavit, submitted in opposition to the Jones defendants' motion, remedy the defects in the complaint (see Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 635–636, 389 N.Y.S.2d 314, 357 N.E.2d 970 [1976] ).  The only statements in the affidavit that are relevant to veil-piercing are the conclusory assertions that defendant Jones “controlled” 4–6 Bleecker, that 4–6 Bleecker was a “shell entity,” and that the Jones defendants should be held liable for the control and domination of 4–6 Bleecker (see e.g. Springut Law PC v. Rates Tech. Inc., 157 A.D.3d 645, 70 N.Y.S.3d 14 [1st Dept. 2018] ).

Plaintiffs' argument pursuant to CPLR 3212(f) that the motion should have been denied because the Jones defendants have exclusive control over documents in their possession that will support plaintiffs' veil-piercing theories, is speculative and therefore unavailing (see Auerbach v. Bennett, 47 N.Y.2d 619, 636, 419 N.Y.S.2d 920, 393 N.E.2d 994 [1979] ).