BOARD OF TRUSTEES SHEET METAL WORKERS NATIONAL PENSION FUND v. ALLURE METAL WORKS INC (2022)

DECISION & ORDER

In an action, inter alia, to enforce a money judgment, the defendant appeals from an order of the Supreme Court, Suffolk County (Sanford Neil Berland, J.), dated September 6, 2019.  The order, insofar as appealed from, denied those branches of the defendant's motion which were pursuant to CPLR 3211(a)(7) to dismiss the first and second causes of action.

ORDERED that the order is affirmed insofar as appealed from, with costs.

The plaintiff is the board of trustees of a multiemployer pension fund, as defined by provisions of the Employee Retirement Income Security Act of 1974 (29 USC § 1001 et. seq.) (hereinafter ERISA).  In 2015, the plaintiff obtained a consent judgment in federal court against nonparty All Around Spiral, Inc. (hereinafter All Around Spiral).  The consent judgment arose out of the alleged failure of another entity, Cool Sheetmetal, Inc. (hereinafter Cool Sheetmetal), to pay to the plaintiff pension fund withdrawal liability pursuant to provisions of ERISA.  All Around Spiral, a party allegedly under common control with Cool Sheetmetal, consented to the entry of the judgment against it for the amount of the withdrawal liability, plus attorneys' fees.

The plaintiff then commenced the instant action against the defendant, Allure Metal Works, Inc. (hereinafter Allure).  In the first and second causes of action, the plaintiff sought, inter alia, to hold Allure liable for payment of the consent judgment, as an alleged alter ego of or successor to All Around Spiral.  Allure moved, among other things, pursuant to CPLR 3211(a)(7) to dismiss the first and second causes of action.  The Supreme Court denied those branches of the motion, and Allure appeals.

“On a motion to dismiss the complaint pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory” (Breytman v. Olinville Realty, LLC, 54 A.D.3d 703, 703–704, 864 N.Y.S.2d 70;  see Leon v. Martinez, 84 N.Y.2d 83, 87, 614 N.Y.S.2d 972, 638 N.E.2d 511;  Smith v. Meridian Tech., Inc., 52 A.D.3d 685, 686, 861 N.Y.S.2d 687).

“[I]n order for a plaintiff to state a viable claim against a parent or alter ego of the corporation, the plaintiff must allege facts that, if proved, indicate that the parent or alter ego exercised complete domination of the corporation in respect to the transaction attacked and that such domination was used to commit a fraud or wrong against the plaintiff which resulted in the plaintiff's injury” (Americore Drilling & Cutting, Inc. v. EMB Contr. Corp., 198 A.D.3d 941, 944, 156 N.Y.S.3d 355;  see Cortlandt St. Recovery Corp. v. Bonderman, 31 N.Y.3d 30, 47–48, 73 N.Y.S.3d 95, 96 N.E.3d 191;  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;  Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135, 142, 603 N.Y.S.2d 807, 623 N.E.2d 1157;  TMCC, Inc. v. Jennifer Convertibles, Inc., 176 A.D.3d 1135, 1136, 111 N.Y.S.3d 102).  “[T]he corporate veil will be pierced to achieve equity, even absent fraud, when a corporation has been so dominated by an individual or another corporation and its separate entity so ignored that it primarily transacts the dominator's business instead of its own and can be called the other's alter ego” (Olivieri Const. Corp. v. WN Weaver St., LLC, 144 A.D.3d 765, 767, 41 N.Y.S.3d 59 [internal quotation omitted];  see Americore Drilling & Cutting, Inc. v. EMB Contr. Corp., 198 A.D.3d at 946, 156 N.Y.S.3d 355;  Williams v. Lovell Safety Mgt. Co., LLC, 71 A.D.3d 671, 672, 896 N.Y.S.2d 150).

Here, the complaint sufficiently alleged a cause of action to enforce the judgment against Allure based on an alter ego theory since, inter alia, it contained allegations that Allure shared common officers with All Around Spiral, at one point Allure had occupied All Around Spiral's former business premises and acquired certain of its equipment and employees, and Allure continued to conduct substantially the same business as All American Spiral (see Medical Arts Off. Servs., Inc. v. Erber, 89 A.D.3d 698, 699, 932 N.Y.S.2d 498;  Peery v. United Capital Corp., 84 A.D.3d 1201, 1203, 924 N.Y.S.2d 470;  Gateway I Group, Inc. v. Park Ave. Physicians, P.C., 62 A.D.3d 141, 146–147, 877 N.Y.S.2d 95;  see also Apex Rehabilitation & Care Ctr. v. Butler, 173 A.D.3d 658, 102 N.Y.S.3d 289).

A corporation may be held liable for obligations of a predecessor if:  “(1) it expressly or impliedly assumed the predecessor's [contract] liability, (2) there was a consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape such obligations” (Schumacher v. Richards Shear Co., 59 N.Y.2d 239, 245, 464 N.Y.S.2d 437, 451 N.E.2d 195;  see R & D Elecs., Inc. v. NYP Mgt., Co., Inc., 162 A.D.3d 1513, 1515, 78 N.Y.S.3d 834).  Here, the complaint adequately alleged that Allure is liable for payment of the consent judgment as the successor to All Around Spiral, based on, among other things, allegations that tend to show a de facto merger of those two entities, that Allure was a mere continuation of All Around Spiral, and that the transfer of business to Allure was intended to escape the obligation for the consent judgment (see Radium2 Capital, LLC v. Xtreme Natl. Maintenance Corp., 202 A.D.3d 638, 639, 159 N.Y.S.3d 853;  Trovato v. Galaxy Sanitation Servs. of N.Y., Inc., 171 A.D.3d 832, 834, 99 N.Y.S.3d 427;  Tap Holdings, LLC v. Orix Fin. Corp., 109 A.D.3d 167, 970 N.Y.S.2d 178).

BARROS, J.P., CHAMBERS, MILLER and CHRISTOPHER, JJ., concur.