DO GOODER PRODUCTIONS INC v. Stanley Brechner, Defendant-Respondent.

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Supreme Court, Appellate Division, First Department, New York.

DO GOODER PRODUCTIONS, INC., Plaintiff-Appellant, v. AMERICAN JEWISH THEATRE, INC., Defendant, Stanley Brechner, Defendant-Respondent.

Decided: October 20, 2009

GONZALEZ, P.J., ANDRIAS, CATTERSON, ACOSTA, ABDUS-SALAAM, JJ. O'Melveny & Myers LLP, New York (Shannon Griffin of counsel), for appellant. Adam L. Goldberg, Brooklyn, for respondent.

Order, Supreme Court, New York County (Carol R. Edmead, J.), entered May 5, 2008, which denied plaintiff's motion for summary judgment or, alternatively, discovery sanctions against defendant Brechner, and granted Brechner's motion for summary judgment dismissing the complaint and all claims asserted against him, unanimously affirmed, without costs.

This is an action for breach of a 1998 license agreement for use of theatre space.   There was insufficient evidence to warrant piercing defendant Theatre's corporate veil for the purpose of holding the individual defendant personally liable.   Plaintiff failed to meet its “heavy burden of showing that the corporation was dominated as to the transaction attacked and that such domination was the instrument of fraud or otherwise resulted in wrongful or inequitable consequences” (TNS Holdings v. MKI Sec. Corp., 92 N.Y.2d 335, 339, 680 N.Y.S.2d 891, 703 N.E.2d 749 [1998] ).   Specifically, plaintiff failed to demonstrate the individual defendant's exercise of complete dominion over the corporation regarding the transaction attacked, with such control used to commit a fraud or wrong resulting in plaintiff's injury (Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135, 141, 603 N.Y.S.2d 807, 623 N.E.2d 1157 [1993] ).   There was no evidence that the corporation was undercapitalized at the time of the license agreement or that it failed to utilize the requisite corporate form.   Evidence was also insufficient to prove Brechner's wrongdoing in utilizing corporate funds for his personal use or in commingling funds.

The court properly denied plaintiff's alternative request for imposition of sanctions based on delay in production of evidence or spoliation resulting from the bank's destruction of records in accordance with its seven-year record retention procedures, finding that most of the delay was the result of plaintiff not commencing the action until more than five years after it vacated the space and the time given plaintiff to obtain new counsel.   There was no showing that Brechner had not substantially complied with disclosure.