OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY v. MOSKOWITZ

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

OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, Respondent, v. Edward MOSKOWITZ, et al., Appellants, et al., Defendants.

Decided: September 23, 2002

DAVID S. RITTER, J.P., NANCY E. SMITH, WILLIAM D. FRIEDMANN and BARRY A. COZIER, JJ. Marvin J. Weinroth, Great Neck, NY, for appellants. Donohue, McGahan & Catalano, Jericho, N.Y. (Nicholas J. Donohue of counsel), for respondent.

In an action to recover damages for conversion, the defendants Edward Moskowitz, Victoria Moskowitz, and Metro Land Services, Inc., appeal, as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Adams, J.), dated December 12, 2000, as granted those branches of the plaintiff's motion which were for partial summary judgment on the issue of liability against the defendants Edward Moskowitz and Victoria Moskowitz, and denied their cross motion for summary judgment dismissing the complaint insofar as asserted against the defendant Victoria Moskowitz.

ORDERED that the appeal taken by the defendant Metro Land Services, Inc., is dismissed, without costs or disbursements, as it is not aggrieved by the portion of the order appealed from (see CPLR 5511);  and it is further,

ORDERED that the order is modified, on the law, by (1) deleting the provision thereof granting that branch of the plaintiff's motion which was for partial summary judgment against the defendant Victoria Moskowitz and substituting therefor a provision denying that branch of the motion, and (2) deleting the provision thereof denying that branch of the cross motion which was for summary judgment dismissing the complaint insofar as asserted against the defendant Victoria Moskowitz and substituting therefor a provision granting that branch of the cross motion;  as so modified, the order is affirmed insofar as reviewed, without costs or disbursements, the complaint is dismissed insofar as asserted against the defendant Victoria Moskowitz, and the action against the remaining defendants is severed.

In 1992 the plaintiff, a New York State licensed title insurer, entered into a title agency agreement with the defendant Metro Land Services, Inc. (hereinafter Metro Land).   Pursuant to that agreement, Metro Land, as the plaintiff's agent, collected various funds at real estate closings to pay, among other things, title insurance premiums and charges, recording fees, and deed, mortgage, and transfer taxes.   In or about the Spring of 1998, the plaintiff discovered that Metro Land had failed to record deeds and other documents for the plaintiff from some 250 closings.   While Metro Land had received the funds, amounting to $1,372,734.84, required to record the documents and pay the requisite taxes, it no longer had the funds.   Kenneth Jacobowitz and Edward Moskowitz were the sole directors, shareholders, and officers of Metro Land.

The plaintiff brought the instant action against Metro Land, Kenneth Jacobowitz and his wife, Jeanne Jacobowitz, and Edward Moskowitz and his wife, Victoria Moskowitz, to recover damages, inter alia, for conversion.   After a default judgment was entered against Kenneth and Jeanne Jacobowitz, the plaintiff moved for partial summary judgment on the issue of liability against Metro Land and Edward and Victoria Moskowitz.   The Supreme Court granted the motion.

 Initially, we note that although Metro Land is named as an appellant in the notice of appeal, no argument is made on appeal that the Supreme Court improperly granted partial summary judgment on the issue of liability against that defendant.   Therefore, there is no issue as to whether Metro Land is liable to the plaintiff, and the only issue presented on the instant appeal is whether the Supreme Court properly pierced the corporate veil to hold Edward and Victoria Moskowitz liable for Metro Land's conversion.  “The concept [of piercing the corporate veil] is equitable in nature and assumes that the corporation itself is liable for the obligation sought to be imposed * * * Thus, an attempt of a third party to pierce the corporate veil does not constitute a cause of action independent of that against the corporation;  rather it is an assertion of facts and circumstances which will persuade the court to impose the corporate obligation on its owners” (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).

 To successfully pierce the corporate veil, a third party must show that:  “(1) the owners exercised complete domination of the corporation in respect to the transaction attacked;  and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury” (Matter of Morris v. New York State Dept. of Taxation & Fin., supra).   In support of its motion for partial summary judgment, the plaintiff made out a prima facie case to support piercing the corporate veil and holding the defendant Edward Moskowitz liable for Metro Land's conversion of funds (see Commercial Sites Co. v. Prestige Photo Studios, 272 A.D.2d 360, 707 N.Y.S.2d 491;  Hyland Meat Co. v. Tsagarakis, 202 A.D.2d 552, 609 N.Y.S.2d 625).   In opposition to this motion, Edward Moskowitz failed to raise a triable issue of fact as to his liability.

 However, the Supreme Court improperly granted that branch of the plaintiff's motion which was for summary judgment against the defendant Victoria Moskowitz, and improperly denied that branch of the cross motion which was for summary judgment dismissing the complaint insofar as asserted against her.   There is no basis to pierce the corporate veil as against her since she was neither an owner, director, nor a shareholder in Metro Land (see Matter of Morris v. New York State Dept. of Taxation & Fin., supra;  Matter of Bergassi v. American Sur. Agency, 278 A.D.2d 413, 718 N.Y.S.2d 611;  Bruzzi v. Syosset Sport Ctr., 277 A.D.2d 413, 716 N.Y.S.2d 895).

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