[*1]
Justus v Miller
2015 NY Slip Op 50546(U) [47 Misc 3d 1210(A)]
Decided on April 17, 2015
Supreme Court, Nassau County
Marber, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on April 17, 2015
Supreme Court, Nassau County


Daniel J. Justus and GENEVIEVE JUSTUS, Plaintiffs, -against

against

George Miller, PLAINVIEW HOMES, INC. and PLAINVIEW BUILDERS, INC, Defendant.




002989/13



Attorney for Plaintiffs:



Victor A. Carr & Associates



88 Second Street



Mineola, NY 11501



(516) 747-2478



Attorney for Defendants:



The Rand Law Firm, P.C.



One John Street, Suite 202



Babylon, NY 11702



(631) 693-4700


Randy Sue Marber, J.

Papers Submitted:



Notice of Motion........................................x



Affirmation in Opposition..........................x



Reply Affirmation......................................x



Upon the foregoing papers, the Motion by the Plaintiffs, Daniel Justus and Genevieve Justus, seeking an order pursuant to CPLR § 3212 granting them summary judgment against the Defendants, George Miller (hereinafter "Miller") and Plainview Homes Inc. (hereinafter "Plainview Homes") and Plainview Builders, Inc. (hereinafter "Plainview Builders"), and piercing the corporate veil of Plainview Homes and permitting the judgment previously obtained against said entity to be entered against George Miller, is determined as hereinafter provided.



On or about March 25, 2004, the Plaintiffs and Plainview Homes entered into a contract whereby the Plaintiffs agreed to purchase the premises located at 43 Sea Breeze Road, Massapequa, New York (see Carr Affirmation in Support at Exhibit 1 at ¶ 3). Pursuant to the terms of the contract, Plainview Homes agreed "to complete certain construction work at the premises" and in connection therewith provided the Plaintiffs with a limited warranty, as well as a Property Condition Disclosure Statement (hereinafter "the Disclosure Statement"), the latter of which represented "that there were no known defects to the structure" (Id. at ¶¶ 4-6, 12). The sale was ultimately consummated on May 28, 2005, at which time the Plaintiffs tendered the sum of $825,000.00 (Id. at ¶¶ 7, 8).



Subsequent to taking possession, the Plaintiffs discovered certain "concealed conditions" existing on the property "including, but not limited to, a defective foundation, inadequate bulkhead and lack of insulation" (Id. at ¶ 9). As a result thereof, on or about January 12, 2010, the Plaintiffs commenced an action exclusively against Plainview Homes alleging that the representations made in the Disclosure Statement were false and misleading and in relying thereon they were damaged in the sum of $100,000.00 (hereinafter "Action 1") (Id. at ¶¶ 10-15). The complaint further alleged that Plainview Homes negligently performed the construction work it was contractually bound to complete and it breached the terms of the limited warranty causing the Plaintiffs to sustain over $100,000.00 in damages incurred in connection to curing the defects precipitated by the Defendants' negligence (Id. at ¶¶ 16-27). Plainview Homes failed to appear in Action 1 and on February 22, 2011, an as yet unsatisfied default judgment was entered against said Defendant in the amount of $110,042.40 (hereinafter the Judgment) (Id. at Exhibit 2).



On or about March 13, 2013, the Plaintiffs commenced the within action alleging that "prior and subsequent to the entry" of the Judgment, the Defendants engaged in a series of asset transfers which were fraudulent and in violation of the Debtor and Creditor Law §§ 273, 273-a, 276 and 276-a having been effected in the absence of consideration (Id. at Exhibit 4 at ¶¶ 21-26, 37-63). The complaint seeks to pierce the corporate veil of both Plainview Homes and Plainview Builders so as to hold Miller personally liable for the outstanding Judgment (Id. at ¶¶ 27, 30-36).[FN1] The [*2]Plaintiffs now move for summary judgment seeking the relief recited above.



In moving herein, the Plaintiffs' counsel contends that Miller, as the sole officer and employee of at least seven corporations, used his domination over such entities to thwart the Plaintiffs' ability to collect on the Judgment by purposely effecting, in the years 2004/2005, a transfer of his personal residence to his children, as well as by transferring the assets of Plainview Homes to Plainview Builders (see Carr Affirmation in Support at ¶¶ 14, 26-33, 45). Counsel asserts that the constellation of facts attendant to the underlying action are sufficient to establish all the requisite factors for this Court to pierce the corporate veil of Plainview Homes and hold the Defendant, Miller, personally liable for the Judgment entered against said entity (Id. at ¶¶ 24, 39, 44-46). More specifically, counsel asserts that the checkbook register maintained by Plainview Homes establishes that Miller, in his capacity as the sole officer and employee of multiple corporations, neglected to adhere to any corporate formalities and that corporate funds belonging to Plainview Homes were improperly intermingled and used for personal rather than business purposes (Id. at ¶¶ 35-36, 45; Exhibit 7; Exhibit 11). Finally, counsel posits that all the businesses in which the Defendant, Miller, has an interest either rent space from another entity owned by him or operate out of his personal residence (Id. at ¶¶ 37, 38).[FN2]



In opposition, counsel for the Defendants, Miller and Plainview Builders asserts there is an absence of evidence that Miller perpetrated a fraud against the Plaintiffs and that his status as the sole employee of any of his corporations is an insufficient basis upon which to premise piercing the corporate veil (see Rand Affirmation in Opposition to the Plaintiff's [sic] Motion for Summary Judgment and in Support of the Defendants' "Cross-Motion" for Summary Judgment at ¶¶ 36, 37).[FN3] Counsel additionally maintains that while the Plaintiffs' counsel references certain entries in the checkbook register indicating, inter alia, that Miller drew an income from Plainview Homes, that said company paid a life insurance premium in the sum of $357.75 and that the company made payments to another entity owned by Miller from which it was renting space, none of these circumstances indicate that corporate funds were improperly commingled (Id. at ¶¶ 38-40).



In Reply, the Plaintiffs' counsel reiterates those arguments previously set forth in support of the within application and stresses that the transfer of Miller's personal residence to his children, as well as the transfer of the assets from Plainview Homes to Plainview Builders were fraudulent, having been effected without consideration and were undertaken with the actual intent [*3]to defraud the Plaintiffs (see Carr Affirmation in Reply at ¶¶ 7-9, 14, 11, 15). Counsel further posits that while Miller testified Plainview Homes ceased operating in 2005, the corporation's tax and bank records establish said entity had assets in excess of $4,000,000.00 in 2006 and Miller's false testimony with respect thereto was but "one of the many fraudulent attempts" he has undertaken to avoid satisfying the Plaintiffs' claims (Id. at ¶¶ 3, 4, 5).



" The general rule . . . is that a corporation exists independently of its owners, who are not personally liable for its obligations, and that individuals may incorporate for the express purpose of limiting their liability'" (Superior Transcribing Serv., LLC v. Paul, 72 AD3d 675, 676 [2d Dept. 2010]; quoting East Hampton Union Free School Dist. v. Sandpebble Bldrs., Inc., 66 AD3d 122, 126 [2d Dept. 2009]). However, "equity will intervene to pierce the corporate veil and permit the imposition of personal liability in order to avoid fraud or injustice" (Ventresca Realty Corp. v. Houlihan, 28 AD3d 537, 538 [2d Dept. 2006]; Superior Transcribing Serv., LLC v. Paul, supra at 676; Shkolnik v. Krutoy, 65 AD3d 1214, 1215 [2d Dept. 2009]). As a general proposition, "piercing the corporate veil requires a showing 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., 82 NY2d 135, 141 [1993]). "While complete domination of the corporation is the key to piercing the corporate veil, especially when the owners use the corporation as a mere device to further their personal rather than the corporate business, such domination, standing alone, is not enough; some showing of a wrongful or unjust act toward plaintiff is required" (Id. at 141-142 [internal citations omitted]). Thus, "[t]hose seeking to pierce a corporate veil of course bear a 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 NY2d 335, 339 [1998]).



The central theory upon which the within action is predicated is that in completely dominating Plainview Homes, Miller was able to effect the challenged asset transfers so as to deliberately frustrate the Plaintiffs' ability to satisfy the Judgment. However, even fully crediting as true that Miller exercised complete domination over Plainview Homes, the evidence submitted herein does not establish such domination was employed so as to perpetrate a fraud against Mr. and Mrs. Justus (Id.; Matter of Morris v. New York State Dept. of Taxation & Fin., supra at 141-142). Here, the transactions specifically challenged by the Plaintiffs are the transfer by Miller of his personal residence into a trust for his children and the transfer of the assets of Plainview Homes to Plainview Builders. With particular regard to the former, there is nothing in the record indicating that Plainview Homes, the judgment debtor, had any ownership interest in that property and accordingly any transfer thereof would have had no impact on the Plaintiffs' efforts in satisfying the Judgment (Id.). Moreover, the record establishes that the transfers at issue occurred in either 2004 or 2005, at least five years prior to the commencement of Action 1, which resulted in the Judgment sought to be enforced herein. As noted above, the Plaintiffs concede the transfer of Miller's residence to his children was effected in either 2004 or 2005 and the check register upon which the Plaintiffs rely to demonstrate the transfer of assets from Plainview Homes to Plainview Builders particularly references transactions occurring in 2004 and 2005. Given the temporal degree to which the challenged asset transfers antedate the commencement of Action 1 and, concomitantly, the [*4]Judgment ultimately emanating therefrom, the Court finds there has been an inadequate showing that any corporate domination exercised by Miller over Plainview Homes was employed so as to defraud the Plaintiffs and deprive them of an opportunity to satisfy their outstanding monetary claims (Id.).



Accordingly, it is hereby



ORDERED, that the motion by the Plaintiffs, which seeks an order granting them summary judgment, is DENIED.



This constitutes the decision and order of the Court.



Dated:Mineola, New York



April 17, 2015

___________________________

Hon. Randy Sue Marber, J.S.C.

Footnotes


Footnote 1:The Court notes that while the complaint seeks to pierce the corporate veil of Plainview Homes, as well as Plainview Builders, the application sub judice does not seek to pierce the corporate veil with respect to the latter entity (see Notice of Motion dated, November 18, 2014; see also Carr Affirmation at ¶ 1).

Footnote 2:Plaintiffs' counsel confines his supporting arguments to piercing the corporate veil and does not address the causes of action premised upon the Debtor and Creditor Law.

Footnote 3:The Court notes that the Defendants, Miller and Planview Builders, have informally Cross-moved for summary judgment dismissing the Second through Eighth causes of action contained in the within complaint and which are premised upon the Debtor and Creditor Law §§ 273, 273-a, 276 and 276-a (see Rand Affirmation in Opposition to Plaintiff's [sic] Motion for Summary Judgment and in Support of Defendants' Cross-Motion for Summary Judgment at ¶ 3). However, given the absence of a Notice of Cross-motion and the lack of any substantive opposition proffered by the Plaintiffs, this Court, in its discretion, elected not to entertain the Defendants' informal request for relief (Fried v. Jacob Holding, Inc., 110 AD3d 56, 65 [2d Dept. 2013]; CPLR § 2215).