You are here: / / SUPREME COURT PROPERLY APPLIED THE “PIERCE THE CORPORATE VEIL CRITERIA”...
, , , ,

SUPREME COURT PROPERLY APPLIED THE “PIERCE THE CORPORATE VEIL CRITERIA” AND ASSESSED DAMAGES FOR BREACH OF CONTRACT AGAINST THE DEFENDANT PARENT CORPORATION; THERE WAS A COMPREHENSIVE TWO-JUSTICE DISSENT (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Kapnick, over a comprehensive two-justice dissent, determined Supreme Court had properly applied the “pierce the corporate veil” criteria to assess damages for breach of contract against the defendant parent company:

“Because a decision to pierce the corporate veil in any given instance will necessarily depend on the attendant facts and equities, there are no definitive rules governing the varying circumstances when this power may be exercised” … . However, under the totality of the circumstances presented here, we conclude that plaintiffs met their heavy burden of showing that “[JAE] exercised complete domination of [J.A. Madison] in respect to the transaction attacked[,] [specifically the Consulting Agreement]” … . Thus, we will address the second prong of the test – namely, whether plaintiffs met their burden to show “that such domination was used to commit a fraud or wrong against the plaintiff[s] which resulted in plaintiff[s’] injury” … . * * *

“Wrongdoing in this context does not necessarily require allegations of actual fraud. While fraud certainly satisfies the wrongdoing requirement, other claims of inequity or malfeasance will also suffice … . Allegations that corporate funds were purposefully diverted to make it judgment proof or that a corporation was dissolved without making appropriate reserves for contingent liabilities are sufficient to satisfy the pleading requirement of wrongdoing which is necessary to pierce the corporate veil on an alter-ego theory … .

… The evidence presented at trial showed that JAE used its domination of J.A. Madison to commit a wrong against plaintiffs by stopping payments to plaintiffs under the Consulting Agreement, causing J.A. Madison to become judgment proof, and then by dissolving J.A. Madison after this action had already been commenced, making plaintiffs’ judgment against J.A. Madison nothing more than a pyrrhic victory. The fact that J.A. Madison may have initially been created for a legitimate purpose of operating a store selling Jonathan Adler merchandise and products does not change the analysis. Rich v J.A. Madison, LLC, 2025 NY Slip Op 04818, First Dept 8-28-25

Practice Point: Consult this opinion and the dissent for a comprehensive discussion of the criteria for piercing the corporate veil in the context of a breach of contract.

 

You might also like
PUTBACK ACTION STEMMING FROM THE PURCHASE OF RESIDENTIAL MORTGAGE BACKED SECURITIES SURVIVED MOTIONS TO DISMISS.
Cumulative Effect of Several “Suggestive” Factors Rendered the Show-Up Identification Inadmissible
DEFENSE COUNSEL TOLD THE COURT DURING THE PRE-TRIAL SUPPRESSION HEARING THAT DEFENDANT WAS NOT CONTESTING HIS CONSENT TO THE INTOXILYZER BREATH TEST; SUPREME COURT PROPERLY DENIED DEFENDANT’S ATTEMPT TO RAISE THAT SAME SUPPRESSION ISSUE DURING TRIAL; THE DISSENT DISAGREED (FIRST DEPT).
DEFENDANT ENTITLED TO A HEARING ON HER MOTION TO SET ASIDE HER CONVICTION, ERRONEOUS ADVICE ABOUT DEPORTATION ALLEGED TO CONSTITUTE INEFFECTIVE ASSISTANCE.
DEFENDANT’S ATTORNEY DID NOT PROVIDE EFFECTIVE ASSISTANCE OF COUNSEL BY CONCEDING DEFENDANT SUFFERED FROM A DANGEROUS MENTAL DISORDER AND THEREBY EFFECTIVELY WAIVING A HEARING TO DETERMINE THE APPROPRIATE TRACK FOR DEFENDANT’S TREATMENT-CIVIL CONFINEMENT (FIRST DEPT).
Pursuant to the Public Authorities Law, Interest on a Judgment To Be Paid by the New York City Transit Authority Cannot Exceed 3%
SUPREME COURT SHOULD NOT HAVE ENTERED A DEFAULT JUDGMENT OF DIVORCE AGAINST THE HUSBAND, WHO WAS REPRESENTING HIMSELF, WHEN HE DID NOT APPEAR AT THE INQUEST; BOTH THE COURT AND THE WIFE WERE AWARE THE HUSBAND HAD BEEN DIAGNOSED WITH A SIGNIFICANT MENTAL HEALTH CONDITION (FIRST DEPT).
Elements of Tampering with Physical Evidence

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

THE CONSENT-SEARCH PROBATION CONDITION WAS NOT WARRANTED IN THIS DWI CASE; THERE... THERE ARE QUESTIONS OF FACT WHETHER THE FORFEITURE OF THE VEHICLE USED FOR FOOD...