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CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD.

The First Department, in an issue-rich decision which is sparse on facts, determined several jurisdiction and choice of law issues in a complex lawsuit involving a great many inter-related international corporations and allegations of fraud. One of the many jurisdiction issues discussed is so-called “conspiracy jurisdiction;” a sample of that discussion follows:

The remaining possibility for obtaining jurisdiction over defendants-appellants is conspiracy jurisdiction … . Defendants contend that the complaint does not allege an agreement by the Citco defendants to participate in a conspiracy to defraud Massachusetts Bay Transportation Authority Retirement Fund (MBTARF) and that MBTARF failed to identify an overt act. However, we find that the complaint contains factual allegations from which such an agreement can be inferred … . It also alleges an overt act, namely, that alleged co-conspirators Mr. Fletcher and FAM took $7.1 million of MBTARF’s investment in nonparty Fletcher Fixed Income Alpha Fund, Ltd. (Alpha) and used it in violation of Alpha’s offering memorandum as partial repayment of Leveraged’s loan to Citco Bank and SFT … .

Turning to the additional requirements for conspiracy jurisdiction … , we must examine Leveraged’s and Fletcher Income Arbitrage Fund Ltd. (Arbitrage)’s conspiracy claims with respect to personal jurisdiction. Leveraged and Arbitrage’s conspiracy claims allege that Mr. Fletcher and FAM fraudulently transferred cash from plaintiff Fletcher International, Ltd. to Unternaehrer in the FIP Transaction. The transfer was made by instructing SFT to transfer money from FIP’s account to Citco Bank’s account at HSBC New York, for further credit to SFT, for further credit to Unternaehrer. Using a New York bank account for a fraudulent scheme constitutes a tort within New York … .

MBTARF’s conspiracy claim alleges that Mr. Fletcher and FAM made misrepresentations to it about how its investment would be used. It also alleges that they diverted its money. Drawing inferences in favor of plaintiffs … , we find that the misrepresentation and diversion occurred in New York because FAM and Mr. Fletcher were located there.

We find that the additional Lawati factors (102 AD3d at 428) are satisfied as to Citco Group but not Citco Global. Since Citco Group is the parent, it is logical to infer that Citco Cayman (a New York co-conspirator because it has not contested jurisdiction) acted under its control. However, since Citco Global is only a sibling of Citco Cayman, it is not as logical to infer that Citco Cayman acted under Citco Global’s control. FIA Leveraged Fund Ltd. v Grant Thornton LLP, 2017 NY Slip Op 03887, 1st Dept 5-16-17

 

CIVIL PROCEDURE (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/JURISDICTION  (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/CONSPIRACY JURISDICTION (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/CORPORATION LAW (JURISDICTION, CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/FRAUD (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)

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ORAL OFFER TO SELL SHARES IN FAMILY CORPORATION FORMED SOLELY TO OWN ONE PIECE OF REAL PROPERTY WAS SUBJECT TO THE STATUTE OF FRAUDS, THE WRITING REQUIREMENT WAS NOT REMOVED BY PART PERFORMANCE. 

The Third Department determined defendant’s oral offer to sell to plaintiff her shares in a family corporation (SEI) formed solely to hold one piece of property (Beach Cove) as its single asset was subject to the statute of frauds (and therefore unenforceable). The court further found that certain actions, like opening a bank account, did not amount to part performance sufficient to overcome the writing requirement of the statute of frauds:

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SEI was a single-asset corporation — that single asset being its ownership of Beach Cove — and, inasmuch as the alleged oral agreement involved the sale of plaintiff’s shares of stock in a corporation whose only asset was an interest in real property, the statute of frauds indeed applied here … . As the alleged oral agreement was not reduced to writing, plaintiff could avoid application of the statute of frauds only if her conduct fell within the part performance exception. In this regard, while the actions upon which plaintiff relies — i.e., opening a bank account in anticipation of a wire transfer of funds from defendant, retrieving her SEI stock certificates to relinquish to defendant, hiring an attorney to coordinate with defendant and/or reduce the alleged oral agreement to writing, timely removing her personal possessions from Beach Cove and promptly vacating the premises in accordance with defendant’s alleged wishes — are consistent with plaintiff’s assertion that she and defendant had a deal to sell plaintiff’s shares in SEI to defendant for $900,000, such actions are not unequivocally referable to — or unintelligible without reference to — the alleged oral agreement, nor so substantial in quality to irremediably alter the situation. Wells v Hodgkins, 2017 NY Slip Op 03824, 3rd Dept 5-11-17

CONTRACT LAW (ORAL OFFER TO SELL SHARES IN FAMILY CORPORATION FORMED SOLELY TO OWN ONE PIECE OF REAL PROPERTY WAS SUBJECT TO THE STATUTE OF FRAUDS, THE WRITING REQUIREMENT WAS NOT REMOVED BY PART PERFORMANCE)/REAL PROPERTY (ORAL OFFER TO SELL SHARES IN FAMILY CORPORATION FORMED SOLELY TO OWN ONE PIECE OF REAL PROPERTY WAS SUBJECT TO THE STATUTE OF FRAUDS, THE WRITING REQUIREMENT WAS NOT REMOVED BY PART PERFORMANCE)/STATUTE OF FRAUDS (ORAL OFFER TO SELL SHARES IN FAMILY CORPORATION FORMED SOLELY TO OWN ONE PIECE OF REAL PROPERTY WAS SUBJECT TO THE STATUTE OF FRAUDS, THE WRITING REQUIREMENT WAS NOT REMOVED BY PART PERFORMANCE)/CORPORATION LAW  (ORAL OFFER TO SELL SHARES IN FAMILY CORPORATION FORMED SOLELY TO OWN ONE PIECE OF REAL PROPERTY WAS SUBJECT TO THE STATUTE OF FRAUDS, THE WRITING REQUIREMENT WAS NOT REMOVED BY PART PERFORMANCE)

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DIFFERENCES BETWEEN CONTRIBUTION AND INDEMNIFICATION EXPLAINED, PERSONAL TORT LIABILITY OF CORPORATE OFFICERS NOTED.

The Second Department, in a lawsuit stemming from the flooding of plaintiffs’ land, explained the differences between contribution and indemnification and noted that corporate officers may be personally liable for torts committed in their performance of corporate duties:

The plaintiffs commenced this action against the Village of East Hills after they experienced flooding on their property from rainwater. The plaintiffs asserted causes of action sounding in tort, alleging that the flooding resulted from the development of land near their property, which was authorized by the Village. The Village commenced a third-party action seeking indemnification and contribution against A to Z Transit Contracting Corp., the project manager that constructed the plaintiffs’ home, as well as its principal, David Ferdinand, architect Carl Majowka, who prepared plans for the construction of the plaintiffs’ home, and Scott Anderson, the principal of Scott Anderson Design, Inc., which performed landscaping work for the plaintiffs’ home. * * *

“[C]ontribution arises automatically when certain factors are present and [does] not requir[e] any kind of agreement between or among the wrongdoers'” … . ” Indemnity, on the other hand, arises out of a contract which may be express or may be implied in law “to prevent a result which is regarded as unjust or unsatisfactory”‘” … . “Further, “[w]here one is held liable solely on account of the negligence of another, indemnification, not contribution, principles apply to shift the entire liability to the one who was negligent.” . . . Conversely, where a party is held liable at least partially because of its own negligence, contribution against other culpable tort-feasors is the only available remedy'”… . “Whether indemnity or contribution applies depends not upon the parties’ designation but upon a careful analysis of the theory of recovery against each tort-feasor'”       * * *

Although “[c]orporate officers may not be held personally liable on contracts of their corporations, provided they did not purport to bind themselves individually under such contracts” … , “corporate officers may be held personally liable for torts committed in the performance of their corporate duties'” … . Eisman v Village of E. Hills. 2017 NY Slip Op 02775, 2nd Dept 4-12-17

NEGLIGENCE (DIFFERENCES BETWEEN CONTRIBUTION AND INDEMNIFICATION EXPLAINED, PERSONAL TORT LIABILITY OF CORPORATE OFFICERS NOTED)/CONTRACT LAW (DIFFERENCES BETWEEN CONTRIBUTION AND INDEMNIFICATION EXPLAINED, PERSONAL TORT LIABILITY OF CORPORATE OFFICERS NOTED)/CORPORATION LAW  (DIFFERENCES BETWEEN CONTRIBUTION AND INDEMNIFICATION EXPLAINED, PERSONAL TORT LIABILITY OF CORPORATE OFFICERS NOTED)/MUNICIPAL LAW (DIFFERENCES BETWEEN CONTRIBUTION AND INDEMNIFICATION EXPLAINED, PERSONAL TORT LIABILITY OF CORPORATE OFFICERS NOTED)

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INSURER’S FRAUDULENT INCORPORATION DEFENSE TO ITS REFUSAL TO PAY NO-FAULT BENEFITS TO A CORPORATION RUN BY NON-PHYSICIANS WAS PROPERLY PRESENTED TO THE JURY, DEPOSITION TESTIMONY IN WHICH NON-PARTIES INVOKED THE FIFTH AMENDMENT SHOULD NOT HAVE BEEN READ TO THE JURY.

The Second Department, in a full-fledged opinion by Justice Duffy, determined defendant insurance company was entitled to the fraudulent incorporation defense in support of its refusal to pay no-fault benefits to plaintiff corporation for MRI’s administered by plaintiff corporation. The Business Corporation Law required that plaintiff corporation be run by physicians. There was substantial evidence the corporation was being run by two non-physicians with a physician as a cover. The Second Department found that the jury instructions explaining the criteria for the fraudulent incorporation defense were proper. The Second Department noted that the deposition testimony in which the two non-physician operators of plaintiff corporation refused to answer questions (invoking the Fifth Amendment) should not have been read to the jury because they were non-party witnesses. However, the error was deemed harmless. With respect to the fraudulent incorporation defense, the court wrote:

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… [T]he jury charge, read as a whole, adequately conveyed the correct legal principles on “fraudulent incorporation” … . The instructions asked the jury to consider whether, under the totality of the circumstances, the plaintiff was operating as a proper professional medical corporation in compliance with state regulations or whether, in order to obtain money that insurers were otherwise entitled to deny, the plaintiff was organized under the facially valid cover of [a physician] but was, in actuality, operated and controlled by [two non-physicians] to funnel profits to themselves. Carothers v Progressive Ins. Co., 2017 NY Slip Op 02614. 2nd Dept 4-5-17

INSURANCE LAW (INSURER’S FRAUDULENT INCORPORATION DEFENSE TO ITS REFUSAL TO PAY NO-FAULT BENEFITS TO A CORPORATION RUN BY NON-PHYSICIANS WAS PROPERLY PRESENTED TO THE JURY)/CORPORATION LAW (INSURER’S FRAUDULENT INCORPORATION DEFENSE TO ITS REFUSAL TO PAY NO-FAULT BENEFITS TO A CORPORATION RUN BY NON-PHYSICIANS WAS PROPERLY PRESENTED TO THE JURY)/EVIDENCE (DEPOSITION TESTIMONY IN WHICH NON-PARTIES INVOKED THE FIFTH AMENDMENT SHOULD NOT HAVE BEEN READ TO THE JURY)/FRAUDULENT INCORPORATION DEFENSE  (INSURER’S FRAUDULENT INCORPORATION DEFENSE TO ITS REFUSAL TO PAY NO-FAULT BENEFITS TO A CORPORATION RUN BY NON-PHYSICIANS WAS PROPERLY PRESENTED TO THE JURY)

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DEFENDANT DID NOT DEMONSTRATE IT WAS THE ALTER EGO OF PLAINTIFF’S EMPLOYER, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT DISMISSING THE NEGLIGENCE COMPLAINT SHOULD NOT HAVE BEEN GRANTED.

The Second Department, reversing Supreme Court, determined defendant did not demonstrate it was the alter ego of plaintiff’s employer (which would trigger the Worker’s Compensation Law as plaintiff’s sole remedy). Defendant’s summary judgment motion on that ground should have been denied. Plaintiff was injured by a defective floor condition where he worked. He sued the owner of the building and the holder of the lease, Clean Rite Cleaners – Flatbush Avenue, LLC:

At the time of the accident, the plaintiff was employed by nonparty CRC-Management Co., LLC (hereinafter CRC-Management), and, after the accident, he sought Workers’ Compensation benefits from CRC-Management. CRC-Flatbush moved, in effect, for summary judgment dismissing the complaint insofar as asserted against it on the ground that the plaintiff’s causes of action were barred by the exclusive remedy provisions of the Workers’ Compensation Law. Among other things, CRC-Flatbush argued that it was “part of a single integrated entity” along with CRC-Management since they were both subsidiaries of nonparty Clean Rite Centers, LLC. …

… “[A] mere showing that the entities are related is insufficient where a defendant cannot demonstrate that one of the entities controls the day-to-day operations of the other” … . Here, CRC-Flatbush failed to make a prima facie showing either that it and the plaintiff’s employer, CRC-Management, operated as a single integrated entity, or that either company controlled the day-to-day operations of the other … . Moses v B & E Lorge Family Trust, 2017 NY Slip Op 01350, 2nd Dept 2-22-17

 

WORKER’S COMPENSATION LAW (DEFENDANT DID NOT DEMONSTRATE IT WAS THE ALTER EGO OF PLAINTIFF’S EMPLOYER, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT DISMISSING THE NEGLIGENCE COMPLAINT SHOULD NOT HAVE BEEN GRANTED)/CORPORATION LAW (WORKER’S COMPENSATION LAE, NEGLIGENCE, DEFENDANT DID NOT DEMONSTRATE IT WAS THE ALTER EGO OF PLAINTIFF’S EMPLOYER, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT DISMISSING THE NEGLIGENCE COMPLAINT SHOULD NOT HAVE BEEN GRANTED)/NEGLIGENCE (WORKER’S COMPENSATION LAW, CORPORATION LAW, DEFENDANT DID NOT DEMONSTRATE IT WAS THE ALTER EGO OF PLAINTIFF’S EMPLOYER, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT DISMISSING THE NEGLIGENCE COMPLAINT SHOULD NOT HAVE BEEN GRANTED)/ALTER EGO (WORKER’S COMPENSATION LAW, CORPORATION LAW, DEFENDANT DID NOT DEMONSTRATE IT WAS THE ALTER EGO OF PLAINTIFF’S EMPLOYER, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT DISMISSING THE NEGLIGENCE COMPLAINT SHOULD NOT HAVE BEEN GRANTED)

NONMONETARY SETTLEMENT OF A SHAREHOLDERS’ CLASS ACTION SUIT APPROVED, NEW ANALYTICAL CRITERIA ANNOUNCED.

The First Department, in a full-fledged opinion by Justice Kahn, with a concurring opinion, reversing Supreme Court, determined a nonmonetary settlement of a shareholders’ class action suit should have been approved. The matter was sent back to determine appropriate attorneys’ fees. The opinion is too comprehensive to fairly summarize here. The court revisited the factors to be considered in analyzing nonmonetary settlements, adding two new factors to those announced in Woodrow v Colt Industries in 1990. This action involved the propriety of the purchase of Verizon Wireless by Verizon Communications:

The rise of nonmonetary class action settlements began in the 1980s and continued into the 1990s, when complaints of corporate misconduct in the context of mergers and acquisitions prompted calls for corporate governance reforms. Often, the perceived need for reform led to the commencement of litigation as a means to address the misfeasance, which would result in settlements with provisions for corporate governance reform or other forms of equitable relief, such as additional disclosures to shareholders in proxy statements, and would be accompanied by an award of reasonable attorneys’ fees to shareholders’ counsel. * * *

In the ensuing decades, however, the use of nonmonetary settlements became increasingly disfavored. Complaints arose that the remedies of “disclosure-only” and other forms of non-monetary settlements themselves proved problematic because they provided minimal benefits either to shareholders or to their corporations. Both courts and commentators came to view the shareholder class action in this context as a “merger tax” and as a cottage industry for the plaintiffs’ class action bar, used to force settlements of nonmeritorious suits and to generate exorbitant attorneys’ fees, causing waste and abuse to the corporation and its shareholders. * * *

… [W]e now refine our Colt standard of review to add to the five established factors to be used by courts to ensure appropriate evaluation of proposed nonmonetary settlements of class action suits these two additional criteria: whether the proposed settlement is in the best interests of the putative settlement class as a whole, and whether the settlement is in the best interest of the corporation. Gordon v Verizon Communications, Inc., 2017 NY Slip Op 00742, 1st Dept 2-2-17

 

CORPORATION LAW (NONMONETARY SETTLEMENT OF A SHAREHOLDERS’ CLASS ACTION SUIT APPROVED, NEW ANALYTICAL CRITERIA ANNOUNCED)/SHAREHOLDERS’ CLASS ACTIONS (NONMONETARY SETTLEMENT OF A SHAREHOLDERS’ CLASS ACTION SUIT APPROVED, NEW ANALYTICAL CRITERIA ANNOUNCED)/CLASS ACTIONS (SHAREHOLDERS, NONMONETARY SETTLEMENT OF A SHAREHOLDERS’ CLASS ACTION SUIT APPROVED, NEW ANALYTICAL CRITERIA ANNOUNCED)/NONMONETARY SETTLEMENTS (SHAREHOLDERS’ CLASS ACTIONS, NONMONETARY SETTLEMENT OF A SHAREHOLDERS’ CLASS ACTION SUIT APPROVED, NEW ANALYTICAL CRITERIA ANNOUNCED)

PIERCING THE CORPORATE VEIL (ALTER EGO) ALLEGATIONS PROPERLY SURVIVED MOTION TO DISMISS.

The First Department determined defendants’ motion to dismiss breach of contract causes of action founded in part on piercing the corporate veil was properly denied:

[Plaintiff] alleged that [defendant] Diaz Rivera, exercised “complete dominion and control” and “complete business discretion” over “all aspects of [the corporation’s] management and operations,” and that [the corporation] and Diaz Rivera failed “to follow normal and customary corporate procedures with regard to [the corporation],” in that [the corporation] “fail[ed] to hold required meetings for [the corporation’s] partners, [and] fail[ed] to prepare and keep corporate records.” Finally, [defendant] alleged that Diaz Rivera, with an improper motive, commingled his funds with [corporation] funds, resulting in inadequate capitalization. …

We find that the allegations of an absence of corporate formalities, inadequate capitalization, and the commingling of corporate and personal funds, as well as the allegations that Diaz Rivera directed [the corporation] to take various actions that harmed [defendant], including failing to transfer property rights, siphoning resort revenues, and incurring unnecessary taxes, are sufficient to withstand this pre-answer motion to dismiss the complaint, based on alter ego liability, as against Diaz Rivera. Cargill Soluciones Empresariales, S.A. de C.V., SOFOM, ENR v Desarrolladora Farallon S. de R.L. de C.V.,2017 NY Slip Op 00069, 1st Dept 1-5-17

 

CORPORATION LAW (PIERCING THE CORPORATE VEIL (ALTER EGO) ALLEGATIONS PROPERLY SURVIVED MOTION TO DISMISS)/PIERCING THE CORPORATE VEIL  (PIERCING THE CORPORATE VEIL (ALTER EGO) ALLEGATIONS PROPERLY SURVIVED MOTION TO DISMISS)/ALTER EGO (CORPORATION LAW, (PIERCING THE CORPORATE VEIL (ALTER EGO) ALLEGATIONS PROPERLY SURVIVED MOTION TO DISMISS)

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QUESTION OF FACT WHETHER WORKER’S COMPENSATION LAW PRECLUDED SUIT IN NEGLIGENCE, DEFENDANT WAS BOTH AN OFFICER OF PLAINTIFF’S EMPLOYER AND OWNER, IN AN INDIVIDUAL CAPACITY, OF THE PREMISES WHERE PLAINTIFF SLIPPED AND FELL.

The Third Department, reversing Supreme Court, determined there was a question of fact whether the Workers’ Compensation Law precluded a lawsuit in negligence against the defendant, who was the president and a shareholder of plaintiff’s employer, Total Recall, and was the owner, in an individual capacity, of the building in which Total Recall is located. Plaintiff slipped and fell on ice in the parking lot behind the building:

… [W]hen an employee, during the course of his or her employment, is injured due to the negligence of a coemployee, the employee’s right to compensation lies under the exclusive provisions of the Workers’ Compensation Law (see Workers’ Compensation Law § 29 [6]…). Where the defendant is both the property owner and a corporate officer of the plaintiff’s employer, the defendant’s responsibility to provide the plaintiff with a safe place to work may be merged, in which case, workers’ compensation benefits are the sole remedy for the plaintiff … . If, however, the “defendant’s duty of care toward [the] plaintiff was owed purely in [the] capacity as owner of the property at the accident site, and not at all as a coemployee,” Workers’ Compensation Law § 29 (6) will not bar the plaintiff’s negligence action … .

The issue distills to whether the accident site was in an area that was exclusive to Total Recall and its employees such that defendant, as the property owner and an executive officer of Total Recall, had indistinguishable obligations to maintain the area in a reasonably safe condition. Garelle v Geinitz, 2016 NY Slip Op 08916, 3rd Dept 12-29-16

NEGLIGENCE (QUESTION OF FACT WHETHER WORKER’S COMPENSATION LAW PRECLUDED SUIT IN NEGLIGENCE, DEFENDANT WAS BOTH AN OFFICER OF PLAINTIFF’S EMPLOYER AND OWNER, IN AN INDIVIDUAL CAPACITY, OF THE PREMISES WHERE PLAINTIFF SLIPPED AND FELL)/WORKERS’ COMPENSATION LAW (NEGLIGENCE, QUESTION OF FACT WHETHER WORKER’S COMPENSATION LAW PRECLUDED SUIT IN NEGLIGENCE, DEFENDANT WAS BOTH AN OFFICER OF PLAINTIFF’S EMPLOYER AND OWNER, IN AN INDIVIDUAL CAPACITY, OF THE PREMISES WHERE PLAINTIFF SLIPPED AND FELL)/SLIP AND FALL (QUESTION OF FACT WHETHER WORKER’S COMPENSATION LAW PRECLUDED SUIT IN NEGLIGENCE, DEFENDANT WAS BOTH AN OFFICER OF PLAINTIFF’S EMPLOYER AND OWNER, IN AN INDIVIDUAL CAPACITY, OF THE PREMISES WHERE PLAINTIFF SLIPPED AND FELL)/CORPORATION LAW (QUESTION OF FACT WHETHER WORKER’S COMPENSATION LAW PRECLUDED SUIT IN NEGLIGENCE, DEFENDANT WAS BOTH AN OFFICER OF PLAINTIFF’S EMPLOYER AND OWNER, IN AN INDIVIDUAL CAPACITY, OF THE PREMISES WHERE PLAINTIFF SLIPPED AND FELL)

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DEFENDANT’S SUMMARY JUDGMENT MOTION WAS PREMATURE, PIERCING THE CORPORATE VEIL MIGHT BE AN ISSUE DETERMINING WHETHER WORKERS’ COMPENSATION IS THE SOLE REMEDY, FURTHER DISCOVERY NEEDED.

The Third Department determined defendant’s summary judgment motion in this wrongful death action should have been denied as premature. Plaintiff’s decedent was killed in a workplace accident and workers’ compensation death benefits were paid out. In addition to arguing that workers’ compensation was plaintiff’s sole remedy, defendant argued the corporation plaintiff sued had been dissolved and assets transferred to another corporation. Because piercing the corporate veil might be an issue, the Third Department held that plaintiff was entitled to discovery to flesh out the relationship among plaintiff’s decedent and the two corporations:

“[A] summary judgment motion is properly denied as premature when the nonmoving party has not been given reasonable time and opportunity to conduct disclosure relative to pertinent evidence that is within the exclusive knowledge of the movant or a codefendant” … . Although we have held that, “in certain situations, . . . more than one entity may be considered a plaintiff’s employer for purposes of workers’ compensation” … , defendant’s submissions fall far short of establishing that premise as a matter of law. A determination as to whether two entities are alter egos of each other requires a far more detailed record than is present here … . Pringle v AC Bodyworks & Sons, LLC, 2016 NY Slip Op 08924, 3rd Dept 12-29-16

CIVIL PROCEDURE (DEFENDANT’S SUMMARY JUDGMENT MOTION WAS PREMATURE, PIERCING THE CORPORATE VEIL MIGHT BE AN ISSUE, FURTHER DISCOVERY NEEDED)/CORPORATION LAW (DEFENDANT’S SUMMARY JUDGMENT MOTION WAS PREMATURE, PIERCING THE CORPORATE VEIL MIGHT BE AN ISSUE, FURTHER DISCOVERY NEEDED)/WORKERS’ COMPENSATION LAW (DEFENDANT’S SUMMARY JUDGMENT MOTION WAS PREMATURE, PIERCING THE CORPORATE VEIL MIGHT BE AN ISSUE TO DETERMINE WHETHER WORKERS’ COMPENSATION IS THE SOLE REMEDY, FURTHER DISCOVERY NEEDED)/NEGLIGENCE (DEFENDANT’S SUMMARY JUDGMENT MOTION WAS PREMATURE, PIERCING THE CORPORATE VEIL MIGHT BE AN ISSUE TO DETERMINE WHETHER WORKERS’ COMPENSATION IS THE SOLE REMEDY, FURTHER DISCOVERY NEEDED)/WRONGFUL DEATH (DEFENDANT’S SUMMARY JUDGMENT MOTION WAS PREMATURE, PIERCING THE CORPORATE VEIL MIGHT BE AN ISSUE TO DETERMINE WHETHER WORKERS’ COMPENSATION IS THE SOLE REMEDY, FURTHER DISCOVERY NEEDED)

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PETITIONER OPERATED AN ONSHORE PETROLEUM STORAGE FACILITY WITHOUT A LICENSE IN VIOLATION OF THE NAVIGATION LAW, LICENSE FEES AND PENALTIES PROPERLY IMPOSED UPON PETITIONER’S SOLE SHAREHOLDER.

The Third Department affirmed the respondent commissioner of environmental conservation’s determination petitioner had failed to obtain licenses and pay license fees for an onshore petroleum storage facility and failed to maintain an adequate secondary containment area for the storage tanks. The assessment of fees and penalties was upheld, as was piercing the corporate veil to impose the fees and penalties upon petitioner’s sole shareholder personally:

The applicable standard of review is whether substantial evidence supports respondent’s determination (see CPLR 7803 [4]…). Under this standard, “it is the responsibility of the administrative agency to weigh the evidence and choose from among competing inferences therefrom and, so long as the inference drawn and the ultimate determination made are supported by substantial evidence, it is not for the court to substitute its judgment for that of the administrative agency” … . Respondent is not bound by the ALJ’s factual findings and is entitled to make his own findings … . To that end, respondent’s determination will not be disturbed so long as it is supported by substantial evidence … . …

Under New York’s Navigation Law, a person is prohibited from operating a major petroleum storage facility in the absence of a license (see Navigation Law § 174 [1] [a]; [9]). Matter of Supreme Energy, LLC v Martens, 2016 NY Slip Op 08143, 3rd Dept 12-1-16

 

ENVIRONMENTAL LAW (PETITIONER OPERATED AN ONSHORE PETROLEUM STORAGE FACILITY WITHOUT A LICENSE IN VIOLATION OF THE NAVIGATION LAW, LICENSE FEES AND PENALTIES PROPERLY IMPOSED UPON PETITIONER’S SOLE SHAREHOLDER)/NAVIGATION LAW (PETITIONER OPERATED AN ONSHORE PETROLEUM STORAGE FACILITY WITHOUT A LICENSE IN VIOLATION OF THE NAVIGATION LAW, LICENSE FEES AND PENALTIES PROPERLY IMPOSED UPON PETITIONER’S SOLE SHAREHOLDER)/PETROLEUM STORAGE FACILITY (ENVIRONMENTAL LAW, NAVIGATION LAW, PETITIONER OPERATED AN ONSHORE PETROLEUM STORAGE FACILITY WITHOUT A LICENSE IN VIOLATION OF THE NAVIGATION LAW, LICENSE FEES AND PENALTIES PROPERLY IMPOSED UPON PETITIONER’S SOLE SHAREHOLDER)/CORPORATION LAW (ENVIRONMENTAL LAW, NAVIGATION LAW, PETITIONER OPERATED AN ONSHORE PETROLEUM STORAGE FACILITY WITHOUT A LICENSE IN VIOLATION OF THE NAVIGATION LAW, LICENSE FEES AND PENALTIES PROPERLY IMPOSED UPON PETITIONER’S SOLE SHAREHOLDER)/PIERCING THE CORPORATE VEIL (ENVIRONMENTAL LAW, NAVIGATION LAW, PETITIONER OPERATED AN ONSHORE PETROLEUM STORAGE FACILITY WITHOUT A LICENSE IN VIOLATION OF THE NAVIGATION LAW, LICENSE FEES AND PENALTIES PROPERLY IMPOSED UPON PETITIONER’S SOLE SHAREHOLDER)

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