928 F. Supp. 2d 683
W.D.N.Y.2013Background
- Ads Plus sues for breach of contract and unjust enrichment over direct mail advertising services.
- Defendants are Alan Ault, Robert Ault, and PAR; only Robert Ault answered; Alan Ault and PAR have not appeared.
- Plaintiffs contend a contract existed with Alan and Robert Ault individually, not with PAR.
- Robert Ault argues the contract was with PAR (corporate entity) and seeks to avoid personal liability by piercing the veil.
- Emails and payments show Ads Plus was paid and engaged for multiple projects; defendants dispute whether those payments establish a contract with PAR or individuals.
- Court denying Robert Ault’s summary judgment motion and finding material issues of fact remain about agency, disclosure, and potential partnership liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ads Plus formed a contract with the individuals or with PAR. | Ads Plus contracted with Alan and Robert Ault personally. | Contract was with PAR; payments were made from PAR accounts. | Genuine issues exist; dispute for jury on agency/disclosure. |
| Whether Robert Ault can be personally liable on a contract entered by Alan Ault for PAR. | Ads Plus relied on Robert as partnerhandle finances; may bind personally. | No disclosure; contract with PAR; veil piercing not established. | Issue of material fact precludes summary judgment on personal liability. |
| Whether partnership by estoppel can render Robert liable for post-May 2008 work. | Robert represented himself as partner handling finances. | No clear reliance or establishment of partnership liability. | Issues of fact preclude summary judgment on partnership by estoppel. |
Key Cases Cited
- Yellow Book Sales & Distribution Co. v. Mantini, 85 A.D.3d 1019 (2d Dep’t 2011) (disclosure of principal and agency affects personal liability)
- In re Estate of Gifford, 144 A.D.2d 742 (3d Dep’t 1988) (agency disclosures; personal liability when undisclosed principal)
- Courthouse Corporate Ctr. LLC v. Schulman, 902 N.Y.S.2d 160 (2d Dep’t 2010) (burden to show disclosed agency relationship)
- First Nation Nationwide Bank v. Brookhaven Realty Assocs., 223 A.D.2d 618 (2d Dep’t 1996) (partnership by estoppel principles; reliance on representation)
- Tarolli Lumber Co. v. Andreassi, 399 N.Y.S.2d 739 (4th Dep’t 1977) (use of corporate payments does not automatically disclose agency)
- Ardwin v. Englert, 81 A.D.2d 960 (3d Dep’t 1981) (corporate checks do not automatically relieve personal liability)
- JLG Architectural Prods., LLC v. WDF, Inc., 928 N.Y.S.2d 750 (2d Dep’t 2011) (written representation of partnership establishes estoppel)
- Judith Garden, Inc. v. Mapel, 342 N.Y.S.2d 489 (Misc. Ct. 1973) (agency defense is an affirmative defense; burden to prove acted for disclosed principal)