39 F. Supp. 3d 516
S.D.N.Y.2014Background
- Plaintiff American Federated Title Corp. seeks post-judgment relief for debts of the A&M Entities and GFI Acquisition.
- Defendants GFI Management, Allen Gross, and Edith Gross allegedly dominated and controlled the related entities and used that control to hinder collection of the bankruptcy judgment.
- A settlement produced a final judgment: $7,000,000 against the A&M Entities and $500,000 against GFI Acquisition.
- Plaintiff pursued asset recovery through CPLR 5225(b) in federal court and obtained broad disclosure; the assets appear unsatisfied.
- Plaintiff alleges inter_ENTITY transfers and payments that stripped assets from the judgment debtors; Defendants allegedly controlled the entities and their finances.
- Court denies dismissal and allows veil-piercing claim to proceed under Rule 69(a) and CPLR 5225(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether veil-piercing is an independent post-judgment remedy. | Plaintiff asserts post-judgment relief under CPLR 5225(b) via federal complaint. | Defendants argue no independent veil-piercing claim exists. | Yes; post-judgment veil-piercing is available. |
| Whether res judicata bars the veil-piercing claim. | Plaintiff was not a party to the prior contract action. | Defendants contend claim should be barred as relitigation. | No; not barred by res judicata. |
| Whether the pleadings adequately state a veil-piercing claim. | Allegations show domination and use of that domination to harm Plaintiff. | Arguments that domination alone suffices; insufficient fraud/wrong connection. | Adequately pled under standards for domination and fraud/wrong. |
Key Cases Cited
- Morris v. New York State Department of Taxation & Finance, 82 N.Y.2d 135 (N.Y. 1993) (requires domination and fraud or wrong; piercing case-law basis)
- Cordius Trust v. Kummerfeld, 153 F. App’x 761 (2d Cir. 2005) (post-judgment veil-piercing under Rule 69(a) and CPLR 5225(b))
- WBP Central Associates, LLC v. DeCola, 50 A.D.3d 693 (2d Dep’t 2008) (post-judgment veil-piercing recognized; nonparty assets and privity issues)
- Passalacqua Builders v. Resnick Developers S., Inc., 933 F.2d 131 (2d Cir. 1991) (factors for domination considered in veil piercing)
- TNS Holdings, Inc. v. MKI Sec. Corp., 92 N.Y.2d 335 (N.Y. 1998) (dominance and wrong; caution about abuse inference)
- Ventresca Realty Corp. v. Houlihan, 41 A.D.3d 707 (2d Dep’t 2007) (shell/dummy entity as basis for piercing lease-related wrong)
- Flushing Plaza Assocs. No. 2 v. Albert, 102 A.D.3d 737 (2d Dep’t 2013) (piercing veil where related actions show abuse of corporate form)