557 F. App'x 22
2d Cir.2014Background
- Six Buyers prevailed on claims of defective homes sold as newly renovated by United Homes and related entities.
- District court consolidated six cases for trial based on common facts and law.
- Defendants argued the merger clause and contract-based relief limited fraud claims and sought JMOL post-trial.
- Jury awarded compensatory and punitive damages; award upheld on appeal.
- Hershco sought piercing the corporate veil; district court denied, jury found domination and proximate causation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Consolidation proper given common issues? | Buyers. | Hershco. | Affirmed consolidation; district court did not abuse discretion. |
| JMOL preservation and merger clause impact on fraud claim? | Fraud shown by misrepresentation of renovation. | As-is contract; merger clause forecloses fraud claim. | Waived merger-clause argument; evidence supported fraud claim. |
| whether misrepresentation constitutes fraud vs contract breach? | Misrepresentations induced contract. | Only breach of contract underlying damages. | Fraud found where concealment and misrepresentations occurred. |
| Availability of punitive damages for GBL § 349 violation? | Punitive damages appropriate given conduct. | Only compensatory damages. | Punitive damages warranted; conduct flagrant. |
| Sufficiency of evidence to pierce corporate veil? | Domination by Hershco; proximate cause shown. | Not properly preserved; unclear causation. | Evidence sufficient; veil pierced. |
Key Cases Cited
- Johnson v. Celotex Corp., 899 F.2d 1281 (2d Cir. 1990) (consolidation discretion; standard of review for consolidation)
- Runner v. N.Y. Stock Exchange, Inc., 568 F.3d 383 (2d Cir. 2009) (de novo review of Rule 50(b) JMOL)
- Van Niel v. Berger, 632 N.Y.S.2d 48 (4th Dep't 1995) (fraud vs contract distinction)
- Deerfield Comm’ns Corp. v. Chesebrough-Ponds, 68 N.Y.2d 954 (1986) (fraud accompanying contract; reliance on representations)
- Hensley v. Eckerhart, 461 U.S. 424 (1983) (partial success and fee-shifting considerations)
- Wm. Passalacqua Builders, Inc. v. Resnick Developers S., Inc., 933 F.2d 131 (2d Cir. 1991) (veil-piercing framework; complete domination and control)
- Freeman v. Complex Computing Co., 119 F.3d 1044 (2d Cir. 1997) (domination-and-causation framework for veil piercing)
- Buckholz v. Maple Garden Apts., LLC, 832 N.Y.S.2d 255 (2d Dep’t 2007) (standards for punitive damages under New York law)
- Wilner v Allstate Ins. Co., 71 A.D.3d 155 (N.Y. App. Div. 2010) (punitive damages for GBL § 349 violations)