22 A.3d 68
N.J. Super. Ct. App. Div.2011Background
- Lakewood of Voorhees Associates LP is a New Jersey limited partnership formed in 1978 to own and operate a nursing home.
- SHI, a Pennsylvania corporation, is Lakewood’s limited partner with ~84% interest and owns Ozal of Lakewood, Inc. and SMN.
- Ozal is Lakewood’s New Jersey general partner with a 1% interest; SMN provides management, accounting and consulting services to Lakewood.
- Lazovitz, SHI’s director and SHI officer, is also Ozal’s director and SHI’s sole controlling figure; he executed Lakewood’s original management agreement.
- Plaintiff Canter alleges Lakewood’s operations were controlled by SHI/SMN, forming a single care network and blurring corporate boundaries.
- The trial judge denied SHI’s partial summary judgment on veil-piercing, finding factual issues as to SHI’s domination and use of Lakewood, which this court reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether veil piercing applies to a NJ limited partnership | Canter argues veil piercing may apply if domination or improper use is shown | SHI contends NJULPL governs and safe harbor protects limited partners from liability | Veil piercing can apply in limited circumstances; not shown here |
| Whether SHI dominated Lakewood under NJ law | Canter asserts significant SHI control over Lakewood through interrelated entities | SHI argues ownership links alone do not prove control; SMN manages day-to-day operations | Record does not show SHI domination sufficient for piercing |
| Whether SHI used Lakewood to perpetrate a fraud or circumvent the law | Plaintiff contends structuring and intercompany relations facilitated abuse | SHI maintains no evidence of fraud or misuse; legitimate structure and capitalization exist | No evidence of domination used to commit fraud or injustice; piercing not warranted |
| Whether the trial court erred by denying summary judgment | Evidence supports finding of domination and misuse | Evidence insufficient to show domination or misuse as a matter of law | Correct to grant SHI summary judgment; veil-piercing not supported by record |
Key Cases Cited
- Verni v. Harry M. Stevens, Inc., 387 N.J. Super. 160 (App. Div. 2006) (limits on piercing limited partnership; domination factors require clear proof)
- Ventron Corp. v. Dept. of Environmental Protection, 94 N.J. 473 (1983) (domination and piercing doctrine; corporate form not absolute shield)
- OTR Assocs. v. IBC Servs., 353 N.J. Super. 48 (App. Div. 2002) (parent-subsidiary control and piercing doctrine in context of liability)
- Zeiger v. Wilf, 333 N.J. Super. 258 (App. Div. 2000) (limits on control-based liability for limited partners)
- Palombi v. Palombi, 414 N.J. Super. 274 (App. Div. 2010) (reconsideration standard and discretion in appellate review)
- Shotmeyer v. N.J. Realty Title Ins. Co., 195 N.J. 72 (2008) (veil piercing and legitimate business structuring guidance)