8-12-08095
Bankr. E.D.N.Y.Jan 17, 2014Background
- Trustee seeks to treat Coach, Bus, and Tours as a single enterprise and pierce veils to reach assets for estate recovery, Tours not joined.
- Debtor disclosed 100% ownership of Horizon Coach, Inc. (Coach); Bus allegedly owned by Boyle; Tours allegedly owned by Tomassi; Debtor ran Bus operations.
- Court finds Debtor controlled Coach and Bus, using them interchangeably, and treats him as equitable owner of Bus for veil-piercing purposes.
- Court pierces Coach/Bus veils to deem them a single entity; reverse piercing of Debtor (Coach/Bus to Debtor) not proven; Tours remains not bound.
- Assets of Coach/Bus are corporate assets not property of the Debtor’s estate; the discharge revocation fails under §727(d)(2); Debtor’s 100% ownership interest remains estate property to be administered.
- Judgment: Trustee prevails on veil piercing of Coach and Bus as a single entity; other relief denied; discharge not revoked.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bus is alter ego of Coach | D’Alessio dominates Bus; Bus assets are his via control. | Bus is distinct; no proper veil piercing. | Yes; Bus is alter ego of Coach; Coach/Bus treated as a single entity for liability. |
| Whether Coach is alter ego of the Debtor on reverse piercing | Debtor used Coach as his own vehicle; veil should be pierced to reach Debtor. | No personal use; lacks true personal end; no reverse piercing proven. | No; reverse piercing not proven; Debtor’s personal use not shown. |
| Whether Coach/Bus assets are property of the debtor's estate | Assets should be estate property via veil piercing. | Corporate assets remain with the corporations, not estate. | Assets remain corporate; not property of estate; relief denied on turnover. |
| Whether § 727(d)(2) discharge revocation is warranted | Debtor failed to report post-petition interests and assets and diverted funds. | No post-petition transfer; pre-petition ownership and assets; not actionable under §727(d)(2). | Discharge not revoked under §727(d)(2); pre-petition interests not reportable post-petition. |
Key Cases Cited
- Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., 933 F.2d 139 (2d Cir. 1991) (non-exhaustive veil-piercing factors; domination inquiry)
- Gartner v. Snyder, 607 F.2d 582 (2d Cir. 1979) (piercing standard and single-owner combinations)
- Walkovszky v. Carlton, 18 N.Y.2d 414 (N.Y. 1966) (shell corporation vs. personal use; limits of personal liability)
- Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130 (2d Cir. 1997) (domination factors; intermingled operations)
- In re Adler, 467 B.R. 279 (Bankr. E.D.N.Y. 2012) (corporate veil considerations and personal use analysis)