Individual Owner Can be Held Liable Under Veil Piercing Claim for the Torts of Owner's Company

On February 21, 2020, Justice Schecter of the New York County Commercial Division issued a decision in Forefront Partners LLC v. Omanoff, 2020 NY Slip Op. 30490(U), holding that an individual owner can be held liable under a veil-piercing theory for torts committed by the owner's company, explaining:

Forefront seeks dismissal of the breach of fiduciary duty claim on the ground that it did not owe fiduciary duties. to the other members merely by virtue of its membership in the Company. The Omanoff Defendants do not dispute that Forefront itself lacks fiduciary duties, but instead claim that Forefront was Reifler's alter ego such that Forefront's corporate veil should be pierced to hold it liable for Reifler's breaches.4 The Answer pleads facts supporting a veil piercing claim, and Forefront does not challenge the sufficiency of these veil piercing allegations. Instead, Forefront argues, without citation to authority, that an individual owner cannot be held liable under a veil piercing claim for the torts of his company. Forefront is wrong. The claim survives dismissal at this stage, and the court will not further opine on its merits given the limited challenge proffered on this motion.

(Internal citations omitted).

This decision discusses an issue that is common in complex commercial litigation: whether an individual or another company can be held liable for a company's actions. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding whether a third-party can be held liable for a company's misconduct.