Allegations of Domination and Control Sufficient to Survive Motion to Dismiss on Veil Piercing Claims

On June 22, 2023, Justice Andrew Borrok of the New York County Commercial Division issued a decision in Hieber Astoria LLC v. Taverna, 2023 NYLJ LEXIS 1486, denying the motion to dismiss brought both by the entity defendants as well as the individual defendant. As to the individual defendant, the Court held that “the well-plead [Amended Complaint] alleges sufficient facts, which taken as true as the Court must, are sufficient to pierce the corporate veil and hold Mr. Taverna personally liable.” The Court further explained:

In his papers, Mr. Taverna argues that he cannot be held personally liable for breach of contract because he did not use his complete domination over TMG and NYIC to commit a fraud or wrong against the plaintiffs (James, 85 AD3d at 619). Mr. Taverna is incorrect. As alleged in the AC, Mr. Taverna used his complete control over TMG and NYIC to defraud the plaintiffs by overcharging them and using funds designated for use on the Properties for his own personal use. This is sufficient to pierce the corporate veil and pursue the claim against Mr. Taverna personally at this stage of the litigation. Thus, his motion must be denied.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning the corporate form or the ability of plaintiffs to pierce the corporate veil to seek damages against individual defendants.