On April 7, 2022, Justice Crane of the New York County Commercial Division issued a decision in G & Y Maintenance Corp. v. 540 W. 48th St. Corp., 2022 NY Slip Op. 31169(U), holding that domination, without more, was insufficient to support a veil piercing claim, explaining:
Although no explicit rules determine when the corporate veil is pierced, veil-piercing allegations generally require a showing that the owner exercised complete domination of the corp·oration with respect to the transaction attacked and that the domination was used to commit a fraud or wrong against the plaintiff resulting in plaintiff’s injury. When assessing disregard for the corporate form, courts often consider: (i) failure to adhere to corporate formalities; (ii) inadequate capitalization; (iii) commingling of assets; and (iv) use of corporate funds for personal use. Veil-piercing allegations require particularized facts detailing fraud or other corporate misconduct. Allegations of domination and control of a corporation are not alone sufficient to maintain a veil-piercing cause of action. Instead, the complaint must also allege that the domination led to inequity,
fraud, or malfeasance.Plaintiff’s allegations against defendant Chunlin Chiang must be dismissed for failure to plead the requisite veil-piercing factors. Plaintiff alleges defendant Chiang, through his sole domination of defendant Core, caused Core to default while owing an outstanding balance to plaintiff for its work on the Subject Premises. Plaintiff attempts to allege Core’s inadequate capitalization, but Core’s bank statements contradict these allegations. On this motion, plaintiff has failed to explain how the corporate veil should be pierced when Core is capable of satisfying the outstanding balance. Thus, plaintiff fails to allege specifically how Chiang’s alleged abuses led to damages. Finally, allegations of a simple breach of contract, without more, do not constitute a
(Internal quotations and citations omitted) (emphasis added).
fraud or wrong warranting corporate veil-piercing. Consequently, plaintiff’s allegations are insufficient to pierce the corporate veil and plaintiff’s claims against Chunlin Chiang are dismissed with prejudice.