On August 8, 2024, Justice Ruchelsman of the Kings County Commercial Division issued a decision in Podokshik v. Cachette, 2024 NY Slip Op. 32795(U), holding that dominance of a corporation alone is insufficient to justify piercing the corporate veil, explaining:
Concerning the allegation of piercing the corporate veil, it is well settled that if the defendant so dominated the activities of the corporation then piercing of the corporate veil would be permitted and defendant could then be liable personally. However, dominance of a corporation, standing alone is insufficient to pierce the corporate veil. New York courts take piercing the corporate veil very seriously and will pierce the corporate veil only when necessary to prevent fraud or to achieve equity. To succeed on a request to pierce the corporate veil the plaintiff must demonstrate that (1) the owners exercised complete dominion of the corporation in respect to the transaction attacked and (2) that such dominion was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff’s injury. As the Court of Appeals observed, at the pleading stage a plaintiff must do more than merely allege that defendant engaged in improper acts or acted in bad faith while representing the corporation. Rather, the plaintiff must allege facts demonstrating such dominion over the corporation and that through such domination, abused the privilege of doing business in the corporate form to perpetuate a wrong or injustice against the plaintiff such that a court in equity will intervene. Factors to be considered in determining whether an individual has abused the privilege of doing business in the corporate or LLC form include the failure to adhere to corporate or LLC formalities, inadequate capitalization, commingling of assets, and the personal use of corporate or LLC funds. Thus, mere conclusory statements that the individual dominated the corporation are insufficient to defeat a motion to dismiss.
In this case the verified complaint does not allege, any facts at all which demonstrate to any degree that the individual defendant dominated the activities of the corporation. In fact, the verified complaint does not mention any of the necessary criteria at all. Therefore, there is no basis upon which to find the individual defendant liable in any manner. Thus, the motion seeking to dismiss the causes of action for breach of contract, breach of fiduciary duty and unjust enrichment is granted.
(Internal quotations and citations omitted).