On July 25, 2023, Justice Cohen of the New York County Commercial Division issued a decision in Snow v. Besen Capital, LLC, 2023 NY Slip Op. 32553(U), holding that a plaintiff had failed to meet the high burden of alleging corporate predecessor liability, explaining:
A Plaintiff who seeks to pierce the corporate veil – to hold a non-signatory corporate affiliate liable for breach of contract – bears a heavy burden. A simple breach of contract, without more, does not constitute a fraud or wrong warranting the piercing of the corporate veil. A corporation may be held liable for the torts of a predecessor entity if (1) it expressly or impliedly assumed the
predecessor’s tort liability, (2) there was a consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape such obligations. To make out a cause of action for liability on the theory of piercing the corporate veil because the corporation at issue is the defendant’s alter ego, the complaining party must, above all, establish that the owners of the entity, through their domination of it, abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against the party asserting the claim such that a court in equity will intervene.Neither the Complaint nor the Michailidis Affirmation submitted in opposition to Defendants’ motion contain any facts to support the allegation that Besen Partners is the successor to Besen Capital, that it assumed the promissory note, or that is the alter ego to Besen Capital. The Complaint only mentions in a conclusory footnote that upon information and belief, Besen Capital LLC has changed its name to Besen Partners. However, there are no facts pled in the Complaint to support this assertion, and none were offered at oral argument.
Further, the three documents attached to the Michailidis Affirmation do not support Plaintiff’s third-party liability argument. The first document is the Note, which shows only Besen Capital as a signatory. The second document is a previous signature page of the promissory note signed by Matthew Slonim as Managing Director of TBG/Targeted Office Fund LP, not Besen Partners. The third document is an email sent by Matthew Slonim notifying Max Snow that his third quarter interest payment for 2020 has been made. Plaintiff argues that Besen Partners manifested an intent to be bound by the Note because the email was signed by Mr. Slonim, whose email signature states that he is Chief Operating Officer of Besen Partners. However, Plaintiff’s argument is refuted by a bank statement showing that Besen Capital was responsible for the payment.
(Internal quotations and citations omitted).