MATTER OF ISLAND SEAFOOD COMPANY, INC. v. Golub Corporation

• Decision Date: 13 March 2003
• Citation: 303 A.D.2d 892,759 N.Y.S.2d 768
• Court: New York Supreme Court — Appellate Division
• Parties: In the Matter of ISLAND SEAFOOD COMPANY, INC., Appellant,<BR>v.<BR>GOLUB CORPORATION et al., Respondents.

303 A.D.2d 892

759 N.Y.S.2d 768

In the Matter of ISLAND SEAFOOD COMPANY, INC., Appellant,

v.GOLUB CORPORATION et al., Respondents.

Kane, J.

Decided March 13, 2003.

Mercure, J.P., Crew III, Peters and Rose, JJ., concur.

Kane, J.

Petitioner obtained a judgment against respondent Anchor Fish Distributors, Ltd. (hereinafter Anchor Distributors) in the amount of $60,932.09, which remains unsatisfied. Respondent Golub Corporation purchased seafood products from respondent Anchor Frozen Food Corporation (hereinafter Anchor Corporation) in packaging that bears the same "Prince of the Sea" logo found on Anchor Distributors' packaging and the same address as Anchor Distributors. Golub is indebted to Anchor Corporation in the amount of $60,000. Roy Tuccillo is the owner of Anchor Distributors and Anchor Corporation, both New York corporations headquartered at 28-32 Urban Avenue, in the Village of Westbury, Nassau County.

Petitioner claims that Anchor Corporation is the alter ego of Anchor Distributors, incorporated by Tuccillo for the purpose of frustrating creditors of the latter corporation seeking payment. To that end, petitioner served Golub with an order to show cause forbidding Golub from paying Anchor Corporation any moneys due and Golub complied with that forbearance. To enforce the judgment, petitioner commenced this special proceeding, pursuant to CPLR 5227, seeking to compel Golub to pay petitioner the debt it owed Anchor Corporation. Ordinarily, unless Golub owed Anchor Distributors, the debt would not be subject to garnishment (see CPLR 5227). Respondents successfully opposed the petition and Supreme Court lifted the restraint imposed by its earlier order and dismissed the petition. Petitioner appeals, alleging that Supreme Court erred in dismissing this proceeding and determining that petitioner failed to demonstrate that Tuccillo is using his dominance over Anchor Distributors to perpetrate a fraud upon petitioner.

We affirm. "Generally, * * * piercing the corporate veil requires a showing that: (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the [petitioner] which resulted in [that petitioner's] injury" (Matter of Morris v New York State Dept. of Taxation & Fin., 82 NY2d 135, 141-142 [1993]). Under New York law, the corporate veil will be pierced to achieve equity, even absent fraud, "[w]hen a corporation has been so dominated by an individual or another corporation and its separate entity so ignored that it primarily transacts the dominator's business instead of its own and can be called the other's alter ego" (Austin Powder Co. v McCullough, 216 AD2d 825, 827 [1995]; see Wm. Passalacqua Bldrs., Inc. v Resnick Devs. S., Inc., 933 F2d 131, 138-139 [1991]). Where a corporation is a fragment of a larger corporate combine which actually conducts the business, the larger corporate entity may be held financially responsible for the acts of that corporation (see Billy v Consolidated Mach. Tool Corp., 51 NY2d 152, 163 [1980]). Generally considered are such factors as whether there is an overlap in ownership, officers, directors and personnel, inadequate capitalization, a commingling of assets, or an absence of separate paraphernalia that are part of the corporate form (see Wm. Passalacqua Bldrs., Inc. v Resnick Devs. S., Inc., supra at 139), such that one of the corporations is a mere instrumentality, agent and alter ego of the other (see e.g. Astrocom Elecs. v Lafayette Radio Elecs. Corp., 63 AD2d 765, 766 [1978]; see also Matter of Sbarro Holding [Shiaw Tien Yuan], 91 AD2d 613, 614 [1982]).

Here, petitioner relies primarily on a judgment of a prior and unrelated federal proceeding,^[*] wherein the government successfully sought to pierce the corporate veil of Anchor Seafood Distributors, Inc., one of the many corporations owned by Tuccillo, in an attempt to collect and enforce a default judgment obtained against it. The default judgment was based upon a Magistrate's report, finding that Anchor Seafood was a corporation dominated by Tuccillo and his domination was used to make the corporation insolvent. Also named as a defendant in that action was Anchor Distributors, the entity against which petitioner has its judgment. Succinctly stated, petitioner argues that because Tuccillo's dealings with Anchor Distributors led to the piercing of the corporate veil of that corporation to reach Tuccillo's assets, the same result should be permitted here.

As part of its proof, petitioner alleges only one seafood operation exists at the Westbury address and Anchor Distributors is the only entity licensed to process seafood at the Urban Avenue plant, despite the plethora of entities incorporated to conduct business there, including Anchor Corporation and Anchor Distributors. Petitioner also offers excerpts of Tuccillo's previous depositions in the federal proceeding in which he testified that the Westbury building contains a single seafood processing plant and the trucks used by the seafood operation bear the name of Anchor Distributors. Petitioner further claims that when questioned about his business operations, Tuccillo cannot remember which corporations exist, which have employees or how many, whether they own equipment, from whom he leases the Urban Avenue plant, to whom rent is paid, or where he banks, although h...