What does it take to pierce the corporate veil? Court finds these allegations enough to overcome motion to dismiss.

Reversal of special term finds allegations sufficient for piercing corporate veil


In an action to recover damages for breach of a commercial lease, the defendants moved to dismiss those causes of action which sought to pierce the corporate veil of the defendant. The court below granted the motion to dismiss and the plaintiff appealed. The Appellate Division, reversing the court below, held that the allegations, which must be taken as true for purposes of a motion to dismiss, adequately presented facts which would justify piercing the corporate veil. Those allegations satisfied the requirement that (a) the owners of the corporation exercised complete domination of the corporation, (b) the domination was used to commit a fraud or wrong against the plaintiff, resulting in injury or damage. The allegations showed an absence of formalities, inadequate capitalization, use of corporate funds for personal use, overlap of officers, directors and personnel, among other signs that the individual owners were the real parties.

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Reference Info:Decision | State, 2nd Circuit, New York | United States

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