Opinion
11231- 11231A Index 653963/12
03-10-2020
ED & F MAN SUGAR INC., ETC., Plaintiff–Respondent, v. ZZY DISTRIBUTORS, INC., ETC., ET AL., Defendants–Appellants, Mariana Deutsch, Defendant.
Mark S. Friedlander, New York, for appellants. Franzino & Scher LLC, New York (Frank J. Franzino, Jr. of counsel), for respondent.
Mark S. Friedlander, New York, for appellants.
Franzino & Scher LLC, New York (Frank J. Franzino, Jr. of counsel), for respondent.
Gische, J.P., Webber, Gesmer, Kern, JJ.
Judgment, Supreme Court, New York County (Andrea Masley, J.), entered July 10, 2019, awarding plaintiff the principal amount of $790,792.45 against defendants ZZY Distributors, Inc., Zale Vishedsky, Zack Vishedsky and Yoseph Sternberg, unanimously modified, on the law, to vacate the judgment as against individual defendants Zale Vishedsky and Zack Vishedsky, and otherwise affirmed, without costs. Appeal from order, same court and Justice, entered on or about May 9, 2019, after a nonjury trial, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
The trial court providently exercised its discretion in granting plaintiff's motion to amend the pleadings to conform to the proof by adding a claim for goods sold and delivered (see CPLR 3025[c] ; Murray v. City of New York, 43 N.Y.2d 400, 405, 401 N.Y.S.2d 773, 372 N.E.2d 560 [1977] ). Contrary to defendants' contention, plaintiff established prima facie "the total quantity of the sugar actually delivered" (i.e., 1,415 metric tons) through defendant Zack Vishedsky's affidavit admitting that 1,415 metric tons of sugar had been delivered but claiming that the sugar had been "foisted" on defendant ZZY Distributors, Inc. (ZZY). Further, defendants were not prejudiced by the amendment (see Kimso Apts., LLC v. Gandhi, 24 N.Y.3d 403, 411, 998 N.Y.S.2d 740, 23 N.E.3d 1008 [2014] ). They had notice of the motion to amend from plaintiff's prior arguments and prior attempts to reclassify the breach of contract claim as a claim for goods sold and delivered (see E.D. & F. Man Sugar, Inc. v. ZZY Distribs., Inc., 150 A.D.3d 452, 55 N.Y.S.3d 10 [1st Dept. 2017] ).
Plaintiff established its claims for goods sold and delivered and breach of contract by a preponderance of the trial evidence. The sale and delivery of sugar is shown by plaintiff's Order Confirmations and ZZY's corresponding purchase orders, Zack Vishedsky's affidavit admitting delivery of 1,415 metric tons of sugar, and defendants' failure to produce the "receiving report" that admittedly contained the quantity of sugar ZZY received, from which the court properly drew an adverse inference (see Gogos v. Modell's Sporting Goods, Inc., 87 A.D.3d 248, 255, 926 N.Y.S.2d 53 [1st Dept. 2011] ). ZZY's acceptance of the sugar is shown by proof of its resale of the sugar received (see UCC 2–606 [1][c] ; Gem Source Intl. v. Gem–Works N.S., L.L.C., 258 A.D.2d 373, 374, 685 N.Y.S.2d 682 [1st Dept. 1999], lv dismissed 93 N.Y.2d 999, 695 N.Y.S.2d 745, 717 N.E.2d 1082 [1999] ). ZZY's failure to pay the full amount due for the sugar is shown by its own QuickBooks accounting records reflecting an outstanding balance of $705,290.86. Given its credibility determinations as to defendants' testimony and submissions, which we see no reason to disturb, the court properly rejected that amount and accepted the figure submitted by plaintiff, i.e., $790,782.45, which is supported by documentary proof.
The foregoing proof of the parties' conduct also establishes the existence of a contract under UCC 2–207(3) (see e.g. Hornell Brewing Co. v. Spry, 174 Misc.2d 451, 455–456, 664 N.Y.S.2d 698 [Sup. Ct., New York County 1997] ), as well as a breach of the contract and damages.
The court properly pierced the corporate veil to hold defendant Yoseph Sternberg (Yoseph) personally liable for ZZY's debts. The trial evidence overwhelmingly demonstrates that Yoseph operated ZZY without any regard to corporate formalities, commingled and made personal use of ZZY's funds by shuttling them between ZZY and third parties, including other closely held corporations owned by him, and that these acts resulted in ZZY's undercapitalization, which rendered ZZY unable to pay itsoutstanding debt to plaintiff (see Baby Phat Holding Co., LLC v. Kellwood Co., 123 A.D.3d 405, 407–408, 997 N.Y.S.2d 67 [1st Dept. 2014] ; Shisgal v. Brown, 21 A.D.3d 845, 849, 801 N.Y.S.2d 581 [1st Dept. 2005] ; Austin Powder Co. v. McCullough, 216 A.D.2d 825, 827, 628 N.Y.S.2d 855 [3d Dept. 1995] ).
However, Zale Vishedsky and Zack Vishedsky may not be held liable individually because they were not owners, directors, or shareholders of ZZY (see Old Republic Natl. Tit. Ins. Co. v. Moskowitz, 297 A.D.2d 724, 726, 747 N.Y.S.2d 556 [2d Dept. 2002] ), and there is no evidence that either of them exerted any dominance over ZZY (see National Union Fire Ins. Co. of Pittsburgh, Pa. v Bodek, 270 A.D.2d 139, 705 N.Y.S.2d 42 [1st Dept. 2000], lv dismissed 95 N.Y.2d 887, 715 N.Y.S.2d 377, 738 N.E.2d 781 [2000] ).