Opinion
No. 39374 RCV 2003.
2010-04-5
Neil RICK, Claimant, v. RICHMOND SECURITY SERVICES, INC., aka Richmond Sound, aka Richmond Services, and Nick Moccia, Defendant.
Hammerman Legal Consultants, PPLC, Brooklyn, attorney for plaintiff.
KATHERINE A. LEVINE, J.
The issue before this court is whether an out of court settlement existed between plaintiff and defendant Mick Moccia (“Moccia”), and whether Moccia is liable as an individual to the plaintiff Neil Rick (“plaintiff” or “Rick”) for the work plaintiff paid for but was not performed by defendant Richmond Security Services, Inc. ( “Richmond Security Services Inc.”). The underlying action brought by plaintiff seeks damages for breach of contract, false representation and conversion.
By decision dated August 8, 2008,
the Hon. Kim Dollard denied plaintiff's motion for summary judgment which requested that judgment be entered because Moccia had substantially complied with the terms of a stipulation of settlement, in accordance with CPLR 2104, negotiated by the attorney for plaintiff and Moccia.
The facts and procedural twists to this case are set forth in the decision/order of the Hon. Kim Dollard, dated August 8, 2008, a copy of which is annexed hereto, and will not be fully reiterated herein.
Plaintiff originally contracted with defendants Richmond Security System and Moccia in 2003 to place a home theater system in his basement. Immediately after that job was successfully completed, plaintiff requested that Moccia perform additional work by putting in a sound system upstairs. Moccia asked for an additional deposit, and on March 7, 2003, plaintiff wrote a check to “Richmond Security” for $1800. The check was deposited into Victory State Bank into an account denominated “Richmond Securities.” No formal contract was entered into for this additional work and no goods and services were ever provided to plaintiff after he made this deposit. Plaintiff avers that Moccia informed him that his brother, who worked with him, had gotten into “a situation,” and that Moccia would “make good” by either returning the money, giving him equipment and having someone else do the work, or by paying the balance of the work to be performed.
Moccia never “made good” on this promise and plaintiff therefore instituted a lawsuit for $1800 against both Richmond Securities and Moccia. A default judgment was entered against both defendants after an inquest, in the amount of $2,633,61, which was entered on October 13, 2006. A restraint was thereafter placed upon Moccia's bank account in Commerce Bank.
In his motion for summary judgment, plaintiff attached an unsigned stipulation of settlement whereby Moccia would agree to voluntarily pay the amount of $2000 to the law firm of Hammerman Legal Consultant LLC, attorney for plaintiff, by executing a conditional release from the bank and thereafter voluntarily pay the remaining $500. Plaintiff also attached a conditional release form addressed to Commerce Bank authorizing it to directly release $2000 to partially satisfy the unpaid judgment upon receipt of defendant's signature, and then left the restraint on his account, and a letter from Hammerman to Moccia dated June 15, 2007, memorializing this alleged agreement Plaintiff recalled receiving a stipulation from Hammerman whereby Moccia allegedly agreed to release $2000 from his account in full settlement of the case. The stipulation was not signed by Moccia, although Moccia admits to authorizing the release of $2000.
By Order to Show Cause dated January 29, 2008, Moccia moved to vacate the judgment on the grounds that this was a corporate rather than an individual debt. By decision dated February 13, 2008, Judge Straniere granted the motion to vacate and set aside the default to the extent of permitting Moccia to interpose an answer. Judge Straniere also determined that the judgment should stand as security pending final disposition of the action.
Plaintiff moved for summary judgment on the grounds that defendant had substantially complied with the terms of settlement and sought judgment for the remaining balance of $500 plus ancillary costs. Moccia contended that he had no knowledge of the document which purported to be the stipulation of settlement that he never signed. He also contended that he only authorized the release of $2000 to Hammerman Legal Consultant PLLC, because a restraint had been placed on his bank account by virtue of the default judgment that plaintiff had obtained against all defendants.
Judge Dollard denied the motion for summary judgment because the stipulation of settlement presented by plaintiff failed to satisfy the mandates of CPLR § 2104, as it was not subscribed in writing by defendant or his attorney. Judge Dollard also found that despite plaintiff's “reliance” upon the stipulation and defendant's “substantial compliance,” the formalities of CPLR 2104 had not been complied with, hence defeating the court's ability to enforce the out of court stipulation, citing Bonette v. Long Island College, Hosp., 3 N.Y.3d 281, 785 N.Y.S.2d 738, 819 N.E.2d 206 (2004). The court also found that a question of fact existed as to whether the monies plaintiff sued for were solely a debt of the corporation for which Moccia, as an individual, was not liable.
During the trial, plaintiff testified that he initially paid cash to Moccia for the first job on his basement to avoid paying the sales tax. He wrote the check for the second job for the upstairs installation to Richmond Security on March 7, 2003. He then learned that Richmond Security had ceased operating because it had tax problems and customers were not paying their bills and the bank foreclosed on their credit line. Plaintiff also testified that he turned the collection of the funds from the judgment he obtained over to Turner & Turner and that he had no personal knowledge as to whether Moccia was shown the stipulation or signed it.
Moccia testified that Richmond Security was a corporation; he was the vice president, his ex wife Linda Moccia was the president, and his daughter was the treasurer. Moccia testified that he asked Rick for a deposit of $1800 for the second job so that he could purchase equipment. He also admits that he never bought the equipment because the corporation went out of business on March 3, 2007 (the same day as the check was tendered) since it had “tax problems” and customers were not paying bills. He did not challenge plaintiff's assertion that the work was never done. Moccia claims he had no knowledge of the judgment and that he only found out about it when he went to Commerce Bank, five years after his corporation had been dissolved, and discovered that a lien had been placed on his personal account. His business card reads “Richmond J. Security” and Nick J. Moccia. He reiterated that this was a corporate debt for which he was not responsible.
The court credits Moccia's assertion that he never signed the stipulation, although Moccia must have been aware of its terms as he admits to having paid $2000 to Hammerman and Associates. However, that issue is not dispositive of whether this court should grant plaintiff's application.
When a corporate officer signs an agreement in his or her corporate capacity, the corporate officer will not be held personally liable on the contract unless he or she personally binds him or herself. Citicorp Vendor Fin., Inc. v. Thierno, 2006 N.Y. Slip Op 50780U, 11 Misc.3d 1089A(Sup.Ct.Nass.Co.2006). See, Metropolitan Switch Board Co., Inc. v. Amici Assocs., Inc., 20 A.D.3d 455, 799 N.Y.S.2d 531 (2nd Dept.2005); Gordon v. Teramo & Co., Inc., 308 A.D.2d 432, 764 N.Y.S.2d 144 (2nd Dept.2004). See also, Matter of Gifford, 144 A.D.2d 742, 535 N.Y.S.2d 154 (3rd Dept.1988) (“an individual who signs a corporate contract and indicates the name of the corporation and the nature of his representative capacity on the contract is generally not subject to personal liability.”) citing, Gold v. Royal Cigar Co., 105 A.D.2d 831, 482 N.Y.S.2d 32 (2nd Dept.1984). However, courts also have the authority to look beyond the corporate form to prevent fraud or achieve equity. See, Gottehrer v. Viet–Hoa Co., 170 A.D.2d 648, 567 N.Y.S.2d 71 (2nd Dept.1991).
Another well accepted rule in New York is that “a dissolved corporation has no existence, either de jure or de facto, except for a limited de jure existence for the sole purpose of winding up its affairs. Lodata v. Greyhawk North America, LLC., 39 A.D.3d 496, 497, 834 N.Y.S.2d 237 (2d Dept.2007). See, Lorisa Capital Corp. v. Gallo, 119 A.D.2d 99, 109–111, 506 N.Y.S.2d 62, (2d Dept.1986). Generally, a person who “purport[s] to act on behalf of a corporation which [has] neither a de jure nor a de facto existence [is] personally responsible for the obligations which he incur[s].” Brandes Meat Corp. v. Cromer, 146 A.D.2d 666, 667, 537 N.Y.S.2d 177(2d Dept.1989). Thus, if an individual signs a contract on behalf of a corporation while the corporation is dissolved for failure to pay its franchise taxes, the individual assumes personal liability under the contract for the subject matter of that contract. Nigro v. Dwyer, 438 F.Supp.2d 229 (S.D.N.Y.2006); Brandes Meat Corp. v. Cromer 1 46 A.D.2d 666, 667 (2d Dept.1989), interpreting N.Y. Tax Law § 203–a(7).
Nonetheless, an individual who has “no actual knowledge of the dissolution” (Bedford Hills Supply v. Hubert, 251 A.D.2d 438, 674 N.Y.S.2d 404 (1998), and thus has not “fraudulently represented the corporate status” of the dissolved entity, will not be held personally liable for the obligations undertaken by the entity while it was dissolved. Lodata, supra, 39 A.D.3d at 497, 834 N.Y.S.2d 237. Moreover, when a dissolution is annulled, the entity's corporate status is reinstated nunc pro tunc, and contracts entered into during the period of dissolution are “ ‘retroactively validated’ “ Flushing Plaza Assoc. No.2 v. Albert, 31 A.D.3d 494, 495, 818 N.Y.S.2d 252 (2d Dept.2006)quoting Lorisa Capital Corp. v. Gallo, supra at 113, 506 N.Y.S.2d 62).
As Moccia is challenging plaintiff's collection of $2000 from his individual account, he bears the burden of showing that he was protected by his corporate status.A defendant's contention that he acted as an agent for a disclosed principal (a corporation) is an affirmative defense (CPLR 3018(B)) which places the burden upon the defendant that he so acted in making the contract sued upon. Garden v. Mapel, 73 Misc.2d 810, 813, 342 N.Y.S.2d 486 (Civil Ct., N.Y. Co.1973), See, Liberty Lumber Co. v. Pye, 44 Misc.2d 950, 255 N.Y.S.2d 782 (Dist.Ct.1965). Moccia utterly fails to meet this burden.
First, Moccia never presented any evidence as to whether Richmond Security Services was ever incorporated, much less dissolved. Moccia failed to present any contract which indicated that the corporation, rather than he, as an individual, was obligated to perform services for plaintiff. Curiously, Moccia accepted cash for the payment on the initial job he performed for plaintiff but then requested a check from plaintiff, made out to Richmond Security, on March 7, 2003, the same day that he claims Richmond Security ceased to operate. This coincidence raises the specter of fraud. Finally, the New York State Department of State, Division of Corporations website indicates that an entity known as Richmond Security Services, Inc., at 23 Oceanic Avenue, Staten Island, N.Y. still exists. This fact, at the minimum, calls into question whether Moccia accurately testified as to the status of the corporation, whether he currently, and during 2007–08, had any relationship with Richmond Security Services, Inc, and whether, if another individual bought the company from him, this new reincarnation of Richmond Security assumed the old company's debts. All of these unknown elements that Moccia failed to address at trial mandate that plaintiff be awarded the sum requested in its motion for summary judgment.
This constitutes the decision and order of this court