Opinion
Index No. 653130/2022
07-19-2023
Inariz Sas, Plaintiff, v. Good Groceries Company, Inc., SUSAN a/k/a SUZIE SOKOLOFF, and SUSAN a/k/a SUZIE SOKOLOFF AS ADMINISTRATOR OR EXECUTRIX OF THE ESTATE OF MARTIN SOKOLOFF, Defendants.
Peyrot & Associates, PC, New York, NY (David C. Van Leeuwen and Francois Peyrot of counsel), for plaintiff. Law Offices of Eric M. Sarver, New York, NY (Eric M. Sarver of counsel), for defendants Susan Marchlen and the Estate of Martin Sokoloff.
Unpublished Opinion
Peyrot & Associates, PC, New York, NY (David C. Van Leeuwen and Francois Peyrot of counsel), for plaintiff.
Law Offices of Eric M. Sarver, New York, NY (Eric M. Sarver of counsel), for defendants Susan Marchlen and the Estate of Martin Sokoloff.
Gerald Lebovits, J.
Plaintiff Inariz SAS is a food provider based in France. Defendant Good Groceries Company, Inc., is a food-service entity in New York. The late Martin Sokoloff was the president and sole owner of defendant Good Groceries Company, Inc., until he passed away from cancer in 2022. Defendant Susan Sokoloff, a/k/a Susan Marchlen, is the administrator or executrix for Martin Sokoloff's estate. Defendant Marchlen is also Sokoloff's widow.
Plaintiff's complaint identifies this defendant as Susan a/k/a Suzie Sokoloff (NYSCEF No. 3, NYSCEF No. 21). The parties agreed that the caption of the action should be amended to identify her instead as "Susan Marchlen" (see NYSCEF No. 14 at 2), but never submitted a motion to carry that agreement into effect. For clarity, this decision refers to defendant as Susan Marchlen.
Plaintiff has alleged that defendant Good Groceries failed to pay 썤,238.70 EUR as required by two invoices and an agreement. Plaintiff is suing all defendants for breach of contract, unjust enrichment, and account stated. (NYSCEF No. 3 at ¶¶ 8-9.) Plaintiff has also alleged that defendants sold some of Good Groceries' assets to a third party and transferred the funds to Marchlen; plaintiff accuses Marchlen (in her individual capacity) of violating Debtor and Creditor Law (DCL) §§ 273 and 274. (See NYSCEF No. 3 at ¶¶ 27-34.)
Marchlen now moves under CPLR 3211 (a) (7) to dismiss plaintiff's claims as against the estate and against herself in her individual capacity. (NYSCEF No. 14 at 4.) The motion is granted.
DISCUSSION
Plaintiff is suing the estate, and Marchlen individually, for breach of contract, unjust enrichment, and account stated. These claims stem from the contract between plaintiff and Good Groceries. To hold the estate and Marchlen liable on these claims, therefore, plaintiff must first establish a basis for piercing the corporate veil. Plaintiff must allege facts showing "(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 plaintiff which resulted in plaintiff's injury." (Matter of Morris v NY State Dept. of Taxation & Fin., 82 N.Y.2d 135, 141 [1993].)
I. Whether Plaintiff Has Stated Claims Sounding in Contract Against the Estate or Marchlen
A. Plaintiff's Contract-Based Claims Against the Estate
Plaintiff alleges, on information and belief, that Sokoloff "directed, dominated, and controlled [Good Groceries], as if it was his alter ego, disregarding corporate formalities." (NYSCEF No. 3 at ¶ 8.) Plaintiff further alleges, again on information and belief, that Sokoloff "wrongfully used Defendant Good Groceries to benefit himself and his family at the expense of third parties, including the Plaintiff." (Id. at ¶ 9.)
As defendant notes, plaintiff's complaint does not allege facts that might establish that Sokoloff dominated Good Groceries. (See Cerrato v Dee Corp., 150 A.D.3d 522, 523 [1st Dept 2017] [piercing the veil is not warranted when plaintiff has not shown that defendant "ignored corporate formalities" and that defendant "engaged in self-dealing in order to perpetuate a fraud or wrong against plaintiffs"].) Nor does plaintiff allege facts that, if credited, would show that Sokoloff used his (asserted) domination to commit wrongs against plaintiff. Plaintiff's conclusory allegations, made entirely on information and belief (without identifying a basis for that belief) are insufficient.
In opposition, plaintiff argues that dismissal is improper because "alter ego claims are ill-suited for resolution on pre-answer, pre-discovery motions to dismiss." (NYSCEF No. 21 at 5.) But to the extent plaintiff claims that alter-ego claims may never be resolved on a motion to dismiss, this court disagrees. Further, as defendant notes, in the cases cited by plaintiff in support of its claim, "the claimant alleged sufficient facts to warrant proceeding to discovery and/or to trial." (NYSCEF No. 22 at 7; see e.g. Ledy v Wilson, 38 A.D.3d 214, 215 [1st Dept 2007] [noting that "evidence was submitted that the corporate plaintiffs and the LLCs shared common officers and directors, and their operations were located in the same offices"].) These cases are therefore distinguishable from this action, in which plaintiff has submitted no supporting factual allegations at all.
Plaintiff entered a sales agreement with Good Groceries, not Martin Solokoff. (NYSCEF No. 3 at ¶ 14.) Because plaintiff has not provided a factual basis supporting piercing the corporate veil with respect to Sokoloff, plaintiff has not stated a claim for holding the estate liable for Good Groceries' alleged wrongdoings. (See e.g. Matter of Small v Estate of Landesman, 216 A.D.3d 522, 523 [1st Dept 2023] [denying plaintiff's application to recover from respondent estate because plaintiff did not present sufficient facts indicating that the decedent dominated and controlled the company in question].)
B. Plaintiff's Contract-Based Claims Against Marchlen
Plaintiff's amended complaint, although asserting claims against Marchlen for breach of contract, unjust enrichment, and account stated (see NYSCEF No. 3 at ¶¶ 13-26), does not contain any contract-related allegation about her-other than identifying her as "an individual with a business address at 98 4th Street, Suite 414, Brooklyn, New York 11231" (id. at ¶ 3). Nor does plaintiff's opposition to the motion to dismiss identify any fact that might establish either that Marchlen contributed to Good Groceries' alleged breach of contract/failure to pay on an account stated, or that a basis exists to pierce the corporate veil with respect to Marchlen.
II. Whether Plaintiff Has Stated Fraudulent-Conveyance Claims Against Marchlen
Plaintiff also seeks to hold Marchlen liable for an alleged fraudulent conveyance under DCL §§ 273 and 274. To plead causes of action under these statutes, "plaintiff must establish that the defendant (1) made a conveyance; (2) without fair consideration; (3) by a person who is insolvent or who become insolvent as a consequence of the transfer." (Loreley Fin. (Jersey) No. 4 Ltd. v UBS Ltd.,, 337 [Sup Ct, NY County 2013].) Plaintiff has not done so.
Plaintiff's opposition to the motion to dismiss suggests that its fraudulent-conveyance claims are also brought against the estate. But the amended complaint is clear that those claims are being asserted only against Marchlen. (See NYSCEF No. 3 at 5, 6.) Nor does the amended complaint contain any allegations at all that might support a fraudulent-conveyance claim against the estate.
Plaintiff has alleged that "[u]pon information and belief, Good Groceries did sell a large portion of its assets to a third party, rendering [Good Groceries] insolvent and transferring same to Defendant Suzie Sokoloff [a/k/a Susan Marchlen] for little or no consideration." (NYSCEF No. 3 at ¶¶ 28, 32.) But neither the amended complaint nor plaintiff's opposition to the motion to dismiss provide any details or specifics about the alleged transfer-such as when this transfer occurred, how much was transferred, to whom the transfer was made, or when and how Good Groceries gave the proceeds to Marchlen. Additionally, as defendant points out, a fraudulent-conveyance claim may not rest only on allegations made on information and belief. (See L&M 353 Franklyn Ave. LLC v Steinman, 202 A.D.3d 440, 440 [1st Dept 2022].)
Indeed, only in the opposition to the motion to dismiss does plaintiff clarify ambiguous language in its fraudulent-conveyance allegations and explain that plaintiff's theory is that Good Groceries sold assets to an unnamed third party and then gave the proceeds to Marchlen without fair consideration. (See NYSCEF No. 21 at 4, citing NYSCEF No. 3 at ¶¶ 28, 32.)
At most, in opposing the motion to dismiss, plaintiff points to Marchlen's statement in her affidavit that she loaned a total of $157,000 to Good Groceries. (See NYSCEF No. 21 at 4, citing NYSCEF No. 16 at ¶ 10). But plaintiff does not explain how this statement supports a claim either that Good Groceries transferred assets to a third party or that Good Groceries paid the resulting proceeds over to Marchlen. Indeed, Marchlen's affidavit also represents that Good Groceries "has made no payments to [her] for many years" and that she is "unlikely to collect on the loans [she] made" to Good Groceries because other creditors are ahead of her in line. (NYSCEF No. 16 at ¶ 11; see also id. at ¶ 16.) Plaintiff provides no basis to question the accuracy of these representations.
Accordingly, it is
ORDERED that the branch of the motion seeking dismissal of plaintiff's breach-of-contract, unjust-enrichment, and account-stated claims against the Estate of Martin Sokoloff is granted; and it is further
ORDERED that the branch of the motion seeking dismissal of plaintiff's breach-of-contract, unjust-enrichment, and account-stated claims against Susan Marchlen is granted; and it is further
ORDERED that the branch of the motion seeking dismissal of plaintiff's fraudulent-conveyance claims against Marchlen is granted; and it is further
ORDERED that the complaint is dismissed as against the Estate and as against Marchlen, with costs and disbursements as taxed by the Clerk of the Court upon the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff's claims against Good Groceries Company, Inc. are severed and continued; and it is further
ORDERED that defendants serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk, which shall enter judgment accordingly.