Blue River Gems Inc. v. Gross

Summary

The Appellate Division, First Department reversed an order that had entered a $50,946 judgment against Michael Gross under Debtor and Creditor Law § 276. The court held that the evidence supported piercing the corporate veil because Gross dominated Michael Gross Diamonds Inc. and used that domination to cause the corporation to become judgment-proof after converting a necklace. The court permitted recovery against Gross of the entirety of the judgment previously entered against the corporation and did not reach the interest-calculation issue.

Holdings

1. The evidence satisfied both requirements for piercing the corporate veil: Gross completely dominated the corporation with respect to the transaction at issue, and he used that domination to commit a wrong or inequity against plaintiff by causing the corporation to become judgment-proof. Plaintiff was therefore permitted to recover against Gross the entirety of the judgment entered against Michael Gross Diamonds Inc.
2. The court did not reach the interest-calculation issue because reversal on the corporate-veil-piercing theory resolved the appeal.

Questions Presented

1. Whether the evidence established the domination and fraud-or-wrong elements required to pierce the corporate veil and hold Michael Gross personally liable for the judgment against Michael Gross Diamonds Inc.
2. Whether the court properly calculated interest under Debtor and Creditor Law § 276.

Disposition

reversed