Clementine v. Eco Life
When I first spoke with my adversary about the pending lawsuit against my client, it didn't leave either of us with a warm and fuzzy feeling. In sum, the conversation went like this: "Your client needs to pay us $1,320,000 plus interest to settle this." To which I replied, "My client is not paying you anything except maybe the fees associated with the cost of defending this action." In response: "I guess we will see about that Mario." "I guess we will Andrew." Well, we just did!!!
After three and a half years of intense legal advocacy, involving multiple motions, the defendant paid $38,895 or less than two percent of the plaintiff's current total demand, and the only reason that was paid was because it was based on our estimate of the projected remaining legal cost to have the plaintiff's action dismissed. Another one for the good guys.
The litigation focused on defendant's execution of a lease for billboard space in a prime Manhattan location. Plaintiff attempted to establish liability against one of the defendant's shareholders by alleging a cause of action for piercing the corporate veil. In essence, plaintiff argued that the individual defendant was not entitled to the normal protection from personal liability afforded by a corporate structure because the corporation did not follow proper corporate formalities. This cause of action was especially important to the plaintiff because 1) collection against the corporate defendant was going to be difficult; and 2) there were issues as to whether plaintiff had the perquisite authority to sign the lease and thus, whether the corporate defendant was even liable.
Plaintiff's counsel, however, misread the law as it applied to piercing the corporate veil. He failed to realize that while following corporate formalities was one factor in establishing a piercing the corporate veil cause action, there were several others for the court to consider. And moreover, he failed to appreciate that the lack of corporate formalities in a start-up company, such as defendants', is not the same as a lack of corporate formalities over time with an established corporation. Thus, the general protections afforded corporate officers and their shareholders, as I advised counsel three and half years earlier, ruled the day.
As a result, we had a happy client who in his own words "appreciated and was very satisfied with [our] great job"
If you ever have any questions regarding your legal needs, we are only a phone call or an email away.
Sincerely,
Mario Biaggi Jr.