Ads Plus Advertising, Inc. v. Ault

928 F. Supp. 2d 683, 2013 WL 788082, 2013 U.S. Dist. LEXIS 28541
CourtDistrict Court, W.D. New York
DecidedMarch 1, 2013
DocketNo. 09-CV-6515P
StatusPublished
Cited by8 cases

This text of 928 F. Supp. 2d 683 (Ads Plus Advertising, Inc. v. Ault) is published on Counsel Stack Legal Research, covering District Court, W.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ads Plus Advertising, Inc. v. Ault, 928 F. Supp. 2d 683, 2013 WL 788082, 2013 U.S. Dist. LEXIS 28541 (W.D.N.Y. 2013).

Opinion

DECISION & ORDER

MARIAN W. PAYSON, United States Magistrate Judge.

PRELIMINARY STATEMENT

Plaintiff, Ads Plus Advertising, Inc. (“Ads Plus”), has sued defendants Alan Ault, Robert Ault and Professional Auto Retailers, Inc. (“PAR”) (collectively, “defendants”) for breach of contract and unjust enrichment arising out of defendants’ alleged failure to compensate Ads Plus for services rendered by it. (Docket # 1). Ads Plus contends that defendants engaged it to perform direct mail advertising, that it performed the work, but that defendants failed to compensate it fully for those services. (Id. at ¶ 7). Robert Ault has answered the Complaint; Alan Ault and PAR have neither answered nor appeared in this action. (Docket # 3).

Currently pending before this Court is Robert Ault’s motion for summary judgment dismissing the action against him. (Docket # 20). According to him, the evidence establishes that Ads Plus contracted with PAR through its principal Alan Ault. (Docket #20-9 at 1, 5-6). Robert Ault further maintains that no evidence exists to warrant piercing PAR’s corporate veil and holding Robert Ault personally liable on its contract with Ads Plus. (Id. at 7-9).

Ads Plus opposes the motion on the grounds that the evidence demonstrates, or at least raises a genuine issue of disputed fact, that it entered into a contract with Alan and Robert Ault and not with PAR. (Docket #27 at 4-6). According to Ads Plus, Alan Ault never disclosed that he was acting as an agent of PAR, rather than in his individual capacity. (Id.). Ads Plus further contends that Robert Ault represented to its president that he was Alan Ault’s partner and would be handling all of the finances and, in fact, participated in certain of the payment transactions. (Docket # 26 at ¶¶ 7,13-14,17-22). These facts, Ads Plus maintains, are adequate to establish Robert Ault’s liability for the amounts due under the contract or, alternatively, to raise disputed issues of material fact that preclude summary judgment. (Docket # 27 at 4-6).

For the reasons set forth below, Robert Ault’s motion for summary judgment is denied.

BACKGROUND

A. The Formation of PAR and Robert Ault’s Involvement in the Business

The following is a summary of the undisputed facts in this matter, except where [686]*686otherwise noted. Robert and Alan Ault are brothers. (Docket # 20-3 at ¶ 2). According to Robert Ault, in January 2007, he loaned Alan Ault $140,000 to start a business known as Professional Auto Retailers, Inc., which was incorporated in Delaware the following month. (Id. at ¶¶ 3-4). No documentary evidence exists in the record, however, that PAR was in fact incorporated, and Robert Ault concedes that “to the best of [his] knowledge, no shares of stock in [PAR] were ever issued, no directors were ever elected, and no corporate meetings were ever held.” (Id. at ¶ 8).

Robert Ault was associated with several of PAR’s financial accounts. For example, Robert and Alan Ault opened a Bank of America bank account in the name “Robert and Alan Ault, Professional Auto Retailers Inc.”; according to Robert Ault, the purpose of the account “was to receive payments directed to PAR, which were in turn to be transferred to [Robert Ault] in repayment of [the loan].” (Id. at ¶ 15). The account statements were mailed to Robert Ault at his residence in Palm Desert, California. (Docket #29 at Exhibits (“Ex.”) B and C). Robert Ault was also listed as a co-signer on an American Express credit account in the corporate name, although he claims he did not authorize his association with the account. (Docket # 20-3 at ¶ 10). Robert Ault also allowed Alan Ault to use Robert’s personal American Express account for a single charge relating to the initiation of the business. (Id. at ¶ 12).

Robert Ault maintains that he was never involved in the operation or management, and has never been a shareholder or director, of PAR. (Id. at ¶¶ 8-9). On February 1, 2008, Robert Ault signed a letter formally resigning any association with PAR; he contends that the purpose of the letter was “to make it absolutely clear that [he] was in no way connected or involved” in the company.1 (Id. at ¶ 20). According to Robert Ault, he never received any funds from the Bank of America bank account, nor issued any checks on the account. (Id. at ¶¶ 16-17). In addition, Robert asserts that Alan Ault repeatedly used Robert’s personal American Express account to make payments on behalf of PAR without his consent or knowledge. (Id. at ¶¶ 13-14).

B. Contractual Work Performed by Ads Plus

The pending lawsuit arises out of a series of transactions in which Ads Plus was engaged by one or more of the defendants to prepare direct mail advertising material. (Docket # 26 at ¶¶ 4-5). No written agreements were ever signed between the parties. Rather, the parties’ contractual relationship was established principally as a result of phone calls and email communications. (Docket # 20-8 at 6).

According to Ads Plus, its first transaction with defendants occurred in May 2007 during a telephone conference between its president, Joanne Cook (“Cook”), and Alan Ault, during which Alan Ault engaged Ads Plus to “design, print and mail” advertisements for one of Alan Ault’s customers. (Id. at 5). Ads Plus asserts that Robert Ault “participated in the transaction.” (Id. at 6). Specifically, the documentary evidence establishes that on May 15, 2007, Robert Ault wired $21,155 from his personal bank account to Ads Plus. (Docket # 26 at ¶¶ 18-19; # 20-4 at 22). According to Ads Plus, it was engaged by defendants to provide similar services for nineteen subsequent advertising projects. (Docket # 20-8 at 6).

Documents submitted in support of the motion reveal that Cook and Alan Ault [687]*687frequently communicated about payment for the services rendered by Ads Plus. (Docket #20-7 at 9-76). Emails on the subject suggest that Ads Plus began to encounter difficulty in obtaining payment beginning in April 2008. (Id.). In response to Cook’s requests for payment, Alan Ault generally either authorized payment through a credit card2 or represented that he had mailed a check to Ads Plus. (See, e.g., id. at 13, 22, 27, 37, 44). Most of the emails sent by Alan Ault were sent from the address “ault@snet.net,” although some were sent from “PAR@snet. net.”

The financial relationship between the parties deteriorated over time. By June 17, 2008, according to an invoice Cook emailed to Alan Ault, approximately $103,495.55 was owed to Ads Plus. (Id. at 48). Alan Ault did not dispute the invoiced amount, but emphasized that he was having financial difficulties. (Id. at 63, 66, 71, 74).

C. The Pending Lawsuit

Ads Plus commenced this action on October 9, 2009, after its unsuccessful attempts to collect on the outstanding invoices. (Docket # 1). The Complaint alleges that defendants owe Ads Plus $120,512 for advertising projects completed by Ads Plus between April and June 2008. (Id. at ¶ 10, Ex. A at 5). In support of its claims, copies of three checks that were returned for insufficient funds are attached to the Complaint. (Id. at ¶ 7 and Ex. A at 6-10).

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928 F. Supp. 2d 683, 2013 WL 788082, 2013 U.S. Dist. LEXIS 28541, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ads-plus-advertising-inc-v-ault-nywd-2013.