Michaels v. Banks

901 F. Supp. 2d 354, 2012 WL 5360938, 2012 U.S. Dist. LEXIS 158654
CourtDistrict Court, N.D. New York
DecidedNovember 1, 2012
DocketNo. 5:10-CV-989
StatusPublished
Cited by2 cases

This text of 901 F. Supp. 2d 354 (Michaels v. Banks) is published on Counsel Stack Legal Research, covering District Court, N.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Michaels v. Banks, 901 F. Supp. 2d 354, 2012 WL 5360938, 2012 U.S. Dist. LEXIS 158654 (N.D.N.Y. 2012).

Opinion

MEMORANDUM-DECISION and ORDER

DAVID N. HURD, District Judge.

I. INTRODUCTION

Plaintiffs Bret Michaels (“Michaels”) and Last Child Productions, Inc. (“Last Child”) (collectively “plaintiffs”) move for summary judgment. Pro se defendants Michael S. Banks (“Banks”) and Jennifer Kingston (“Kingston”) (collectively “defendants”) oppose. Plaintiffs replied. The motion was taken on submission without oral argument.

II. BACKGROUND

The following facts are undisputed unless otherwise noted.

Prior to March 31, 2010, Banks and non-party Patrick LaPage (“LaPage”) agreed to form a limited liability company, Aloha Events, LLC (“Aloha LLC”), to promote a concert series over the summer of 2010. On March 31, 2010, the Articles of Organization for Aloha LLC were filed with the New York Secretary of State. Banks and LaPage each owned fifty percent of Aloha LLC as of March 31, 2010. Aloha LLC’s Operating Agreement required a majority vote for all actions of the company.

On April 22, 2010, Banks removed La-Page as a member of Aloha LLC. According to Banks, he did so because LaPage failed to respond to his attempts to complete the organization of the company. Banks interpreted this failure to respond as abandoning the company. However, Banks’ removal of LaPage as a member of Aloha LLC was done unilaterally, without written notice to LaPage prior to the membership meeting and without a majority vote to take such action. Banks also transferred LaPage’s ownership interest in Aloha LLC to himself and Kingston, again without prior written notice to LaPage and without a majority vote to do so. This transfer resulted in Banks having a ninety percent ownership and Kingston having ten percent.

Banks wrote a check to himself from the Aloha LLC account to reimburse his initial [356]*356capital contribution to the company. He deposited child support payment arrears into Aloha LLC’s bank account. He used Aloha LLC’s debit card to purchase a gift for his granddaughter, but, according to him he replaced those funds. Banks made two payments for his health insurance from Aloha LLC’s account. He also infused personal funds into Aloha LLC, as did Kingston on at least two occasions. According to Banks, the personal funds he put into Aloha LLC constituted a loan to the company. However, there are no loan documents.

Kingston used her personally-owned computer to conduct Aloha LLC business. Banks used the same home office to conduct Aloha LLC business as well as that of his two other businesses, Alpha Realty Group (“Alpha Realty”) and Aloha Energy. The office had a single-line telephone, which was used for all Banks’ businesses. Banks primarily used a cell phone in Alpha Realty’s name to conduct Aloha LLC business. He also used the cell phone to conduct Alpha Realty business. Banks transferred money from Aloha LLC’s account to Alpha Realty’s account to pay the cell phone bill.

According to Banks, he and Kingston acted as members of the corporation. Aloha LLC had liability insurance and a mailing office. Banks states that he used Alpha Realty’s office equipment only sparingly for Aloha LLC’s business, and it was in Aloha LLC’s best interest to use the equipment rather than incurring the expense of purchasing such equipment for Aloha LLC’s sole use.

Aloha LLC and plaintiffs entered into a contract under which Michaels would perform at a concert in Syracuse, New York, on August 5, 2010. Pursuant to the contract, Aloha LLC was to pay $100,000 to plaintiffs for the concert, as follows: $10,000 by June 11, 2010; $40,000 by July 16, 2010; and $50,000 no later than one hour prior to the concert. Aloha LLC paid defendants only $5,000 total. The contract permitted plaintiffs to cancel the contract if the required payments were not made.

According to Banks, he was in contact with plaintiffs regarding the shortfall in payments. He notified them that he was attempting to secure funding for the concert but had been unable to do so. Further, he requested that the concert be rescheduled after he secured further funding, but was told that the concert would not be rescheduled until Aloha LLC paid the amounts due under the contract.

Michaels arrived at the concert site on August 5, 2010, to find no stage, no sound equipment, and no lighting equipment. According to defendants, the equipment was at the site but no sound and lighting company was hired because they did not believe the concert would take place. Defendants admit that Aloha LLC breached the contract.1

III. DISCUSSION

A. Summary Judgment Standard

Summary judgment must be granted when the pleadings, depositions, answers to interrogatories, admissions and affidavits show that there is no genuine issue as to any material fact, and that the moving party is entitled to summary judgment as a matter of law. Fed.R.Civ.P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). The moving party [357]*357carries the initial burden of demonstrating an absence of a genuine issue of material fact. Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Facts, inferences therefrom, and ambiguities must be viewed in a light most favorable to the nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

When the moving party has met the burden, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Id. at 586, 106 S.Ct. at 1356. At that point, the nonmoving party “must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56; Liberty Lobby, Inc., 477 U.S. at 250, 106 S.Ct. at 2511; Matsushita Elec. Indus. Co., 475 U.S. at 587, 106 S.Ct. at 1356. To withstand a summary judgment motion, sufficient evidence must exist upon which a reasonable jury could return a verdict for the nonmovant. Liberty Lobby, Inc., 477 U.S. at 248-49, 106 S.Ct. at 2510; Matsushita Elec. Indus. Co., 475 U.S. at 587, 106 S.Ct. at 1356.

B. Analysis

Because the breached contract for which plaintiffs seek damages was between plaintiffs and a corporate entity, Aloha LLC, Banks and Kingston will be liable only if the Aloha LLC corporate veil is pierced, making them individually responsible.

A corporate veil may be pierced where it is established that (1) “ ‘the owner exercised complete domination over the corporation with respect to the transaction at issue,’ ” and (2) “ ‘such domination was used to commit a fraud or wrong that injured the party seeking to pierce the veil.’ ” MAG Portfolio Consultant, GMBH v. Merlin Biomed Group LLC,

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Related

Blum v. Spaha Capital Management, LLC
44 F. Supp. 3d 482 (S.D. New York, 2014)
Michaels v. Banks
959 F. Supp. 2d 244 (N.D. New York, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
901 F. Supp. 2d 354, 2012 WL 5360938, 2012 U.S. Dist. LEXIS 158654, Counsel Stack Legal Research, https://law.counselstack.com/opinion/michaels-v-banks-nynd-2012.