Plaintiff, the Board of Managers of a Brooklyn County condominium, brought an action against the Sponsor of the Condominium and its principals, asserting twelve causes of action relating to the allegedly defective construction of the Condominium.

Using its expertise in construction defect litigation, Adam Leitman Bailey, P.C. was able to secure dismissal of all twelve causes of action against the Sponsor’s principals. Specifically, Adam Leitman Bailey, P.C. argued that each and every cause of action against the Individual Defendants failed because the Board did not and could not plead any basis to hold the individual principals liable for the Sponsor’s purported wrongdoing. Adam Leitman Bailey, P.C. cited to extensive case law providing that a board plaintiff who seeks to pierce the corporate veil of a sponsor entity must demonstrate, with sufficiently detailed factual allegations: (1) the owners exercised complete domination of the corporation with respect to the transactions or occurrences at issue, and (2) that domination was used to wrong the plaintiff, resulting in injury.

In this case, the Board set forth no facts whatsoever, let alone enough to meet the heavy burden of demonstrating entitlement to pierce the corporate veil: the Board no allegations whatsoever, let alone any allegations with proper substantiation or factual support, that the Sponsor’s principals dominated the Sponsor and used that domination to perpetrate harm upon Plaintiffs. In fact, Adam Leitman Bailey, P.C. was able to cite to numerous cases where a condominium board presented far more factual support for a veil piercing claim than the Board did in this case and the Courts still found those allegations insufficient to pierce the corporate veil of a sponsor entity.

Here, the only allegations of any kind plead specifically against the Sponsor’s principals were that they executed the certifications contained the Offering Plan. However, Adam Leitman Bailey, P.C. is quite familiar with this argument. We were therefore able to point to case law across the departments that consistently holds that liability cannot be imposed upon the individual members of a sponsor entity based simply upon the execution of the required offering plan certification.

With these ironclad arguments, the Court had no choice but to dismiss all causes of action as asserted against the Sponsor’s principals.

Courtney J. Lerias, Esq. and Rachel Sigmund McGinley, Esq. of the Real Estate Litigation Group achieved this successful result for the client.