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Current Developments in the Commercial Divisions of the
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Posted: June 24, 2016

Control and Domination Alone Insufficient to Justify Alter Ego Liability

On June 14, 2016, the First Department issued a decision in Cornwall Management Ltd. v. Kambolin, 2016 NY Slip Op. 04680, dismissing a claim based on alter ego liability, explaining:

The allegations that defendants Kambolin and Atlant Capital Holdings controlled and dominated defendant Thor United are insufficient to state a cause of action for alter ego liability. The complaint alleges, upon information and belief, only that Kambolin, after relinquishing his interest in Thor United, continued to dominate it by controlling its bank account and decision making, and that Thor United and other entities controlled by Kambolin, including Atlant Capital, commingled funds and shared a business address. It alleges no specific facts to establish actions taken by Thor United or its owners in connection with the loans and the alleged scheme to avoid their repayment or that Kambolin’s control of Thor United encompassed any such actions.

Nor does it allege any of the other factors that support a veil-piercing claim, such as a lack of corporate formalities or undercapitalization.

(Internal quotations and citations omitted) (emphasis added).

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