| Matter of Mercury Factoring, LLC v Partners Trust Bank |
| 2010 NY Slip Op 05912 [75 AD3d 1101] |
| July 2, 2010 |
| Appellate Division, Fourth Department |
| In the Matter of Mercury Factoring, LLC, Appellant, v PartnersTrust Bank, Respondent, and Lennon's Litho, Inc., Respondent. |
—[*1] Michael A. Castle, Herkimer (Scott H. Oberman of counsel), forrespondent-respondent.
Appeal from an order of the Supreme Court, Herkimer County (Michael E. Daley, J.),entered October 9, 2009. The order, insofar as appealed from, denied the motion of petitionerseeking, inter alia, the entry of a satisfaction of judgment pursuant to CPLR 5021.
It is hereby ordered that the order insofar as appealed from is unanimously reversed on thelaw without costs, the motion is granted, and the matter is remitted to Supreme Court, HerkimerCounty, for further proceedings in accordance with the following memorandum: RespondentLennon's Litho, Inc. (Litho) obtained a judgment in the amount of $81,600 against petitioner,Mercury Factoring, LLC (Mercury), and filed an execution seeking to enforce that judgmentagainst two parcels of real property owned by Mercury. Mercury established that the parcels hada fair market value in excess of $95,000, and Litho does not contest that valuation. A sheriff'ssale was conducted, at which the sole bid of $10,000 was made by Robert J. Lennon, the ownerof Litho, in his personal capacity. The premises were conveyed to Lennon for that amount and,after deduction of the Sheriff's poundage and fees and the addition of interest, the judgment wasreduced to approximately $76,000. Litho thereafter began proceedings to execute uponequipment owned by Mercury, whereupon Mercury moved for an order seeking, inter alia, theentry of a satisfaction of the judgment pursuant to CPLR 5021. We agree with Mercury thatSupreme Court erred in denying its motion.
" 'Where the judgment debtor can show not merely disparity in price, but in addition one ofthe categories integral to the invocation of equity, such as fraud, mistake or exploitiveoverreaching, a court of equity may grant relief' " (Merchants Natl. Bank & Trust Co. ofSyracuse v H. H. & F. E. Bean, 142 AD2d 928, 929 [1988]; see Yellow Cr. HuntingClub v Todd Supply, 145 AD2d 679 [1988]). Here, it is undisputed that Mercury's propertyhad a fair market value in excess of $95,000, but the judgment obtained by Litho has beenreduced by no more than approximately $9,500, not taking into account the additional interestincluded in the judgment. Consequently, although the sheriff's sale was procedurally proper, wenevertheless conclude that in support of its motion Mercury has demonstrated exploitativeoverreaching sufficient to compel the conclusion that the judgment should be deemed satisfied(see generally Federal Deposit Ins. [*2]Corp. v Forte, 144AD2d 627, 628 [1988]). We therefore reverse the order insofar as appealed from, grant themotion, and remit the matter to Supreme Court to grant Mercury the relief requested.
Contrary to the contention of Litho, the acquisition of the property by Lennon in his personalcapacity does not require a different result. "Broadly speaking, the courts will disregard thecorporate form, or, to use accepted terminology, pierce the corporate veil, whenever necessary toprevent fraud or to achieve equity" (Matter of Morris v New York State Dept. of Taxation &Fin., 82 NY2d 135, 140 [1993] [internal quotation marks omitted]; see Walkovszky vCarlton, 18 NY2d 414, 417 [1966]). Mercury established in support of its motion that Lithoceased doing business at the time Mercury purchased the subject property from Litho prior tothis litigation, before it was repurchased from Mercury by Lennon, and that Litho had ceasedpaying corporate taxes and had no assets other than the instant judgment. Furthermore, Mercuryestablished that Lennon was the principal of Litho, and that any amounts collected on thejudgment would inure to his sole benefit. Neither Lennon nor Litho submitted any evidence tocontravene those facts established by Mercury in support of its motion. Inasmuch as the recordestablishes that Lennon received the full value of the judgment against Mercury by "exercis[ing]complete domination of the corporation with respect to the transaction in question and saiddomination was used to commit a . . . wrong against [Mercury,] resulting in[Mercury]'s injury" (Austin Powder Co. v McCullough, 216 AD2d 825, 826 [1995];see Morris, 82 NY2d at 141), the court should have pierced the corporate veil andgranted the relief requested by Mercury. Present—Smith, J.P., Lindley, Sconiers, Pine andGorski, JJ.