First Capital Asset Mgmt., Inc. v. N.A. Partners, L.P

In First Capital Asset Mgmt., Inc. v. N.A. Partners, L.P., 260 AD2d 179 (1st Dept 1999), lv. to appeal denied, 93 NY2d 817 (1999) petitioner had commenced a prior action against corporate and individual defendants for payment under a stock purchase agreement. 260 AD2d at 180. The complaint was dismissed as to the controlling individual of the judgment debtors, because he was not personally liable for the purchase price under the agreement, and judgment was only entered against the corporate entities, which were empty shells. Id. Petitioner commenced a subsequent proceeding against the previously dismissed individual to enforce the judgment, alleging that he was the alter ego of the judgment debtors. Id. at 181. The Supreme Court dismissed the petition, holding that it was barred by res judicata. Id. The Appellate Division, First Department, vacated this aspect of the Supreme Court's decision, explaining that the petition in the enforcement action: sought to enforce the judgment in the prior action against [the principal] based on allegations that [the judgment debtors] were his alter egos. The dismissal of the complaint as against [the principal] in the prior action was based on the finding that he was not personally liable for the purchase price under the terms of the stock purchase agreement, and did not preclude a subsequent proceeding to enforce the judgment against [the principal] based on allegations that would support piercing the corporate veil of the judgment debtors (see Rebh v. Rotterdam Ventures, Inc., 252 AD2d 609, 675 NYS2d 234; RENP Corp. v. Embassy Holding Co., 229 AD2d 381, 382, 644 NYS2d 567; Dannasch v. Bifulco, 184 AD2d 415, 585 NYS2d 360), inasmuch as "the necessary elements of proof and evidence required to sustain recovery vary materially." 260 AD2d at 181.