The following e-filed documents, listed by NYSCEF document number (Motion 004) 70, 71, 72, 73, 74, 75, 76, 77, 78, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113 were read on this motion to QUASH SUBPOENA, FIX CONDITIONS. For the reasons set forth hereinbelow, the instant motion to quash a subpoena is granted; and the instant cross-motion, to the extent that it seeks summary judgment piercing the corporate veil, is granted, and to the extent that it seeks other relief is denied, without prejudice, solely as moot. The details of the instant action are somewhat hazy, but the drift is unmistakable. DECISION ORDER ON MOTION Background In or about 2012 defendants Michael Stern and David Juracich presented to plaintiffs Etage Real Estate LLC and Davla Consulting, Inc. a statement purporting to show that defendants’ company, DJJMS (“David Juracich, Jr. and Michael Stern”?), had assets of over $200,000,000. This induced plaintiffs to loan DJJMS $3,000,000. Interest was to be $2,000,000, and, apparently in an attempt to avoid usury issues, the deal was structured so that plaintiffs were to provide consulting services and receive several hundred thousand dollars in consulting fees. Defendants maintain that plaintiffs never performed the services; however, subsequent events (infra) have rendered this claim moot. The $3,000,000 was to be, and was, used by DJJMS to help purchase or upgrade 105 West 57th Street (said street often called “Billionaire’s Row” by real estate cognoscenti), a building worth approximately $40,000,000 and purchased for that amount. Despite defendants’ agreement to keep and hold their interest, worth $18,000,000, in the building, defendant Stern transferred that interest, signing as both the transferor and transferee, for zero consideration, to another company he or defendants controlled, JDS Development Group, Stern being a principal thereof, which developed 111 West 57th Street. This transfer rendered DJJMS “judgement proof.” JDS then incorporated 105 into 111, an “ultra-luxury” skyscraper with some apartments selling for in the $50,000,000 range. The Underlying Action On May 17, 2017, plaintiffs sued DJJMS in Supreme Court, NY County, Index No. 652659/2017. Simply put, plaintiffs obtained a default judgment; that judgment was vacated (reluctantly, based on the presiding judge’s comments); plaintiffs moved for summary judgment; DJJMS defaulted; and on 7/25/2019 the Clerk entered judgments against non-party DJJMS, LLC in the collective amount of $746,558.84: $144,795.62 in favor of Etage; $579,182.47 in favor of Davla; and $22,580.75 in legal fees. The Instant Action On October 28, 2019 plaintiffs commenced the instant action “for indemnity and contribution and to pierce the corporate veil of DJJMS LLC.” Plaintiffs now move for, among other things, summary judgment. To pierce the corporate veil a plaintiff must show “that: (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff s injury.” Ciavarela v. Zagaglia, 132 AD3d 608, 608-09 (1st Dep’t 2015). Cases often talk about piercing the corporate veil when the principals are using the corporation “as their personal piggy-bank.” Discussion The subject subpoena is hereby quashed as it is extremely overbroad. It is also moot in light of today’s Decision and Order. The most egregious act that defendants committed, and the ratio decidendi of today’s decision, was transferring DJJSM’s interest in 105 West, apparently its sole significant asset, to JDS for zero consideration. This alone justifies piercing the corporate veil. Defendants’ businesses practices are something of a mystery. In prior papers defendants explained 105 West’s demise as due to a catastrophic business failure (or something like that), not exactly the norm on West 57th Street. In opposition to the instant motion defendants have explained nothing, as the only opposition to the motion was submitted by counsel, not defendants, who would be the only persons with personal knowledge. Defendants’ legal practices, particularly numerous defaults, including on their disclosure obligations, are also something of a mystery (but, again, not the ground for today’s decision). Plaintiffs request to unseal portions of the record designated as sealed by defendants is denied as moot and/or in the Court’s discretion. Conclusion The subject subpoena is hereby quashed. The request to unseal parts of the record is denied. Plaintiffs’ request for summary judgment is hereby granted, and the Clerk is hereby directed to enter judgment in favor of plaintiff Etage Real Estate LLC in the amount of $144,795.62, plus interest from 7/25/19, against defendants Michael Stern and David Juracich, jointly and severally; and to enter judgment in favor of plaintiff Davla Consulting, Inc. in the amount of $579,182.47, plus interest from 7/25/19, against defendants Michael Stern and David Juracich, jointly and severally; and in favor of plaintiffs jointly and severally and against defendants jointly and severally in the amount of $22,580.75, plus interest from the date of entry of judgment, for legal fees. CHECK ONE: X CASE DISPOSED NON-FINAL DISPOSITION X GRANTED DENIED GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE Dated: September 22, 2021
