DECISION AFTER TRIAL This case concerns a business transaction involving plaintiff Steven J. Snyder (“Steven”), defendants Julie K. Wolf (“Julie”) Mixt Snacks, LLC (“Mixt”), and non-party James Wolf (“James”). Steven and James have been friends for more than 20 years. Julie is James’s daughter and has known Steven since she was twelve. In early 2017, James, who previously worked in the food supply industry, approached Steven about becoming involved in Mixt, a business James and Julie were contemplating. There was no agreement as to the corporate form the parties would use to operate the business. There was no agreement about whether or not Steven would receive an equity stake or interest in the business if he provided funding. However, Steven trusted his close friends and infused the business with cash in the hope of keeping Mixt afloat, only never to see that money again. Procedural Posture Steven commenced this case on November 7, 2021, alleging claims for declaratory relief, breach of fiduciary duty, fraud, conversion, and unjust enrichment. On January 7, 2022, defendants moved to dismiss the breach of fiduciary duty, fraud, and conversion claims. The court granted the motion, leaving the remaining unjust enrichment claim for trial.1 The court held a one-day virtual bench trial on consent over Microsoft Teams on January 11, 2023. The court thanks counsel for both sides for their diligent efforts in litigating this case. At trial, Steven sought to recover $291,112, plus prejudgment interest, from Mixt and Julie, jointly and severally. That figure represents $204,112 that Steven transferred directly to Mixt, and $87,000 that Steven transferred to James prior to Mixt’s formation. James was never an owner, member, employee, or officer of Mixt once the company was formed. Thus, the specific questions for trial were: (1) is Mixt is liable for the $204,112 transferred to it directly; (2) is Mixt is liable for the $87,000 transferred to James before Mixt’s formation; and (3) can Julie can be held jointly and severally liable for the some or all of the $291,112 under a veil piercing theory? Credibility Determinations At trial, the court heard testimony from two witnesses: (1) Steven, the plaintiff; and (2) Julie, the individual defendant and Mixt’s sole operator and member. Steven testified by affidavit on direct and was cross-examined by defendants’ counsel. The court found no reason to doubt his credibility. Plaintiff’s counsel examined Julie during Steven’s case-in-chief, and Julie also testified in her defense and was questioned by counsel for both parties. The court did not find her particularly credible, considering her purported inability to answer basic questions about a business that she claimed to have so closely ran. For instance, when asked about how Mixt recorded received funds, Julie could not provide a response, and instead claimed that she could not remember, despite being the company’s sole manager, signatory, decision-maker, and individual overseeing books and records (Doc 65 [Trial Tr.] at 85-86). When presented with questions that weighed against her interests, Julie shied from answering, and instead pinned the blame on her father.2 For example, when asked why she kept the money she received, Julie responded that “there was nothing that said you can or can’t use it,” that “[i]t was just money that was wired into the account,” and that “it was [James] who was soliciting these funds” and that “[she] never solicited any of them” (id., at 86:7-17). The court finds Julie’s evasive answers concerning, considering that they relate directly to the core disputes in this case. Additionally, that she had no idea when or where the funds came from, even though she was the individual in charge of Mixt’s books and records, strains credulity. Ultimately, Julie’s answers negatively impacted her credibility. Factual Findings After selling another company in 2010, James began a new business focused on innovative, upscale snacks and nut products (Doc 62 [Snyder Trial Aff.], 9). Eventually, Julie asked to help with starting and running the business, and he agreed. Julie then began assisting by designing packaging, providing personal input, preparing presentation materials to aid with external engagements, and observing meetings James thought were appropriate for her learning. I. The Initial Discussions In early 2017, James approached Steven about becoming a “partner” in Mixt, the business that James and Julie discussed launching (Doc 62 [Snyder Trial Aff.], 9). Mixt was preparing to launch products on a large scale at a regional grocery store chain and needed funds to do so (id.). To that end, James asked Steven if he could provide the financing (id.). Afterwards, “[i]n an attempt to better understand the opportunity and the risks involved in the Mixt business, as well as to understand what [his] funds would be used for, [Steven] asked [James] for a set of financial projections” (Doc 62 [Snyder Trial Aff.], 10). Julie sent him these projections on April 16, 2017 (Doc 62 [Snyder Trial Aff.], 11). The projections contemplated a $75,000 equity infusion, indicated how funds would be used, and provided anticipated revenues, costs, and profits for the first 24 months of operations (id.,
10-11). Based on his review of these projections, Steven decided to become a “partner” in Mixt (id., 13). However, at that point, the parties neither discussed what percentage of Mixt Steven would own due to his investment, nor reached an agreement on the corporate form of the business (id.). Instead, Steven “trusted that [his] friend of twenty years and his daughter, [Julie], would do the right thing at the appropriate time” (id.). II. The Fund Transfers After these discussions, Steven transferred funds to: (a) James, directly, before Mixt’s formation as an entity; and (b) later, to Mixt’s bank account, directly, after its formation. a. Pre-Formation Transfers ($87,000) Steven initially sent funds directly to James prior to Mixt’s formation (id., 15). On February 22, 2017, after a meeting regarding Mixt’s business, Steven provided James with a $6,000 check based on the prior requests that he join as a partner (Doc 62 [Snyder Trial Aff.], 16). Afterwards, on March 3, 2017, Steven wired another $6,000 to James (id., 16; plaintiff’s exhibit T). Snyder believed these funds were for the business’ general startup costs (id.). On May 5, 2017, Steven also wired $75,000 to James for Mixt based on the projections that Julie had provided (id., 17; plaintiff’s exhibit T). At that time, Steven had provided a total of $87,000 to James (id., 18; plaintiff’s exhibit X). b. Post-Formation Transfers ($204,112) On June 23, 2017, Mixt was organized and formed as an LLC in Massachusetts, and on August 4, 2017, it opened its bank account (Doc 62 [Snyder Trial Aff.], 19; plaintiff’s exhibits E, I). Sections 2.01 and 3.01 of Mixt’s Operating Agreement identified Julie as the sole member and operator. Under sections 3.03 and 3.04, only Julie had authority, as Mixt’s manager, to enter into transactions binding the company (Doc 40 [Operating Agreement]). In August or early September 2017, James informed Steven about the new account and that Mixt would operate as “Mixt Snacks LLC” moving forward (Doc 62 [Snyder Trial Aff.], 20). Subsequently, Steven made the following transfers into Mixt’s account directly: $35,000 on September 11, 2017; $15,000 on October 13, 2017; $50,000 on November 30, 2017; $12,612 on January 30, 2019; $35,000 on April 1, 2019; $16,500 on July 31, 2019; $10,000 on August 26, 2019; and $10,000 on October 10, 2019 (id., 21; plaintiff’s exhibits T, X). In total, Steven transferred $204,112 to Mixt. III. The October 2019 Meeting & Julie’s Conduct In late October 2019, Steven and Julie met to discuss the business (plaintiff’s exhibit U, 35). During the meeting, Steven reminded her that her father was the business’ founder and conceiver and that the partners all needed to agree on a strategic direction (id., 36). Julie responded that her strategy did not need approval, and Steven replied that she had partners and needed their respective buy-ins (id., 35). The parties did not come to any substantive agreement, but they agreed to meet again later that year to resolve these issues. IV. The January 2020 Meeting & Julie’s Conduct On January 21, 2020, Steven emailed the Wolfs a proposed agenda for a planned meeting in New York on January 29, 2020 (plaintiff’s exhibit U at 38). During the meeting, Steven and James raised the same concerns that Steven raised during the meeting in October 2019. Julie refused to discuss Mixt’s strategic or operational aspects, such as how it would move forward with a new business opportunity for testing its snacks in HomeGoods (id.). She also informed Steven and her father that she unilaterally ordered goods, without either of their authorizations, for a potential deal with Stop & Shop (id., 39). Ultimately, Julie agreed to follow up with Steven and her father on these matters, most notably, the need to formalize operations and ownership structure and to move forward with the contemplated HomeGoods opportunity with which her father was also involved (id., 40). V. Communications and Events After the February 2020 Meeting & Julie’s Conduct Afterwards, the parties communicated several times, including on call on February 20, 2020 to discuss the HomeGoods opportunity, and through an email on February 28, 2020 regarding name changes to products Mixt hoped to sell to HomeGoods (id., 41). Additionally, on April 29, 2020, Steven emailed the Wolfs summarizing the takeaways from the January 2020 meeting and requesting updates upon matters the parties had agreed to follow up. (id., 43). On May 4, 2020, Julie emailed Steven acknowledging that Mixt had received the “$228,000″ that he wired to it (plaintiff’s exhibit D). At her deposition, Julie clarified that the amount received was $204,112, not $228,000 (Doc 62 [Snyder Trial Aff.], 22). The bank account statements for the relevant time also confirms that Mixt received the $204,112 in its account (Doc 62 [Snyder Trial Aff.], 23; plaintiff’s exhibits I, J, K, L). In her email, Julie also stated that Mixt had engaged an accountant, promised to provide First Quarter 2020 and April 2020 financials within 30 days, and requested proof of additional funds (Doc 62 [Snyder Trial Aff.], 22; plaintiff’s exhibit D). She also promised to discuss Steven’s role as an investor or lender with Mixt and, if necessary, update the governing documents or draft a promissory note (id.). On June 2, 2020, Julie sent a profit and loss statement for the period of January 2020 to April 2020 (id., 26 [c]; plaintiff’s exhibit G). On June 16, 2020, she again emailed her father and Steven to inform them that a decision was needed on the HomeGoods matter (Doc 10 [6/16/20 Email]; plaintiff’s exhibit H). She also promised to send financials and account balances at each quarter’s end, and to review and discuss them during future meetings (id.). She concluded that “[they] [would] get all of this into a more formal agreement once [they] further [their] discussions regarding the relationship” (id.). Months later, on October 27, 2020 and October 30, 2020, Steven emailed Julie and requested the quarterly financials, but did not receive a response (Doc 11 [11/17/20 Email Re: Financials] at 3-4). Later, on November 17, 2020, Steven emailed Julie again to request the information. Again, he did not receive a response (id., at 3; plaintiff’s exhibit H). On May 13, 2021, Steven’s attorney sent Julie a letter demanding to inspect Mixt’s books and records (Doc 12 [5/13/21 Letter]). Julie responded that neither Steven nor her father had any equity interests in Mixt, and Steven’s attorney replied by highlighting the money that Steven had given Mixt and requested a response by May 31, 2021 (Doc 13 [5/21/20 Email]). However, no response was received (id.). VI. Evidence Concerning the Use of Pre-Formation Funds and Mixt’s and Julie’s Use of Post-Formation Funds At trial, the parties submitted evidence related to the use of the pre-formation funds he provided Mixt. This limited evidence included Steven’s sworn testimony. He described the relevant events surrounding and leading up to the transfers, the various wire confirmations from his bank, investment accounts, and Mixt’s bank account statements, documents and communications between the parties related to the $75,000 wire transfer he provided Mixt for various business operations. The credible evidence established that Steven sent James two payments totaling $6,000 each, and later sent one payment totaling $75,000 after he received the Mixt business proposal. The evidence did not conclusively establish whether or where James transferred those funds. The parties also submitted evidence at trial related to the post-formation funds that Steven provided. This evidence included Mixt’s bank statements, that list the dates Mixt received the funds and indicate Mixt did not reimburse Steven for them, Mixt’s testimony that it received, but has not returned, these funds, and Steven’s own direct sworn testimony. Julie testified that she withdrew a small portion of these funds from the Mixt account and used them as her salary. Julie would write herself checks, representing her salary, from the Mixt account. Conclusions of Law I. Unjust Enrichment Steven argues that he is entitled to recover $291,112 from Mixt on his claim for Unjust Enrichment. That amount is comprised of: (a) the $87,000 that he transferred to James before Mixts’ formation; and (b) the $204,112 that he transferred directly to Mixt after its formation. Unjust enrichment is a “quasi-contract claim and contemplates an obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the parties (Georgia Malone & Co., Inc. v. Rieder, 19 NY3d 511, 516 [2012] [internal quotations omitted]). It is “the receipt by one party of money or a benefit to which it is not entitled, at the expense of another” (Abacus Fed. Sav. Bank v. Lim, 75 AD3d 472, 473 [1st Dept 2010]). Thus, the basis for such a claim is that the “defendant has obtained a benefit which in equity and good conscience should be paid to the plaintiff” (Corsello v. Verizon NY, Inc., 18 NY3d 777, 790 [2012] [internal quotations omitted]). The critical inquiry is whether “it is against equity and good conscience to permit the defendant to retain what is sought to be recovered” (Mandarin Trading Ltd v. Wildenstein, 16 NY3d 173, 182 [2011] [internal citations omitted]). To recover on an unjust enrichment claim, a plaintiff must show, “that (1) the other party was enriched, (2) at that party’s expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered” (Philips Intl. Invs., LLC v. Pektor, 117 AD3d 1, 7 [1st Dept 2014]). a. Pre-Formation Liability Steven seeks the $87,000 that he transferred to James before Mixt’s formation on the ground that an entity is responsible for pre-formation liabilities incurred in furtherance of its business. This amount is comprised of: (i) the $75,000 that Steven wired to James prior to Mixt’s formation and bank account opening in April 2017; (ii) the $6,000 check he provided James on February 22, 2017; and (iii) the $6,000 he wired to James on March 3, 2017. A corporation is bound to liabilities its promotors incurred in its name prior to the completion of incorporation, where the corporation subsequently adopts the liabilities by express ratification, or by the acceptance of benefits referrable to it (see generally Reif v. Williams Sportswear, Inc., 9 NY2d 387, 391 [1961] ["(A) corporation will be liable on a contract of its promoters only if adopted, either expressly or by acceptance of benefits referable to that contract."]). While this principle is most frequently applied to express contracts, it has also been applied to compensate parties who deliver goods, services, or other value to a pre-incorporation business (see e.g. Eden Temporary Services, Inc. v. House of Excellence Inc., 270 A.D.2d 66 [1st Dept 2000]; see also Universal Indus. Corp. v. Lindstrom, 92 A.D.2d 150, 152 [4th Dept 1983] [reversing summary judgment and holding that where business accepted delivery of goods prior to incorporation, subsequent entity could be found liable for payment for goods]). Concerning the $75,000 transfer, the evidence provided that on April 16, 2017, Julie, at her father’s request, emailed Steven financial projections indicating that Mixt would need $75,000 to operate in its first month and that Mixt would use the funds for various initial business costs such as displays, printing plates, start-up costs, and working capital (id.,
