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Michael Macready, et al. v. Tci Trans Commodities

October 11, 2011

MICHAEL MACREADY, ET AL.
v.
TCI TRANS COMMODITIES, A.G., ET AL.



The opinion of the court was delivered by: McLaughlin, J.

MEMORANDUM

This suit arises from a sales contract between the plaintiff Kennett International Corp. ("Kennett") and TCI Trans Commodities A.G. ("TCI Switzerland"), a Switzerland-based corporation that is now bankrupt. The plaintiff seeks to recover outstanding debts incurred by TCI Switzerland from the defendant, a New York-based corporation called Trans Commodities, Inc. ("Trans Commodities"). The plaintiff claims that the two companies are so intertwined or interrelated that through the "alter ego," "enterprise entity," or "single entity" theories of piercing the corporate veil, the plaintiff can reach the assets of Trans Commodities.

This case was filed in 2000 but was in suspension for many years pending bankruptcy proceedings involving TCI Switzerland and then settlement discussions between the parties. In November of 2009, the Court permitted discovery and then dispositive motions on the issue of the defendant's liability under a veil piercing theory. The defendant moved for summary judgment. The Court will grant the defendant's motion for summary judgment.

I. Summary Judgment Record

Kennett entered into a sales contract with TCI Switzerland in 1996. The terms of the agreement are defined by three one-page letters exchanged in early October of 1996 by Michael Macready, the owner of Kennett, and Julian Connor, an employee of TCI Switzerland. Mem. of Law of Pl. in Opp. to Mot. of Def. ("Pl. Opp."), Decl. of Michael Macready ("Macready Decl."), Ex. A.

Between 1996 and 2000, Kennett acted as a commissioned sales agent for TCI Switzerland. The plaintiff brought this suit in 2000 for commission payments that were not made. In the original complaint, Macready was named as a plaintiff, and Seymon Kislin ("Sam Kislin" or "Kislin"), David Kislin, Henry Kislin, and Elliot Asher were named as individual defendants. The complaint was amended two months after filing. The amended complaint named only Kennett as a plaintiff and only TCI Switzerland and Trans Commodities as defendants.

TCI Switzerland entered bankruptcy proceedings in 2001 and the plaintiff was unable to recover from TCI Switzerland the debts owed.

A. Trans Commodities

Trans Commodities was created in 1992 by Kislin although Kislin had been using the name "Trans Commodities" in commodities trading work he was doing as early as 1990. From 1992 until 1997, Kislin was the sole shareholder and CEO of Trans Commodities. In 1997, Kislin gave his stock ownership to his two children, Regina and David Kislin. Around 2000, David Kislin became the sole shareholder of Trans Commodities. During this time, Kislin remained on Trans Commodities's board of directors and was the company's CEO. Mem. of Law in Supp. of Def. Mot. for Summ. J. Def. Mot. ("Def. Mot."), Decl. in Supp. ("Kislin Decl.") ¶¶ 5-6.

B. Trans Commodities's Relationship With TCI Switzerland*fn1 TCI Switzerland was created in 1993 by Ansgar Felber.

When founding TCI Switzerland, Felber worked with Kislin, who had contacts with Russian metal suppliers. In exchange for contact with these suppliers, Felber offered Kislin guaranteed purchasing levels from those companies as well as the opportunity to choose members of the TCI Switzerland Board of Directors. Both David Kislin and George Benninger, Kislin's attorney, were on the board of directors of TCI Switzerland from its formation until it entered bankruptcy. In 1998, Ansgar left TCI Switzerland. Willi Bolinger took over as CEO and Connor took control of sales and purchasing for TCI Switzerland. Kislin was never an employee or a director of TCI Switzerland. Kislin Decl. ¶¶ 5, 10, 12, 16-18, 25.

Trans Commodities entered into a Consulting Agreement with TCI Switzerland in 1995. Trans Commodities provided logistical support to TCI Switzerland, particularly regarding the collection of unpaid debts from customers in the United States. Kislin Decl. ¶¶ 13-14.

Trans Commodities's interaction with TCI Switzerland extended beyond mere support. E-mails from David Kislin to Connor in early 1999 show that Kislin authorized hiring and firing of some TCI Switzerland employees. In addition, Connor spoke with Kislin every day, sometimes multiple times a day, about TCI Switzerland's trades, shipments, profits, and other matters. Pl. Opp., Decl. of Julian H. Connor ("Connor Decl.") ¶¶ 7, 19, Ex. JCH 2 a-b. Connor believes that Trans Commodities had "absolute control" over the hiring, firing, and steel trade determinations of TCI Switzerland and that steel contracts were only made by TCI Switzerland after they were sent to Trans Commodities for approval by Kislin. In 1997, Connor was informed by Kislin that Trans Commodities would "take over direct control of the claims and rejections process" for TCI Switzerland. Connor Decl. ¶¶ 4, 6, 13.

While executing Kennett's contract with TCI Switzerland, Macready spoke daily with Sam or David Kislin or Elliot Asher, a Trans Commodities employee. On two letters to Macready, Asher lists Trans Commodities below his signature line, and the address is listed in New York, but the letterhead is that of TCI Switzerland. Another letter to Macready likewise lists the employee as that of Trans Commodities but is on TCI Switzerland letterhead. Macready Decl., Exs. B, C-1 to C-3, C-5.

In late 2000, Trans Commodities withdrew approximately one million dollars belonging to TCI Switzerland from a lockbox in a Manhattan bank. This money was eventually returned by Trans Commodities to TCI Switzerland. See Pl. Opp., Ex. F David Kislin Dep. 124-125; Macready Decl., Exs. E-5, E-6, E-8.*fn2

C. Kislin's Relationship with TCI Switzerland Separately from Trans Commodities, Kislin personally had a relationship with TCI Switzerland. Kislin provided advice to Ansgar regarding purchase pricing and market trends and continued to advise Bolinger and Connor after Ansgar left.

Kislin Decl. ¶¶ 12, 16, 26. Kislin also attended TCI Switzerland Board Meetings, as an "Informal Member" of the Board. See Macready Decl., Ex. E-11.

Kislin may also have been the owner of Tanacross B.V. ("Tanacross"), which owned TCI Switzerland. Minutes from a TCI Switzerland board meeting list Kislin as the owner of Tanacross and a power of attorney document directing Tanacross is signed by Kislin. Connor Decl. ΒΆ 5; Macready Decl., Exs. E-4, E-12. In a declaration submitted in a different lawsuit, Kislin states that Trans Commodities had a branch office in ...


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