KAPLAN, District Judge.
These actions involve, among other things, conflicting claims of ownership and infringement of the trademark TOPICLEAR as applied to certain cosmetic products as well as a claim by the defendants for goods sold and delivered. All issues save for damages for alleged trademark infringement were tried in December 1996 and resolved in May 1997 in Aini v. Sun Taiyang Co., 964 F.Supp. 762 (S.D.N.Y.1997) ("Aini I"). An interlocutory judgment, which among other things awarded to defendant Laboratoire REC ("REC") and against plaintiff Jacob Aini the sum of $553,995.26 in respect of goods sold and delivered and interest, was entered in July 1997. The Court then tried the surviving trademark infringement damage claim of plaintiff Topiclear Beauty Products, Inc. ("TBPI"), which was determined in Aini v. Sun Taiyang Co., No. 96 Civ. 7763(LAK), 1997 WL 576027 (S.D.N.Y. Sept.15, 1997) ("Aini II"). Final judgment now has been entered disposing of this and a related action, No. 96 Civ. 9318.
On September 3, 1997, Jacob Aini moved, inter alia, to vacate the portion of the interlocutory judgment which determined that he was indebted to REC for $553,995.26. All other parts of the motion have been withdrawn or rendered moot. Accordingly, only this aspect of Aini's motion remains.
Aini's contentions of course are best understood against the background of the Court's opinions in Aini I and Aini II, familiarity with which is assumed. They are as follows:
1. The debt on which REC sued and sought relief actually was owed, if it was owed at all, by a corporation known as RNM, which was not a party to the action. REC's claim for goods sold and delivered therefore was beyond the scope of the litigation.
2. The Court improperly pierced the corporate veil to hold Jacob Aini liable for RNM's debt.
3. The Court erred in computing damages in that (a) it improperly relied upon documents not in evidence, (b) the invoices upon which the damage determination was made improperly reflected overcharges by REC for the goods in question, and (c) the debt claimed actually had been paid.
4. Although REC was named by plaintiffs as a defendant in this case and brought the counterclaim that resulted in the judgment against Aini, there is no evidence that it was authorized to sue or that its counsel in this action was authorized to act on its behalf.
The most meritorious of these assertions is frivolous.
Aini's Personal Liability for the Debt
Aini's first two points boil down to the contention that the contracts for the sale of goods that gave rise to the debt upon which REC sued were not his personal obligations. He bases the argument on the assumption that the debt was owed by a corporation
Aini's argument comes much too late. As Aini I makes clear, the evidence at trial did not establish that RNM was a corporation, and Aini did not dispute that he was personally liable for any debt owed under the name RNM, whatever it was.
The twelfth claim for relief in the counterclaim asserted on behalf of REC, among others, alleged that REC supplied over $2 million worth of goods to Jacob Aini, that Aini promised payment, and that Aini personally owed it more than $ 1 million.
During the trial, Aini's testimony never directly addressed his alleged personal liability for goods sold and delivered although he on several occasions acknowledged, speaking in the first person without any explicit reference to his companies, that he had ordered goods from REC and affiliates and taken other steps to advance the business.
The proof offered by REC of the amount of Aini's liability consisted of deposition testimony of George Guterman's and two worksheets that he prepared.
Had Aini raised the issue at trial the Court would have rejected his position for several reasons. First, Aini's failure to file a responsive pleading denying the counterclaim's allegation that he was the buyer of the goods admitted that assertion.
Second, although Aini now claims that RNM, the ostensible obligor on the debt, was a corporation when the debt was contracted, no such proof was offered at trial.
Moreover, it was clear from the testimony of Mr. Jedouane that REC dealt with Aini and that "RNM" was simply a name that Aini gave him, as he gave him many others, as a shipping and invoice designation for the purpose of avoiding taxes and, perhaps, regulatory requirements.
Third, even if the RNM referred to in Guterman's testimony was a corporate entity, the Court nevertheless would hold Aini personally liable. It certainly is true, as Aini now argues. that the separate existence of a New York corporation is not easily disregarded.
An individual who is a controlling shareholder may cause the corporation to do business that ultimately redounds to the shareholder's benefit. Where that occurs, the shareholder is entitled to the protection of the corporation's separate existence absent satisfaction of the piercing requirements. But such a shareholder also may conduct business him or herself, including business that redounds to the benefit of the corporation. Where that occurs, the shareholder is personally liable for the shareholder's actions.
In this case, the evidence as to what Aini was doing when he ordered goods from REC is susceptible of either interpretation. Some evidence — most notably the fact that REC's books appear to have reflected part of REC's account receivable from Aini's interests under the RNM name — points in Aini's favor because it provides at least a suggestion that REC was looking for payment to RNM, whatever it was, rather than to Aini. Other evidence, however, points in the opposite direction. Aini used and dropped company names as if upon whim, at least in the case of "RNM Corporation" apparently without ever actually forming the corporate entity. The parties had an established course of dealing in which Aini ordered goods and later supplied names to be invoiced and used on shipping documents, which is at least consistent with a view that REC was relying on Aini's credit, not the credit of these names. Moreover, Aini's explanation to Jedouane that he used the various names essentially for tax avoidance permits the conclusion that Jedouane reasonably expected that Aini's use of the names would not affect REC's ability to collect for the goods.
Having considered all of the evidence on the point, this Court finds that Aini's purchases from REC were made by him in his individual capacity, that REC was entitled to and did rely on Aini's personal credit in supplying the goods to him on open account, and that the obligation to pay for the goods is Aini's.
The Computation of Damages
Each of Aini's assertions regarding supposed errors in the computation of damages is flatly wrong.
First, Aini argues that the Court relied upon DX XE and XF although, he contends, they were not received in evidence.
Second, Aini claims that the amount that Guterman testified was owed was mistaken because Guterman assumed that REC was entitled to $1 per tube of TOPICLEAR
The Claim of Payment
Aini now contends that a stack of checks received in evidence at trial were payments for goods sold and delivered, the prices for which are included in the sum that Guterman testified still was outstanding.
As REC's memorandum points out, the total of the checks upon which Aini relies is far less than the total amount of goods sold by REC to Aini during the relevant period. In consequence, even assuming that the checks all were payments on the open account, the balance due on that account would far exceed the amount of the judgment against Aini.
Authority to Sue
The last point made by Aini is that the Court should not have entered judgment in favor of REC because "REC was involved in a bankruptcy proceeding" in France from August 1993 through August 1995, there is no evidence that the individuals who have acted for it in this litigation were authorized to do so, and "it is likely that the Commissioner of Accounts appointed by the French Bankruptcy Court is not even aware of the existence of these proceedings ..."
The only remotely relevant evidence tendered is a letter from a French attorney which notes that REC was ordered reorganized in 1993 by the Court of Commerce of Paris, that a court-appointed trustee submitted a report proposing a continuation plan, that the continuation plan was authorized in August 1995, and that the manager of REC was directed in December 1995 to provide certain documents to the Paris court.
Whatever Aini's position is now, it is a position that he never took prior to the entry of judgment against him. There is no showing that he could not have raised the point previously. Even if the application is considered under Rule 54(b), this alone would warrant rejection of Aini's contention. But even if the Court were to consider the matter as having been raised prior to the entry on July 7, 1997 of the interlocutory judgment, it would reject Aini's position.
Rule 8(c) of the Federal Rules of Civil Procedure requires that a party against whom a claim is asserted "set forth affirmatively" a variety of enumerated defenses "and any other matter constituting an avoidance or affirmative defense." Rule 9(a) provides that "[w]hen a party desires to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued or the authority of a party to sue or be sued in a representative capacity, the party desiring to raise the issue shall do so by specific negative averment, which shall include such supporting particulars as are peculiarly within the pleader's knowledge."
As nearly as the Court can determine, Aini now is suggesting either that REC lacks the
For the foregoing reasons, Jacob Aini's motion to vacate so much of the interlocutory judgment as awarded money damages in favor of Laboratoire REC and against him, which is treated as applying also to the final judgment entered earlier this month, is denied in all respects. This case is closed.