- Court
- New York Supreme Court, Appellate Division, First Department
- Case Name
- Soleil Chartered Bank v. Breton Equity Co. Corp.
- Slip Op. No.
- 2026 NY Slip Op 03280
- Decision Date
- May 26, 2026
- Docket No.
- Index No. 653094/25, Appeal No. 6727, Case No. 2025-07627
Background
Soleil Chartered Bank sued Breton Equity Company Corp. and its principal, Ted Doukas, seeking to hold Doukas personally liable for Breton Equity’s contractual indemnity obligation. The bank alleged that Doukas was the alter ego of Breton Equity and that piercing the corporate veil was warranted to reach Doukas’s personal assets. The complaint alleged, on information and belief, that Doukas exercised dominion and control over Breton Equity and that he misused or moved the company’s funds.
Doukas moved to dismiss the complaint as against him. Supreme Court (Waterman-Marshal, J.) granted the motion. Soleil Chartered Bank appealed.
Holding
The First Department unanimously affirmed the dismissal. The court held that the complaint’s conclusory, information-and-belief allegation that Doukas exercised dominion and control over Breton Equity was insufficient to support alter ego liability. Even assuming the complaint adequately alleged dominion and control, this single factor alone is insufficient to pierce the corporate veil.
Under the two-prong test established by the Court of Appeals in TNS Holdings, Inc. v. MKI Securities Corp. (1998), a plaintiff must show both (1) that the owner exercised complete domination over the corporation with respect to the transaction at issue, and (2) that the domination was used to commit a fraud or wrong that resulted in the plaintiff’s injury. The complaint’s allegations regarding misuse of corporate funds were conclusory and made on information and belief, without particularized statements showing how the alleged abuse of the corporate form was for the purpose of avoiding the indemnification obligation or how Doukas’s domination was the instrument of fraud.
The court emphasized that a simple breach of contract, without more, does not constitute a fraud or wrong warranting the piercing of the corporate veil. The wrong alleged here was essentially that Breton Equity breached its contract by failing to indemnify the plaintiff.
Key Takeaways
- Conclusory, information-and-belief allegations of dominion and control are insufficient to support an alter ego theory for piercing the corporate veil.
- Even if dominion and control are established, that single factor is insufficient; the plaintiff must also demonstrate that the domination was used to commit a fraud or wrong.
- A breach of contract alone does not constitute the type of fraud or wrong required to pierce the corporate veil under New York law.
- Allegations of corporate fund misuse must be particularized, not conclusory, to survive a motion to dismiss.
- The plaintiff must demonstrate a connection between the alleged abuse of the corporate form and the specific obligation at issue.
Why It Matters
This decision reaffirms the high bar that New York law sets for piercing the corporate veil and holding corporate principals personally liable. Creditors seeking to reach behind a corporate entity must plead particularized facts showing both complete domination and that the domination was the instrument of fraud or wrong—not merely that the corporation breached a contract. The ruling is especially relevant for banks and creditors pursuing indemnification obligations against thinly capitalized entities, underscoring the need for detailed factual allegations rather than formulaic recitations of the veil-piercing elements. Practitioners should conduct thorough pre-litigation investigation to develop the particularized facts necessary to sustain alter ego claims.