Iceland Telecom v. Information Systems and Networks Corp.

268 F. Supp. 2d 585 (2003)

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Iceland Telecom v. Information Systems and Networks Corp.

United States District Court for the District of Maryland
268 F. Supp. 2d 585 (2003)

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Facts

Arvin Malkani (defendant) was the president and chief executive officer of ISN Global Communications, Inc. (ISNGC). ISNGC was a subsidiary of Information Systems and Networks Corporation (ISN). ISNGC observed little to no corporate formalities, and its operations relied almost entirely on ISN’s resources. ISNGC never held a shareholder or director meeting, and it never registered to do business in either of the states in which it operated. Moreover, all of ISNGC’s expenses were processed and paid for by ISN, and ISNGC operated out of ISN’s office space, for which ISNGC paid no rent. ISNGC entered into a contract with Iceland Telecom, Ltd. (plaintiff). During the negotiations, Malkani led Iceland Telecom to believe that it was dealing with ISN and not ISNGC. Nevertheless, ISNGC was the only one of Malkani’s companies to sign the contract. After a payment dispute, Iceland Telecom sued to recover for breach of contract and unjust enrichment. Iceland Telecom sought damages not only from ISNGC but also from ISN and Malkani under a theory that the circumstances justified piercing the corporate veil to hold ISN and Malkani liable for ISNGC’s debts. ISN and Malkani moved for summary judgment, arguing that piercing the corporate veil was not justified.

Rule of Law

Issue

Holding and Reasoning (Williams, J.)

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