Panam Management Group, Inc. v. Peña

2011 WL 3423338 (2011)

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Panam Management Group, Inc. v. Peña

United States District Court for the Eastern District of New York
2011 WL 3423338 (2011)

Facts

Panam Management Group (Panam) (plaintiff), a New York real estate marketing company, entered into a contract with Yuma Bay Development Corporation (Yuma Bay) (defendant), a company incorporated in Panama. Yuma Bay had not paid its annual corporate registration fee in Panama for three years, but under Panama law it remained incorporated. The contract, which contained a choice-of-law clause selecting Dominican law, was for the promotion and sale of residential units at Yuma Bay Resort Village, which Yuma Bay planned to build in the Dominican Republic. Although Panam brokered the sale of 59 sales contracts in New York, Yuma Bay Resort Village never materialized. Panam filed suit for breach of contract and unjust enrichment against Yuma Bay and Yuma Bay’s directors and officers individually, including Raymond Peña, Doris Peña, Eladio Sanchez, and Juan Carlos Lopez (collectively, the directors and officers) (defendants), among other parties. Panam alleged Yuma Bay did not disclose to the investors that (1) they could not get government approval to develop the land and (2) Yuma Bay was not registered to do business in the Dominican Republic. Although Panam’s complaint did not allege fraud or domination of Yuma Bay by the directors and officers, Panam’s claims against them relied on piercing the corporate veil. The directors and officers moved to dismiss, providing an expert opinion on Panama law that explained piercing the corporate veil was only available in Panama in exceptional circumstances in which a corporation was used for the sole purpose of fraud or violating the law. The officers and directors also provided an expert opinion on Dominican law explaining that piercing the corporate veil was a recently enacted remedy that could not retroactively apply to the present case. Panam argued that New York applied because the contract’s transactions had occurred in New York, and that the veil could be pierced under New York law.

Rule of Law

Issue

Holding and Reasoning (Bianco, J.)

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