Preview
FILED: NEW YORK COUNTY CLERK 07/27/2023 11:00 PM INDEX NO. 652287/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/27/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
CANDACE BARASCH and RICHARD
GROSSMAN,
Plaintiffs,
Index No.: 652287/2023
-against-
LISA SCHIFF, SCHIFF FINE ART LLC
d/b/a SFA ADVISORY, and DOES 1-10,
Defendants.
CANDACE CARMEL BARASCH, MICHAEL A.
BARASCH, and BRADLEY A. CARMEL
LIVING TRUST,
Plaintiffs, Index No.: 652380/2023
-against-
LISA SCHIFF, SCHIFF FINE ART LLC
d/b/a SFA ADVISORY, and DOES 1-10,
Defendants.
REPLY MEMORANDUM OF LAW IN
FURTHER SUPPORT OF DEFENDANT LISA SCHIFF’S MOTION TO DISMISS
ARTXLAW PLLC
John R. Cahill
8 North Front Street
Kingston, NY 12401
john@artxlaw.com
Tel. 917-674-5135
Attorney for Defendants
Lisa Schiff and Schiff Fine Art LLC
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Defendant Lisa Schiff (“Ms. Schiff”), by her attorneys, respectfully submits this
memorandum of law in support of her motion to dismiss the claims brought against
her individually in the above- captioned actions (the “Related Actions”).
SUMMARY OF ARGUMENTS ON REPLY
Plaintiffs’ Memorandum of Law in Opposition to the Motion to Dismiss of
Defendant Lisa Schiff (“Pl. Opp. Mem”) relies primarily on ad hominem—with
references to “theft,” etc. (id. at 2) that belie what Plaintiffs allege that Ms. Schiff
actually said to them, i.e., that the Defendants “did not have the funds . . . owed to
[Plaintiffs],” that the funds were “gone,” but that the defendants had “every intention
to make things right”) (id. at 2-3 and Barasch Family Complaint (Index No. 652380-23)
¶ 37).
Plaintiffs should not be permitted to argue against the unqualified allegations
in the complaints that they filed. Although Plaintiffs claim not to “acknowledge” that
Plaintiffs worked with Ms. Schiff through her companies (id. at 3), their pleadings say
exactly that at least twice:
Starting in approximately 2004 or 2005, Plaintiffs entered
into an oral agreement with Schiff pursuant to which [Ms.]
Schiff, through her companies, acted as Plaintiffs’ art advisor,
in exchange for payment of commissions on purchases and
sales of artworks belonging to Plaintiffs.
Barasch Family Complaint (Index No. 652380-23) ¶¶ 28, 64.
Controlling New York statutes and case law explicitly preclude holding an
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individual officer or member of a limited liability company personally liable for
actions taken through her companies. So too do controlling New York statutes and
case law preclude enforcing “oral agreements” involving the sale of art and related
income earned for finding artworks for purchase.
Plaintiffs also acknowledge that “it is not clear that this is a case of piercing the
corporate veil” and that they will seek “leave to amend “ if additional facts supporting
such a claim come to light thorough discovery.” (Pl. Opp. Mem. at 15; emphasis
added). Nothing in the complaints that Plaintiffs have filed, however, provides a
sufficient basis for this Court to keep Ms. Schiff as a defendant because the Plaintiffs
may in the future “thorough discovery” decide to file an amended complaint with the
allegations required by law to sustain claims against Ms. Schiff individually.
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ARGUMENT
I. The Complaints Do Not Plead Claims Against Ms. Schiff Personally
New York, as a matter of law and for sound policy reasons, does not hold
individual members of companies liable for actions taken “through their companies”:
Neither a member of a limited liability company, a manager
of a limited liability company managed by a manager or
managers nor an agent of a limited liability company
(including a person having more than one such capacity) is
liable for any debts, obligations or liabilities of the limited
liability company or each other, whether arising in tort,
contract or otherwise, solely by reason of being such
member, manager or agent or acting (or omitting to act) in
such capacities or participating (as an employee, consultant,
contractor or otherwise) in the conduct of the business of the
limited liability company.
N.Y. LIMIT. LIAB. CO. L. § 609 (McKinney) (emphasis added); see also Cortazar v. Tomasino,
211 A.D.3d 677, 679 (2d Dep’t 2022) (citations omitted) (. . . a limited liability company, .
. . is a separate legal entity from its members”).
“Although on a motion to dismiss plaintiffs' allegations are presumed to be true
and accorded every favorable inference, conclusory allegations—claims consisting of
bare legal conclusions with no factual specificity—are insufficient to survive a motion to
dismiss.” Godfrey v. Spano, 13 N.Y.3d 358, 373 (2009). Defendants’ references to the
costly appurtenances Ms. Schiff took on when her full-time job was to cater to wealthy
clients accustomed to expensive vacations, rented apartments, etc. are both conclusory
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and speculative. Indeed, Plaintiffs argue that Ms. Schiff’s generating more than $10
million in profits for them allowed Defendant Schiff Fine Art, LLC to lawfully earn
more than $1,000,000 in commissions from Plaintiffs alone. (Index No. 652380: Dkt-57-
Plaintiff’s Memorandum of Law in Opposition to Defendants’ Motion for a Stay dated
2023-July-10 at 5.)
There is a “heavy burden to be met if the corporate veil is to be pierced,” Collins
v. E-Magine, LLC, 291 A.D.2d 350, 351 (1st Dep’t 2002), and Plaintiffs have not met it. To
the contrary, Plaintiffs have acknowledged that “it is not clear that this is a case of
piercing the corporate veil.” (Pl. Opp. Mem. at 15) (emphasis added. Plaintiffs’ reliance
on extrinsic materials, including affidavits, does not suffice. See, e.g., Biondi v. Beekman
Hill House Apartment Corp., 257 A.D.2d 76, 81 (1st Dep’t 1999), aff'd, 94 N.Y.2d 659, 731
(2000) (“In cases where the court has considered extrinsic evidence on a CPLR 3211
motion, “the allegations are not deemed true”).
While it is, recent advances in artificial intelligence notwithstanding, still true as
Plaintiffs argue that “[a]n entity can only act through a person” (Pl. Opp. Mem. at 4),
the individual person acting for the entity is not himself/herself/themselves, as a matter
of statutory and common law, individually liable absent allegations that Plaintiffs have
neither pleaded nor alleged that they can plead even if given the opportunity to amend
their complaints.
Plaintiff’s brief reference in he opposition papers to allegations that are not in
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either of the complaints amounting to Ms. Schiff’s “exercising ultimate dominion over
SFA [the limited liability company defendant], and using an apparently legitimate shell
corporation to take advantage of the trust that Plaintiffs placed in her” are “only
‘conclusory allegations merely reciting typical veil-piercing factors’.” G & Y Maint. Corp.
v. Core Cont'l Constr. LLC, 215 A.D.3d 553, 554 (1st Dep’t 2023) (citations omitted).
This decision of this Court’s Appellate Division cited above is particularly
apposite here as it rejected an effort to hold a company officer liable for a breach of
contract. Here, Plantiffs’ sole allegation against Ms. Schiff individually rests on the
alleged breach of a contract, an alleged “oral agreement” dating from “approximately
2004 or 2005.” (Barasch Family Complaint (Index No. 652380-23) ¶¶ 28, 64.)
What cannot be ignored in evaluating whether Ms. Schiff, as an individual,
breached a contract is the allegations of the Plaintiffs in their own complaints. They
specifically and without qualification alleged that “[Ms.] Schiff, through her companies,
acted as Plaintiffs’ art advisor.” (Id.; emphasis added).
It is respectfully submitted that there is no fair or just way to read that allegation
except as stating that it was “through her companies” that Ms. Schiff acted. Put another
way, Plaintiffs clearly and affirmatively assert that Ms. Schiff was not acting
individually but rather “through her companies.”
Even if Plaintiffs had alleged in one of their complaints—nb, they do not cite to
any such allegations in their papers opposing defendants’ motion—that Ms. Schiff was
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“exercising dominion,” over the company, “using one's domination and control to
cause another ‘to breach its contractual obligations [here, an “oral agreement”]... is
insufficient to pierce the corporate veil’.” .” G & Y Maint. Corp., 215 A.D.3d at 554
(citations omitted).
.
II. Any Alleged “Oral Agreement” With Ms. Schiff Individually is Barred
As noted in Defendants’ moving memorandum, claims arising out of the purchase
of artworks pursuant to an alleged “oral agreement” are barred by statutory law, including
the Statute of Frauds. See, e.g., Sprecase v. Tenreiro, (N.Y. Cty. Sup. Ct, Feb. 15, 2023) (Kraus,
J.) (dismissing claim arising out of the “purchase of various artwork pursuant to . . . oral
agreement” as, among other things as barred by the Statute of Frauds, N.Y. GEN. OBLIG. L. §
5-701).
The Statute of Frauds bars not only oral long-term contracts as Plaintiffs allege, but
also oral agreements to pay reasonable compensation for services, including the specific
services that Plaintiffs claim included “finding . . . artworks . . . .” (Barasch Family
Complaint (Index No. 652380-23) ¶ 30).
New York’s Uniform Commercial Code also bars “oral agreements” for the sale and
purchase of “goods” (N.Y. U.C.C. § 2-201), which include artworks. See, e.g., Beard v. Chase,
162 A.D.3d 533, 534 (1st Dep’t 2018) (“The motion court correctly found that the works of art
at issue were goods, and thus that the purported oral agreement to sell them was barred by
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the statute of frauds” (citation to UCC omitted).
Already too thin a reed on which to hang a claim of individual liability due to the
applicable statutes and case law, that the alleged “oral agreement from 2004 or 2005” is
also, on its face (“[Ms.] Schiff, through her companies, acted as Plaintiffs’ art advisor”)
barred as a matter of law (including two New York statutes and applicable case law)
requires the dismissal of the claims against Ms. Schiff.
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CONCLUSION
For the foregoing reasons, it is respectfully submitted that the claims against
Defendant Lisa Schiff in the complaints filed in the Related Actions should be dismissed.
Dated: 2023-July-27
ARTXLAW PLLC
By: /s/JR Cahill
8 North Front Street
Kingston, NY 12401
john@artxlaw.com
Tel. 917-674-5135
Attorney for Defendants
Lisa Schiff and Schiff Fine Art LLC
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Preview
FILED: NEW YORK COUNTY CLERK 07/27/2023 11:00 PM INDEX NO. 652287/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/27/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK CANDACE BARASCH and RICHARD GROSSMAN, Plaintiffs, Index No.: 652287/2023 -against- LISA SCHIFF, SCHIFF FINE ART LLC d/b/a SFA ADVISORY, and DOES 1-10, Defendants. CANDACE CARMEL BARASCH, MICHAEL A. BARASCH, and BRADLEY A. CARMEL LIVING TRUST, Plaintiffs, Index No.: 652380/2023 -against- LISA SCHIFF, SCHIFF FINE ART LLC d/b/a SFA ADVISORY, and DOES 1-10, Defendants. REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF DEFENDANT LISA SCHIFF’S MOTION TO DISMISS ARTXLAW PLLC John R. Cahill 8 North Front Street Kingston, NY 12401 john@artxlaw.com Tel. 917-674-5135 Attorney for Defendants Lisa Schiff and Schiff Fine Art LLC 1 of 9 FILED: NEW YORK COUNTY CLERK 07/27/2023 11:00 PM INDEX NO. 652287/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/27/2023 Defendant Lisa Schiff (“Ms. Schiff”), by her attorneys, respectfully submits this memorandum of law in support of her motion to dismiss the claims brought against her individually in the above- captioned actions (the “Related Actions”). SUMMARY OF ARGUMENTS ON REPLY Plaintiffs’ Memorandum of Law in Opposition to the Motion to Dismiss of Defendant Lisa Schiff (“Pl. Opp. Mem”) relies primarily on ad hominem—with references to “theft,” etc. (id. at 2) that belie what Plaintiffs allege that Ms. Schiff actually said to them, i.e., that the Defendants “did not have the funds . . . owed to [Plaintiffs],” that the funds were “gone,” but that the defendants had “every intention to make things right”) (id. at 2-3 and Barasch Family Complaint (Index No. 652380-23) ¶ 37). Plaintiffs should not be permitted to argue against the unqualified allegations in the complaints that they filed. Although Plaintiffs claim not to “acknowledge” that Plaintiffs worked with Ms. Schiff through her companies (id. at 3), their pleadings say exactly that at least twice: Starting in approximately 2004 or 2005, Plaintiffs entered into an oral agreement with Schiff pursuant to which [Ms.] Schiff, through her companies, acted as Plaintiffs’ art advisor, in exchange for payment of commissions on purchases and sales of artworks belonging to Plaintiffs. Barasch Family Complaint (Index No. 652380-23) ¶¶ 28, 64. Controlling New York statutes and case law explicitly preclude holding an 1 9 2 of FILED: NEW YORK COUNTY CLERK 07/27/2023 11:00 PM INDEX NO. 652287/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/27/2023 individual officer or member of a limited liability company personally liable for actions taken through her companies. So too do controlling New York statutes and case law preclude enforcing “oral agreements” involving the sale of art and related income earned for finding artworks for purchase. Plaintiffs also acknowledge that “it is not clear that this is a case of piercing the corporate veil” and that they will seek “leave to amend “ if additional facts supporting such a claim come to light thorough discovery.” (Pl. Opp. Mem. at 15; emphasis added). Nothing in the complaints that Plaintiffs have filed, however, provides a sufficient basis for this Court to keep Ms. Schiff as a defendant because the Plaintiffs may in the future “thorough discovery” decide to file an amended complaint with the allegations required by law to sustain claims against Ms. Schiff individually. 2 9 3 of FILED: NEW YORK COUNTY CLERK 07/27/2023 11:00 PM INDEX NO. 652287/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/27/2023 ARGUMENT I. The Complaints Do Not Plead Claims Against Ms. Schiff Personally New York, as a matter of law and for sound policy reasons, does not hold individual members of companies liable for actions taken “through their companies”: Neither a member of a limited liability company, a manager of a limited liability company managed by a manager or managers nor an agent of a limited liability company (including a person having more than one such capacity) is liable for any debts, obligations or liabilities of the limited liability company or each other, whether arising in tort, contract or otherwise, solely by reason of being such member, manager or agent or acting (or omitting to act) in such capacities or participating (as an employee, consultant, contractor or otherwise) in the conduct of the business of the limited liability company. N.Y. LIMIT. LIAB. CO. L. § 609 (McKinney) (emphasis added); see also Cortazar v. Tomasino, 211 A.D.3d 677, 679 (2d Dep’t 2022) (citations omitted) (. . . a limited liability company, . . . is a separate legal entity from its members”). “Although on a motion to dismiss plaintiffs' allegations are presumed to be true and accorded every favorable inference, conclusory allegations—claims consisting of bare legal conclusions with no factual specificity—are insufficient to survive a motion to dismiss.” Godfrey v. Spano, 13 N.Y.3d 358, 373 (2009). Defendants’ references to the costly appurtenances Ms. Schiff took on when her full-time job was to cater to wealthy clients accustomed to expensive vacations, rented apartments, etc. are both conclusory 3 9 4 of FILED: NEW YORK COUNTY CLERK 07/27/2023 11:00 PM INDEX NO. 652287/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/27/2023 and speculative. Indeed, Plaintiffs argue that Ms. Schiff’s generating more than $10 million in profits for them allowed Defendant Schiff Fine Art, LLC to lawfully earn more than $1,000,000 in commissions from Plaintiffs alone. (Index No. 652380: Dkt-57- Plaintiff’s Memorandum of Law in Opposition to Defendants’ Motion for a Stay dated 2023-July-10 at 5.) There is a “heavy burden to be met if the corporate veil is to be pierced,” Collins v. E-Magine, LLC, 291 A.D.2d 350, 351 (1st Dep’t 2002), and Plaintiffs have not met it. To the contrary, Plaintiffs have acknowledged that “it is not clear that this is a case of piercing the corporate veil.” (Pl. Opp. Mem. at 15) (emphasis added. Plaintiffs’ reliance on extrinsic materials, including affidavits, does not suffice. See, e.g., Biondi v. Beekman Hill House Apartment Corp., 257 A.D.2d 76, 81 (1st Dep’t 1999), aff'd, 94 N.Y.2d 659, 731 (2000) (“In cases where the court has considered extrinsic evidence on a CPLR 3211 motion, “the allegations are not deemed true”). While it is, recent advances in artificial intelligence notwithstanding, still true as Plaintiffs argue that “[a]n entity can only act through a person” (Pl. Opp. Mem. at 4), the individual person acting for the entity is not himself/herself/themselves, as a matter of statutory and common law, individually liable absent allegations that Plaintiffs have neither pleaded nor alleged that they can plead even if given the opportunity to amend their complaints. Plaintiff’s brief reference in he opposition papers to allegations that are not in 4 9 5 of FILED: NEW YORK COUNTY CLERK 07/27/2023 11:00 PM INDEX NO. 652287/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/27/2023 either of the complaints amounting to Ms. Schiff’s “exercising ultimate dominion over SFA [the limited liability company defendant], and using an apparently legitimate shell corporation to take advantage of the trust that Plaintiffs placed in her” are “only ‘conclusory allegations merely reciting typical veil-piercing factors’.” G & Y Maint. Corp. v. Core Cont'l Constr. LLC, 215 A.D.3d 553, 554 (1st Dep’t 2023) (citations omitted). This decision of this Court’s Appellate Division cited above is particularly apposite here as it rejected an effort to hold a company officer liable for a breach of contract. Here, Plantiffs’ sole allegation against Ms. Schiff individually rests on the alleged breach of a contract, an alleged “oral agreement” dating from “approximately 2004 or 2005.” (Barasch Family Complaint (Index No. 652380-23) ¶¶ 28, 64.) What cannot be ignored in evaluating whether Ms. Schiff, as an individual, breached a contract is the allegations of the Plaintiffs in their own complaints. They specifically and without qualification alleged that “[Ms.] Schiff, through her companies, acted as Plaintiffs’ art advisor.” (Id.; emphasis added). It is respectfully submitted that there is no fair or just way to read that allegation except as stating that it was “through her companies” that Ms. Schiff acted. Put another way, Plaintiffs clearly and affirmatively assert that Ms. Schiff was not acting individually but rather “through her companies.” Even if Plaintiffs had alleged in one of their complaints—nb, they do not cite to any such allegations in their papers opposing defendants’ motion—that Ms. Schiff was 5 9 6 of FILED: NEW YORK COUNTY CLERK 07/27/2023 11:00 PM INDEX NO. 652287/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/27/2023 “exercising dominion,” over the company, “using one's domination and control to cause another ‘to breach its contractual obligations [here, an “oral agreement”]... is insufficient to pierce the corporate veil’.” .” G & Y Maint. Corp., 215 A.D.3d at 554 (citations omitted). . II. Any Alleged “Oral Agreement” With Ms. Schiff Individually is Barred As noted in Defendants’ moving memorandum, claims arising out of the purchase of artworks pursuant to an alleged “oral agreement” are barred by statutory law, including the Statute of Frauds. See, e.g., Sprecase v. Tenreiro, (N.Y. Cty. Sup. Ct, Feb. 15, 2023) (Kraus, J.) (dismissing claim arising out of the “purchase of various artwork pursuant to . . . oral agreement” as, among other things as barred by the Statute of Frauds, N.Y. GEN. OBLIG. L. § 5-701). The Statute of Frauds bars not only oral long-term contracts as Plaintiffs allege, but also oral agreements to pay reasonable compensation for services, including the specific services that Plaintiffs claim included “finding . . . artworks . . . .” (Barasch Family Complaint (Index No. 652380-23) ¶ 30). New York’s Uniform Commercial Code also bars “oral agreements” for the sale and purchase of “goods” (N.Y. U.C.C. § 2-201), which include artworks. See, e.g., Beard v. Chase, 162 A.D.3d 533, 534 (1st Dep’t 2018) (“The motion court correctly found that the works of art at issue were goods, and thus that the purported oral agreement to sell them was barred by 6 9 7 of FILED: NEW YORK COUNTY CLERK 07/27/2023 11:00 PM INDEX NO. 652287/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/27/2023 the statute of frauds” (citation to UCC omitted). Already too thin a reed on which to hang a claim of individual liability due to the applicable statutes and case law, that the alleged “oral agreement from 2004 or 2005” is also, on its face (“[Ms.] Schiff, through her companies, acted as Plaintiffs’ art advisor”) barred as a matter of law (including two New York statutes and applicable case law) requires the dismissal of the claims against Ms. Schiff. 7 9 8 of FILED: NEW YORK COUNTY CLERK 07/27/2023 11:00 PM INDEX NO. 652287/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/27/2023 CONCLUSION For the foregoing reasons, it is respectfully submitted that the claims against Defendant Lisa Schiff in the complaints filed in the Related Actions should be dismissed. Dated: 2023-July-27 ARTXLAW PLLC By: /s/JR Cahill 8 North Front Street Kingston, NY 12401 john@artxlaw.com Tel. 917-674-5135 Attorney for Defendants Lisa Schiff and Schiff Fine Art LLC 8 9 9 of