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Zhejiang Dushen Necktie Co. Ltd. v. Blue Med, Inc.

United States District Court, S.D. Florida, Miami Division

September 18, 2017

ZHEJIANG DUSHEN NECKTIE CO., LTD. Plaintiff,
v.
BLUE MED, INC., et al. Defendants.

          ORDER DENYING DEFENDANTS9');">9; MOTION TO DISMISS

          JONATHAN GOODMAN, UNITED STATES MAGISTRATE JUDGE

         Defendants Eros Cattaneo; Ida Arnese; Blue Med, Inc.; Neo Design, Inc.; Pandora Holding Group, Inc.; and E.H.I. LLC move to dismiss Count I of the Complaint filed by Plaintiff Zhejiang Dushen Necktie Co., Ltd. [ECF Nos. 1; 10]. Under Count I, Zhejiang seeks to pierce the corporate veil between the movants and E.C. Global, Inc., a co-Defendant currently in bankruptcy that Zhejiang sued for breach of contract under Count II of the Complaint. [ECF No. 1]. Zhejiang filed an opposition response to the motion to dismiss [ECF No. 17], and Defendants filed a reply. [ECF No. 20]. The parties have consented to the Undersigned issuing final orders with respect to motions to dismiss. [ECF No. 23].

         For reasons explained below, the Undersigned denies Defendants9');">9; Motion to Dismiss.

         I. Allegations in the Complaint

         Zhejiang is a Chinese company that manufactures and exports neckties, scarfs, and other garments. [ECF No. 1, ¶ 2]. E.C. Global was dissolved at the time of the lawsuit. [ECF No. 1, ¶ 3]. Its principal place of business matches the home address of the individual Defendants -- Cattaneo and Arnese, who are husband and wife -- and the principal place of business, mailing address, or registered agent address for the other corporate Defendants. [ECF No. 1, ¶¶ 3-9');">9].

         Cattaneo is the sole director, president, registered agent, secretary, and treasurer of E.C. Global, Blue Med, and Neo Design; the sole president and registered agent of Pandora Holding; the sole manager and registered agent of E.H.I.; and, on information and belief, a majority shareholder of all those corporations. [ECF No. 1, ¶ 4]. Arnese, in turn, is the sole vice president and vice secretary of E.C. Global and Neo Design; the sole vice president of Blue Med and Pandora Holding; the sole treasurer and secretary of E.H.I.; and, on information and belief, also holds shares in all the corporations. [ECF No. 1, ¶ 9');">9].

         The dispute began with E.C. Global owing Zhejiang more than $39');">91, 000 for past orders. [ECF No. 1, ¶ 12]. The two agreed that E.C. Global would pay down the debt while placing additional orders, which Zhejiang fulfilled. [ECF No. 1, ¶¶ 12-13]. The arrangement worked until it stopped working, resulting in E.C. Global owing Zhejiang more than $380, 000. [ECF No. 1, ¶ 14].

         Without Zhejiang9');">9;s knowledge, E.C. Global filed for corporate dissolution. [ECF No. 1, ¶ 15]. When Zhejiang learned of the dissolution, it emailed E.C. Global, asking for the money it was owed. [ECF Nos. 1, ¶ 16; 1-9');">9, p. 36]. Cattaneo wrote back:

i am sorry i did not write you before but we have been busy restructioning the companies. Tie business is still very very soft with all with customers still owe us money therefore i am also in a big crush of cash flow. We will try to help you as much as possible but it will take a while. I am srry to let you know that we had to close Ec Global inc and just operation with other partners with a different company but i am only a parter not the main boss anymore, regardless we will try to do the best we can to help you.

[ECF No. 1-9');">9, p. 36 (grammatical and spelling errors in original)].[1]

         In Count I, Zhejiang sued Defendants under a piercing the corporate veil theory. [ECF No. 1, ¶¶ 22-30]. After adopting its general allegations, Zhejiang makes several more-specific allegations in Count I. First, Zhejiang alleges that “Cattaneo and Arnese have been conducting, managing, and controlling the affairs of E.C. Global, Blue Med, Neo Design, Pandora Holding, and E.H.I.” [ECF No. 1, ¶ 23]. Second, Zhejiang alleges that “Cattaneo and Arnese have held themselves out to Plaintiff as inseparable with, and indistinguishable from, E.C. Global.” [ECF No. 1, ¶ 24]. Third, Zhejiang alleges that “Cattaneo and Arnese wield such complete dominion and control over E.C. Global, Blue Med, Neo Design, Pandora Holding, and E.H.I. such that those corporate Defendants are mere instrumentalities or agents, or alter egos, of Cattaneo and Arnese.” [ECF No. 1, ¶ 25].

         Fourth, Zhejiang alleges that “Cattaneo and Arnese have used, and continue to use, E.C. Global to mislead or to perpetrate a fraud.” [ECF No. 1, ¶ 26]. Specifically, Zhejiang alleges:

Cattaneo and Arnese have used, and continue to use, E.C. Global9');">9;s status as a corporate entity - which is capable of being dissolved and which they did in fact dissolve - as a means to evade payment of the outstanding debt owed to Plaintiff, and to escape their contractual liability to Plaintiff, all the while benefitting from Plaintiff9');">9;s full compliance with and complete fulfillment of its own commitments under the parties9');">9; contract.

[ECF No. 1, ¶ 26].

         Fifth, Zhejiang similarly states that “Cattaneo and Arnese have used, and are continuing to use, Blue Med, Neo Design, Pandora Holding, and E.H.I. to mislead or to perpetrate a fraud.” [ECF No. ...


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