Torricelli v. VB Asset Management, LLC

Background

Robert Torricelli and Elise Lelon sued VB Asset Management, LLC (VBAM) and Viscogliosi Brothers, LLC (VB LLC). The opinion describes VB LLC as an investment company and VBAM as its wholly owned subsidiary. The plaintiffs alleged that they joined VBAM’s board in February 2021 and entered board and compensation agreements with VBAM. They alleged that the agreements provided quarterly retainer fees, certain capital-raising fees, and a share of VBAM’s carried interest, but that they were never paid for their board services.

The plaintiffs asserted breach-of-contract claims against both defendants. They also asserted tortious interference, quantum meruit, and unjust enrichment claims against VB LLC. VB LLC moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not allege enough facts to state a legally plausible claim.

Alter Ego and Corporate-Veil Claims

The plaintiffs argued that VB LLC should be responsible for VBAM’s alleged contract breach because the two companies were alter egos—effectively a single company despite their separate legal forms. Applying Delaware law, the court explained that a plaintiff must plausibly allege both that the companies operated as a single economic entity and that an overall injustice or unfairness was present.

The court concluded that the complaint did not plausibly allege that the companies were a single economic entity. The plaintiffs’ allegations that VBAM was undercapitalized and unable to pay them were based on information and belief without supporting facts. The court also found that the allegations about shared leadership, overlapping personnel, a shared address, and the actions of Anthony Viscogliosi did not show an abuse of corporate formalities. The complaint did not allege that the dominant shareholder siphoned company funds. The court likewise found that the companies’ descriptions of their relationship in marketing materials and their shared management did not establish that VBAM was merely a facade for VB LLC.

The court separately held that the plaintiffs had not adequately alleged the required injustice or unfairness. Their allegations that VB LLC was involved in hiring them, underfunded VBAM, changed compensation to an accrued arrangement, and failed to pay them largely repeated the alleged underlying contract violations. The court held that these allegations did not show that the corporate structure itself was used to commit a distinct fraud or injustice.

The court therefore dismissed the plaintiffs’ breach-of-contract claims against VB LLC.

Tortious Interference

Under New York law, tortious interference generally requires, among other things, a contract, knowledge of the contract, intentional inducement of a breach, and resulting damages. The court held that only a stranger to a contract can be liable for tortious interference. Because VB LLC owned and controlled VBAM, the court held that VB LLC was not a stranger to the contract involving its wholly owned subsidiary.

The court dismissed the tortious-interference claim against VB LLC.

Quantum Meruit and Unjust Enrichment

The court treated the plaintiffs’ quantum meruit and unjust enrichment theories together as one quasi-contract claim. Quantum meruit concerns the reasonable value of services provided with an expectation of payment. Unjust enrichment requires a defendant to have received a specific and direct benefit at the plaintiff’s expense under circumstances making repayment appropriate.

The court found that the complaint did not adequately allege that the plaintiffs expected compensation from VB LLC, the reasonable value of services provided specifically to VB LLC, or that VB LLC received a specific and direct benefit from the plaintiffs at their expense. General allegations that the plaintiffs provided advisory services, attended meetings, spoke with overlapping company principals, and discussed marketing were too vague to establish a direct benefit to VB LLC. The complaint also did not allege that Elise Lelon actually used her contacts or expertise to benefit VB LLC.

The court dismissed the quantum meruit and unjust enrichment claims against VB LLC.

Disposition

The court granted VB LLC’s motion to dismiss all claims against it. It declined to give the plaintiffs another opportunity to amend the complaint, finding that another amendment would be futile. The Clerk was directed to close the motion and terminate Viscogliosi Brothers, LLC from the docket.