H. Daya International Co., Ltd. v. DO Denim, LLC et al

Filing 243

DECISION AND ORDER denying 240 Motion for Reconsideration re; 239 Order on Motion for Summary Judgment. For the reasons stated above, it is hereby ORDERED that the motion filed by plaintiff H. Daya International Co. Ltd. (see Dkt. No. 240) for reconsideration of the Court's Order, dated March 31, 2022 (Dkt. No. 239) is DENIED. SO ORDERED. (Signed by Judge Victor Marrero on 4/29/2022) (vfr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
H. DAYA INTERNATIONAL, CO., LTD.,

4/29/22

Plaintiff,
- against -

16 Civ. 8668 (VM)
DECISION AND ORDER

DO DENIM LLC, REWARD JEAN LLC, R.
SISKIND & COMPANY, INC., SALOMON
MURCIANO, VINTAGE APPAREL GROUP LLC,
RICHARD SISKIND, and ONLY BRANDS,
INC.,
Defendants.

VICTOR MARRERO, United States District Judge.
Before the Court is a motion from plaintiff H. Daya
International Co. Ltd. (“H. Daya”) for reconsideration of the
Court’s Decision and Order, dated March 31, 2022 (“SJ Order,”
Dkt. No. 23), denying H. Daya’s motion for summary judgment.
(“Motion” or “Mot.,” Dkt. No. 240.) For the reasons stated
below, the Motion is hereby DENIED.
I.
The

Court

assumes

BACKGROUND
familiarity

with

the

factual

and

procedural background as set forth in the SJ Order. See
H. Daya Int’l Co. v. Do Denim LLC, No. 16 Civ. 8668, 2022 WL
974382

(S.D.N.Y.

Mar.

31,

2022).

To

briefly

summarize,

H. Daya filed this action against Do Denim LLC (“Do Denim”),
Reward

Jean

LLC

(“Reward,”

collectively

with

Do

Denim,

“Judgment Debtors”), R. Siskind & Company, Inc. (“RSC”), and
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Vintage Apparel Group LLC (“Vintage,” collectively with RSC
and the Judgment Debtors, “Corporate Defendants”) to obtain
payment on a $1,157,012.23 judgment against Do Denim and
Reward. Among other claims, H. Daya alleges that the Corporate
Defendants are joint and severally liable under a de facto
merger theory.
In its summary judgment papers, H. Daya advanced a theory
that there

was a de facto merger

between the Corporate

Defendants by way of two smaller de facto mergers that later
formed one larger de facto merger. (See Dkt. No. 199 at 2223.) Specifically, in its reply brief, H. Daya argued that
“the first smaller merger included defendant Vintage and both
judgment-debtor-defendants Do Denim LLC and Reward Jean LLC,
all of whom had a common owner in defendant Murciano, while
the second smaller merger included defendants Vintage and RSC
with their common owner.” (“H. Daya Reply Br.,” Dkt. No. 228
at 9.)
H. Daya now moves for reconsideration on the grounds
that the Court overlooked a case that H. Daya cited in its
summary judgment papers and that H. Daya contends supports
its theory of smaller mergers leading to a larger merger among
the Corporate Defendants. (See Mot. at 1-2.)

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II.
Reconsideration
employed

sparingly

conservation

of

LEGAL STANDARD

is

“an

extraordinary

in

the

interests

scarce

judicial

remedy

of

to

be

finality

resources.”

Yi

and

Xiang

v.

Inovalon Holdings, Inc., 268 F. Supp. 3d 515, 519 (S.D.N.Y.
2017) (quoting In re Health Mgmt. Sys., Inc. Sec. Litig., 113
F. Supp. 2d 613, 614 (S.D.N.Y. 2000)). As the Second Circuit
has

explained,

reconsideration

the
“is

standard
strict,

for
and

granting

a

motion

reconsideration

for
will

generally be denied unless the moving party can point to
controlling decisions or data that the court overlooked -matters, in other words, that might reasonably be expected to
alter the conclusion reached by the court.” Van Buskirk v.
United Grp. Cos., 935 F.3d 49, 54 (2d Cir. 2019) (quoting
Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir.
1995)). “The major grounds justifying reconsideration are ‘an
intervening change of controlling law, the availability of
new evidence, or the need to correct a clear error or prevent
manifest injustice.’” Virgin Atl. Airways, Ltd. v. Nat’l
Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992) (quoting 18
Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,
Federal Practice & Procedure § 4478, at 790 (2d ed.)); accord
Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable
Tr.,

729

F.3d

99,

104

(2d

Cir.
3

2013).

“[A]

motion

to

reconsider should not be granted where the moving party seeks
solely to relitigate an issue already decided.” Shrader, 70
F.3d at 257.
III.

DISCUSSION

A de facto merger is a form of successor liability that
is

typically

a

vehicle

for

holding

“the

purchaser

of

a

corporation’s assets” liable “for the seller’s debts.” Cargo

Partner AG v. Albartrans, Inc., 352 F.3d 41, 45 (2d Cir.
2003). There are four hallmarks for identifying a de facto
merger, one of which is continuity of ownership. See New York
v. Nat'l Serv. Indus., Inc., 460 F.3d 201, 209 (2d Cir.
2006)). While not all of the hallmarks are necessary to
establish a de facto merger, “‘continuity of ownership is the
essence of a merger,’ and the doctrine of de facto merger
cannot apply in its absence.” Priestley v. Headminder, Inc.,
647 F.3d 497, 505 (2d Cir. 2011) (citation omitted).
In the SJ Order, the Court addressed H. Daya’s theory
that

it

established

continuity

of

ownership

between

the

Corporate Defendants by way of “two smaller defacto [sic]
mergers” between RSC and Vintage, on one side, and Do Denim
and Reward, on the other, which facilitated a “single larger
defacto [sic] merger” between all the companies. H. Daya,
2022 WL 974382, at *13. The Court found that although H. Daya
asserted there was a de facto merger between RSC and Vintage,
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H. Daya was advancing an alter ego theory of liability by
alleging that RSC and Vintage operated as a single company.
Id. Although successor liability is typically a vehicle for
holding the purchaser of a corporation’s assets liable for
the seller’s debts, under New York law, “an aggrieved party
can still seek to impose liability on an individual associated
with the successor entity under a corporate veil-piercing
theory.” Ji Li v. New Ichiro Sushi, Inc., No. 14 Civ. 10242,
2020 WL 2094095, at *5 (S.D.N.Y. Apr. 30, 2020); Tommy Lee
Handbags,

971

F.

Supp.

2d

at

374-80

(finding

plaintiff

adequately alleged de facto merger claim based on alter ego
theory).
Under New York’s choice of law principles, the law of
the

state

of

incorporation

determines

whether

it

is

appropriate to pierce the corporate veil. See Nat'l Gear &
Piston, Inc. v. Cummins Power Sys., LLC, 975 F. Supp. 2d 392,
401 (S.D.N.Y. 2013). Since the parties did not brief the issue
of piercing the corporate veil, the Court deferred judgment
on whether H. Daya established a de facto merger claim based
on an alter ego theory. See H. Daya, 2022 WL 974382, at *1314.
In the Motion, H. Daya argues that the Court overlooked
Recurrent Capital Bridge Fund I LLC v. ISR Systems & Sensors
Corp., 875 F. Supp. 2d 297 (S.D.N.Y. 2012), which H. Daya
5

cited in its reply brief in support of its motion for summary
judgment. (See H. Daya Reply Br. at 7.) In particular, H. Daya
contends that Recurrent supports its alternative theory of a
smaller de facto merger between Vintage and the Judgment
Debtors, on one side, and RSC and Vintage, on the other side.
(See Mot. 1-2.) But that case is not fully analogous here.
The Recurrent court found, at the motion to dismiss stage,
that the plaintiff adequately alleged continuity of ownership
between a successive chain of four companies because the
companies shared common owners. Id. at 308-09 (noting that
three companies had “substantial ownership in common,” and
that “the ownership and management . . . formed [the fourth]
company”).
While the Recurrent court accepted a theory of a de facto
merger among several companies, that theory is inapplicable
here unless H. Daya can establish that that (1) there was a
de facto merger between Vintage and the Judgment Debtors, and
(2) RSC and Vintage were alter egos, which warrants piercing
the corporate veil between them. See H. Daya, 2022 WL 974382,
at *13-14. Since the Court already found that H. Daya’s de
facto

merger

claim

requires

establishing

these

two

conditions, the Court finds that reconsideration of the SJ
Order is unwarranted, and H. Daya’s Motion should be denied.

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ORDER
For the reasons stated above, it is hereby
ORDERED that the motion filed by plaintiff H. Daya
International Co. Ltd. (see Dkt. No. 240) for reconsideration
of the Court’s Order, dated March 31, 2022 (Dkt. No. 239) is
DENIED.
SO ORDERED.
Dated:

April 29, 2022
New York, New York

_________________________
Victor Marrero
U.S.D.J.

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