Collection Efforts Head Back to Drawing Board
FORT MYERS, Fla. (CN) - A company trying to collect an $11 million default judgment must amend its complaint to pierce corporate veil, a federal judge ruled.
Serefex Corp. obtained the judgment in 2010 based upon false and misleading information that it was supplied during the due-diligence period for a 2007 stock exchange with Hickman Holdings.
To pierce Hickman's corporate veil and secure payment of the $11.2 million default judgment, Serefex has looked to the firm's limited partners: Robert Jonas, Kenneth Snyder Sr., David D'Anza, and trustees James Piini and John Piini.
Its first amended complaint includes claims for fraud and violations of the Securities Exchange Act.
The defendants all moved to dismiss, and U.S. District Judge John Steele agreed Monday that Serefex should file a second amended complaint.
"After reviewing the allegations in the complaint, the court finds that dismissal is warranted because plaintiff has failed to put defendants on notice as to the nature of the claims asserted against them," Steele wrote. "The court is unable to determine if plaintiff is attempting to recover based upon the individual conduct of defendants or through a piercing theory. The court also finds that plaintiff's alter ego allegations are insufficient."
Serefex also alleged that "Hickman Holdings control over WP Hickman Systems was so complete that Hickman Holdings had no separate existence of its own and to the general public."
But Steele said this argument "simply does not make legal or factual sense."
There complaint also fails to allege what each defendant did to justify breaching the limited partnership veil, according to the ruling.
Serefex has 14 days to amend, and Steele denied the dismissal motions as moot.
Jonas and Snyder had said the deficiencies in Serefex's complaint warranted sanctions and that they have been released them from liability.
Steele said he would not yet consider sanctions, but Jonas and Snyder can refile for them at a later date if appropriate.