Case 6:10-cv-06507-CJS-MWP Document 59 Filed 06/07/18 Page 1 of 24
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF NEW YORK
`__________________________________________
`
`IZZO GOLF INC.,
`f/k/a DANCORP INVESTORS, INC.,
`
`Plaintiff
`
`-vs-
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`KING PAR CORPORATION, B&P BAIRD HOLDINGS,
`INC., KP ACQUISITION COMPANY, KING PAR LLC,
`WILLIAM J. BAIRD, PAMELA BAIRD, “JOHN DOE”
`1-10, “MARY ROE” 1-10 and XYZ CORPORATION
`1-10,
`
`Defendants
`__________________________________________
`
`INTRODUCTION
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`DECISION AND ORDER
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`10-CV-6507 CJS
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`Now before the Court is Plaintiff’s motion for partial summary judgment (Docket No.
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`[#53]), “determining that Defendant William J. Baird [is] liable[, as alter ego,] for the full
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`amount of damages for Defendant B & P Baird Holding’s Inc.’s (f/k/a King Par Golf, Inc.,
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`a/k/a “Old King Par”) infringement of U.S. Patent No. 5,042,704 belonging to Plaintiff Izzo
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`Golf Inc., as adjudged in the action styled Izzo Golf v. King Par Golf Inc., No. 6:02-CV-6012
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`(W.D.N.Y.).” The application is granted.
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`BACKGROUND
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`The general underlying facts of this case were set forth in the Court’s prior Decision
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`and Order [#38] in this action (denying Plaintiff’s motion for preliminary injunctive relief and
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`Defendant’s cross-motion to dismiss), and will only be repeated here as necessary, and
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`as viewed in the light most-favorable to non-moving defendant William J. Baird (“Baird”).
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`This action is related to Izzo Golf Inc. v. King Par Golf, Inc., 6:02-CV-6012 (“the
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`patent infringement action”), in which Izzo sued King Par for infringement of a patent for
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`a golf-bag strap system. Izzo and King Par were competing manufacturers of golf
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`equipment. On January 8, 2002, Izzo commenced the patent infringement action. King
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`Par subsequently filed a summary judgment motion, seeking a determination that its golf
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`bags did not infringe Izzo’s patent. On July 5, 2007, the Honorable Michael A. Telesca,
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`Senior District Court Judge, issued a Decision and Order granting in part, and denying in
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`part, King Par’s summary judgment motion. In particular, Judge Telesca found that one
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`style of King Par’s golf bags (the new-style bag) did not infringe Izzo’s patent, while the
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`other style (the old-style bag) infringed the patent.
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`As the patent infringement action proceeded toward a trial on damages, Izzo
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`learned of a change in King Par’s corporate circumstances. More specifically, by early
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`January, 2009, Izzo learned that King Par had sold its assets, and had changed its name
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`to B&P Baird Holdings, Inc. On January 7, 2010, Izzo’s attorneys wrote to King Par’s trial
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`counsel about the asset sale, stating, in part, “We are concerned that King Par now has
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`insufficient assets to cover the potential damages caused by the sale of infringing golf
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`bags[.]” Izzo’s attorneys requested supplemental discovery concerning King Par’s (B&P
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`Baird’s) “current assets,” including the details of the asset sale, and indicated that if King
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`Par did not provide such information, Izzo would “move for an order from the Court
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`requiring such disclosure.” King Par’s trial counsel responded that he did not believe that
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`such information was relevant or discoverable as a general matter, and that he was not
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`aware of any particular discovery demand/response on that point that needed to be
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`supplemented. Nevertheless, on January 27, 2010, King Par’s counsel agreed to provide
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`corporate financial information to Izzo, for the years 2004-2008, but indicated that the
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`1
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`Kar Aff. [#32-7], Ex. 1.
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`financial records for 2009 were not finished. The parties did not bring these matters to the
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`Court’s attention.
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`On January 19, 2010, the Court issued a Pretrial Order [#150], scheduling the trial
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`to begin on June 14, 2010. Thereafter, the parties had private settlement discussions, of
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`which the Court was also unaware. On May 6, 2010, King Par’s owner, Mr. Baird, offered
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`a settlement in the amount of $425,000. On June 7, 2010, an Izzo representative had a
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`settlement discussion with Baird, in which Baird implied, as an inducement for Izzo to
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`accept his settlement offer, that Old King Par might have been stripped of its assets,
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`stating, “I only have a $1,000 in the corporate account and who’s to say whether the rest
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`of the proceeds went to me or somewhere else.” Izzo’s representative understood Baird
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`to mean that, “even though [King Par] only had $1,000 from which to pay an adverse
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`judgment, he personally was willing to use $425,000 of his own money to settle Izzo’s
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`claims.” Izzo rejected the offer, but indicated that it would consider settling for around $1
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`million.
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`Between June 14, 2010 and June 18, 2010, the Court (which still had not been told
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`about the asset sale and settlement discussions) presided over a jury trial on the issue of
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`damages. On June 18, 2010, the jury returned a verdict against King Par in the amount
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`On December 21, 2009, counsel for the parties had appeared before the undersigned for a
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`pretrial conference, “to clarify the issues that remain to be tried, to set a trial date, and to discuss
`possible settlement.” (The docket sheet incorrectly states that the appearance took place on
`December 22, 2009.) At the conference, counsel said nothing to the Court about the asset sale,
`discovery, or concerns about King Par’s ability to pay a judgment.
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`Affidavit of James Kar [#32-6] at ¶ 10 (“On June 7, 2010, approximately a week before trial, I
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`personally spoke with Mr. Baird for approximately 40 minutes in an effort to settle the case. . . . Mr.
`Baird stated to me “I only have a $1,000 in the corporate account and who’s to say whether the rest of
`the proceeds went to me or somewhere else.”) As will be discussed further below, it turned out that
`there actually was not even a corporate account or $1,000 remaining in Old King Par’s name at that
`time, but Mr. Baird was keeping that fact from Izzo.
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`of $3,286,476.65. King Par was stunned by the size of the verdict, since King Par’s trial
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`counsel had estimated that damages would be well below one million dollars. Immediately
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`following the trial, between June and August of 2010, Izzo filed motions for attorney’s fees,
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`pre-judgment interest and post-judgment interest. King Par responded by filing a motion
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`for a new trial.
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`On September 7, 2010, Izzo commenced the instant action, alleging fraud and other
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`related claims. Subject-matter jurisdiction was based upon diversity. The gist of the
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`lawsuit was that King Par, Baird, and others committed fraud against Izzo in connection
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`with the sale of King Par’s assets, leaving only a judgment-proof corporate shell. More
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`specifically, Izzo alleged that Baird sold King Par’s assets for four million dollars
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`(specifically, $4,010,242.00), which was less than half of their fair-market value, and placed
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`the sale proceeds in his personal account, leaving King Par insolvent, without sufficient
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`corporate assets to fulfill its obligations, including a judgment in the Izzo patent-
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`infringement case. Izzo sought to have the alleged fraudulent transfer of King Par’s assets
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`set aside, and alleged that Mr. Baird was the “alter ego” of King Par. In particular, the
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`Complaint’s “Seventh Claim for Relief,” entitled “Alter Ego Liability Claim Against William
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`Baird,” demands judgment in the amount of the jury’s verdict in the patent infringement
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`action, $3,286,476.65[,] plus interest, cost[s] and disbursements.”
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`On September 8, 2010, the day after Izzo filed this lawsuit, B&P Baird Holdings,
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`Inc., filed a Chapter 7 bankruptcy action in U.S. Bankruptcy Court for the Western District
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`of Michigan. The bankruptcy petition listed the Izzo patent infringement judgment as one
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`of the disputed claims. On or about September 16, 2010, Izzo informed this Court that
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`4
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`Complaint [#1] at ¶ 1.
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`King Par had filed for bankruptcy. Due to the bankruptcy filing, both of Izzo’s
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`aforementioned actions before this Court were automatically stayed.
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`Either through its investigation prior to commencing this action, or during its
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`involvement in the bankruptcy proceedings, Izzo learned the particulars of how Mr. Baird
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`had sold King Par’s assets, and how he subsequently handled the “winding-up” of the
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`corporation. For example, Izzo learned that Baird was King Par’s sole shareholder, and
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`that he and his wife, Pamela, were the officers and directors of the corporation. Izzo also
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`discovered that King Par had stopped keeping corporate minutes after 2005. Izzo further
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`learned that, at about the same time that Judge Telesca issued his 2007 summary
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`judgment ruling in the patent infringement action, Baird began seeking a buyer for King
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`Par, and ultimately entered into an asset purchase agreement with KP Acquisition
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`Company, LLC (“KP Acquisition”), an entity that was formed by a group of individuals
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`including King Par’s Chief Financial Officer.
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`The closing between King Par and KP Acquisition occurred on June 5, 2009. As
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`part of the sale, King Par transferred all of its operating assets to KP Acquisition. However,
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`King Par retained operating cash that it had on hand at the time, accounts payable and
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`accounts receivable pre-dating April 2009, as well as the obligation to pay certain claims,
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`including the Izzo patent infringement claim. Regarding the infringement claim, Mr. Baird
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`believed at that time, based on his attorney’s estimate, that King Par’s potential liability at
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`trial was approximately $375,000.00, with a verdict as high as $600,000.00 being an
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`absolute worst-case scenario.
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`Following the asset sale to KP Acquisition, Baird changed King Par, Inc.’s name to
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`B&P Baird Holdings, Inc. Meanwhile, KP Acquisition changed its named to King Par, LLC.
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`Henceforth in this Decision and Order, the Court will refer to King Par, Inc./B&P Baird
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`Holdings, Inc. as “Old King Par,” and will refer to KP Acquisition/King Par, LLC, as “New
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`King Par.”
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`The asset purchase agreement included a general statement that New King Par
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`would “hold back” $420,000.00 at closing, to cover “costs relating to markdowns, charge
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`backs, warranty claims, and the Izzo Lawsuit.” In fact, though, the $420,000. “holdback”
`5
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`amount was specifically allocated to markdowns ($100k), chargebacks ($20k), warranty
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`claims ($100k) and “China Holdings” ($200k), and did not provide for New King Par to
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`retain any specific sum for the Izzo litigation. 6
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`Regarding payment for the asset sale, pursuant to the parties’ agreement, New King
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`Par wired the sales proceeds, in the amount of $4,010,242.00, directly into a bank account
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`personally owned by Baird and his wife, because Old King Par did not have any corporate
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`bank account of its own. Baird has alternately indicated that such payment was made to
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`him personally for his stock equity, and that such payment represented money owed to Old
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`King Par corporation. After closing, New King Par made additional payments into the
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`Bairds’ personal bank account. Specifically, while as part of the asset sale Old King Par
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`retained the right to certain accounts receivables, it delegated the collection of those
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`accounts to New King Par, in exchange for a collection fee. New King Par subsequently
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`collected Old King Par’s receivables, totaling over $200,000.00, and wired the payments
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`directly into the Baird’s personal account since, again, there was no Old King Par corporate
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`5
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`Asset Purchase Agreement, Art. III, § 3.1.
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`6
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`Asset Purchase Agreement, Art. III, § 3.1.
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`7
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`See, Foss Decl. ¶ 26 (citing Baird’s deposition testimony).
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`bank account. 8
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`Following the asset sale, Old King Par effectively ceased doing any business, and
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`all that remained for Mr. Baird to do was to wind up the corporation, pay creditors and await
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`the resolution of the Izzo patent infringement action. Significantly, though, to anyone not
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`directly involved in the asset sale between Old King Par and New King Par, it would have
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`appeared that Old King Par was continuing to do business as usual. Even persons closely
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`associated with Old King Par, such as the patent attorney who had represented the
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`corporation for decades, were not apprised of the asset sale. For example, even as the
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`damages trial was proceeding before this Court, Mr. Baird did not tell Old King Par’s
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`patent-law attorneys, Young & Basile, P.C., (“Young & Basile”) that he had sold the
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`corporation’s assets. Nor did Baird inform the damages expert, Jeffrey Hauswirth
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`(“Hauswirth”), who had been retained by Old King Par to testify at trial, about the asset
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`transfer.
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`Mr. Baird did not set aside any of the sale proceeds, or any other corporate assets,
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`to pay a potential judgment in the Izzo patent infringement action, even though Judge
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`Telesca had already determined that Old King Par’s old-style bag infringed Izzo’s patent.
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`Neither did Baird put aside any money to pay Young & Balile or Hauswirth for their
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`participation at trial in the patent infringement action.
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`During the period between the asset sale and the trial, Baird paid certain Old King
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`Par creditors from the same personal account into which the corporate asset-sale proceeds
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`had been deposited. According to Baird, during the post-asset-sale period, he paid both
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`personal and corporate bills from the same personal account that he shared with Mrs.
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`8
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`Foss Decl., Ex. 6 at p. 158.
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`Baird, without differentiating, or considering the difference, between corporate and
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`personal debts. Izzo’s counsel accurately summed up that situation by stating, “Mr. Baird’s
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`testimony makes indisputable that he was simply commingling personal and corporate
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`business and funds without regard to source, purpose or application.”9
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`During the course of the bankruptcy proceedings that followed the jury verdict in the
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`patent infringement action, Bankruptcy Court concluded that the transfers, of Old King
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`Par’s asset-sale proceeds and accounts receivable into the Bairds’ personal bank account,
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`were constructively fraudulent, insofar as no provision had been made for Old King Par to
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`pay a potential judgment in the Izzo patent litigation. In that regard, Bankruptcy Court
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`indicated that Old King Par should have reasonably estimated, based on the information
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`that it had at the time, that its potential liability to Izzo was in the neighborhood of
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`$250,000.00. Although the actual verdict turned out to be much higher, Bankruptcy Court
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`concluded that Mr. Baird had “good reason to believe in 2009 that the Izzo Golf debt would
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`be much less than what it ultimately turned out to be.” Consequently, Bankruptcy Court
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`indicated that, although Mr. Baird’s handling of the winding-down of the Old King Par
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`corporation was “dubious,” it was declining to find that he had actual fraudulent intent.
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`Rather, Bankruptcy Court concluded that Mr. Baird had unreasonably underestimated
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`outstanding liabilities, while simultaneously overestimating the amount of money that Old
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`King Par would receive post-closing from accounts receivable.
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` At the same time, though,
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`Bankruptcy Court opined that the placement of the sale proceeds into the Bairds’ personal
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`9
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`Foss Decl. at ¶ 45.
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`10
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`Foss Decl., Ex. 30 at pp. 39-40.
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`See, e.g., Foss Decl., Ex. 30 at p. 62 (According to the bankruptcy judge, “Mr. Baird’s failure
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`to provide for the Izzo Golf claim was based upon an unreasonable optimism[.]”).
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`bank account suggested an improper motive. Specifically, Bankruptcy Court commented
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`that, “the arrangement certainly suggests that Mr. Baird wanted to gain over Izzo Golf a
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`negotiating advantage, or, in fraudulent transfer law parlance, Mr. Baird wanted to hinder
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`or delay Izzo Golf by depleting Old King Par of all of its assets and, in particular, its cash.”12
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`After Bankruptcy Court’s ruling on this point (that the transfer of Old King Par’s sale
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`proceeds to the Bairds’ personal bank account was constructively fraudulent), the Bairds
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`settled with the Bankruptcy Trustee, resulting in payments to Izzo in the approximate
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`amount of $3.17 million.
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`13
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` However, Izzo’s post-trial motions seeking, inter alia, treble
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`damages and attorney fees, remain pending before this Court. In that regard, as part of
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`the same bankruptcy action, Premier Retail, Inc. (“Premier Retail”) purchased, from the
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`bankruptcy estate Old King Par’s rights with regard to the defense of the Izzo patent
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`infringement action. Premier Retail and Izzo have common ownership, meaning that Izzo
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`is now essentially both the plaintiff and defendant in the patent infringement action.
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`Presumably, therefor, Premier Retail will not oppose Izzo’s applications in the patent
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`infringement action for treble damages, attorney’s fees and interests, and will withdraw Old
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`King Par’s motion for a new trial.
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`On November 28, 2014, Bankruptcy Court modified the automatic stay, in order to
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`permit Izzo to proceed with the two actions before this Court. Bankruptcy Court’s order
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`remained appealable until December 12, 2014.
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`On January 14, 2015, Izzo filed a motion for a preliminary injunction, requesting an
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`order “preventing [Mr. Baird] from offshoring assets and otherwise acting during the
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`12
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`Foss Decl., Ex. 30 at p. 64.
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`13
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`Foss Decl. at ¶ 53.
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`pendency of this action from seeking to frustrate any judgment Plaintiff will likely obtain[.]” 14
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`In that regard, Izzo contended that it was likely that Mr. Baird would take further actions to
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`frustrate Izzo’s ability to collect the outstanding amount of its judgment and any interest
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`and attorney’s fees that the Court may award. On January 23, 2015, Baird filed an
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`opposition to Izzo’s motion, and cross-moved to dismiss the action as against him
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`personally, for lack of subject matter jurisdiction. In connection with those motions, Baird
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`disputed that he was Old King Par’s alter ego, but did not argue that the exercise of
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`personal jurisdiction over him would be inappropriate if he was found to be Old King Par’s
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`alter ego, and if Old King Par was found to be subject to personal jurisdiction in this action.
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`On December 6, 2016, the Court issued a Decision and Order [#38], denying both
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`Izzo’s request for preliminary injunctive relief and Baird’s cross-motion to dismiss for lack
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`of personal jurisdiction. With regard to personal jurisdiction, the Court found that Old King
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`Par was subject to personal jurisdiction in New York, pursuant to New York CPLR § §
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`302(a)(1)&(2), due to having sold infringing golf bags in New York, and that Baird was the
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`alter ego of Old King Par, and was therefore also subject to personal jurisdiction. On this
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`point, the Court stated, in pertinent part:
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`The next issue is whether Baird is subject to personal jurisdiction as the alter
`ego of Old King Par. The applicable legal principles have been stated as
`follows:
`It is clear that if a court has jurisdiction over a corporation, it
`may obtain jurisdiction over a corporate officer or shareholder
`by disregarding the corporate entity. . . . In determining
`whether to disregard the corporate entity, the critical question
`is whether the corporation is a “shell” being used by the
`individual shareowners to advance purely personal rather than
`corporate ends. The court may consider such factors as the
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`14
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`Foss Decl. at ¶ 1.
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`lack of corporate formalities, the inadequate capitalization of
`the corporation, and the intermingling of corporate and
`individual finances. The corporate veil may be pierced either
`when the defendant has used the corporation to perpetrate
`fraud, or simply when he has dominated the corporation for his
`personal business. One of the factors the courts have
`considered is whether there has been post[-]tort activity
`conducted to strip the corporation of its assets in anticipation
`of impending legal liability. The existence of this activity,
`together with substantial ownership of stock of a corporation by
`one individual will support “piercing the corporate veil” for
`jurisdictional purposes on grounds of equity and fairness.
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`Kinetic Instruments, Inc. v. Lares, 802 F. Supp. 976, 985 (S.D.N.Y. 1992)
`(citations and internal quotation marks omitted).
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`Here, Izzo maintains that following the asset sale, Baird acted as Old King
`Par’s alter ego, since he essentially ignored all corporate formalities and
`commingled the corporation’s assets with his own assets. The Court agrees.
`To begin with, Izzo contends, and Baird does not dispute, that Old King Par,
`which is entirely owned by Mr. Baird, stopped keeping corporate minutes
`after 2005. Izzo has further shown that following the closing, Old King Par
`was undercapitalized, and, in fact, had no distinct assets of its own, not even
`a corporate bank account. And finally, Izzo has made a sufficient showing
`that during the relevant post-asset sale period, Mr. Baird commingled the
`corporation’s assets (sale proceeds and accounts receivable) with his own
`money, and utterly failed to recognize any distinction between the
`corporation’s money and debts, and his own money and debts.
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`Baird denies that he ignored corporate formalities or commingled funds. In
`that regard, he insists that all of the money that went into his personal bank
`account immediately after the asset sale belonged to him, as stockholder
`equity, and that he expected to pay any outstanding liabilities, including any
`judgment in the patent litigation trial, from additional funds that he expected
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` However, while the
`to be paid from New King Par for accounts receivable.
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`Court need not resolve the issue of Mr. Baird’s intent in order to decide this
`application, it notes that he previously acknowledged that the asset-sale
`proceeds deposited into his personal account were corporate assets, and
`that many of the debts that he paid from that personal account were
`corporate debts.
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`Decision and Order [#38] at pp. 20-21. In sum, applying New York procedural law the
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`Court determined that Baird was Old King Par’s alter ego for purposes of personal
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`jurisdiction.
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`With regard to Izzo’s application for preliminary injunctive relief, the Court
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`determined that Izzo had not made a sufficient showing of irreparable harm. In particular,
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`the Court found that Izzo had not adequately shown that Baird’s sale of King Par’s assets
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`was designed to frustrate Izzo’s ability to collect a judgment in the patent infringement
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`action. On this point, the Court stated, in pertinent part:
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`Izzo has certainly made a substantial showing that Baird’s handling of the
`winding -up of Old King Par was, as the Bankruptcy Court found, “dubious.”
`However, on the current record, the Court is not persuaded that Mr. Baird
`intended to frustrate Izzo’s ability to collect a judgment.
`***
`[T]he present record does not strongly suggest that Baird’s sale of Old King
`Par’s assets had anything to do with the Izzo patent litigation. Indeed, Izzo’s
`own papers seem conflicted as to whether Mr. Baird was simply incompetent
`in financial matters, or whether he was a cunning schemer.
`***
`[T]he Court finds, on the present record, that it is more than likely that Mr.
`Baird’s sale of Old King Par was not intended to frustrate Izzo’s ability to
`collect a judgment in the patent action. Rather, the record suggests that Mr.
`Baird simply wanted to sell the corporation at that time, and was not
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`See, e.g., Baird Reply Memo [#34] at p. 13 (“[H]e never had any intention of taking assets
`15
`belong to Old King Par [and] placing them in his personal account. He took money the corporation
`owed him and which it was obligated by the Asset Purchase Agreement to pay him.”).
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`particularly concerned whether the sale proceeds went into a personal
`account or a corporate account, because he was the sole shareholder and
`intended to pay any judgment, regardless of what type of account the
`payment came from. It seems, though, that Baird’s plan in that regard was
`derailed by two events: First, the accounts receivable that he received from
`New King Par following the closing were drastically smaller than he had
`anticipated; and second, the verdict in the patent trial was drastically larger
`than he had anticipated. This view of the evidence also seems consistent
`with Bankruptcy Court’s decision, discussed earlier.
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`Izzo’s contrary view of the evidence – that Baird orchestrated the sale of Old
`King Par’s assets, and transferred the proceeds into a personal bank
`account, in order to avoid paying “a large judgment” in the patent
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`infringement case -- seems implausible for several reasons. First, it seems
`undisputed that at the time of the asset sale, Baird had no reason to suspect
`that Old King Par was facing a $3 million dollar verdict in the patent trial.
`Rather, as Bankruptcy Court indicated, Baird seems to have believed that
`the corporation’s potential liability to Izzo was in the neighborhood of
`$250,000.00.
` Izzo doesn’t really explain why it would be plausible to think
`17
`that Baird would sell an $18 million corporation (for $4 million less than what
`it was worth, according to Izzo),
` in order to avoid paying a $250,000.
`18
`judgment. Nor does Izzo provide a convincing explanation for why Baird
`would go to all the time and expense to create “an empty corporate shell,”19
`and then offer $425,000. of his personal funds to settle the action,
`particularly when that offer was at the high end of what Baird estimated his
`exposure to be. Rather, in the Court’s view, such fact is consistent with the
`idea that Baird intended, at least prior to the unexpectedly-high verdict, not
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`16
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`Complaint [#1] at ¶ 50.
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`Foss Decl., Ex. 30 at pp. 39-40 (Bankruptcy Court concluded that Mr. Baird had “good
`17
`reason to believe in 2009 that the Izzo Golf debt would be much less than what it ultimately turned out
`to be.”).
`
`The Court is aware that Izzo’s complaint in this action alleges that Baird sold Old King Par’s
`18
`assets to New King Par for drastically less than what they were worth, because Old King Par and New
`King Par were in cahoots. However, the Court has seen no evidence of such a fraudulent
`arrangement between Old King Par and New King Par.
`
`19
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`Foss Aff. [#22-3] at ¶ 36.
`
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`Case 6:10-cv-06507-CJS-MWP Document 59 Filed 06/07/18 Page 14 of 24
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`to evade paying Izzo, but to simply pay for a settlement or verdict from his
`personal account, using the funds that he received from the asset sale.
`
`In sum, the Court finds that Izzo has not made a sufficient showing of
`irreparable harm, because it has not shown that Baird’s sale of Old King Par,
`and his subsequent handling of the proceeds, were intended to frustrate
`Izzo’s ability to collect a judgment. Accordingly, the Court need not address
`the other preliminary-injunction factors.
`
`Decision and Order [#38] at pp. 24-28.
`
`On December 15, 2017, Plaintiff filed the subject motion for partial summary
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`judgment, that Mr. Baird is the alter ego of Old King Par, and therefore personally liable for
`
`whatever amount is eventually assessed against Old King Par in the patent infringement
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`action. In particular, Izzo’s motion demands judgment “for the full amount of damages for
`
`[Old King Par’s] infringement of U.S. Patent No. 5,042,704 belonging to Plaintiff Izzo Golf
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`Inc., as adjudged in the [patent infringement action.]” Of course, that “full amount” is
`
`unknown at this time, as the post-trial motions are still pending.
`
`Izzo contends that under the substantive law of the State of Michigan, where Old
`
`King Par was incorporated, Baird is Old King Par’s alter ego. The facts upon which Izzo
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`relies are generally the same that were discussed above, along with the following additional
`
`facts: 1) in connection with the asset sale, Baird expressly rejected suggestions that he
`
`establish an escrow account to pay Old King Par’s creditors, and instead stated that he
`
`would “handle it”; and 2) following both the asset sale and trial, Baird selectively paid Old
`
`King Par creditors who could benefit him personally, while leaving other creditors (including
`
`Old King Par’s trial counsel Young & Basile, local counsel Nixon Peabody LLP, and
`
`damages expert Hauswirth, none of whom were told of the asset sale until after the trial
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`in which they participated at Old King Par’s behest) to seek relief in bankruptcy court.
`
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`Case 6:10-cv-06507-CJS-MWP Document 59 Filed 06/07/18 Page 15 of 24
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`On January 17, 2018, Baird filed a response [#55, 56] to Izzo’s motion. Baird
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`contends first, that the discovery that Izzo obtained since the Court’s denial of the
`
`preliminary injunction motion is “inconsequential,” suggesting that the facts essentially
`20
`
`remain as they were before the Court at the time of that ruling. Such facts, Baird
`
`maintains, fail to justify piercing of Old King Par’s corporate veil. Baird further maintains
`
`that Izzo’s present reliance upon Michigan law is contrary to the Complaint in this action,
`
`which purports to plead an alter-ego claim under New York law. Alternatively, Baird
`
`indicates that if the Court applies Michigan law, he wins nevertheless, since the Court has
`
`already found that he did not intend to defraud Izzo when he sold Old King Par’s assets.
`
`Baird also disputes Izzo’s view of his potential damages, in the event that this Court
`
`finds that he is Old King Par’s alter ego. On this point, Baird argues that Izzo would be
`
`limited to the amount demanded in the Complaint, which, he contends, is less than what
`
`Izzo is now demanding in connection with the subject motion. In that regard, Baird
`
`maintains that as part of the bankruptcy proceeding, he and Izzo settled all of the claims
`
`in the instant complaint, except the Seventh Claim for Relief, and that such claim
`
`interest, cost[s] and
`‘the amount of $3,286,476.65 plus
`seeks
`disbursements.’ Nothing is mentioned regarding the ‘Whole Hog’ demand
`made in [Izzo’s] motion seeking exposure for Baird in whatever amount Old
`King Par is found to eventually owe in the Patent Litigation.
`
`Baird Memo of Law [#55-1] at p. 4.
`
`On February 13, 2018, Izzo filed a reply [#57]. Izzo begins by noting that no triable
`
`issues of fact have been identified. Izzo further states that the undisputed facts indicate
`
`that Baird completely disregarded corporate formalities, and used Old King Par as a mere
`
`20
`
`Pl. Memo of Law [#55-1] at p. 5.
`
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`Case 6:10-cv-06507-CJS-MWP Document 59 Filed 06/07/18 Page 16 of 24
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`instrumentality to commit a fraud or wrong. Izzo contends that Baird’s attempt to rely upon
`
`the Court’s prior decision in this case, denying preliminary injunctive relief, is misplaced
`
`because that decision focused on whether Baird intended to create an empty shell when
`
`he sold Old King Par’s assets, while the issue now before the Court is whether Baird used
`
`that corporate shell to commit a fraud or wrong.
`21
`
` On this point, Izzo states:
`
`At the preliminary injunction stage, the Court found the facts ‘consistent with
`the idea that Baird intended, at least prior to the unexpectedly-high verdict,
`not to evade paying Izzo, but to simply pay for a settlement or verdict from
`his personal account, using the funds that he received from the asset sale.’
`Izzo’s present motion to pierce the corporate veil seeks only to hold
`Baird to that intention, i.e., that he pay the judgment.
`
`Pl. Memo of Law [#57] at p. 9 (emphasis added). Izzo further maintains that to prove Baird
`
`used Old King Par to commit a fraud or wrong, it need only show that such misuse
`
`prejudiced third parties, which it has done. As an example of this Izzo states that Baird
`
`“put Izzo and the Court through a week-long trial on damages even though he knew the
`
`company had zero assets left to pay a judgment.” Izzo further contends that Baird
`22
`
`caused it to suffer an unjust loss, by stripping Old King Par of its assets following