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SEMIGRAN ENTERPRISES, INC., ET AL., Plaintiffs-Appellants, v. GARY NOREN, ET AL., Defendants-Respondents. GARY NOREN, ET AL., Counterclaim Plaintiffs-Respondents,

Plaintiffs are two corporations, one a designer of fashion apparel and the other an importer of fashion apparel, which brought this action alleging, inter alia, that defendants wrongfully appropriated plaintiffs' property, manufactured or sourced out for manufacture the wrongfully appropriated property, and tortuously interfered with plaintiffs' business. Defendants answered and counterclaimed against the corporate defendants and an additional defendant, Lawrence B. Semigran, for breach of contract and related claims. A settlement agreement amongst the parties resolved all claims except defendants' eighth, ninth and tenth counterclaims; the agreement did not specifically exclude any claims against Semigran individually. Justice Gammerman referred the remaining claims to a Special Referee to hear and determine. Referee Birnbaum subsequently found Semigran individually liable on defendants' eighth counterclaim; that counterclaim did not encompass a claim against Semigran individually. A Special Referee's jurisdiction is limited to those matters which were part of the order of reference. Any determination outside the scope of the reference is in excess of his jurisdiction and must be considered a nullity (see Chang v. Chang, 190 A.D.2d 311, 319-320). While defendants attempt to salvage the Referee's finding of individual liability by arguing that the evidence established a basis for piercing the corporate veil, the eighth counterclaim contained no particularized allegations regarding Semigran's use of Semigran Enterprises as his corporate alter-ego and therefore failed to set forth a basis on which Semigran could be held individually liable (cf., Trans International Corp. v. Clear View Technologies, Ltd., 278 A.D.2d 1; International Credit Brokerage Co, Inc. v. Agapov, 249 A.D.2d 77).

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

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SEMIGRAN ENTERPRISES v. NOREN
(Jul 19, 2001)