## Facts

- NetJets leased LHC a 12.5% fractional aircraft interest for five years under a Lease Agreement with fixed monthly payments and a qualified early-termination right.
- NetJets also entered a Management Agreement to provide flight-related services (e.g., maintenance and piloting) at specified hourly rates.
- The agreements provided for recovery of attorneys’ fees upon breach.
- LHC was a single-member Delaware LLC owned and controlled by Laurence S. Zimmerman, who had sole authority over LHC’s financial decisions.
- Zimmerman routinely moved funds between LHC and his personal accounts without written loan documentation and made withdrawals for personal expenses (e.g., residence-related bills, car, family health insurance).
- A substantial portion of the flight time under the NetJets arrangement was used by Zimmerman and his family for personal travel.
- About one year into the term, LHC terminated the lease; LHC later ceased operations owing NetJets $340,840.39.
- NetJets sued LHC for breach of contract and account stated, and sued Zimmerman on an alter-ego/veil-piercing theory to impose personal liability for LHC’s debt.
- The district court awarded NetJets summary judgment on account stated against LHC, sua sponte dismissed NetJets’ contract claims against LHC as duplicative, and granted Zimmerman summary judgment on veil-piercing.

## Issues

1. Whether breach-of-contract claims were improperly dismissed as duplicative of an account-stated claim where the contracts provided attorneys’ fees not available under account stated.
2. Whether the record raised genuine disputes of material fact under Delaware veil-piercing law such that summary judgment for the LLC’s sole member was improper.

## Decision

- The Second Circuit vacated the judgment to the extent it dismissed NetJets’ breach-of-contract claims against LHC and all claims against Zimmerman, and remanded.
- The court held the contract claims were not duplicative because they sought contractually authorized attorneys’ fees beyond the account-stated balance.
- The court held summary judgment for Zimmerman was improper because the evidence could support findings that LHC and Zimmerman functioned as a single economic entity and that respecting the LLC form would cause injustice or unfairness.

## Legal Principles

- An account stated establishes agreement on a balance due and supports recovery of that balance, but does not by itself include contractual remedies such as attorneys’ fees absent a separate basis.
- A breach-of-contract claim is not duplicative of an account-stated claim when the contract provides additional relief (including attorneys’ fees) not recoverable on account stated alone.
- Under Delaware law, veil-piercing requires proof that the entity and individual operated as a single economic entity and that an overall element of injustice or unfairness would result from respecting the entity form.
- Veil-piercing factors may include commingling of funds, insolvency, undercapitalization, disregard of entity formalities, and use of the entity as a façade for personal dealings; when supported by record evidence, these issues are typically for the factfinder rather than disposition on summary judgment.

## Conclusion

The court restored NetJets’ contract claims because they sought attorneys’ fees unavailable under account stated and held that evidence of commingling and personal use of LLC funds created triable issues on whether the LLC was the owner’s alter ego under Delaware law, requiring further proceedings.


NetJets Aviation, Inc. v. LHC Commc’ns, LLC, 537 F.3d 168 (2d Cir. 2008)