Leo N. Levitt and Ruth G. Levitt - Page 42

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               Petitioners contend that under the precedents of the Court             
          of Appeals for the Third Circuit a shareholder and a corporation            
          are not in privity.  Hornstein v. Kramer Bros. Freight Lines, 133           
          F.2d 143 (3d Cir. 1943).  In Hornstein, the Court of Appeals for            
          the Third Circuit held that under Pennsylvania law shareholders             
          and their corporations were not in privity in a tort case for               
          collateral estoppel purposes.  Id. at 146.  That interpretation             
          does not apply here because Pennsylvania law does not apply.                
          Petitioners do not cite cases under New Jersey law which hold               
          that a sole shareholder and his or her corporation are not in               
          privity for collateral estoppel purposes.4                                  
               Petitioners contend that petitioner and Resyn were not in              
          privity because the bankruptcy court had appointed a receiver to            
          be responsible for Resyn's operations at that time.  We disagree.           
          When a nonparty to an action has control over the conduct of the            
          litigation, it may be in privity with the party it controls and             
          bound by the results of the litigation.  American Safety Flight             
          Systems, Inc. v. Garrett Corp., 528 F.2d 288, 289 (9th Cir.                 
          1975).  There is no evidence that the receiver controlled,                  
          attended, or was involved in the bankruptcy litigation.  We                 

          4 In their answering brief, petitioners cite a New Jersey                   
          case involving whether the court would pierce the corporate veil            
          and disregard the corporate form where there was no fraud or                
          injustice.  Lyon v. Barrett, 89 N.J. 294, 300, 445 A.2d 1153,               
          1156 (1982).  That case does not hold or suggest that a sole                
          shareholder is not in privity with his corporation for purposes             
          of collateral estoppel.                                                     

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