Buchwald v. 1307 Porterville Rd., LLC

• Decision Date: 27 April 2018
• Docket Number: CA 17–01680,495
• Parties: David C. BUCHWALD, Plaintiff–Appellant, v. 1307 PORTERVILLE ROAD, LLC, Defendant–Respondent.
• Court: New York Supreme Court — Appellate Division

160 A.D.3d 1464

75 N.Y.S.3d 729

David C. BUCHWALD, Plaintiff–Appellant,

v.1307 PORTERVILLE ROAD, LLC, Defendant–Respondent.

495

CA 17–01680

Supreme Court, Appellate Division, Fourth Department, New York.

Entered: April 27, 2018

GROSS SHUMAN P.C., BUFFALO (KATHERINE M. LIEBNER OF COUNSEL), FOR PLAINTIFF–APPELLANT.

LAW OFFICES OF JOHN WALLACE, BUFFALO (ALYSON C. CULLITON OF COUNSEL), FOR DEFENDANT–RESPONDENT.

PRESENT: WHALEN, P.J., LINDLEY, DEJOSEPH, CURRAN, AND TROUTMAN, JJ.

MEMORANDUM AND ORDERMemorandum:

Plaintiff commenced this action seeking damages for injuries he allegedly sustained when he fell from the hayloft of a barn located on property owned by defendant. Plaintiff was employed by Fox Run Horse Farms, LLC (Fox Run), which leased the property from defendant and operated a horse farm business on the property. Defendant moved for summary judgment dismissing the complaint, contending, inter alia, that defendant and Fox Run were alter egos and, as a result, plaintiff's action against defendant was barred by the exclusive remedy provisions of Workers' Compensation Law §§ 11 and 29(6). Supreme Court granted the motion on that ground, and we now affirm.

"As a general rule, when ... employee[s are] injured in the course of [their] employment, [their] sole remedy against [their] employer lies in [their] entitlement to a recovery under the Workers' Compensation Law" ( Billy v. Consolidated Mach. Tool Corp., 51 N.Y.2d 152, 156, 432 N.Y.S.2d 879, 412 N.E.2d 934 [1980], rearg denied 52 N.Y.2d 829, 437 N.Y.S.2d 1030, 418 N.E.2d 694 [1980] ; see §§ 11, 29[6] ), and " ‘[t]he protection against lawsuits brought by injured workers ... also extends to entities which are alter egos of the entity which employs the plaintiff’ " ( Ciapa v. Misso, 103 A.D.3d 1157, 1159, 959 N.Y.S.2d 774 [4th Dept. 2013] ; see Cleary v. Walden Galleria LLC, 145 A.D.3d 1524, 1525, 44 N.Y.S.3d 305 [4th Dept. 2016] ).

" ‘A defendant may establish itself as the alter ego of a plaintiff's employer by demonstrating that one of the entities controls the other or that the two operate as a single integrated entity ’ " ( Cleary, 145 A.D.3d at 1525, 44 N.Y.S.3d 305 [emphasis added]; see Quizhpe v. Luvin Constr. Corp., 103 A.D.3d 618, 619, 960 N.Y.S.2d 130 [2d Dept. 2013] ). Factors relevant to the determination of that issue include whether the two entities share a common purpose, have integrated or commingled assets, share a tax return, are treated by the owners as a single entity, share the same insurance policy, and share managers or are owned by the same person.

Additional factors include whether the alter ego has any employees, whether the alter ego leases property pursuant to a written lease or pays rent to the plaintiff's employer, and whether one entity pays the bills for the other even if those bills are for the benefit of the nonpaying entity (see e.g. Quizhpe, 103 A.D.3d at 619, 960 N.Y.S.2d 130 ; Thomas v. Dunkirk Resort Props., LLC, 101 A.D.3d 1721, 1722, 957 N.Y.S.2d 542 [4th Dept. 2012] ; Amill v. Lawrence Ruben Co., Inc., 100 A.D.3d 458, 459, 954 N.Y.S.2d 27 [1st Dept. 2012] ; Carty v. East 175th St. Hous. Dev. Fund Corp., 83 A.D.3d 529, 529, 921 N.Y.S.2d 237 [1st Dept. 2011] ; Lee v. Arnan Dev. Corp., 77 A.D.3d 1261, 1262–1263, 909 N.Y.S.2d 826 [3d Dept. 2010] ; Samuel v. Fourth Ave. Assoc., LLC, 75 A.D.3d 594, 595, 906 N.Y.S.2d 67 [2d Dept. 2010] ; Mertz v. Seibel Realty, 265 A.D.2d 925, 925– 926, 696 N.Y.S.2d 598 [4th Dept. 1999] ; Richardson v. Benoit's Elec., 254 A.D.2d 798, 799, 677 N.Y.S.2d 855 [4th Dept. 1998] ).

Here, we conclude that defendant established as a matter of law that it was the alter ego of Fox Run. Defendant and Fox Run were single-member-owned LLCs that were created on the same day "for a single purpose[,] to operate a horse stable business" (see Carty, 83 A.D.3d at 529, 921 N.Y.S.2d 237 ; Cappella v. Suresky at Hatfield Lane, LLC, 24 Misc.3d 1225[A], 2007 N.Y. Slip Op. 52609[U], *3, 2007 WL 6830765 [Sup. Ct., Orange County 2007], affd 55 A.D.3d 522, 864 N.Y.S.2d 316 [2d Dept. 2008] ; cf. Wernig v. Parents & Bros. Two, 195 A.D.2d 944, 945, 600 N.Y.S.2d 852 [3d Dept. 1993] ; but see Richardson, 254 A.D.2d at 799, 677 N.Y.S.2d 855 ). Both defendant and Fox Run had the same individual owner (see Di Rie v. Automotive Realty Corp., 199 A.D.2d 98, 98, 605 N.Y.S.2d 60 [1st Dept. 1993] ), reported their taxes on the same tax return (cf. Salcedo v. Demon Trucking, Inc., 146 A.D.3d 839, 841, 44 N.Y.S.3d 543 [2d Dept. 2017] ; Thomas, 101 A.D.3d at 1722, 957 N.Y.S.2d 542 ; Shelley v. Flow Intl. Corp., 283 A.D.2d 958, 960, 724 N.Y.S.2d 244 [4th Dept. 2001], lv dismissed 96 N.Y.2d 937, 733 N.Y.S.2d 375, 759 N.E.2d 374 [2001] ), and shared the same insurance policy (see Carty, 83 A.D.3d at 529, 921 N.Y.S.2d 237 ; Cappella, 2007 N.Y. Slip Op. 52609[U], *3 ; cf. Salcedo, 146 A.D.3d at 841, 44 N.Y.S.3d 543; Wernig, 195 A.D.2d at 945, 600 N.Y.S.2d 852 ). Defendant had "[n]o separate set of [financial] books" and "no separate accounting or tax reporting" (see Cappella, 2007 N.Y. Slip Op. 52609[U], *3 ; cf. Thomas, 101 A.D.3d at 1722, 957 N.Y.S.2d 542 ; Lee, 77 A.D.3d at 1262–1263, 909 N.Y.S.2d 826 ; Wernig, 195 A.D.2d at 945–946, 600 N.Y.S.2d 852 ).

In addition, defendant had no employees (see Cappella, 2007 N.Y. Slip Op. 52609[U], *3 ) and "was formed solely for the purpose of owning the premises upon which plaintiff's employer ... operate[d]" its horse farm ( id. ). Fox Run leased property from no one other than defendant, there was no written lease agreement, and Fox Run did not pay any rent to defendant (see id. ). Finally, Fox Run's owner paid defendant's property taxes as well as the operating expenses of the property (see id. ; see also Carty, 83 A.D.3d at 529, 921 N.Y.S.2d 237 ).

Those facts establish that "defendant, which ha[d] no employees, [was] controlled by the individual that control[led] plaintiff's employer" ( Di Rie, 199 A.D.2d at 98, 605 N.Y.S.2d 60 ), and that the two entities "functioned as one company" ( Carty, 83 A.D.3d at 529, 921 N.Y.S.2d 237 ; see Quizhpe, 103 A.D.3d at 619, 960 N.Y.S.2d 130 ; cf. Batts v. IBEX Constr., LLC, 112 A.D.3d 765, 767, 977 N.Y.S.2d 282 [2d Dept. 2013] ). Plaintiff, in opposition to the motion, failed to raise a triable issue of fact (see Quizhpe, 103 A.D.3d at 619, 960 N.Y.S.2d 130, citing Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ). We thus conclude that the court properly granted defendant's motion for summary judgment...