Fuller v. KFG Land I, LLC, 12350

• Decision Date: 29 December 2020
• Docket Number: 12350,Case No. 2019-5509,Index No. 158511/16E
• Citation: 139 N.Y.S.3d 166,189 A.D.3d 666
• Parties: Elbert FULLER, et al., Plaintiffs–Respondents–Appellants, v. KFG LAND I, LLC, Defendant–Appellant–Respondent.
• Court: New York Supreme Court — Appellate Division

189 A.D.3d 666

139 N.Y.S.3d 166

Elbert FULLER, et al., Plaintiffs–Respondents–Appellants,

v.KFG LAND I, LLC, Defendant–Appellant–Respondent.

12350

Index No. 158511/16E

Case No. 2019-5509

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

ENTERED: December 29, 2020

Mauro Lilling Naparty, LLP, Woodbury (Seth M. Weinberg of counsel), for appellant-respondent.

Lurie, Ilchert, Mac Donnell and Ryan, LLC, New York (George W. Ilchert of counsel), for respondents-appellants.

Gische, J.P., Gesmer, Kern, Kennedy, JJ.

Order, Supreme Court, New York County (Kathryn E. Freed, J.), entered July 8, 2019, which, to the extent appealed from as limited by the briefs, granted defendant's motion for summary judgment dismissing the Labor Law § 240(1) cause of action and denied the motion as to the common-law negligence cause of action, modified, on the law, to grant the motion as to the common-law negligence cause of action, and otherwise affirmed, without costs. The Clerk is directed to enter judgment dismissing the complaint.

We affirm the dismissal of the Labor Law § 240(1) claim and dismiss the common-law negligence claim. KFG Land I, LLC (KFG Land) established that the exclusivity provisions of the Workers' Compensation Law (WCL) apply and that plaintiff's recovery for his injuries is limited to the workers' compensation benefits he applied for and received under the insurance policy in the name of nonparty KFG Operating I, LLC (KFG Operating) (see WCL 11 ; 29[6] ).

KFG Land moved for summary judgment after the parties had engaged in extensive discovery, which included the exchange of documents and depositions. Among the persons deposed was Charles–Edouard Gros. Gros testified and also provided sworn affidavits that on September 22, 2019 three limited liability companies were formed. Gros testified that he is a managing member of nonparty Hopkins Ventures, and that Hopkins Ventures is the member of each of the other two LLCs also formed at the time, defendant, KFG Land and KFG Operating. According to Gros, the companies were established with the purpose, common goal and intention of purchasing the real property at 155 Dean Street, Brooklyn, New York, which was improved by a building housing a skilled nursing facility then known as Bishop Mugavero. KFG Operating is plaintiff's employer and the nursing facility is now known as the Hopkins Center. KFG Land is a single purpose limited liability company that was formed to hold title ownership to the real property. KFG Operating staffs, operates, and maintains the nursing facility. The closing took place in March 2011.

Prior to the closing, KFG Land and KFG Operating entered into a lease agreement dated September 29, 2010 identifying KFG Land as the lessor and KFG Operating as lessee of the nursing facility. Pursuant to the lease, KFG Operating undertook to maintain the premises, including any structural alterations and repairs. Plaintiff claims he was injured while performing work on the roof of the nursing home. He filed for and received workers' compensation benefits under the policy that KFG Operating maintains for the benefits of the employees. Some of the employees were previously employed by Bishop Mugavero and continued to work for the Hopkins Center after the purchase was completed. Gros testified that KFG Land does not have any employees and that its business is ownership of the property. KFG Land does not maintain its own WCL policy, because it has no one to insure.

KFG Land and KFG Operating have maintained 155 Dean Street as their business address since the closing. Gros also states that Hopkins Ventures files taxes on behalf of both KFG Land and KFG Operating under the taxpayer identification number for Hopkins Ventures. Since this is how the LLCs have structured their operations, neither KFG Land nor KFG Operating file independent tax returns. Their tax returns are completed through Hopkins Ventures. A sample tax return was provided during discovery. Gros avers that all three LLCs have always functioned as a single integrated entity for the purposes of owning and maintaining the Hopkins Center. He states that not only are KFG Land and KFG Operating wholly owned subsidiaries of Hopkins Ventures, but, also, he is in control of the companies because he is a managing member of Hopkins Ventures. According to Gros, Susan Rice, the licensed administrator for the Hopkins Center, reports directly to him because he is a managing member of Hopkins Ventures.

The proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact ( Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ). Based upon the foregoing, and the documentary evidence produced, KFG Land argues that Supreme Court erred in denying its motion for summary judgment dismissing plaintiff's common-law negligence claim because it met its burden of proving that all three companies function as a single integrated entity and that their collective enterprise is the acquisition, ownership, and operation of the nursing home.

The exclusivity defense is available where the relationship among business entities is so close that they are really alter egos of one another ( Batts v. IBEX Const., LLC, 112 A.D.3d 765, 766, 977 N.Y.S.2d 282 [2d Dept. 2013] ). The defense is also available, however, in situations where the plaintiff's employer and the defendant have functioned as one company ( Carty v. East 175th St. Hous. Dev. Fund Corp., 83 A.D.3d 529, 921 N.Y.S.2d 237 [1st Dept. 2011] ). In those circumstances, two or more companies function much as joint venturers ( Carty v. E. 175th St. Hous. Dev. Fund Corp., 32 Misc.3d 1217[A] [Sup. Ct. Bronx County 2010], 2010 N.Y. Slip Op. 52412[U], 2010 WL 7018600, *2–3, affd 83 A.D.3d 529, 921 N.Y.S.2d 237 [1st Dept. 2011] ). An employer's organization into separate entities does not preclude a finding that the plaintiff-employee is limited to benefits under the WCL, because "for statutory purposes, an employee may have more than one employer" ( Ramnarine v. Memorial Ctr. for Cancer & Allied Diseases, 281 A.D.2d 218, 219, 722 N.Y.S.2d 493 [1st Dept. 2001] ). It is not necessary for an employer to be the direct, "paper" employer of an injured worker for that employer to benefit from the protection of the WCL. Rather, "[m]any factors are weighed in deciding whether a special employment relationship exists" ( Thompson v. Grumman Aerospace Corp., 78 N.Y.2d 553, 558, 578 N.Y.S.2d 106, 585 N.E.2d 355 [1991] ) "[A] general employee of one employer may also be in the special employ of another, notwithstanding the general employer's responsibility for payment of wages and for maintaining workers' compensation and other employee benefits" ( Ramnarine at 219, 722 N.Y.S.2d 493 ). It is the interconnectivity of the entities that determines whether the benefit of the WCL should apply to an entity that is not the direct employer of an injured person.

Here KFG Land argues that plaintiff is relegated to his remedy under the WCL held in the name of KFG Operating because KFG Land and KFG Operating, plaintiff's nominal employer, are sister entities, and both companies functioned and interfaced as a single integrated entity from the inception of the process to obtain, maintain and operate the nursing home until the present time (see Carty, 83 A.D.3d 529, 921 N.Y.S.2d 237 ; Ramnarine, 281 A.D.2d 218, 722 N.Y.S.2d 493 ). Both companies are wholly owned by a common parent company (Hopkins Ventures), through which they filed taxes, using the parent company's taxpayer identification number; they shared resources, including their business address, all administrative and managing personnel, and they were formed on the same date for the same common business purpose, namely to purchase and operate the skilled nursing facility (see Carty, 83 A.D.3d 529, 921 N.Y.S.2d 237 ; Ramnarine, 281 A.D.2d 218, 722 N.Y.S.2d 493 ). Thus, while plaintiff's employer and KFG Land were separately organized, both are wholly owned subsidiaries of Hopkins Ventures and managed by Gros. KFG Land, as the title owner of the real property, and KFG Operating, as the operator of the building on the property, are two halves of the whole that is known to the public as the Hopkins Center. KFG Land has established that these companies held themselves out to the public as an integrated institution – the Hopkins Center – and all three entities shared the same space and the same principal, and filed one tax return (see Ramnarine, 281 A.D.2d 218, 722 N.Y.S.2d 493 ). By doing so, defendant demonstrated its prima facie entitlement to judgment as a matter of law by establishing that the companies were engaged in a joint venture, which was owning and operating the skilled nursing home. Since the companies have operated as a single integrated entity, the exclusivity rule of the WCL applies to insulate KFG Land from liability (see WCL 11, 29[6] ). "[A]n employee working for one employer is considered an employee of the other employers in the joint venture" ( Mitchell v. A.F. Roosevelt Ave. Corp., 207 A.D.2d 388, 389, 615 N.Y.S.2d 707 [2d Dept. 1994] ). Consequently, the employee's exclusive remedy against the entities forming the joint venture is workers' compensation.

Once a defendant makes its prima showing of entitlement to judgment as a matter of law, "the party opposing the motion must demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action or tender an acceptable excuse for his failure so to do, and the submission of a hearsay affirmation by counsel alone does not satisfy this requirement" ( Zuckerman, 49 N.Y.2d at 560, 427 N.Y.S.2d 595, 404 N.E.2d 718 ). In response to the motion, plaintiff submitted nothing of probative value that would raise a triable issue of fact, despite having had the benefit of extensive discovery. Althoug...