Longshore v. Paul Davis Systems of the Capital District

Decision Date10 April 2003
PartiesWILLIAM LONGSHORE, Appellant,<BR>v.<BR>PAUL DAVIS SYSTEMS OF THE CAPITAL DISTRICT, Respondent, et al., Defendant.
CourtNew York Supreme Court — Appellate Division

Cardona, P.J., Mercure, Carpinello and Lahtinen, JJ., concur.

Kane, J.

In the summer of 1999, plaintiff worked as a painter for defendant Certa ProPainters of the Capital District, Inc. (hereinafter Certa) through a temporary employment agency. Defendant Paul Davis Systems of the Capital District (hereinafter defendant), a general contractor, subcontracted with Certa for Certa to perform the painting portion of the restoration of a house. On July 7, 1999, plaintiff was on a ladder that was 20 feet off the ground on a roof slope, and which was held in place by a rope tied to another ladder laying on the other side of the roof's peak. The rope holding the ladder broke, sending both plaintiff and the ladder to the pavement below. To recover for injuries sustained as a result of his fall, plaintiff commenced this action against Certa and defendant alleging, among other things, violations of Labor Law § 240. Certa moved for summary judgment dismissing plaintiff's claims against it, claiming that workers' compensation was plaintiff's exclusive remedy because plaintiff was a special employee of Certa. Defendant cross-moved for summary judgment, also on the ground of Workers' Compensation Law exclusivity. Plaintiff cross-moved for partial summary judgment on several grounds. Finding that plaintiff was a special employee of Certa, Supreme Court granted Certa's motion. However, it denied plaintiff's and defendant's motions, finding issues of fact regarding whether defendant was plaintiff's employer, possibly entitling defendant to protection under Workers' Compensation Law §§ 11 and 29. Supreme Court did not reach the issue of whether plaintiff was entitled to summary judgment on his Labor Law § 240 claim. Plaintiff now appeals and, as limited by his brief, claims error with only that portion of the order relating to defendant.

Defendant argues that plaintiff was its employee and that his exclusive remedy should be workers' compensation benefits pursuant to Workers' Compensation Law §§ 11 and 29. Douglas Comer was defendant's president and sole officer and Certa's vice-president, and he and his wife were the only shareholders of both corporations. Despite Comer's involvement with both corporations, there was no proof that the two entities were alter egos of each other.

Closely associated corporations, even ones that share directors and officers, will not be considered alter egos of each other if they were formed for different purposes, neither is a subsidiary of the other, their finances are not integrated, assets are not commingled, and the principals treat the two entities as separate and distinct (see Wernig v Parents & Bros. Two, 195 AD2d 944, 945-946 [1993]). Comer's and his wife's testimony established that defendant is a corporation formed to perform insurance restoration repair and general remodeling, while Certa was formed as a franchisee to do basic residential painting. Each corporation had its own bank accounts, different individuals kept the financial records of each corporation, and Certa paid rent to defendant by check for leasing part of its office space. In addition, while defendant subcontracted some painting jobs to Certa, the majority of Certa's work was not secured through defendant, but through direct mail solicitations and referrals. Employees of Certa, not defendant, hired and supervised plaintiff and provided equipment for the job. "The individual princip[als] in this business enterprise, for their own business and legal advantage, elected to operate that enterprise through separate corporate entities. The structure they created should not lightly be ignored at their behest, in order to shield one of the entities they created from * * * common-law tort liability" (Buchner v Pines Hotel, 87 AD2d 691, 692 [1982], affd 58 NY2d 1019 [1983]; see Armstrong v Foxcroft Nurseries, 283 AD2d 814, 815 [2001]).

We find no facts to support defendant's claim that it is an alter ego of Certa (see Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). It necessarily follows that defendant was not plaintiff's employer and is not entitled to the protection afforded by Workers' Compensation Law §§ 11 and 29. Therefore, that portion of plaintiff's cross motion seeking dismissal of defendant's affirmative defense should have been granted.

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    ...find an alter ego relationship in Figueiredo , 39 A.D.3d at 364, 833 N.Y.S.2d 492, we cited to Longshore v. Davis Sys. of Capital Dist. , 304 A.D.2d 964, 965–966, 759 N.Y.S.2d 204 (3d Dept. 2003), where our colleagues in the Third Department noted that" ‘The individual princip[als] in this ......
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