Rothstein v. Equity Ventures, LLC

• Decision Date: 18 November 2002
• Citation: 299 A.D.2d 472,750 N.Y.S.2d 625
• Parties: KENNETH ROTHSTEIN et al., Appellants-Respondents,<BR>v.<BR>EQUITY VENTURES, LLC, Respondent-Appellant, CHRISTOPHER YAROSCAK et al., Respondents, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

299 A.D.2d 472

750 N.Y.S.2d 625

KENNETH ROTHSTEIN et al., Appellants-Respondents,

v.EQUITY VENTURES, LLC, Respondent-Appellant, CHRISTOPHER YAROSCAK et al., Respondents, et al., Defendants.

Decided November 18, 2002.

O'Brien, J.P., Krausman, Townes and Cozier, JJ., concur.

Ordered that the order is reversed insofar as cross-appealed from, and that branch of the motion which was for summary judgment dismissing the cause of action to recover damages for breach of contract insofar as asserted against the defendant Equity Ventures, LLC, is granted; and it is further,

Ordered that the order is affirmed insofar as appealed from; and it is further,

Ordered that one bill of costs is awarded to the defendants Equity Ventures, LLC, Christopher Yaroscak, and Thomas Yaroscak.

In August 1997 the plaintiffs entered into a contract to purchase a newly-constructed single-family residence in Armonk from the defendant Equity Ventures, LLC (hereinafter Equity). At the closing in November 1997, Equity provided the plaintiffs with a limited warranty for latent defects caused by defective design, workmanship, materials, and/or installation. The warranty also set forth the steps the plaintiffs would be required to follow in the event they wished to make a claim for damages.

In August 1999, over one year after the closing, a heavy rainfall left water accumulation in the plaintiffs' basement. Equity agreed to remedy the problem by making minor repairs to the foundation of the premises. About one month later, the plaintiffs' basement was flooded by rain from a major hurricane. The plaintiffs notified Equity of the flooding, but did not follow the claims procedure set forth in the limited warranty. When Equity was unable, within 48 hours, to devise a solution to the drainage problem in the plaintiffs' basement which the plaintiffs deemed acceptable, the plaintiffs hired an outside contractor. The outside contractor allegedly advised the plaintiffs that the drainage and septic systems in the house were defective, and replaced those systems.

The plaintiffs subsequently commenced this action against several parties, including Equity and two of its individual managing members, Christopher Yaroscak and Thomas Yaroscak, seeking damages, inter alia, for fraud, negligence, breach of contract, and breach of warranty. The Yaroscaks and Equity then moved for summary judgment dismissing the complaint insofar as asserted against them. The Supreme Court granted those branches of the motion which were for summary judgment dismissing the complaint insofar as asserted against the Yaroscaks, and the breach of warranty, fraud, and negligence causes of action insofar as asserted against Equity.

The plaintiffs contend that the Supreme Court erred in dismissing their fraud and negligence causes of action against the Yaroscaks, as those defendants may be held personally liable for torts committed in the performance of their duties for Equity. We agree that members of limited liability companies, such as corporate officers, may be held personally liable if they participate in the commission of a tort in furtherance of company business (see W. Joseph McPhillips, Inc. v Ellis, 278 AD2d 682, 684; Westminster Constr. Co. v Sherman, 160 AD2d 867; Widlitz v Scher, 148 AD2d 530). Here, however, after the Yaroscaks and Equity established their prima facie entitlement to judgment as a matter of law, the plaintiffs did not state a viable cause of action to...