Salinas v. 64 Jefferson Apartments, LLC

Decision Date27 March 2019
Docket NumberIndex No. 52216/13,2016–11306
Citation170 A.D.3d 1216,97 N.Y.S.3d 136
Parties Jose SALINAS, Respondent-Appellant, v. 64 JEFFERSON APARTMENTS, LLC, Appellant-Respondent.
CourtNew York Supreme Court — Appellate Division

DECISION & ORDER

ORDERED that order is modified, on the law, by deleting the provisions thereof, in effect, denying those branches of the plaintiff's cross motion which were for summary judgment dismissing the eighth and ninth affirmative defenses, and substituting therefor provisions granting those branches of the plaintiff's cross motion; as so modified, the order is affirmed insofar as appealed and cross-appealed from, with costs to the plaintiff, and a subsequent decision of the same court dated March 7, 2017, is vacated.

The plaintiff commenced this personal injury action against the defendant alleging, among other things, a violation of Labor Law § 240(1). In its answer, the defendant asserted a number of affirmative defenses, including, as its eighth affirmative defense, that it was an alter ego of the plaintiff's employer, thereby excluding it from liability for injuries sustained by the plaintiff under the Workers' Compensation Law; as its ninth affirmative defense, that it was the plaintiff's special employer, thereby excluding it from liability for injuries sustained by the plaintiff under the Workers' Compensation Law; and, as its tenth affirmative defense, that the plaintiff was a recalcitrant worker. By notice of motion dated April 27, 2016, the defendant moved, inter alia, for summary judgment dismissing the complaint on the ground that all of the plaintiff's claims against it are barred by the exclusivity provisions of the Workers' Compensation Law, on the ground that it was the alter ego of the plaintiff's employer. The plaintiff opposed the defendant's motion, and cross-moved, among other things, for summary judgment on the issue of liability on the Labor Law § 240(1) cause of action; for summary judgment dismissing the defendant's eighth, ninth, and tenth affirmative defenses; and pursuant to CPLR 3126 to preclude the defendant from relying on documents in support of its motion and at trial that it had failed to exchange during discovery.

In an order dated September 23, 2016, the Supreme Court, inter alia, determined that there were triable issues of fact with respect to the defendant's alter ego defense and, upon its determination, in effect, denied the defendant's motion for summary judgment and those branches of the plaintiff's cross motion which were for summary judgment dismissing the defendant's eighth and ninth affirmative defenses. The court also, in effect, granted that branch of the plaintiff's cross motion which was for summary judgment on the issue of liability on the Labor Law § 240(1) cause of action, granted that branch of the plaintiff's cross motion which was for summary judgment dismissing the defendant's tenth affirmative defense, and denied that branch of the plaintiff's cross motion which was pursuant to CPLR 3126 for preclusion.

An injured employee's sole remedy against his or her employer is recovery under the Workers' Compensation Law (see Workers' Compensation Law §§ 11, 29[6] ; Billy v. Consolidated Mach. Tool Corp. , 51 N.Y.2d 152, 156, 432 N.Y.S.2d 879, 412 N.E.2d 934 ). "The protection against lawsuits brought by injured workers which is afforded to employers by Workers' Compensation Law §§ 11 and 29(6) also extends to entities which are alter egos of the entity which employs the plaintiff" ( Moses v. B & E Lorge Family Trust , 147 A.D.3d 1045, 1046, 48 N.Y.S.3d 231 [internal quotation marks omitted]; see Haines v. Verazzano of Dutchess, LLC , 130 A.D.3d 871, 872, 12 N.Y.S.3d 906 ; McDonald v. Winter Bros. Transfer Sta. Corp. , 120 A.D.3d 1315, 992 N.Y.S.2d 568 ; Batts v. IBEX Constr., LLC , 112 A.D.3d 765, 766, 977 N.Y.S.2d 282 ; Quizhpe v. Luvin Constr. Corp. , 103 A.D.3d 618, 618–619, 960 N.Y.S.2d 130 ). "A defendant moving for summary judgment based on the exclusivity defense of the Workers' Compensation Law under this theory must show, prima facie, that it was the alter ego of the plaintiff's employer" ( Haines v. Verazzano of Dutchess, LLC , 130 A.D.3d at 872, 12 N.Y.S.3d 906 [internal quotation marks omitted]; see Batts v. IBEX Constr., LLC , 112 A.D.3d at 766, 977 N.Y.S.2d 282 ; Quizhpe v. Luvin Constr. Corp. , 103 A.D.3d at 619, 960 N.Y.S.2d 130 ). "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" ( Quizhpe v. Luvin Constr. Corp. , 103 A.D.3d at 619, 960 N.Y.S.2d 130 ; see Batts v. IBEX Constr., LLC , 112 A.D.3d at 766, 977 N.Y.S.2d 282 ; Samuel v. Fourth Ave. Assoc., LLC , 75 A.D.3d 594, 595, 906 N.Y.S.2d 67 ). "[A] mere showing that the entities are related is insufficient where a defendant cannot demonstrate that one of the entities controls the day-to-day operations of the other" ( Samuel v. Fourth Ave. Assoc., LLC , 75 A.D.3d at 595, 906 N.Y.S.2d 67 ; see Batts v. IBEX Constr., LLC , 112 A.D.3d at 767, 977 N.Y.S.2d 282 ; Longshore v. Davis Sys. of Capital Dist. , 304 A.D.2d 964, 965, 759 N.Y.S.2d 204 ; Constantine v. Premier Cab Corp. , 295 A.D.2d 303, 304, 743 N.Y.S.2d 516 ).

Contrary to the defendant's contention, in moving for summary judgment dismissing the complaint on the ground that the plaintiff's claims against it are barred by the exclusivity provisions of the Workers' Compensation Law, on the ground that it was the alter ego of the plaintiff's employer, it failed to make a prima facie showing that it and Westchester Management, LLC, operated as a single integrated entity (see Samuel v. Fourth Ave. Assoc., LLC. , 75 A.D.3d at 595, 906 N.Y.S.2d 67 ). The defendant's submissions demonstrated that the defendant and Westchester Management are closely related. Gil Bergman explained in an affidavit submitted in support of the defendant's motion that he and his wife control approximately 15 entities, including the defendant, which in turn own various parcels of residential rental properties, and that Westchester Management was formed to provide maintenance services to those various properties. However, the defendant's submissions also demonstrated that the Bergmans have been careful to maintain the defendant and Westchester Management as separate and distinct from each other. Among other things, neither entity is a subsidiary of the other, the entities were formed for different corporate purposes, the defendant maintains its own bank account separate from that of Westchester Management and pays its own expenses, and separate Schedule Cs are filed for each entity for tax purposes, albeit as part of the Bergmans' personal income tax return (see Longshore v. Davis Sys. of Capital Dist. , 304 A.D.2d 964, 759 N.Y.S.2d 204 ; Rosenburg v. Angiuli Buick , 220 A.D.2d 654, 632 N.Y.S.2d 658 ). The defendant and Westchester Management are parties to a management agreement which provides that Westchester Management will act as an agent for the defendant with regard to the management and maintenance of the defendant's property. Westchester Management's employees perform maintenance and superintendent services at various properties owned by all of the entities controlled by the Bergmans, not only the defendant, and the employees are paid with checks drawn on the account of Westchester Management only. The defendant, on the other hand, itself employs contractors to perform construction work at its premises beyond that which the employees of Westchester Management are able to perform, such as the installation of a new roof, and pays those contractors with checks drawn on the defendant's account. In addition, nonparty Juan Ovalles, an employee of Westchester Management, testified at his deposition that he was unaware that the properties that he and his coworkers maintained were also controlled by the Bergmans, including the premises owned by the defendant. Given this evidence, the defendant failed to establish, prima facie, that it and Westchester Management operated as a single integrated entity (see Salcedo v. Demon Trucking, Inc. , 146 A.D.3d 839, 841, 44 N.Y.S.3d 543 ; Longshore v. Davis Sys. of Capital Dist. , 304 A.D.2d at 965, 759 N.Y.S.2d 204 ; Rosenburg v. Angiuli Buick , 220 A.D.2d at 655, 632 N.Y.S.2d 658 ; cf. Cappella v. Suresky at Hatfield Lane, LLC , 55 A.D.3d 522, 523, 864 N.Y.S.2d 316 ). Accordingly, we agree with the denial of that branch of the defendant's motion which was for summary judgment dismissing the complaint on this basis, regardless of the sufficiency of the plaintiff's opposition papers (see Winegrad v. New York Univ. Med. Ctr. , 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 ).

However, contrary to the Supreme Court's determination, in cross-moving for summary judgment dismissing the defendant's eighth affirmative defense, the plaintiff's submissions established, prima facie, that the defendant is not an alter ego of the plaintiff's employer. In addition to the evidence described above, the plaintiff's submissions demonstrated that tenants at the defendant's rental property enter into a lease agreement with the defendant, and not Westchester Management, and that the Worker's Compensation Policy for Westchester Management is for the benefit of its own employees only, when those employees are working at various locations, including, among other locations, the property owned by the defendant. In opposition to the plaintiff's prima facie showing, the defendant failed to raise a triable issue of fact (see Longshore v. Davis Sys. of Capital Dist. , 304 A.D.2d at 964, 759 N.Y.S.2d 204 [" ‘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...

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