Schaeffer v. Lipton

• Decision Date: 23 October 1997
• Citation: 243 A.D.2d 969,663 N.Y.S.2d 392
• Parties: , 1997 N.Y. Slip Op. 8756 Bernarr C. SCHAEFFER, Appellant, v. Marshall C. LIPTON, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 392

663 N.Y.S.2d 392

243 A.D.2d 969, 1997 N.Y. Slip Op. 8756

Bernarr C. SCHAEFFER, Appellant, v. Marshall C. LIPTON, Respondent.

Supreme Court, Appellate Division Third Department.

Oct. 23, 1997.

Eisenberg & Kirsch (Bertram W. Eisenberg, of counsel), Liberty, for appellant.

Drake, Sommers, Loeb, Tarshis & Catania P.C. (Stephen J. Gaba, of counsel), Newburgh, for respondent.

Before CARDONA, P.J., and MERCURE, WHITE, PETERS and CARPINELLO, JJ.

MERCURE, Justice.

Appeals (1) from an order of the Supreme Court (Torraca, J.), entered September 16, 1996 in Ulster County, which, inter alia, granted defendant's cross motion for summary judgment dismissing plaintiff's third cause of action, and (2) from an order of said court, entered December 31, 1996 in Ulster County, which, inter alia, denied plaintiff's motion for leave to amend the complaint.

Plaintiff commenced this legal malpractice action in 1989 to recover for money damages allegedly resulting from his purchase of realty that he was unable to utilize for its intended purpose, the site of a proposed plastics manufacturing plant. ¹ Following our prior decision and remittal for a new trial (217 A.D.2d 845, 629 N.Y.S.2d 515), plaintiff moved to strike the defense of culpable conduct, to preclude any evidence of the rental value of the property or its market value at the time of its purchase, to permit plaintiff to offer proof concerning damages flowing from his loss of opportunity to manufacture and market unique plastic structural panels referred to as "Schaeffer panels" and, finally, for a ruling that plaintiff's damages and those of his subchapter S corporation, Usheco Inc., are coextensive and permitting evidence as to the latter. Defendant cross-moved for partial summary judgment dismissing plaintiff's third cause of action for economic losses allegedly flowing from plaintiff's inability to use the property to produce and develop the Schaeffer panels upon the ground that any such losses were sustained solely by Usheco, which is not a party to the action. Supreme Court denied plaintiff's motion, granted defendant's cross motion and dismissed plaintiff's third cause of action. Plaintiff subsequently moved to amend the complaint to add Usheco as a plaintiff and to reargue his prior motion. Supreme Court denied the motion and plaintiff now appeals both orders.

Initially, we agree with Supreme Court's conclusion that, notwithstanding plaintiff's status as a 95% shareholder of Usheco, a closely held subchapter S corporation, he lacked standing to sue in his own name for injuries to the corporation (see, Glenn v. Hoteltron Sys., 74 N.Y.2d 386, 392-393, 547 N.Y.S.2d 816, 547 N.E.2d 71; Abrams v. Donati, 66 N.Y.2d 951, 953, 498 N.Y.S.2d 782, 489 N.E.2d 751; Quatrochi v. Citibank N.A., 210 A.D.2d 53, 618 N.Y.S.2d 820). The general rule is that "[f]or a wrong against a corporation a shareholder has no individual cause of action, though he loses the value of his investment or incurs personal liability in an effort to maintain the solvency of the corporation" (Abrams v. Donati, supra, at 953, 498 N.Y.S.2d 782, 489 N.E.2d 751; see, Davis v. Magavern, 237 A.D.2d 902, 654 N.Y.S.2d 517, 518; Elenson v. Wax, 215 A.D.2d 429, 626 N.Y.S.2d 531), and this case presents no established exception (see, Glenn v. Hoteltron Sys., supra; Abrams v. Donati, supra ). It is our further view that Supreme Court did not err in denying plaintiff's motion to amend the complaint to add Usheco as an additional plaintiff because there is no evidence that defendant committed legal malpractice with regard to that entity. To the contrary, it is undisputed that plaintiff en...