Stewart Tenants Corp. v. Square Industries, Inc.

• Decision Date: 17 February 2000
• Citation: 703 N.Y.S.2d 453,269 A.D.2d 246
• Parties: STEWART TENANTS CORP., Appellant,<BR>v.<BR>SQUARE INDUSTRIES, INC., et al., Respondents.
• Court: New York Supreme Court — Appellate Division

269 A.D.2d 246

703 N.Y.S.2d 453

STEWART TENANTS CORP., Appellant,

v.SQUARE INDUSTRIES, INC., et al., Respondents.

Decided February 17, 2000.

Concur — Rosenberger, J. P., Ellerin, Wallach and Saxe, JJ.

This is an action for liability on a judgment and for unjust enrichment. Plaintiff Stewart Tenants Corp. is a cooperative corporation which owns a building at 70 East 10th Street in Manhattan. Plaintiff leased the parking garage in that building to defendant Stewart Garage in 1972. In 1989, after a prior extension of the lease, Stewart Garage subleased the garage to defendant 70 East 10th Square Corp. (Square Corp.), a wholly-owned subsidiary of defendant Square Industries. Although the lease and sublease terminated on November 1, 1995, the premises were not vacated.

Plaintiff brought a holdover proceeding in Civil Court against Stewart Garage and Square Corp. Believing that defendant Square Plus Operations Corp. (Square Plus) actually managed the operations of Square Corp. and funneled the money to Square Industries, plaintiff named these two parties as respondents in the holdover proceeding as well.

At trial, plaintiff attempted to explore defendants' interconnecting corporate structure, but defense counsel successfully objected that such piercing of the corporate veil required a summons and complaint in Supreme Court. Accordingly, the Civil Court determined that it had no jurisdiction over Square Plus and Square Industries because they were never in possession of the garage. The court restricted itself to entering a judgment of possession and use and occupancy against the tenant Stewart Garage and the subtenant Square Corp. The tenant and the subtenant were evicted, but the judgment was never paid.

On May 15, 1998, plaintiff brought this action. The first cause of action sought to recover the unpaid judgment from Square Industries, on the ground that the tenant and subtenant were merely dummy corporations that were controlled by Square Industries. The second cause of action alleged that Square Industries was unjustly enriched due to its holdover possession of the garage (through its dummy corporations). Neither cause of action specifically stated a claim against Square Plus, Square Corp. or Stewart Garage.

The motion court granted defendants' motion to dismiss the complaint against Square Plus, Square Corp. and Stewart Garage on the ground that the pleadings did not explicitly allege any claims against them. The court also held that plaintiff was collaterally estopped from bringing an unjust enrichment claim against Square Industries and Square Plus because the Civil Court had already ruled that these defendants were never in possession of the garage.

We find that plai...