Opinion
Index No. 950351/2021 Motion Seq. No. 002
08-21-2023
M.D., Plaintiff, v. CITY OF NEW YORK; BROOKWOOD CHILD CARE a/k/a THE BROOKWOOD FOUNDATION; SCO FAMILY OF SERVICES; and DOES 1-10 Defendants.
Unpublished Opinion
Motion Date 10/15/2021
PRESENT: HON. ALEXANDER M. TISCH, Justice
DECISION + ORDER ON MOTION
HON. ALEXANDER M. TISCH, JUSTICE
The following e-filed documents, listed by NYSCEF document number (Motion 002) 24, 25, 26, 27, 28, 29, 30, 31, 32, 35, 36, 37, 38, 39, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50 were read on this motion to/for DISMISS.
Upon the foregoing documents. Defendant SCO Family of Services ("SCO") in the above captioned Child Victims Act ("CVA") action moves for dismissal of the matter as against it pursuant to CPLR 3211(a)(1), CPLR 3211 (a)(7), CPLR 3211(c) and CPLR 3212 (Motion Seq. 002). Plaintiff and City of New York oppose.
Plaintiff alleges that from approximately 1989 to 1990 when Plaintiff was approximately five to seven years old, Plaintiff was sexually abused while in foster care by another foster child and that shortly after this foster child left the home another foster child moved into the home and sexually assaulted Plaintiff approximately five times. Plaintiff alleges that the foster mother walked in on the alleged sexual abuse by the second foster child and did not take any action beyond telling both children to stop. Plaintiff also alleges that he informed his social worker he does not want to be in the home. Plaintiff alleges that SCO was an agent affiliate, successor, successor in interest, assignee and/or beneficiary of Brookwood Child Care a/k/a The Brookwood Foundation ("Brookwood").
In determining dismissal under CPLR Rule 3211 (a) (7), the "complaint is to be afforded a liberal construction" (Goldfarb v Schwartz, 26 A.D.3d 462, 463 [2d Dept 2006]). The "allegations are presumed to be true and accorded every favorable inference" (Godfrey v Spano, 13 N.Y.3d 358, 373 [2009]). "[T]he sole criterion is whether the pleading states a cause of action, and if from its four comers factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail" (Guggenheimer v Ginzburg, 43 N.Y.2d 268, 275 [1977]). Additionally, "[w]hether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss" (EBC I, Inc. v Goldman, Sachs &Co., 5 N.Y.3d 11, 19 [2005]).
A motion to dismiss a complaint based upon documentary evidence pursuant to CPLR 3211 (a) (1) "may be appropriately granted where the documentary evidence utterly refutes the plaintiffs factual allegation, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N. Y., 98 N.Y.2d 314, 326 [2002]; Leon v Martinez, 84 N.Y.2d 83, 88 [1994]). Not every piece of evidence in the form of a document is properly deemed "documentary evidence." The appellate courts have noted this distinction, finding that legislative history and supporting cases make it clear that "judicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are 'essentially undeniable,' would qualify as 'documentary evidence' in the proper case" (Fontanetta v Doe, 73 A.D.3d 78, 86 [2d Dept 2010]; Amsterdam Hosp. Grp., LLC v Marshall-Alan Assocs., Inc., 120 A.D.3d 431, 432 [1st Dept 2014]).
In support of their motion, SCO submits an affidavit from Jessica Hanlon, associate counsel for SCO, which states that neither Plaintiffs name nor the foster parent's name appear in any SCO database. The affidavit also states that SCO is not a successor of Brookwood and their only relationship was as a gift recipient.
Plaintiff argues that SCO is liable as a successor in interest as a de facto merger occurred because "(i) when BROOKWOOD ceased to exist, nearly all of their remaining monetary assets were given to SCO FAMILY in the form of an endowment gift; (ii) SCO Family maintains the assets of BROOKWOOD as a 'donor-restricted endowment fund (the 'Brookwood Fund') that has been classified as permanently restricted net assets;' (iii) terms and conditions surrounding the endowment or the restrictions are not ascertainable without discovery; and (iv) the Treasurer of BROOKWOOD at the time of the endowment is currently an important member of SCO FAMILY and has been since shortly after the dissolution" (NY St Cts Elec Filing [NYSCEF] Doc No. 41, affirmation in opposition at 20). "The de facto merger doctrine is based on the concept that a successor that effectively takes over a corporation in its entirety should carry the predecessor's liabilities as a concomitant to the benefits it derives from the good will purchased, which is consistent with the desire to ensure that a source remains to pay for the victim's injuries" (Dutton v Young Men's Christian Assn, of Buffalo Niagara, 207 A.D.3d 1038, 1040 [4th Dept 2022] [internal quotation marks and citations omitted]).
Indeed, whether a corporation can be considered as a successor to be liable for the torts of its predecessor is a fact-intensive inquiry (see generally Matter of New York City Asbestos Litig., 15 A.D.3d 254, 255-256 [1st Dept 2005]). "De facto" merger factors include "(1) continuity of ownership; (2) cessation of ordinary business operations and the dissolution of the selling corporation as soon as possible after the transaction; (3) the buyer's assumption of the liabilities ordinarily necessary for the uninterrupted continuation of the seller's business; and (4) continuity of management, personnel, physical location, assets and general business operation" (Sweatland v Park Corp., 181 A.D.2d 243, 245-246 [4th Dept 1992]). However, "[not] all of these factors are needed to demonstrate a merger; rather, these factors are only indicators that tend to show a de facto merger" (id. at 246). "[W]hen evaluating the applicability of the de facto merger doctrine, the court should analyze each situation on a case-by-case basis" (Dutton, 207 A.D.3d at 1040).
The affidavit signed by Jessica Hanlon does not constitute "documentary evidence" within the meaning of CPLR 3211 (a) (1) (see J.D. v Archdiocese of New York, ___ A.D.3d ___, 2023 NY Slip Op 01588 [1st Dept Mar. 23, 2023]; Correa v Orient-Express Hotels, Inc., 84 A.D.3d 651 [1st Dept 2011] citing, inter alia, Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 A.D.3d 267, 271 [1st Dept 2004]; Fontanetta v Doe, 73 A.D.3d 78, 86 [2d Dept 2010] ["it is clear that affidavits and deposition testimony are not 'documentary evidence' within the intendment of a CPLR 3211(a)(1) motion to dismiss"]). Even if the statements regarding the database search are considered evidence, which the Court is not taking a position on, the conclusory statements regarding successor liability are not.
Further, although "a trial court may use affidavits in its consideration of a pleading motion to dismiss," where, as here, the Court declines to convert the motion into one for summary judgment, such affidavits "are not to be examined for the purpose of determining whether there is evidentiary support for the pleading" (Rovello v Orofino Realty Co., Inc., 40 N.Y.2d 633, 635 [1976]). Consequently, affidavits submitted from a defendant "will almost never warrant dismissal under CPLR 3211" (Lawrence v Miller, 11 N.Y.3d 588, 595 [2008]) "unless [they] establish conclusively that plaintiff has no cause of action" (Rovello, 40 N.Y.2d at 636).
SCO provides additional exhibits as part of their reply, including judicial documents and affidavits. However, "[t]he function of reply papers is to address arguments made in opposition to the position taken by the movant and not to permit the movant to introduce new arguments in support of, or new grounds for the motion" (Dannasch v Bifulco, 184 A.D.2d 415, 417, 585 N.Y.S.2d 360 [1st Dept 1992]; see also All State Flooring Distribs., L.P. v MD Floors, LLC, 131 A.D.3d 834, 836 [1st Dept 2015]). Here, successor liability was alleged in the amended complaint and Plaintiff addressed this issue in both their motion to dismiss and annexed affidavit. A surreply was not authorized by the Court and Plaintiff did not have an opportunity to respond to the new evidence submitted as part of SCO's reply. As such the additional exhibits will not be considered and dismissal of Plaintiff s actions as against SCO is not warranted.
Defendant's alternate request for relief pursuant to CPLR 3212 is denied as well. First, CPLR 3212 (a) explicitly requires that issue be joined and defendant has not yet filed an answer (see Alro Builders and Contractors, Inc. v Chicken Koop, Inc., 78 A.D.2d 512, 512 [1st Dept 1980]). Second, it is clear that discovery remains outstanding related to the issue mentioned above about the exact nature and scope of the relationship between defendant and the tortfeasor(s), among others. Accordingly, summary judgment is premature (see Rutherford v Brooklyn Navy Yard Dev. Corp., 174 A.D.3d 932, 933 [2d Dept 2019]; Rodriguez Pastor v DeGaetano, 128 A.D.3d 218, 227-28 [1st Dept 2015]).
Although the motion suggests that SCO is a separate entity with no successor liability as to Brookwood, an inquiry into whether there was a de facto merger is fact intensive and the Court declines to dismiss SCO as a defendant at this juncture without the benefit of discovery given that it appears there was a transfer of the majority of assets from Brookwood to SCO and the possibly of an overlapping board member.
Accordingly, it is hereby ORDERED that the motion is denied; and it is further
ORDERED that the movant shall file and serve an answer to the complaint within twenty (20) days from service of a copy of this order with notice of entry; and it is further
ORDERED that the parties shall proceed with discovery pursuant to CMO No. 2, Section IX (B) (1) and a first compliance conference order within thirty (30) days after issue is joined.
This constitutes the decision and order of the Court.