Opinion
15558/04.
Decided May 31, 2006.
Law Offices of Steven E. Rosenfeld, P.C., New York, New York, Counsel for Plaintiff.
Hall, David Joseph, P.A., Miami, FL, Co-counsel for Plaintiff.
Weiss Zarett, P.C., New Hyde Park, New York, Counsel for Defendant.
Defendants move for summary judgment dismissing the first cause of action, except to the extent that its asserts a cause of action for non-payment of rent, as well as the second, third, fourth, fifth and sixth causes of action and for summary judgment, in favor of Defendant on the fourth affirmative defense and counterclaim. Plaintiff cross-moves for summary judgment on liability for all causes of action except for the claim for damage to the basement and for summary judgment on liability and damages on the claim for unpaid rent.
BACKGROUND
This action arises out of the termination of his tenancy and use of a portion of premises located at 110-34 70th Road, Forest Hills, New York ("the Premises") for his medical practice by Defendant J. Jason Bitter, M.D. ("Dr. Bitter").
Plaintiff Rhoda Wanich ("Wanich") is the owner of the Premises and was Dr. Bitter's landlord.
The Premises was built during the 1950's as a home and medical office for Wanich and her late husband, Dr. Stanley Dannenberg. Dr. Dannenberg used the first floor of the Premises for his medical practice. Dr. Dannenberg and Wanich resided in the apartment on the second floor. Dr. Dannenberg practiced diagnostic and therapeutic radiology.
Diagnostic radiology involves the use of radiological equipment such as x-ray machines, sonograms, CT scans and MRIs to diagnose medical conditions and diseases. Therapeutic radiology involves the use of devices such as cobalt radiation machines for the treatment of medical conditions and diseases, primarily cancerous tumors.
The licensing requirements for these two fields are different.
During Dr. Dannenberg's occupancy of the Premises, he constructed an additional wing on the first floor, which was made of cement, in which he installed a cobalt therapy machine. Dr. Dannenberg also installed two permanent and one portable x-ray machine in he Premises.
Dr. Dannenberg died in 1973. In 1975, Wanich, acting in her capacity as executrix of the Estate of Stanley Dannenberg, sold the furniture, fixtures, machines and equipment located at the Premises and used in the practice of radiological medicine to Dr. Stanley Wolfson. Wanich also leased the first floor of the Premises to Dr. Wolfson for his use as an office for the practice of radiological medicine.
In 1983, Dr. Bitter entered into an agreement with Dr. Wolfson to purchase Dr. Wolfson's medical practice. The purchase of the practice was contingent upon Dr. Bitter being able to obtain a new office lease from Wanich and upon Dr. Bitter being able to assume the obligation to pay the balance of the promissory note due from Dr. Wolfson to Wanich in connection with the purchase of the furniture, fixtures, machinery and equipment.
Dr. Bitter and Wanich were able to negotiate a new lease which ran for a period of ten years commencing on July 1, 1983. Wanich permitted Dr. Bitter to assume the payment of the promissory note due from Dr. Wolfson.
Paragraph 38 of the 1983 lease which permitted Dr. Bitter to assign the lease to a corporation in which he or his wife were the owners of at least 51% of the shares provided that the promissory note had been paid in full and two months rent were deposited as security with Wanich.
Paragraph 20 of the 1983 lease provides:
"If after default in payment of rent or violation of any other provision of this lease, or upon expiration of this lease, Tenant moves out or is dispossessed and fails to remove any trade fixtures or other property prior to such said default, removal, expiration of lease, or prior to the final order or execution of the warrant, then and in that event, the said fixtures and property shall be deemed abandoned by Tenant and shall become property of Landlord."
Paragraph 30 of the 1983 lease provides:
"The Lessee (Dr. Bitter) shall not make any alterations or changes in the demised premises without the written consent of the Lessor, (Wanich) and all additions, fixtures, or improvements, except only store and office furniture and fixtures which shall be readily removable without injury to the Premises, shall be and remain a part of the Premises at the expiration of the Lease."
By Assignment and Assumption Agreement dated October 7, 1992, Dr. Bitter assigned his interest in the lease to Defendant 110-34 70th Road Inc. ("70th Road, Inc.").
By Lease Renewal and Modification Agreement ("Renewal Agreement")between Wanich and 70th Road, Inc. dated October 22, 1992, the lease was extended for a period of ten years commencing on August 1, 1993 and terminating on July 31, 2003.
Bitter alleges that in late 2000 or early 2001, he decided to sell his practice. However, the prospective purchaser and Wanich were unable to negotiate the terms of a new lease. As a result, Dr. Bitter did not sell his practice.
During the summer of 2001, Dr. Bitter claims he advised Wanich that he would be closing his office in September 2001 and would be remaining in the Premises for a few months thereafter to wrap up his practice. Dr. Bitter sold some of the portable equipment and removed his office records and files. He closed his office as of November 30, 2001. The rent had been paid through that date. Upon closing his office, Dr. Bitter asserts that he surrendered possession of the Premises to Wanich.
Dr. Bitter claims that, when he closed his practice and office, the only items he left in the Premises were the cobalt therapy machine and two x-ray machines which were permanently affixed to the floor.
Wanich relates a different version of the events. She avers that all three x-ray machines were permanently installed. During the course of Dr. Bitter's tenancy, one of the machines broke. Dr. Bitter removed the broken machine and had the damage to the Premises caused by the removal of the machine repaired. She further asserts that only a portion of the cobalt therapy machine was permanently affixed. The radioactive head could be removed.
Wanich further disputes Dr. Bitter's assertion that the cobalt therapy machine was inoperable. Dr. Bitter asserts that he never used the machine. Bitter avers that when he purchased the practice from Dr. Wolfson that he did not received the key necessary to operate the machine. Wanich asserts that after Bitter left the Premises an inspector from the City of New York was able to turn on the machine.
Wanich also alleges that, when Dr. Bitter left the Premises, he did not remove the tanks containing the processing fluid for x-rays. These items were not permanently affixed to the premises.
The parties also dispute whether Dr. Bitter had caused damage to the Premises.
Dr. Bitter asserts that the only damage to the Premises occurred in 1999 when x-ray developer fluid leaked into the kitchen of the apartment in the basement of the Premises. He reported the claim to his insurance carrier which paid to have the damage repaired. Dr. Bitter asserts that all of the damage caused by the leak was repaired.
Dr. Bitter had his x-ray equipment service company install a steel pan under the x-ray developer to prevent further leakage from seeping into the floor. Dr. Bitter denies any further damage to the property.
Wanich denies that there was an apartment in the basement. She claims that during her occupancy of the Premises, the basement was used as a playroom for her children and a laundry room. She further alleges that Dr. Bitter used a portion of the basement for storage.
Wanich claims that, when she went into the premises after Dr. Bitter had terminated his occupancy, she found areas that were damaged as a result of the 1999 leak.
The complaint alleges six causes of action. The first cause of action seeks damages for breach of the lease against 70th Road, Inc. The second cause of action seeks damages for breach of lease against Dr. Bitter. The first and second causes of action are identical and combine Wanich's claim for the rent with her claim for damages.
The third cause of action alleges a claim for strict liability against 70th Road, Inc. and is premises upon Dr. Bitter's failure to safeguard and/or dispose of the radioactive material in the office when he abandoned the Premises.
The fourth cause of action alleges a claim for nuisance against 70th Road, Inc and Dr. Bitter. It is premised upon Dr. Bitter's permitting the acid from the x-ray developer to leak causing damage to electrical and plumbing systems and structure and in failing to safeguard and/or dispose of the radioactive material when he abandoned the Premises.
The fifth cause of action sounds in negligence per se against 70th Road, Inc. and Bitter. It is premised upon Defendants' failure to properly license the radiological equipment in the office and/or failed to properly safeguard and dispose of the radiological material upon abandoning the Premises.
The sixth cause of action alleges negligence theory of recovery against 70th Road, Inc. and Bitter. It is premised upon their negligently maintaining the premises, lost rent and failing to dispose of the radiological material upon abandoning the Premises.
Wanich seeks to recover (1) the rent due on the lease from November 2001 through the end of the lease term July 31, 2003; (2) the costs incurred in removing the medical equipment from the premises; (3) the amount required to repair the damage to the premises; and (4) the rental lost as a result of being unable to re-rent the Premises. Wanich also seeks legal fees in accordance with the terms of the Renewal Agreement.
While the complaint alleges the foregoing causes of action, the motion papers indicate that liability is interposed against 70th Road, Inc. as the tenant. Bitter's liability is based on a piercing the corporate veil theory. Wanich alleges that 70th Road, Inc. is a shell or alter ego of Bitter.
Defendants move for summary judgment dismissing the complaint except to the extent that it asserts a cause of action for rent against 70th Road, Inc. and for summary judgment on its fourth affirmative defense seeking a credit for the security deposit.
Plaintiff cross-moves for summary judgment on the issue of liability on all causes of action and for liability and damages on her claim for rent.
DISCUSSION
A. Summary Judgment — Standard
Summary judgment is a drastic remedy which will be granted only when the movant establishes that there are no triable issues of fact. Andre v. Pomeroy, 35 NY2d 361 (1974). See also, Mosheyev v. Pilevsky, 283 AD2d 469 (2nd Dept., 2001); and Akseizer v. Kramer, 265 AD2d 365 (2nd Dept., 1999).
The party seeking summary judgment must make a prima facie showing of entitlement to judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986); and Zuckerman v. City of New York, 49 NY2d 557 (1980).
Once the party seeking summary judgment has met his burden, the party opposing the motion must come forward with proof in evidentiary form establishing the existence of triable issues of fact or must demonstrate an acceptable excuse for its failure to do so. Zuckerman v. City of New York, supra; Davenport v. County of Nassau, 279 AD2d 497 (2nd Dept., 2001); and Bras v. Atlas Construction Corp., 166 AD2d 401 (2nd Dept., 1991).
When deciding a motion for summary judgment, the court must determine if triable issues of fact exist. Matter of Suffolk County Dept. of Social Services v. James M., 83 NY2d 178 (1994); and Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957). The motion must be denied if the court has any doubt as to the existence of a triable issue of fact. Freese v. Schwartz, 203 AD2d 513 (2nd Dept., 1994); and Miceli v. Purex Corp., 84 AD2d 562 (2nd Dept., 1984).
When deciding a motion for summary judgment, the court must view the evidence in a light most favorable to the non-moving party and must give the non-moving party all of the reasonable inferences which can be drawn from the evidence. Negri v. Stip Shop, Inc., 65 NY2d 625 (1985); and Louniakov v. M.R.O.D. Realty Corp., 282 AD2d 657 (2nd Dept., 2001).
B. Rent
A commercial landlord does not have a duty to re-let or attempt to re-let the demised premises in order to mitigate damages. Holy Properties Limited, L.P. v. Kenneth Cole Productions, Inc., 87 NY2d 130 (1995). When a tenant abandons the property, the landlord has three options: (1) do nothing and collect the full rent due from the tenant; (2) accept the tenant's surrender, reenter the Premises and rent the property for the benefit of the landlord thereby releasing the tenant of any further liability for rent; or (3) advise the tenant that the landlord is entering and re-renting the property for the benefit of the tenant. Id.
If the landlord chooses the re-enter and re-rent for the benefit of the tenant, then the rent collected is apportioned to repay the landlord's expenses in reentering and then to tenant's rent obligation under the lease. Id. Landlord can then look to the tenant for any deficiency. Altamuro v. Capoccetta, 212 AD2d 904 (3rd Dept. 1995).
Wanich asserts, and 70th Road, Inc. does not contest, that she is due the rent under the Renewal Agreement for the period December 1, 2001 through July 31, 2003. The rent for this period is $75,112.00.
However, the parties disagree as to the amount of set-off to be credited against the rent on account of the security deposit.
Paragraph 3 of the Renewal Agreement obligated Dr. Bitter to pay a security deposit of $6,000.00. This provision further required Dr. Bitter to increase the security deposit during the term so that the security deposit would be equal to two (2) months rent.
Wanich was required to maintain the security deposit in an interest bearing account. All interest less one (1%) percent which was to be retained by the landlord was due and payable to the tenant at the end of the lease.
The $6,000.00 security deposit due and payable on the execution of the Renewal Agreement was paid. Wanich acknowledged the receipt of this sum. The additional security deposit required to bring the amount equal to two (2) months rent as the rent increased over the term was never paid.
Wanich did not recall whether she ever deposited the security deposit into an interest bearing account and cannot account for the interest earned on the deposit.
The parties dispute the amount of interest that should be credited on the security deposit. Defendants assert that interest should be credited at the statutory rate of nine (9%) percent. See, CPLR 5004. Wanich asserts that interest rate on savings accounts varied over the period in question and suggests a rate of two and one half (2.5%) percent would be appropriate. Since Wanich is entitled to retain one (1%) percent of the interest, she is willing to give Defendants credit for interest at the rate of one and one half (1.5%) percent.
A lease, like any other contract, is to be interpreted in accordance with the intent of the parties. George Backer Mgt. Corp. v. Acme Quilting Co., 46 NY2d 211 (1978). See also, Martin v. Glenzan Assoc., Inc., 75 AD2d 660 (3rd Dept. 1980); and 74 NY Jur2d, Landlord and Tenant § 65. If an agreement is clear and unambiguous, the court must determine its meaning as a matter of law based upon the terms of the agreement without resort to extrinsic language. Greenfield v. Philles Records, Inc. 98 NY2d 562 (2002) and Katina, Inc. v. Famiglietti, 306 AD2d 440 (2nd Dept. 2003).
The Renewal Agreement provides that the security will be maintained in an interest bearing account. However, it does not indicate the type of account into which the security should be deposited. The Court notes that interest rates have varied since 1993. Clearly, the parties anticipated that interest would be earned on the security deposit at the prevailing rate for savings accounts or certificates of deposit. Neither party has established what an appropriate rate of interest should be as a matter of law.
Therefore, the Court finds that Wanich is due rent of $75,112 from 70th Road, Inc. less a deduction for the security deposit plus the appropriate interest as is to be determined at trial.
C. Fixtures and Damage to the Premises
While not necessarily pled as such, Wanich's damage claim involves the costs incurred in removing the x-ray machines, cobalt therapy machine and other items of personal property used by Dr. Bitter in connection with his practice from the Premises when he abandoned the property.
1. Common Law and Breach of Lease
Both Paragraph 3 of the lease and the common law require the tenant to surrender possession of the Premises in as good a condition as they were at the commencement of lease reasonable wear and tear excepted. See, Centre Great Neck Co. v. Penn Encord, Inc., 276 AD2d 735 (2nd Dept. 2000); and 74 NY Jur2d Landlord and Tenant § 203.
Paragraph 3 of the July 1983 lease specifically provides that the tenant shall surrender possession ". . . in as good condition as reasonable use thereof shall permit." Paragraph 17 of the Renewal Agreement ratifies and incorporates by reference all of the terms of the July 1983 lease except to the extent that they were modified by the Renewal Agreement. The Renewal Agreement does not modify the provisions of Paragraph 3 of the July 1983 lease.
A tenant may be held liable to the landlord for damages caused to the Premises which arise from the tenant's willful conduct or negligence. Granger University Avenue Corp. v. First State Ins. Co., 99 AD2d 1022 (1st Dept. 1984). The landlord may recover the actual costs of the repairs. JIHL Assocs. v. Frank, 137 AD2d 655 (2nd Dept. 1988).
Wanich asserts that Dr. Bitter was obligated to remove the x-ray machines and cobalt therapy machine from the premises when he abandoned the premises. Wanich further asserts that Dr. Bitter failed to remove tanks, equipment and acid used to develop x-rays from the Premises. Dr. Bitter responded that the x-ray machines and cobalt therapy machine were fixtures permanently affixed to the property. Thus, removal of these items would be difficult and cause damage to the property. He further asserts that the lease required him to leave these items.
Trade fixtures are items of personal property which a tenant places or affixes to a leased property for the purposes of conducting its business or trade during the term of the lease. Orange County-Poughkeepsie MSA Limited Partnership v. Bonte, 301 AD2d 583 (2nd Dept., 2003); and J.K.S.P. Restaurant, Inc. v. County of Nassau, 127 AD2d 121 (2nd Dept., 1987).
Trade fixtures remain the property of the tenant and may be removed from the leased property at the termination of the lease unless removal is prohibited by the lease or removal would cause injury to the land. Orange County-Poughkeepsie MSA Limited Partnership v. Bonte, supra; and In re Dormitory Authority of the State of New York, 172 AD2d 401 (1st Dept., 1991). See also, Allyn v. State, 11 AD2d 831 (3rd Dept., 1960).
The cobalt therapy machine was allegedly affixed to the concrete walls of the room built specifically to house that particular piece of equipment. The wiring to operate the cobalt therapy machine ran through the cement floor and walls into controls in other rooms. Wanich concedes that the stand for the cobalt therapy machine was bolted into the concrete. However, the radioactive head of the machine was not permanently affixed. The photograph of the cobalt machine annexed to Wanich's motion papers indicate that it is a rather large machine that appears to be permanently affixed to both the wall and the floor.
The cobalt therapy machine and x-ray machine were in the Premises when they were leased to Dr. Bitter in 1983. In fact, these machines were installed in the Premises by Dr. Dannenberg.
Dr. Bitter asserts that he was obligated to leave these machines in the Premises by Paragraph 30 of the lease which requires that ". . . all . . . fixtures, except only store and office furniture and fixtures which shall be readily removable without injury to the premises, shall be and remain a part of the premises at the expiration of the lease."
Neither party places before the Court a description of the measures necessary to remove the cobalt therapy machine or the x-ray machine from the Premises. A photograph attached to Wanich motion papers which depicts the removal of the cobalt therapy machine indicates that the removal required three men and possibly the use of a hoisting devise. It is unclear from the picture whether this machine was removed through an existing door or whether a special opening had to be created to remove it from the premises.
Dr. Bitter also asserts that these items are fixtures that became property of the landlord when he left the Premises without removing them. Paragraph 20 of the lease provides that if the tenant moves out after default in payment of rent, any trade fixtures or property left on the Premises is deemed abandoned and becomes property of the landlord.
There are clearly questions of fact as to whether the items in question could be "readily removed" from the Premises. In view of this, summary judgment must be denied.
2. Strict Liability
Wanich's claim is premised upon Dr. Bitter's failure to safeguard and dispose the radioactive material in the cobalt therapy machine and x-ray machine and permitting acid and other hazardous materials caused damage to the Premises.
Strict liability may be imposed upon one who engages in an abnormally dangerous activity. Doundoulakis v. Town of Hempstead, 42 NY2d 440 (1977). Liability is premised upon the policy consideration that ". . . those who engage in activity of sufficiently high risk of harm to others, especially if there are reasonable, even if more costly, alternatives, should bear the cost of harm caused to the innocent.(citations omitted)." Id. at 448.
The determination of whether something is an ultra-hazardous or an abnormally dangerous activity is determined by the consideration of a number of factors suggested by in the Restatement of Torts Second § 520 including: (a) existence of a high degree of risk of harm to the person, land or chattels of others; (b) likelihood that the harm that will result from it will be great; (c) inability to eliminate the risk by the exercise of reasonable care; (d) extent to which the activity is not a matter of common usage; (e) inappropriateness of the activity to the place where it is carried on; and (f) the extent to which its value to the community is outweighed by its attributes." See also, Searle v. Suburban Propane Div. of Quantum Chemical Corp., 263 AD2d 335 (2nd Dept. 2000).
However, even in strict liability, the Defendant's activities must have been the proximate cause of some harm. Id. See also, Spano v. Perini Corp., 25 NY2d 11 (1969); and Iannone v. Cayuga Const. Corp., 66 AD2d 745 (1st Dept. 1978); and 1A NY PJI 3d 2:112 at p. 620.
In this case, there is no evidence that Defendants' failure to safeguard the equipment caused any harm. Furthermore, there is no evidence the Premises was subject to any contamination caused by emissions from the x-ray machine or cobalt therapy machine.
Wanich has failed to place before the Court any evidence that the fluids used to develop x-rays pose any special or unreasonable degree of risk if used properly.
To the extent that this claim is based upon an alleged violation of the Environmental Conservation Law § 380-4.1, there is no such section. The proper reference is to 6 NYCRR § 380-4.1 which relates to the disposal of radioactive material. This provision incorporates by reference the other regulations upon which Wanich relies, to wit: New York City Health Code § 175.104, 10 NYCRR Part 16 and 12 NYCRR Part 38.
Violation of a regulation is some evidence of negligence. Elliott v. City of New York, 95 NY2d 730 (2001); Long v. Forest-Fehlhaber, 55 NY2d 154 (1982); and Cruz v. City of New York, 13 AD3d 254 (1st Dept. 2004). To the extent that the cited regulations are relevant to this action, violation of these regulations would be some evidence of negligence, but would not give rise to a claim for strict or absolute liability.
If Wanich incurred any additional expenses in the removal of the cobalt therapy machine and x-ray machines, those sums can be recovered as part of the claim for breach of lease or negligence, if Dr. Bitter was obligated to remove those items.
Since Wanich has failed to establish any basis for imposing strict liability upon the Defendants, this cause of action must be dismissed.
3. Negligence Per Se
Violation of a statute may constitute negligence per se or give rise to absolute liability. Elliott v. City of New York, supra; and Van Gaasbeck v. Webatuck Central School District No. 1, 21 NY2d 239 (1967). To constitute negligence per se, the statute must impose a specific duty on the Defendant and be intended to provide protection to a specific class of people. Nicholson v. South Oaks Hosp., 27 AD3d 628 (2nd Dept. 2006).
In this case, Wanich has failed to allege the violation of any statute. Plaintiff's negligence pro se claim is premised upon the violation of regulations, which, are only some evidence of negligence.
Since Wanich has failed to establish any statute or regulation which would give rise to negligence per se, the fifth cause of action must be dismissed.
5. Nuisance
"[T]oday it is recognized that one is subject to liability for private nuisance if his conduct is a legal cause of the invasion of the interest in the private use and enjoyment of land and such invasion is (1) intentional and unreasonable, (2) negligent or reckless, or (3) actionable under rules governing liability for abnormally dangerous conditions or activities (citations omitted)." Copart Industries, Inc. v. Consolidated Edison Co. of New York, Inc., 41 NY2d 564, 569 (1977). Put another way, the elements of a cause of action for private nuisance are: ". . . (1) an interference substantial in nature, (2) intentional in origin, (3) unreasonable in character, (4) with a person's right to use and enjoy land, (5) caused by another's conduct." Id. at 570. See also, Mangusi v. Town of Mount Pleasant, 19 AD3d 656 (2nd Dept. 2005); Zimmerman v. Carmack, 292 AD2d 601 (2nd Dept. 2002); and Weinberg v. Lombardi, 217 AD2d 579 (2nd Dept. 1995).
Wanich has failed to establish the elements of this cause of action. Wanich has not placed before the court any evidence to establish that Defendants invaded her interest in the property or their conduct was unreasonable in nature or actionable under the rules governing liability for abnormally dangerous conditions and activities.
Wanich's claim is that the Defendants, former tenants in her property, abandoned the property during the term of the lease, did not remove items of personalty and did not leave the property in as good a condition as it was in when it was let except for reasonable wear and tear. This does not give rise to cause of action for private nuisance. Wanich may have incurred additional expenses in restoring the property because of the nature of the items to be removed. These sums are recoverable under the breach of lease or common law claims if they are recoverable at all.
Therefore, the cause of action for nuisance must be dismissed.
D. Piercing the Corporate Veil
While Wanich pleads substantive causes of action against Dr. Bitter, it appears, for the purposes of these motions, that she seeks to hold Dr. Bitter personally responsible on the theory of piercing the corporate veil.
A party seeking to pierce the corporate veil must prove that the owner of the corporation dominated the corporation in regard to the transaction in question so as to constitute an abuse of the privilege of doing business as a corporation and that such domination was used to perpetrate a fraud or injustice upon the Plaintiff. TNS Holdings, Inc. v. MKI Securities, Inc., 92 NY2d 335 (1998) and Matter of Morris v. New York State Dept. of Taxation Finance, 82 NY2d 339 (1993). See also, First Capital Asset Management, Inc., v. N.A. Partners, L.P., 300 AD2d 112 (1st Dept. 2002). When seeking to pierce the corporate veil, the Plaintiff is seeking to impose upon the corporate shareholder or officer the entire liability of the corporation arising out of the transaction. Matter of Morris v. New York State Dept. of Taxation and Finance, supra. See also, Walkovsky v. Carlton, 18 NY2d 414 (1966).
In making the determination as to whether to pierce the corporate veil, the court must determine whether a corporate officer or principal to be held liable (1) exerted domination and control over the corporation which was so complete that the corporation had no separate mind, will or existence of its own; (2) used this domination and control to commit fraud or wrong or any other dishonest or unjust act; and (3) whether injury or unjust loss resulted to Plaintiff from said control and wrong. Bowles v. Errico, 163 AD2d 771, 773 (3rd Dept. 1990) citing 13 NYJur. 2d Business Relationships § 26. See also, Maggio v. Becca Construction Co., Inc. 229 AD2d 426 (2nd Dept. 1996).
In making this determination, the court must consider such factors as the existence of corporate minutes, the existence of a board of directors, the actual issuance of shares, the existence of corporate records or bank accounts and the extent to which corporate formalities were observed. Id.; and McMullin v. Pelham Bay Riding, Inc., 190 AD2d 529 (1st Dept. 1993).
The parties do not contest that Dr. Bitter was permitted to, and did, assign his interest in the lease to 70th Road, Inc. Wanich asserts that 70th Road, Inc. is Dr. Bitter's alter ego. There are certainly factual issues relating to this question. 70th Road, Inc. was incorporate solely for the purpose of holding the lease for Dr. Bitter's office. 70th Road, Inc. had no other business. 70th Road, Inc. did not enter into a formal sub-lease by which it sub-let the Premises to Dr. Bitter. 70th Road, Inc. acted as nothing more than a conduit to pay Dr. Bitter's rent to Wanich. Dr. Bitter testified at his deposition that he would periodically deposit enough money into 70th Road's account as was required to pay its expenses. The corporation never had any capital.
At least three times during the period during which 70th Road, Inc. was the tenant, its rent was paid by a check issued by Dr. Bitter from his personal account.
Dr. Bitter wants the Court to infer that, because he complied with corporate formalities, that the he is insulated from personal liability. Wanich seeks wants the Court to draw the inference that 70th Road, Inc. was a sham corporation.
Generally, the determination of whether the corporate veil should be pierced is so fact laden that it is not subject to summary resolution. Giarguaro S.p.A. v. Amko International Trading, Inc., 300 AD2d 349 (2nd Dept., 2002); and Forum Ins. Co. v. Texarkoma Transp. Co., 229 AD2d 341 (1st Dept., 1996).
Since the finder of fact could logically draw the inferences suggested by either party, the motion to dismiss the causes of action against Dr. Bitter must be denied.
E. Defendants' Cross-Motion
Defendants seek to dismiss Plaintiff's causes of action which relate to the damage to the basement of the Premises and on its claimed set-off.
1. Damage to the Basement
The parties concede that fluid used to develop x-rays leaked into the basement in 1999. The damage was repaired. Dr. Bitter took action to assure that this did not occur again.
Wanich asserts that there is damage to the basement caused by Dr. Bitter which is different from the damage resulting from the 1999 leak. Dr. Bitter denies such damage exists or that he caused this damage.
Wanich has not described the damaged items, the nature of the damage or linked the damage to Dr. Bitter's use and occupancy of the Premises. The conclusory and speculative assertions unsupported by any evidence are insufficient to overcome Defendants' prima facie showing of entitlement to judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320, 324 (1986). See also, Sureda v. Diamonti, 300 AD2d 572 (2nd Dept. 2002); and Remigio v. City of New York, 291 AD2d 262 (1st Dept. 2002).
2. Set-Off
Defendants seek a set-off for the amount due on rent due in an amount equal to $6,000 which represents the security deposit plus interest at the rate of 8% per annum. Defendants assert that since Wanich did not deposit the security deposit into an interest bearing account as required by the Renewal Agreement, Defendants should get the benefit of the judgment rate less one percent, which Wanich was permitted to retain.
The security portion of the Renewal Agreement was observed in its breach. On the one hand, Wanich was required to deposit the security money into a separate interest bearing account. She did not comply with the provision. On the other, Dr. Bitter and 70th Road, Inc. were required to deposit an additional amount when the rent increased so that the security would be equal to two (2) months rent. This was never done.
The Renewal Agreement provides for interest at the rate of bank deposit. Granting Defendants interest at the judgment rate would be granting them a windfall beyond that which they would have received had Wanich complied with the Renewal Agreement. The amount of interest which should be credited to the security deposit will have to be determined at trial based upon appropriate evidence as to the applicable rate of interest during the relevant periods.
Accordingly, it is,
ORDERED, that Defendants' motion for summary judgment is granted to the extent of dismissing the third, fourth and fifth causes of action and is, in all other respects denied; and it is further,
ORDERED, that Plaintiff's motion for summary judgment is denied in its entirety; and it is further
ORDERED, that counsel for the parties are directed to appear for a pre-trial conference on June 1, 2006 at 9:30 a.m.
This constitutes the decision and Order of the Court.