Opinion
2828/02.
Decided February 1, 2006.
Carroll, McNulty Kull, New York, New York, Attys. For Deft.
Jasne, Florio Florio, L.L.P., White Plains, New York, Attys. For Pltf.
This is an action to recover for personal injuries allegedly sustained by plaintiff on July 8, 1999, when he was struck by a large falling tree limb which fell off of a willow situated on defendant's property. On that date, the property where the incident occurred was leased to non-party Mount Kisco Country Club Inc. (the "Club"). Plaintiff, at that time, was an employee of the Club performing golf maintenance, including mowing the lawn. The ensuing accident report prepared by the Club's supervisor states that the "tree fell without any warning, no unsafe conditions, freak accident."
Defendant now is moving for summary judgment dismissing the complaint, arguing that notwithstanding the two separate corporate identities, defendant and the Club are actually one and the same, and therefore plaintiff's claims are barred by Workers' Compensation Law Sections 11 and 29. In support of its argument, defendant argues that the lease agreement between defendant and the Club was signed by the same individual as president for both entities and that Joseph Carello, the comptroller for both corporations, had testified that not only do the two companies both employ him as their comptroller, but that the general manager for both companies is also the same person. Further, Mr. Carello had testified that the directors and officers of both corporations are the same twelve individuals, that the accounting books are the same for both corporations, that the two corporations occupy the same physical office space and that the Club does not pay any rent to defendant. The two corporations also maintain the same workers' compensation policy and general liability insurance policies. Moreover, Mr. Carello testified that both corporations have the same employees. According to Mr. Carello, the Club owns most of defendant's shares. However, the two corporations do file separate tax returns. With respect to the checking accounts, Mr. Carello testified that the employees' checks came from an account with the Club's name and that defendant did not have any checking account with its own name on it.
The foregoing, defendant submits, demonstrates that the Club is the alter ego of defendant, for whom plaintiff worked at the time of his accident, and thus plaintiff is relegated to pursuing relief solely under the Workers' Compensation Law.
Alternatively, if the foregoing argument does not dispose of this action, defendant contends that defendant was an out-of-possession landlord at the time of plaintiff's accident and that the Club alone was contractually obligated for maintaining and controlling the golf course area where the accident occurred. Defendant notes that critically absent from the subject leasing agreement is any right of re-entry and/or reservation by defendant to make inspection or repairs.
Finally, defendant submits that it cannot be liable for plaintiff's accident because it did not cause, create or have notice of the allegedly defective tree condition and it had a tree maintenance contract in place and the golf course's superintendent, Fred Scheyhing, had testified that as part of his job he, as well as assistants, regularly had walked the grounds looking for dangerous and rotting trees.
Plaintiff opposes the motion in all respects. As to defendant's claim that the Workers' Compensation Law is plaintiff's exclusive remedy, plaintiff argues that triable issues of fact exist regarding the relationship between the two entities, specifically as to the amount of dominion and control exercised by one corporation over the other, so as to ascertain whether they are alter egos united in interest. According to plaintiff, defendant's alternative claim that defendant is merely an out-of-possession landlord which cannot be liable for this accident is belied by the uncontroverted facts that it shares the same physical office space with the Club, as well as the same employees, shareholders, directors and officers. Plaintiff argues that defendant cannot simultaneously maintain that it is an out-of-possession landlord while urging that its legal identity with the Club is actually one and the same.
Finally, plaintiff argues that defendant has failed to demonstrate entitlement to judgment based upon a lack of notice because defendant has failed to establish that Mr. Scheyhing, who claims to regularly have inspected the trees, had any qualifications or knowledge to make tree health assessments and/or that his inspection technique was reasonable and sufficient for this purpose. Indeed, plaintiff notes that in a prior related action wherein plaintiff had sued the tree company that had been hired to prune and trim the trees at the Club, the tree company's principal John Hawthorne had testified that he was called to the scene after plaintiff's accident to do clean up and that his subsequent cutting down of the subject tree which had injured plaintiff revealed that it was rotted.
Plaintiff's action under Westchester County Index Number 3998/00 was dismissed by this Court (Barone, J.).
In any event, plaintiff has submitted an affidavit wherein he states, based upon his experience of having worked at the Club for more than four months prior to the subject accident, that he observed neither Scheyhing nor anyone else making regular and/or routine inspections of the grounds looking for defective trees. He also states that shortly before his accident, another tree had fallen near the second golf tee, "raising questions as to both the number and effectiveness of any inspections of trees conducted by the Defendant."
Addressing first the applicability of the Workers Compensation Law, it is settled law that "an employer's organization into separate legal entities does not preclude a finding that an employee is limited to benefits under the Workers' Compensation Law." Ramnarine v. Memorial Ctr. for Cancer Allied Diseases, 281 AD2d 218 (1st Dept. 2001), citing Di Rie v. Automotive Realty Corp., 199 AD2d 98 (1st Dept. 1993). However, "[c]losely associated corporations, even ones that share directors and officers, will not be considered alter egos of each other if they were formed for different purposes, neither is a subsidiary of the other, their finances are not integrated, assets are not commingled, and the principals treat the two entities as separate and distinct." Longshore v. Davis Sys. of Capital Dist., 304 AD2d 964, 965 (3rd Dept. 2003).
Here, defendant prima facie has demonstrated that the Club and defendant are alter egos where neither corporation engages in any business other than the operation of the country club, the Board of Directors, officers, comptroller and general manager are the same for both corporations, it is claimed that defendant does not pay rent to the Club, the Club owns most of the shares of defendant, both companies maintain the same Workers' Compensation policy and general liability insurance policies and one financial report is issued on behalf of both corporations. See Thompson v. Bernard G. Janowitz Const. Corp., 301 AD2d 588 (2nd Dept. 2003); see, also Crespo v. Pucciarelli, 21 AD3d 1048 (2nd Dept. 2005); Ortega v. Noxxen Realty Corp., 5 Misc 3d 1003 (A) (NY Sup. Ct. 2004).
However, and while extremely close, the Court further finds that plaintiff has raised a triable issue of fact with respect to this alter ego theory where, according to plaintiff, he was employed only by the Club, see Rosenburg v. Angiuli Buick, Inc., 220 AD2d 654 (2nd Dept. 1995), the corporations' shareholders are not completely identical, see Kramer v. NAB Const. Corp., 282 AD2d 714 (2nd Dept. 2001), lv. to app. den. 97 NY2d 606 (2001), there is no showing in the record at bar that defendant had exercised complete dominion and control over the day to day operations of the Club, see Almonte v. Western Beef, Inc., 21 AD3d 514 (2nd Dept. 2005); Gonzalez v. 310 West 38th, L.L.C., 14 AD3d 464 (1st Dept. 2005); Constantine v. Premier Cab Corp., 295 AD2d 303 (2nd Dept. 2002); Dennihy v. Episcopal Health Services, Inc., 283 AD2d 542 (2nd Dept. 2001), the subject property is owned solely in the name of defendant, Rosenburg v. Angiuli Buick, Inc., supra, and the companies filed separate income tax returns. See Kaplan v. Bayley Seton Hosp., 201 AD2d 461 (2nd Dept. 1994). The Court further observes that the record is devoid of proof regarding whether the two entities operated under separate budgets, Id., and whether they had formed for the same corporate purpose and/or exercised similar functions. See Longshore v. Paul Davis Systems of Capital Dist., 304 AD2d 964 (3rd Dept. 2003); Ortega v. Noxxen Realty Corp., 5 Misc 3d 1003 (A) (NY Sup. Ct. 2005). Further, the Court notes that while there was testimony that no rent for the premises is paid, the lease indicates that the Club is supposed to pay defendant annual rental in the sum of $150,000. Also, while defendant insists in arguing that only one checking account was used by both entities, such contention is not accurately based upon the record at bar. Mr. Carello had testified only that the employees' checks were issued by the Club and that defendant did not maintain a checking account in its own name. Notably, Mr. Carallo was not asked and there is no other evidence in the record establishing whether defendant, like the Club, had a separate operating account. Accordingly, the Court finds that a triable issue of fact exists as to whether defendant is the alter ego of the Club so as to entitle it to the exclusivity provision of the Workers' Compensation Law. See Young Man Song v. CSA Contracting Corp., 287 AD2d 560 (2nd Dept. 2001).
The Court finds totally devoid of merit defendant's alternative claim that it is not liable to plaintiff because it had relinquished control and maintenance of the premises to the Club. The case law and cases upon which defendant relies involve the situation not presented here of a truly out-of-possession landlord. Cf. Cregan v. Greenlawn Plaza Corp., 269 AD2d 418 (2nd Dept. 2000); Hood v. John Hancock Mut. Life Ins. Co., 216 AD2d 269 (2nd Dept. 1995). Here, defendant readily concedes not only that it was in possession of the premises, but that all of its personnel are the same as that of the Club. The rationale for the rule that an out-of-possession owner or lessor is not liable for injuries that occur on the premises unless the owner or lessor has retained some control over the premises or is contractually obligated to repair or maintain would be totally undermined by its application to the facts presenting at bar.
Further, the Court finds that defendant has failed to demonstrate entitlement to judgment as a matter of law dismissing this action upon its claim that it had no actual or constructive knowledge of the defective tree. The record at bar establishes that the subject tree was rotted and that defendant's supervisor claims to have performed regular inspections of the trees; yet, the particular tree here in issue was never identified as having any problem. A question of fact thus exists as to the level of the supervisor's training and knowledge of tree health to make the inspections, the appropriateness of the visual inspections he claims to have made, the Court noting that no detailed description of the type of tree examination made by Mr. Scheyhing or any one else is included in this record, and why there was a failure to perceive the danger presented by the particular willow tree in issue. Defendant, in its attempt to establish a lack of notice regarding the tree's unhealthy condition, relies upon testimony elicited from Mr. Scheyhing that the fallen willow limb appeared "fresh" in that the bark underneath the limb was not dark and there were green leaves on the tree. However, defendant fails to submit an expert affidavit wherein it is opined that these observations necessarily contravene any finding that the tree was unhealthy and that a proper inspection by a knowledgeable and qualified person or arborist would not have revealed its apparently true decayed condition.
Plaintiff is directed to file his note of issue within fifteen (15) days after the date hereof. The parties shall appear at 9:30 a.m. on March 1, 2006, in the Central Calendar Part for assignment of a trial date. This grossly protracted action must expeditiously be brought to trial.