Opinion
February 19, 1985
Appeal from the Supreme Court, Kings County (Bellard, J.).
Amended order affirmed, with one bill of costs payable to defendants appearing separately and filing separate briefs.
Rafael Perez was the superintendent of a cooperative apartment building located at 129 Columbia Heights, in Kings County. As part of the consideration for his services, Perez was given an apartment in the basement of the building, where he lived with his wife and young son. Perez, while performing his duties, left a container of caustic cleaning solvent unattended in the basement area and his child, then 18 months old, swallowed some of this highly toxic fluid, which contained sulfuric acid. As a result, the infant sustained serious bodily injuries.
The infant and his mother commenced an action against the cooperative corporation and against the manufacturer of the cleaning solvent. On the day before the Statute of Limitations was to expire, plaintiffs' counsel discovered that the building was insured by a policy which had a limited coverage of $500,000. Guided by the belief that there was a great possibility that a settlement or verdict could be in excess of $500,000, plaintiffs' counsel instituted suit against all of the shareholder-tenants who resided at and/or owned the premises, 129 Columbia Heights.
Special Term was correct in dismissing the complaint against these shareholders. Courts will pierce the corporate veil when it is clear that shareholders are using the corporation merely as a conduit to conduct their personal business in order to shield themselves from personal liability ( see, Port Chester Elec. Constr. Corp. v Atlas, 40 N.Y.2d 652, 657), or where "necessary `to prevent fraud or to achieve equity'" ( Billy v Consolidated Mach. Tool Corp., 51 N.Y.2d 152, 163, quoting from International Aircraft Trading Co. v Manufacturers Trust Co., 297 N.Y. 285, 292). Merely because the shareholder defendants, as an incident of their stock ownership, were entitled to occupy their apartments under a proprietary lease and thereby use these apartments in a personal way, as all tenants are entitled to, does not render the corporate structure a sham. The cooperative corporation laws of New York are structured so that shareholders may personally benefit from their membership in the cooperative ( see, Cooperative Corporations Law § 3 [c], [d]).
We find that the complaint falls short of adequately stating a cause of action against the shareholders ( see, Cusumano v Iota Indus., 100 A.D.2d 892, 893). There are no allegations that these shareholders ignored, circumvented or perverted the corporate form nor are there allegations of fraud or misrepresentation. In fact, what the complaint does describe are features of a valid housing cooperative. The benefits which flow to these shareholders, including the limitations on their personal liability, in no way impair the independent existence of the corporation ( see, We're Assoc. Co. v Cohen, Stracher Bloom, 103 A.D.2d 130). The complaint is totally devoid of solid, nonconclusory allegations ( see, Walkovszky v Carlton, 18 N.Y.2d 414, 421, n 3).
Moreover, we find that Special Term was correct in its view that "[f]or all practical purposes, there is only one action here and plaintiffs amended the complaint twice without first obtaining leave of the court". Therefore, plaintiffs' cross motion was properly denied as unnecessary ( see, Catanese v Lipschitz, 44 A.D.2d 579, 580).
Lastly we note that respondents are not entitled to recover attorney's fees in this action and on this appeal from the plaintiffs since such fees are merely an incident of litigation ( see, City of Buffalo v Clement Co., 28 N.Y.2d 241, 262; Klein v Sharp, 41 A.D.2d 926). Gibbons, J.P., Thompson, Weinstein and Brown, JJ., concur.