Williams v REDF Equities, LLC
Annotate this CaseDecided on April 12, 2018
Supreme Court, Kings County
Jerome Williams, Plaintiff,
against
REDF Equities, LLC, TOMER DAFNA, ISKYO ARONOV, DAVID AUGENSTEIN, and HERMAN MEISELS, Defendants.
503186/2017
Attorney for plaintiff
Firm Name: Law Offices of Miller & Miller
Address: 26 Court Street, STE 2511
Brooklyn, New York 11242
Phone: (718) 522-0023
Attorney for defendant Aronov
Firm Name: Jason J. Rebhun, Esq.
Address: 225 Broadway FL 38
New York, NY 10007
Phone: (646) 201-9392
Paul Wooten, J.
PAPERS/NUMBERED
Notice of Motion/ Order to Show Cause — Affidavits — Exhibits 1, 2
Answering Affidavits — Exhibits (Memo) 3
Replying Affidavits (Reply Memo) 4
Motions sequence numbers 1 and 2 are consolidated for disposition.
This is a personal injury action commenced by plaintiff, Jerome Williams, to recover damages for personal injuries allegedly sustained on June 9, 2016, when he fell inside the first floor bathroom area of the premises located at 155 Wyona Street, Brooklyn, New York (the Property). Before the Court is a motion by defendant Iskyo Aronov (Aronov), pursuant to CPLR 3211(a)(7), for an Order dismissing plaintiff's Complaint on the basis that he cannot be held personally liable for plaintiff's injuries inasmuch as the Property, where plaintiff allegedly fell, [*2]was owned by co-defendant REDF Equities LLC (REDF), a valid New York Limited Liability Company (motion sequence 1). Plaintiff cross-moves, pursuant to CPLR 3215, for a default judgment against REDF, Aronov, and David Augenstein (Augenstein). Plaintiff's cross-motion also opposes Aronov's motion to dismiss, under CPLR 3211(a)(7), and seeks, in the alternative, leave to supplement the Complaint (motion sequence 2). Aronov opposes plaintiff's cross- motion. Plaintiff submits a reply to Aronov's opposition to the default judgment motion and Aronov submits a reply to his motion to dismiss.
In support of his motion to dismiss, Aronov submits, inter alia, a copy of the pleadings; his sworn affidavit, dated June 5, 2017; a copy of the Bargain Deed, prepared on March 20, 2015; and an online Department of State search printout showing that REDF is a valid New York State LLC. Aronov argues that on the date of plaintiff's accident, co-defendant REDF owned the Property. Aronov contends that although he is a member of REDF, plaintiff cannot pierce the corporate veil of REDF and hold him personally liable for the injuries since he did not personally, inter alia, lease, operate, maintain, manage, control, supervise or repair the Property.
In opposition to Aronov's motion, plaintiff avers that the Verified Complaint states a cause of action against Aronov as the Complaint alleges that on the date of plaintiff's accident, Aronov was an owner of the Property. Plaintiff contends that Aranov seeks to go beyond the four corners of the Complaint by submitting extrinsic evidence which purports to establish that REDF owns the Property. Plaintiff also argues that the issue of whether plaintiff pierced the corporate veil is a fact laden issue, generally unsuited for summary resolution, and thus, Aranov's motion is premature and without merit. Lastly, plaintiff argues that the documentary evidence, submitted and relied upon by Aranov, is inadmissible, and thus, fails to make Aronov's prima facie case of entitlement to judgment as a matter of law.
3211(a)(7) Motion to Dismiss Standard
On a motion to dismiss pursuant to CPLR 3211(a)(7), the court should "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 NY2d 83, 87-88 [1994]; see Biro v Roth, 121 AD3d 733 [2d Dept 2014]; Parekh v Cain, 96 AD3d 812, 815 [2d Dept 2012]). The standard is not whether the complaint states a cause of action, but whether the plaintiff has a cause of action (see Morales v Copy Right, Inc., 28 AD3d 440 [2d Dept 2006]). "CPLR 3211(a)(7) dismissals merely address the adequacy of the [pleading], and do not reach the substantive merits of a [party's] cause of action" (Lieberman v Green, 139 AD3d 815, 816 [2d Dept 2016], quoting Hendrickson v Philbor Motors, Inc., 102 AD3d 251, 255 [2d Dept 2012]; see also CPLR 3211[a][7]; Gershon v Goldberg, 30 AD3d 372, 373 [2d Dept 2006] [the sole criterion in considering a motion to dismiss pursuant to CPLR 3211(a)(7) is whether "from [the complaint's] four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law"];Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]).
Whether the complaint will later survive a motion for summary judgment, or whether the plaintiff will ultimately be able to prove his or her claims, plays no part in the determination of a prediscovery CPLR 3211 motion to dismiss (see Biro v Roth, 121 AD3d at 735; Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 38 [2d Dept 2006]). "Such a motion should be granted where, even viewing the allegations as true, the plaintiff [*3]cannot establish a cause of action" (id.). "However, '[a] court is, of course, permitted to consider evidentiary material submitted by a defendant in support of a motion to dismiss pursuant to CPLR 3211(a)(7)'" (Bokhour v GTI Retail Holdings, Inc., 94 AD3d 682, 682-683 [2d Dept 2012], quoting Sokol v Leader, 74 AD3d 1180, 1181 [2d Dept 2010]).
DISCUSSION
A. Aronov's Motion to Dismiss (Motion Sequence 1)
Generally, a corporation exists independently of its owners, who are not personally liable for its obligations (see Vivir of L I, Inc., v Ehrenkranz, 145 AD3d 834, 834 [2d Dept 2016], quoting East Hampton Union Free School Dist. v Sandpebble Bldrs., Inc., 66 AD3d 122, 126 [2d Dept 2009] aff'd 16 NY3d 775 [2011]). However, in certain instances, a plaintiff may seek to pierce the corporate veil and impose personal liability on owners for the obligation of their corporation (id.). A complaint which seek to pierce corporate veils is subject to the "notice pleading" standard, that is a pleading sufficiently particular to give the court and parties notice of the material elements of a cause of action, under CPLR 3013 (see CPLR §§ 104, 3026; Severino v Salisbury Point Co-ops., 21 AD2d 813 [2d Dept 1964]; Foley v D'Agostino, 21 AD2d 60, 63 [1st Dept 1964]). Notice pleadings are liberally construed (see id.). However, to satisfy the requirements of CPLR 3013, a plaintiff cannot rely upon mere "buzz words" or vague or conclusory allegations (see CPLR 3013; Walkovszky v Carlton, 18 NY2d 414, 420 [1966]). Instead, the complaint must still allege, inter alia, "material elements of each cause of action asserted" (East Hampton Union Free School Dist., 66 AD3d at 127).
To survive a motion to dismiss the complaint under CPLR 3211(a)(7), "a party seeking to pierce the corporate veil must allege facts that, if proved, establish that the party against whom the doctrine is asserted (1) exercised complete domination over the corporation with respect to the transaction at issue, and (2) through such domination, abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against the plaintiff such that a court in equity will intervene" (East Hampton Union Free School Dist., 16 NY3d at 776; see Olivieri Const. Corp v WN Weaver Street, LLC, 144 AD3d 765 [2d Dept 2016]; Vivir of L I, Inc., 145 AD3d at 834; Morris v New York State Dept. of Taxation & Fin., 82 NY2d 135,142 [1993]). "Conduct constituting an abuse of the privilege of doing business in the corporate form is a material element of any cause of action seeking to hold an owner personally liable for the actions of his or her corporation under the doctrine of piercing the corporate veil" (id.).; hence, a plaintiff must articulate actual conduct by the individual that creates a nexus between it and the "transactions or occurrences" of the complaint (East Hampton Union Free School Dist., 66 AD3d at 132).
Allegations of domination and control, standing alone, are insufficient to state a cause of action for personal liability against a corporate owner (see Vivir of L I Inc., 145 AD3d at 834; Seafood Co., Inc. v Golub Corp., 303 AD2d 892, 895 [3d Dept 2003]). If that were so, "virtually every cause of action brought against a corporation that is wholly or principally owned by an individual conducting corporate affairs could be extended ipso facto to the owner personally" (Morris., 82 NY2d at 141-142). Such a result would "render the principle of limited liability illusory" (see Qadan v Tehseldar, 139 AD3d 1036, 1037 [2d Dept 2016]; Bartle v Home Owners Coop., 309 NY 103, 106 [1955]).
Here, after giving consideration to the foregoing papers, the Court finds that plaintiff's [*4]Complaint fails to meet state a cause of action against Aranov for the alleged negligence of REDF, under the standard articulated by the Court of Appeals in East Hampton Union Free School Dist. (East Hampton Union Free School Dist., 16 NY3d at 776). Specifically, in his Verified Complaint, plaintiff alleges that "[a]t the time herein mentioned, the defendant Iskyo Aronov owned the premises located at 155 Wyona Street, Brooklyn, New York" (see Notice of Motion, exhibit 1 ¶ 46). Plaintiff further avers that Aronov was a lessee of the premises located at 155 Wyona Street, Brooklyn, New York (id. at ¶ 48). The Court finds that plaintiff's Complaint lacks any allegations that Aronov exercised domination and control over REDF such that this Court should pierce the corporate veil and subject him to personal liability. Rather, plaintiff asserts that at the time of his accident, Aranov, his servants, agents, and/or employees operated, managed, maintained, controlled, supervised, inspected, designed and repaired the Property (id. at ¶¶ 49-58). These allegations are insufficient to impute personal liability upon Aranov since the recorded Deed (Document ID: 2015041300369001) demonstrates that REDF is the sole deed holder of the Property (see Notice of Motion, exhibit 2). There are no allegations in plaintiff's Complaint which asserts or suggests that Aranov treated REDF's corporate assets as his own, or that he undercapitalized the corporation, or that he did not respect corporate formalities, or that he, in any other way, abused the privilege of doing business in the corporate form (see East Hampton Union Free School Dist., 16 NY3d at 776). Therefore, the Court finds that plaintiff fails to allege any material facts which indicate that Aranov engaged in improper conduct tantamount to an abuse or perversion of the corporate form, and plaintiff fails to establish a nexus between said conduct and plaintiff's alleged injuries (see id.; Smith v Delta Intern. Machinery Corp, 69 AD3d 840 [2d Dept 2010]; AHA Sales, Inc. v Creative Bath Prods., Inc., 58 AD3d 6, 24 [2d Dept 2008]; cf Gateway I Group, Inc. v Park Ave. Physicians, P.C., 62 AD3d 141, 144 [2d Dept 2009]). Thus, without any allegation that Aranov's conduct constituted an abuse of the privilege of doing business in the corporate form, this Court finds that plaintiff's Complaint fails to state a cause of action against Aranov under the theory of piercing the corporate veil (see Lawlor v Hoffman, 59 AD3d 499 [2d Dept 2009]).
The Court further finds plaintiff's opposition to Aranov's motion to dismiss insufficient preclude dismissal. Namely, plaintiff argues that dismissal of the Complaint, as asserted against Aranov, is premature at this stage inasmuch as evidence may eventually be discovered that would justify piercing the corporate veil. This Court disagrees. As held by the Appellate Division, Second Department in East Hampton Union Free School Dist, "the policy inherent in allowing individuals to conduct business in the corporate form so as to shield themselves from personal liability would be seriously threatened were we to allow an insufficient cause of action to survive, at least to the summary judgment stage, merely on the plaintiff's hope that something will turn up" (East Hampton Union Free School Dist., 66 AD3d at 127).
Moreover, in opposition to Aronov's motion, plaintiff cross-moved and sought leave of this Court to amend his Summons and Complaint. "In the absence of significant prejudice or surprise to the opposing party, leave to amend a pleading should be freely given, unless the proposed amendment is palpably insufficient or patently devoid of merit" (Russo v Lapeer Contracting Co. Inc., 84 AD3d 1344, 1344 [2d Dept 2011]; CPLR 3025[b]). However, "a motion to dismiss, which is addressed to the merits may not be defeated by an amended pleading" (Livadiotakis v Tzitzikalakis, 302 AD2d 369, 370 [2d Dept 2003]). Here, the Court [*5]finds plaintiff's proposed Amended Verified Complaint is insufficient to state a cause of action against Aranov under a theory of piercing the corporate veil, since the proposed amended Complaint merely parrots the same allegations as plaintiff's "original" Complaint. Thus, plaintiff's proposed Amended Verified Complaint is palpably insufficient and lacks merit; and thus, that branch of plaintiff's cross-motion is denied (Russo, 84 AD3d at 1344; East Hampton Union Free School Dist., 16 NY3d at 776; Yeshiva Ohr Torah Community School, Inc. v Zurich American Ins. Co., 78 AD3d 686, 689 [2d Dept 2010]).
B. Plaintiff's Cross-Motion for Default Judgment (Motion Sequence 2)
To the extent that the Court has already denied the branch of plaintiff's cross-motion to amend his pleading as against Aronov, and granted Aronov's motion to dismiss plaintiff's Complaint, pursuant to CPLR 3211(a)(7), the Court further finds that the branch of plaintiff's motion seeking a default judgment against Aronov is denied as moot. In support of his cross- motion for default against REDF and Augenstein, plaintiff attaches affidavits of service which purport to show that: (1) REDF was served with service of process, through the New York State Secretary of State under Business Corporation Law 306, on March 31, 2017; and (2) Augenstein was served with a copy of the Summons and Verified Complaint, in accordance with CPLR 308 (2), on May 29, 2017. The Court finds that plaintiff properly effectuated service upon REDF and Augenstein (see ATM One, LLC v Landaverde, 2 NY3d 472, 475 [2004] ["when service is made personally or by mail, an affidavit by the person making the service or mailing shall constitute sufficient proof of service"]). Since REDF and Augenstein have neither moved with respect to plaintiff's Summons and Verified Complaint, nor opposed the herein cross-motion, the Court finds that the branch of plaintiff's motion for a default judgment against REDF and Augenstein is granted, without opposition.
CONCLUSION
Accordingly it is hereby,
ORDERED that defendant Aranov's motion to dismiss plaintiff Jerome Williams' Complaint, pursuant to CPLR 3211(a)(7), is granted in its entirety, and the Complaint as asserted against Aranov is dismissed; and it is further,
ORDERED that the branch of plaintiff's cross-motion seeking leave of the Court to amend his Complaint, as asserted against Aranov, is denied; and it is further,
ORDERED that the portion of plaintiff's motion for a default judgment against Aranov is denied; and it is further,
ORDERED that the branch of plaintiff's motion for a default judgment against defendants REDF and Augenstein is granted, without opposition; and it is further,
ORDERED that counsel for plaintiff Jerome Williams is directed to serve a copy of this Order with Notice of Entry upon the all defendants and the County Clerk who shall enter judgment accordingly.
This constitutes the Decision and Order of the Court.
Dated: April 12, 2018
[*6]
PAUL WOOTENJ.S.C.
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