Court Opinion

ID: 4087060
Source: CourtListenerOpinion
Date Created: 2016-10-08 00:11:43.741228+00
Date Added: 2024-06-11T07:45:24.398982
License: Public Domain

SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

1023
CA 11-00169
PRESENT: CENTRA, J.P., FAHEY, SCONIERS, GREEN, AND MARTOCHE, JJ.

TRACY PRESTON, AS ADMINISTRATOR OF THE
ESTATE OF ERIC S. LEHMAN, DECEASED,
PLAINTIFF-RESPONDENT,

                    V                                OPINION AND ORDER

APCH, INC., ALSTOM POWER, INC., AND
COMBUSTION ENGINEERING, INC.,
DEFENDANTS-APPELLANTS.

RUPP, BAASE, PFALZGRAF, CUNNINGHAM & COPPOLA LLC, BUFFALO (JEFFREY F.
BAASE OF COUNSEL), FOR DEFENDANTS-APPELLANTS.

LAWRENCE A. SCHULZ, ORCHARD PARK, FOR PLAINTIFF-RESPONDENT.

     Appeal from an order of the Supreme Court, Allegany County (James
E. Euken, A.J.), entered May 14, 2010. The order, insofar as appealed
from, denied in part the motion of defendants to dismiss the amended
complaint.

     It is hereby ORDERED that the order so appealed from is
unanimously affirmed without costs.

     Opinion by FAHEY, J.: Plaintiff commenced this action seeking
damages for the wrongful death and conscious pain and suffering of
plaintiff’s decedent resulting from an accident that occurred while he
was an employee of defendant Alstom Power, Inc. (Alstom). Defendants
moved to dismiss the amended complaint against them, and Supreme Court
granted that part of the motion with respect to the seventh cause of
action against the three defendants to the extent that it seeks
discovery, a procedural rather than a substantive remedy, and thus
“fails to state a claim for which relief may be granted.”

     The primary issue before us on appeal is whether the court
properly denied those parts of defendants’ motion seeking dismissal of
the remainder of the amended complaint against defendants APCH, Inc.
(APCH) and Alstom, pursuant to CPLR 3211 (a) (1). We conclude, under
the facts presented here, that the court properly denied those parts
of the motion. In addition, we conclude that the court properly
denied those parts of the motion with respect to defendant Combustion
Engineering, Inc. (CEI).

                                  I
                                 -2-                          1023
                                                         CA 11-00169

     On August 26, 2008, decedent was one of two welders assigned
during the course of their employment to participate in the assembly
of a rotor compartment weighing approximately five tons at an
industrial facility in Wellsville (hereafter, plant). Decedent was
positioned in front of the rotor compartment and was inspecting his
work when the compartment fell from its stands. The compartment
pinned decedent to the floor. His injuries were fatal. At the time
of the accident, decedent was employed by Alstom, a Delaware
corporation authorized to do business in New York.

     The most significant question before us concerns which defendant
owned the plant at the time of the accident. The plant was conveyed
on July 31, 2002 to APCH, a Delaware corporation that was not
authorized to do business in New York. APCH was a wholly-owned
subsidiary of Alstom at the time of the conveyance. On August 13,
2007, Alstom merged with APCH and succeeded to the ownership of all of
the assets, liabilities and obligations of APCH. A certificate of
ownership reflecting the merger was filed with the Delaware Secretary
of State on that date. However, there was no filing concerning the
merger with the New York Secretary of State prior to the accident.
Likewise, no deed or other record of conveyance transferring the plant
from APCH to any person or entity was filed in the Allegany County
Clerk’s Office between July 31, 2002 and the time of the accident.
Also noteworthy is the fact that CEI, a Delaware corporation
authorized to do business in New York, previously had filed for
bankruptcy and had been reorganized pursuant to chapter 11 of the
Bankruptcy Code (11 USC). According to plaintiff, he was unable to
resolve the issue whether the assets of APCH had been transferred to
CEI after the bankruptcy reorganization of CEI and before the
accident.

     Plaintiff, decedent’s father, was appointed administrator of
decedent’s estate following the accident, and he initially commenced
this action by filing a summons and complaint against APCH. APCH made
a pre-answer motion to dismiss the complaint, but before the return
date thereof plaintiff filed an amended complaint naming APCH, Alstom
and CEI as defendants and asserting against all defendants causes of
action for, inter alia, negligence, violation of the Labor Law and
conscious pain and suffering. Plaintiff also asserted a cause of
action against Alstom, alleging that the exclusivity provisions of the
Workers’ Compensation Law do not apply to Alstom and that Alstom is
liable to plaintiff based on its assumption of the obligations and
liabilities of APCH. In that cause of action, plaintiff further
alleged that he had been unable to determine whether ownership
interest in the plant had been transferred to CEI after the bankruptcy
reorganization of that corporation, and he sought disclosure of those
corporate records of defendants necessary to determine the issue of
the ownership of the plant.

     In a pre-answer motion, defendants moved to dismiss the amended
complaint pursuant to CPLR 3211 (a) (1), contending that Workers’
Compensation Law § 11 bars plaintiff’s action against Alstom, and that
plaintiff is not entitled to recover from APCH because ownership of
the plant was transferred from APCH to Alstom at the time of the
                                 -3-                          1023
                                                         CA 11-00169

merger, which preceded the date of the accident. Defendants also
sought relief pursuant to CPLR 3211 (a) (7), contending that the
amended complaint should be dismissed against CEI given what
defendants characterized as the absence of a factual basis for the
allegation that CEI owned the plant. The court, as relevant to this
appeal, granted the motion only to the extent that it sought dismissal
of that part of the seventh cause of action seeking disclosure of all
of defendants’ corporate records necessary to determine the issue of
the ownership of the plant.

                                  II

     We are first confronted with a procedural issue. In their notice
of appeal, defendants specified that the appeal is from “each and
every part of the . . . [o]rder . . . [that] denied the defendants’
motion to dismiss the plaintiff’s complaint in its entirety.”
Plaintiff contends that, by referencing only the complaint rather than
the amended complaint, defendants waived their right to challenge that
part of the order denying the motion to dismiss the amended complaint
in its entirety (see Erie Petroleum v County of Chautauqua, 286 AD2d
854, 855). That contention lacks merit. “ ‘[W]hen an amended
complaint has been served, it supersedes the original complaint and
becomes the only complaint in the case’ ” (Aikens Constr. of Rome v
Simons, 284 AD2d 946, 947). Consequently, the second of the two pre-
answer motions to dismiss, which was made on behalf of all defendants,
was properly before the court after plaintiff served the amended
complaint, and in that motion defendants were not required to specify
that their challenge was to the amended complaint rather than the
original complaint because there was only one active complaint, i.e.,
the amended complaint. We note in addition that the second of the two
pre-answer motions was made by the three defendants named in the
amended complaint, whereas the original complaint named only one of
the three defendants.

                                 III

     Turning to the merits, defendants contend that the court erred in
denying that part of the motion with respect to APCH because APCH did
not own the plant at the time of the accident and thus cannot be held
liable on that basis, and because APCH cannot be sued inasmuch as it
no longer exists as a corporate entity. We reject those contentions.

     Addressing first the contention that APCH did not own the plant
at the time of the accident, we note that article 9 of the Business
Corporation Law governs merger or consolidation, and that mergers
involving foreign corporations are addressed in Business Corporation
Law § 907. That section, however, is self-limiting to the extent that
it addresses mergers involving only “[o]ne or more foreign
corporations and one or more domestic corporations” (§ 907 [a]). By
virtue of that restriction, section 907 does not govern the merger in
this case, which involved two Delaware corporations (see Kubiszyn v
Terex Div. of Terex Corp., 212 AD2d 93, 96 n 3, lv denied 86 NY2d 711;
cf. § 1319 [a] [6]).
                                 -4-                          1023
                                                         CA 11-00169

     In view of the inapplicability of New York law to the merger, as
opposed to the property transfer, we turn to Delaware law to determine
when the merger became effective. In order for Delaware corporations
to effectuate a merger under Delaware law, each corporation must have
its board of directors adopt a resolution approving the merger (see
Del Code Ann, tit 8, § 251 [b]), and the surviving corporation must
thereafter file either an agreement of merger or a certificate of
merger with the Delaware Secretary of State (see tit 8, §§ 103, 251
[c], [f], [g]). Once the agreement of merger or certificate of merger
is properly filed, the merger is deemed effective upon the date of its
filing (see tit 8, § 103 [d]; § 251 [d]). Here, the record
establishes that Alstom, the surviving corporation, filed a signed and
dated “certificate of ownership and merger” with the Delaware
Secretary of State on August 13, 2007 and, because the certificate did
not provide otherwise (see tit 8, § 103 [d]), the merger became
effective at that time (see Termine v Continental Baking Co., 299 AD2d
406).

      Nevertheless, the fact that the merger was effective prior to the
date of the accident does not necessitate the conclusion that the
plant was conveyed by APCH to Alstom upon the date of the merger. On
this point, there is apparent discord between the laws of Delaware and
New York with respect to such timing. Pursuant to Delaware law, when
a merger becomes effective, property previously held by the non-
surviving corporation vests in the surviving corporation (see Del Code
Ann, tit 8, § 259 [a]). Likewise, New York law provides that “[a]
foreign corporation . . . may convey [real property in this state] by
deed or otherwise in the same manner as a domestic corporation”
(Business Corporation Law § 1307), and domestic corporations are
permitted to convey real property by merger (see § 906 [b] [2]). In
addition to requiring that a “certificate of merger” must be filed
with the Department of State once the constituent corporations agree
upon a merger plan (see § 904 [a]), however, Business Corporation Law
§ 904 (b) further requires the surviving corporation to “cause a copy
of such certificate, certified by the department of state, to be filed
. . . in the office of the official who is the recording officer of
each county in this state in which real property of a constituent
corporation, other than the surviving corporation, is situated.”
Indeed, Business Corporation Law § 906, entitled “Effect of merger or
consolidation,” contains language indicating that a merger is not
accomplished absent the filing of the certificate of merger with the
Department of State, to wit: “Upon the filing of the certificate of
merger . . . by the department of state or on such date subsequent
thereto, not to exceed thirty days, as shall be set forth in such
certificate, the merger or consolidation shall be effected” (§ 906
[a]).

     “The rule is that the validity of a conveyance of a property
interest is governed by the law of the place where the property is
located” (James v Powell, 19 NY2d 249, 256-257, rearg denied 19 NY2d
862), and New York law thus controls our analysis of the issue whether
the merger caused the plant to be conveyed from APCH to Alstom on the
date on which the merger became effective. As noted, under New York
law, domestic corporations may convey real property by merger
                                 -5-                          1023
                                                         CA 11-00169

(see Business Corporation Law § 906 [b] [2]), but the merger, and thus
the conveyance, is not effective in the absence of both filings with
the Department of State (see § 904 [a]) and “the recording officer of
each county in this state in which real property of a constituent
corporation, other than the surviving corporation, is situated” (§ 904
[b]). Here, no such filings were made, and APCH thus failed to comply
with the requirements for domestic corporations to convey property by
way of merger.

     We next turn to the contention that APCH cannot be held liable
because it did not exist as a corporate entity at the time of the
accident. A corporation merged out of existence typically “cease[s]
to exist as a separate entity, and may no longer be a named party in
litigation” (Westside Fed. Sav. & Loan Assn. of N.Y. v Fitzgerald, 136
AD2d 699; see Zarzycki v Lan Metal Prods. Corp., 62 AD3d 788, 789;
Sheldon v Kimberly-Clark Corp., 105 AD2d 273, 276, appeal dismissed 65
NY2d 691). Here, however, neither APCH nor Alstom provided notice of
the merger as required by the Business Corporation Law for domestic
corporations to effect a transfer of real property by merger. For
this Court to conclude that APCH and its successor in interest,
Alstom, are immune from suit in spite of those failings would render
illusory the Business Corporation Law’s requirements for conveyance of
real property by merger. Consequently, under the facts presented
here, APCH is not immune from suit on the ground that it no longer
exists as a corporate entity.

                                  IV

     Defendants further contend that the court erred in denying that
part of the motion seeking dismissal of the amended complaint against
Alstom on the ground that Workers’ Compensation Law § 11 precludes
plaintiff, Alstom’s employee, from bringing an action against Alstom.
Once again, we cannot agree with defendants.

     Generally, “ ‘the sole remedy of an employee . . . injured in the
course of employment against his [or her] . . . employer is recovery
under the Workers’ Compensation Law’ ” (Testerman v Zielinski, 68 AD3d
1751, 1752; see Workers’ Compensation Law § 11; Riggins v Stong, 238
AD2d 950). There is, however, a narrow exception to that rule that
was set forth in Billy v Consolidated Mach. Tool Corp. (51 NY2d 152,
162, rearg denied 52 NY2d 829), i.e., that an employer that
voluntarily assumes the assets, obligations and liabilities of a
third-party tortfeasor cannot avail itself of the exclusivity
provision of Workers’ Compensation Law § 11 (see Oliver v N.L. Indus.,
170 AD2d 959, 960).

     Here, the court properly determined that the Billy exception
applies. As in Billy, the merger at issue occurred before the
accident, and the surviving corporation employed decedent (see Billy,
51 NY2d at 156-158). Moreover, similar to Billy, plaintiff seeks
damages from decedent’s employer, i.e., Alstom, on the ground that the
employer is ineligible for the exclusivity provisions of the Workers’
Compensation Law and liable to plaintiff because it independently
assumed the assets, obligations and liabilities of a predecessor
                                 -6-                          1023
                                                         CA 11-00169

corporation, i.e., APCH, through a merger. The fact that Alstom
happened to be decedent’s employer at the time of the accident is of
no moment, inasmuch as the obligation giving rise to this lawsuit is
not the employment relationship between Alstom and decedent but,
rather, the controlling factor is the “independent business
transaction” between Alstom and APCH (id. at 161).

     Were we to conclude that defendants are contending that the
denial of that part of the motion seeking dismissal of the amended
complaint against Alstom violates the “ ‘dual capacity’ ” doctrine,
and were we to conclude that such contention is properly before us
(see Ciesinski v Town of Aurora, 202 AD2d 984, 985), we note that such
a contention was rejected as fundamentally unsound in Billy (51 NY2d
at 158). Indeed, the Court of Appeals in Billy rejected that doctrine
as contrary to the legislative plan embodied in Workers’ Compensation
Law § 11 (see id. at 160) and, in any event, this case falls squarely
into the Billy exception discussed above, i.e., that Alstom is liable
because it voluntarily assumed the assets, obligations and liabilities
of APCH.

                                  V

     Finally, we conclude that there is no merit to defendants’
further contention that the court should have dismissed the amended
complaint in its entirety against CEI as failing to state a cause of
action against CEI. On a motion pursuant to CPLR 3211 (a) (7), we
must “accept the facts as alleged in the complaint as true, accord
plaintiff[] the benefit of every possible favorable inference, and
determine only whether the facts as alleged fit within any cognizable
legal theory . . . ‘[T]he criterion is whether [plaintiff] has a cause
of action, not whether he [or she] has stated one’ ” (Leon v Martinez,
84 NY2d 83, 87-88; see Burton v Matteliano, 81 AD3d 1272, 1274, lv
denied 17 NY3d 703).

     Applying that standard of review, we conclude that the court did
not err in refusing to grant in its entirety defendants’ motion with
respect to CEI. Here, the amended complaint alleges that all
defendants are liable for causing decedent’s death. Specifically, the
amended complaint alleges that decedent was fatally injured during the
“construction, erection, alteration, repair and inspecting” of the
compartment on defendants’ property, that defendants were both
negligent and grossly negligent in several ways with respect to the
performance of the injury-producing work, and that defendants violated
specified provisions of the Labor Law. Plaintiff further alleged that
Alstom had issued a resolution pursuant to which it planned to
transfer the property of APCH subsequent to the completion of CEI’s
bankruptcy reorganization and that plaintiff had not been able to
determine whether such property had in fact been transferred.

     Put differently, the amended complaint alleges that CEI is liable
by virtue of its status as the owner of the premises on which the
accident occurred, and addresses the possibility that CEI acquired an
interest in the plant prior to the accident. Consequently, the court
properly determined that CEI is not entitled to dismissal of the
                                 -7-                          1023
                                                         CA 11-00169

remaining causes of action against it pursuant to CPLR 3211 (a) (7).
We cannot agree with defendants to the extent they contend that the
amended complaint against CEI should be dismissed because the
allegations set forth therein are insufficiently particular to state a
cause of action. In our view, the amended complaint is sufficient to
advise the court and defendants of the transactions and occurrences
intended to be proved (see CPLR 3013).

                                  VI

     Accordingly, we conclude that the order should be affirmed.

Entered:   October 7, 2011                      Patricia L. Morgan
                                                Clerk of the Court