Court Opinion

ID: 4086685
Source: CourtListenerOpinion
Date Created: 2016-10-08 00:09:06.03836+00
Date Added: 2024-06-11T14:06:39.154284
License: Public Domain

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

1411
CA 11-01403
PRESENT: SMITH, J.P., FAHEY, CARNI, SCONIERS, AND GORSKI, JJ.

ANTHONY MCCLOUD, PLAINTIFF-RESPONDENT,

                    V                             MEMORANDUM AND ORDER

BETTCHER INDUSTRIES, INC., DEFENDANT-APPELLANT,
ET AL., DEFENDANT.

GOLDBERG SEGALLA LLP, BUFFALO (ROBERT E. GALLAGHER, JR., OF COUNSEL),
FOR DEFENDANT-APPELLANT.

LIPSITZ GREEN SCIME CAMBRIA LLP, BUFFALO (JOHN A. COLLINS OF COUNSEL),
FOR PLAINTIFF-RESPONDENT.

     Appeal from an order of the Supreme Court, Erie County (Frank A.
Sedita, Jr., J.), entered January 28, 2011 in a personal injury
action. The order denied the motion of defendant Bettcher Industries,
Inc. for summary judgment.

     It is hereby ORDERED that the order so appealed from is
unanimously reversed on the law without costs, the renewed motion is
granted and the complaint against Bettcher Industries, Inc. is
dismissed.

     Memorandum: Plaintiff commenced this action seeking damages for
injuries he sustained while operating a breader machine. Bettcher
Industries, Inc. (defendant) appeals from an order denying its renewed
motion for summary judgment dismissing the complaint against it. It
is undisputed that the breader machine was manufactured by Sam Stein
Associates (Stein). Approximately 21 years prior to the incident,
defendant purchased all of the common stock of Stein pursuant to a
written stock purchase agreement. Plaintiff sought to pierce the
corporate veil to hold defendant liable for his injuries as the parent
corporation of Stein, its subsidiary. We agree with defendant that,
as a shareholder, it cannot be held liable for the torts of its
subsidiary.

     It is well settled that “liability can never be predicated solely
upon the fact of a parent corporation’s ownership of a controlling
interest in the shares of its subsidiary. At the very least, there
must be direct intervention by the parent in the management of the
subsidiary to such an extent that ‘the subsidiary’s paraphernalia of
incorporation, directors and officers’ are completely ignored” (Billy
v Consolidated Mach. Tool Corp., 51 NY2d 152, 163, rearg denied 52
NY2d 829, quoting Lowendahl v Baltimore & Ohio R.R. Co., 247 App Div
                                 -2-                          1411
                                                         CA 11-01403

144, 155, affd 272 NY 360, rearg denied 273 NY 584). A plaintiff
“seeking to pierce the corporate veil must establish that the owners,
through their domination, abused the privilege of doing business in
the corporate form,” thereby perpetrating a wrong that resulted in
injury to the plaintiff (Matter of Morris v New York State Dept. of
Taxation & Fin., 82 NY2d 135, 142; see Gateway I Group, Inc. v Park
Ave. Physicians, P.C., 62 AD3d 141, 145; Lawlor v Hoffman, 59 AD3d
499). “Factors to be considered in determining whether the [parent
company] has ‘abused [that] privilege . . .’ include whether there was
a ‘failure to adhere to corporate formalities, inadequate
capitalization, commingling of assets, and use of corporate funds for
personal use’ ” (East Hampton Union Free School Dist. v Sandpebble
Bldrs., Inc., 66 AD3d 122, 127, affd 16 NY3d 775). Here, defendant
established that its conduct with respect to Stein did not constitute
an abuse of the privilege of doing business in the corporate form (see
Lawlor, 59 AD3d 499), and plaintiff failed to raise a triable issue of
fact sufficient to defeat the renewed motion (see generally Zuckerman
v City of New York, 49 NY2d 557, 562).

     In light of our determination, we need not address defendant’s
contention regarding the alleged improper characterization of the
deposition testimony of its chief executive officer.

Entered:   December 30, 2011                    Frances E. Cafarell
                                                Clerk of the Court