Gateway I Group, Inc. v. Park Avenue Physicians, P.C.

62 A.D.3d 141, 877 N.Y.S.2d 95
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMarch 17, 2009
StatusPublished
Cited by63 cases

This text of 62 A.D.3d 141 (Gateway I Group, Inc. v. Park Avenue Physicians, P.C.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gateway I Group, Inc. v. Park Avenue Physicians, P.C., 62 A.D.3d 141, 877 N.Y.S.2d 95 (N.Y. Ct. App. 2009).

Opinion

OPINION OF THE COURT

Dickerson, J.

[143]*143Factual Background and Prior Action

The plaintiff, Gateway I Group, Inc., owns real property located at One North Lexington Avenue in White Plains. The defendant Park Avenue Physicians, PC. (hereinafter Physicians) was the plaintiff’s tenant at that property. In a prior action commenced by the plaintiff to recover unpaid rent from Physicians, the plaintiff was awarded the sum of $183,808.33, and Physicians was evicted from the property.

The Instant Action

The plaintiff commenced the instant action against Physicians, as well as the defendants Park Avenue Health Care Management, Inc. (hereinafter Health Care), Park Avenue Senior Medicine PC. (hereinafter Senior Medicine), Park Avenue Geriatric Management, LLC (hereinafter Geriatric Management), and Brad Markowitz, by the filing of a summons and verified complaint dated February 10, 2006. In this action, the plaintiff asserts 34 causes of action, and seeks, inter alia, to recover the unpaid judgment as well as post-eviction rent.

On or about July 26, 2006, the plaintiff served an amended complaint, alleging that Physicians, which was dissolved on December 29, 2004, had been undercapitalized and failed to adhere to corporate formalities. The plaintiff also alleged that Markowitz, who was a stockholder, officer, and director of Physicians, used corporate funds for his own personal purposes and exercised complete domination and control over Physicians. The plaintiff further alleged that Physicians was the alter ego and a mere instrumentality of Markowitz. According to the plaintiff, Markowitz thus used Physicians to defraud the plaintiff and commit other wrongful acts against it.

The plaintiff also alleged that there was an overlapping and interlocking of owners, officers, and directors amongst Physicians and the defendants Health Care, Senior Medicine, and Geriatric Management; that Health Care, Senior Medicine, and Geriatric Management (hereinafter together the corporate appellants) used the same office space, equipment, and telephone number as Physicians; that the corporate appellants were stockholders of Physicians; that the corporate appellants exercised complete domination and control over Physicians, which they employed to commit wrongful acts against the plaintiff; that Markowitz and the corporate appellants abused the privilege of doing business in the corporate form of Physicians to perpetrate wrongs against the plaintiff; and that Physicians was the alter ego and a mere instrumentality of the [144]*144corporate appellants. Based on these allegations, the plaintiff sought to recover from Markowitz, Health Care, Senior Medicine, and Geriatric Management (hereinafter together the appellants) under a theory of piercing the corporate veil.

In the first cause of action, the plaintiff asserted that, based on Physician’s default under the lease and its subsequent eviction, Physicians—as well as the appellants under a theory of piercing the corporate veil—were liable to it for, inter alia, rental payments owed for the period beginning August 1, 2004 and ending July 31, 2006. In the second, third, and fourth causes of action, the plaintiff alleged that, on or about June 17, 1999, Physicians orally assigned the lease to the corporate appellants, and that, thereafter, based on a number of alleged factual circumstances, the corporate appellants held themselves out as Physicians’ assignees, and that, having assumed the lease, the corporate appellants were obligated to pay rent and additional rent for a specified period of time. In the fifth, sixth, and seventh causes of action, the plaintiff alleged that, having assumed the lease, the corporate appellants were liable, under a theory of piercing the corporate veil, for post-eviction rent. In the eighth, ninth, and tenth causes of action, the plaintiff sought to recover from the corporate appellants in quantum meruit, based on their use and occupation of the subject property. In the remaining causes of action, the plaintiff alleged, inter alia, that Physicians conveyed its assets to the appellants, while insolvent and for no consideration, to operate as a corporate shield, that these conveyances violated Debtor and Creditor Law §§ 273, 273-a, 274, 275, 276 and 276-a, and that they should be set aside.

The Motion to Dismiss

On or about January 2, 2007, the appellants moved to dismiss the complaint in its entirety pursuant to CPLR 3211 (a) (7) and 3016 (b). With regard to the first cause of action, the appellants claimed that, because only Physicians was a signatory to the lease, they could not be held liable for any breach thereof. As to the second through seventh causes of action, the corporate appellants claimed, inter alia, that the alleged oral assignments of the lease by Physicians to them were voidable under the statute of frauds, as they contemplated a lease term in excess of one year. The corporate appellants also sought dismissal of the first, fifth, sixth, and seventh causes of action, claiming that the plaintiffs allegations in support of its corporate veil-piercing theory were impermissibly conclusory. The corporate appellants claimed that the causes of action by which the plaintiff sought [145]*145to recover on a quantum meruit basis must be dismissed because there was a valid and enforceable lease in place requiring Physicians to pay rent on the subject property. As to the causes of action under the Debtor and Creditor Law, the appellants claimed that such causes of action were subject to the heightened pleading requirements of CPLR 3016 (b) as they sounded in fraud. The appellants asserted that the plaintiff failed to satisfy those heightened pleading requirements, as the amended complaint was conclusory in this regard, and merely echoed the language of the relevant sections of the Debtor and Creditor Law.

The Order Appealed From

In an order entered May 17, 2007, the Supreme Court denied the appellants’ motion in its entirety, concluding that “[a] review of the amended verified complaint reveals that it states cognizable causes of action.” We affirm.

Discussion

Motion to Dismiss for Failure to State a Cause of Action

“On a motion to dismiss the complaint pursuant to CPLR 3211 (a) (7) for failure to state a cause of action, the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory” (Breytman v Olinville Realty, LLC, 54 AD3d 703, 703-704 [2008]; see Leon v Martinez, 84 NY2d 83, 87 [1994]; Smith v Meridian Tech., Inc., 52 AD3d 685, 686 [2008]).

Breach of Lease

In the first cause of action, the plaintiff seeks to hold the appellants liable, under a theory of piercing the corporate veil, for Physicians’ failure to pay rent in breach of its lease with the plaintiff. “A party seeking to pierce the corporate veil must establish that ‘(1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in the plaintiffs injury’ ” (Millennium Constr., LLC v Loupolover, 44 AD3d 1016, 1016 [2007], quoting Matter of Morris v New York State Dept. of Taxation & Fin., 82 NY2d 135, 141 [1993]; see Hyland Meat Co. v Tsagarakis, 202 AD2d 552, 552 [1994]).

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Bluebook (online)
62 A.D.3d 141, 877 N.Y.S.2d 95, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gateway-i-group-inc-v-park-avenue-physicians-pc-nyappdiv-2009.