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PLAINTIFF’S MOTION TO AMEND THE COMPLAINT TO ADD ALLEGATIONS SUPPORTING “PIERCING THE CORPORATE VEIL” SHOULD HAVE BEEN GRANTED, CRITERIA EXPLAINED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion to amend the complaint to add allegations supporting “piercing the corporate veil” in this breach of contract action should have been granted:

“Broadly speaking, the courts will disregard the corporate form, or, to use accepted terminology, pierce the corporate veil, whenever necessary to prevent fraud or to achieve equity” … . “Because a decision whether to pierce the corporate veil in a given instance will necessarily depend on the attendant facts and equities, the New York cases may not be reduced to definitive rules governing the varying circumstances when the power may be exercised” … . However, “[g]enerally, a plaintiff seeking to pierce the corporate veil must show 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 plaintiff’s injury. The plaintiff must adequately allege the existence of corporate obligation and that defendant exercised complete domination and control over the corporation and abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice” … . “[T]he corporate veil will be pierced to achieve equity, even absent fraud, when a corporation has been so dominated by an individual or another corporation and its separate entity so ignored that it primarily transacts the dominator’s business instead of its own and can be called the other’s alter ego. In determining whether to pierce the corporate veil, [g]enerally considered are such factors as whether there is an overlap in ownership, officers, directors and personnel, inadequate capitalization, a commingling of assets, or an absence of separate paraphernalia that are part of the corporate form” … . Another factor to be considered is whether the corporation and its owners shared “common office space” … . “A cause of action under the doctrine of piercing the corporate veil is not required to meet any heightened level of particularity in its allegations” … , and “a fact-laden claim to pierce the corporate veil is unsuited for resolution on a pre-answer, pre-discovery motion to dismiss” … . HLI Rail & Rigging, LLC v Franklin Exhibit Mgt. Group, LLC, 2025 NY Slip Op 02330, Second Dept 4-23-25

Practice Point: Consult this decision for a concise description of the criteria for “piercing the corporate veil” in the context of a motion to amend the complaint to add the relevant allegations.

 

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BECAUSE THE RES IPSA LOQUITUR DOCTRINE IS DEPENDENT UPON CIRCUMSTANTIAL EVIDENCE FROM WHICH INFERENCES MUST BE DRAWN, SUMMARY JUDGMENT IS USUALLY NOT APPROPRIATE; HERE A GARAGE DOOR CLOSED OR FELL ON PLAINTIFF; PLAINTIFF’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the res ipsa loquitur doctrine was not a proper basis for granting plaintiff’s summary judgment motion. Plaintiff was injured when a garage door at defendant’s vehicle-repair shop closed on her as she left the customer waiting area. Plaintiff could have used an exterior door rather than the open garage door:

“The doctrine of res ipsa loquitur permits an inference of negligence to be drawn solely from the happening of an accident” … . It requires evidence of an event which ordinarily does not occur in the absence of negligence, was caused by an agency or instrumentality within the exclusive control of the defendant, and was not due to any voluntary action or contribution on the part of the plaintiff … . “Since the circumstantial evidence allows but does not require the jury to infer that the defendant was negligent, res ipsa loquitur evidence does not ordinarily or automatically entitle the plaintiff to summary judgment, even if the plaintiff’s circumstantial evidence is unrefuted” … . Summary judgment on the issue of liability should only be granted “in the rarest of res ipsa loquitur cases” where “the plaintiff’s circumstantial proof is so convincing and the defendant’s response so weak that the inference of [the] defendant’s negligence is inescapable” … .

Here, the plaintiff did not establish, by sufficiently convincing circumstantial proof, “that the inference of [the] defendant’s negligence is inescapable” … . Specifically, the plaintiff failed to submit sufficiently convincing circumstantial proof that the garage door and its mechanism were within the defendant’s exclusive control, and that the accident was not due to any fault on the part of the plaintiff … . “‘In those cases where conflicting inferences may be drawn, choice of inference must be made by the jury'” … . Hafeez v TT of Freeport, 2025 NY Slip Op 02327, Second Dept 4-23-25

Practice Point: Consult this decision for insight into the proof requirements for liability under the res ipsa loquitur doctrine.​

Practice Point: Because the res ipsa loquitur doctrine is dependent upon circumstantial evidence, summary judgment is rarely appropriate even where plaintiff’s evidence is unrefuted.

 

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STANDING ON AN INVERTED BUCKET CONSTITUTED A “PHYSICALLY SIGNIFICANT” HEIGHT-DIFFERENTIAL FOR PURPOSES OF LIABILITY UNDER LABOR LAW 240(1); INJURY WHILE PREVENTING A FALL IS COVERED BY LABOR LAW 240(1) (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined there was a question of fact whether plaintiff’s injury, suffered as he tried to maintain his balance while standing on an inverted bucket, was covered by Labor Law 240(1), despite the fact that plaintiff did not actually fall:

Plaintiff … testified at his deposition that he sustained biceps and shoulder injuries while installing a heavy marble slab on a bathroom wall during a construction project. To install the marble slab, plaintiff and his coworker were required to lift the slab onto two 15-inch-high inverted buckets set up on opposite ends of the slab, then stand on the buckets and attach two suction cups to the slab to lift it to the height of the bathroom ceiling. Plaintiff testified that his injury occurred as he was standing in an awkward position, trying to maintain his balance, because the “buckets were wobbling.” …

… [T]he record presents an issue of fact as to whether plaintiff was injured while trying to avoid falling from the bucket while lifting the marble slab, and whether the injury could have been prevented if defendants had provided an adequate protective device to enable him to accomplish his work at a height … . Because Labor Law § 240(1) applies so long as the “harm directly flowed from the application of the force of gravity to an object or person” … , plaintiff’s claim is not defeated by the fact that he did not actually fall. On the contrary, this Court has consistently held that the statute applies where a worker was injured in the process of “preventing himself from falling” … .

We reject defendants’ argument that the protection of Labor Law § 240(1) is not available because the 15-inch-tall bucket was not a “physically significant” elevation differential. This Court has found that an inverted bucket is an inadequate safety device to raise a worker to the height required to perform the work and presents a risk within the ambit of the statute … . LaGrippo v 95th & Third LLC, 2025 NY Slip Op 02288, First Dept 4-22-25

Practice Point: Standing on an inverted bucket constitutes a physically significant height-differential for purposes of liability under Labor Law 240(1).

Practice Point: Plaintiff’s injury, not from a fall, but rather from his efforts to prevent his falling, can be covered under Labor Law 240(1).

 

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THE LAWSUIT BROUGHT BY PLAINTIFF BENEFICIARY AGAINST DEFENDANT TRUSTEE DID NOT CHALLLENGE THE TRUST, BUT RATHER SOUGHT TO ENFORCE THE PROVISIONS OF THE TRUST; THEREFORE THE LAWSUIT DID NOT TRIGGER THE IN TERROREM CLAUSE (WHICH DISPOSSES A BENEFICIARY WHO SEEKS TO NULLIFY THE TRUST); THERE WAS A THREE-JUDGE DISSENT (CT APP). ​

The Court of Appeals, in a full-fledged opinion by Judge Rivera, over a three-judge dissent, reversing (modifying) Supreme Court, determined the lawsuit brought by plaintiff beneficiary of the estate (Carlson) against the trustee (Colangelo) did not trigger the “in terrorem” clause in the will and the trust. Therefore the provisions of the will and the trust remained enforceable by the plaintiff and the plaintiff was entitled to the real property bequeathed to her. The opinion is fact-specific and cannot be fairly summarized here:

The trust includes an in terrorem clause, which dispossesses a beneficiary or other challenger who contests or seeks to nullify the trust. The issue on this appeal is whether plaintiff triggered the clause when she commenced the underlying action against the trustee and thereby forfeited her bequests. * * *

We conclude that because plaintiff’s lawsuit seeks to enforce the Trust provisions as written and intended by the grantor, plaintiff did not attempt to nullify the Trust or challenge its terms. Thus, plaintiff did not violate the in terrorem clause and defendant is not entitled to summary judgment. We further conclude that plaintiff has established her right to summary judgment on her first cause of action regarding her ownership rights to the Premises and her motion should be granted to that extent. Carlson v Colangelo, 2025 NY Slip Op 02264, CtApp 4-17-25

Practice Point: Consult this opinion for insight into when a lawsuit against a trustee triggers an in terrorem clause in the trust document. Here the majority concluded the lawsuit did not challenge the trust but rather sought to enforce the provisions of the trust. Therefore the in terrorem clause was not triggered.

 

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IN THIS CHILD VICTIMS ACT NEGLIGENT-SUPERVISON ACTION AGAINST THE COUNTY, THE PLAINTIFF DID NOT RAISE A QUESTION OF FACT ABOUT WHETHER THE COUNTY HAD NOTICE OF A SOCIAL SERVICES CASEWORKER’S SEXUAL ABUSE OR PROPENSITY FOR SEXUAL ABUSE OF CHILDREN (CT APP).

The Court of Appeals, affirming the dismissal of this Child Victims Act suit against the county, in a full-fledged opinion by Judge Wilson, over a comprehensive dissenting opinion, determined the plaintiff did not raise a question of fact about whether the county had actual or constructive notice that a Department of Social Services caseworker (Hoch) had sexually abused children or had a propensity for the sexual abuse of children. Therefore, the plaintiff did not make out a prima facie “negligent supervision” cause of action:

In the summer of 1993, the parents of 11-year-old Michael Nellenback had him designated as a person in need of supervision (PINS) and placed in the care of Madison County’s Department of Social Services. The Madison County Department of Social Services assigned caseworker Karl Hoch to the Nellenback case. According to Mr. Nellenback, over the next three years, Mr. Hoch repeatedly sexually abused and assaulted him. It turned out that Mr. Hoch had sexually abused several other children to whose cases he was assigned.

In 2019, Mr. Nellenback filed suit against Madison County under the claim-revival provision of the Child Victims Act, alleging that that the County was negligent in hiring, supervising, and retaining Mr. Hoch. The sole issue on appeal is whether Mr. Nellenback raised a triable issue of fact on his negligent supervision claim. We hold that he did not: Even viewed in the light most favorable to Mr. Nellenback, the evidence was insufficient to prove the County was on notice of the abuse and that it negligently placed Mr. Hoch in a position to cause harm. * * *

… [T]here was neither evidence that the County had any knowledge of Mr. Hoch’s abuse before the report of his abuse of another child in 1996, nor any evidence the County was aware of any conduct that could have alerted them to the potential for harm. Nellenback v Madison County, 2025 NY Slip Op 02263, CtApp 4-17-25

Practice Point: This is a fact-specific opinion which analyzes the proof necessary to raise a question of fact whether a county social services department had constructive notice of its caseworker’s propensity for the sexual abuse of children. The majority, over an extensive dissent, determined the evidence relied on by the plaintiff was not sufficient to raise a question of fact.

 

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WHERE, AS HERE, PLAINTIFFS ALLEGE THE CONTESTED SALES TAX STATUTE IS “WHOLLY INAPPLICABLE” TO THEM, AND PLAINTIFFS SEEK A DECLARATORY JUDGMENT TO THAT EFFECT, THE “EXHAUSTION OF ADMINISTRATIVE REMEDIES” REQUIREMENT IS NOT RELEVANT (THRID DEPT). ​

The Third Department, reversing (modifying) Supreme Court, determined some of the plaintiffs had not failed to exhaust their administrative remedies in this action contesting the imposition of sales tax on the construction and demolition inspection services provided by plaintiffs. There is an exception to the “exhaustion of administrative remedies” requirement where, as here, plaintiffs claim the tax statute at issue is “wholly inapplicable” to them:

… [T]he remaining plaintiffs did not, as Supreme Court held, fail to exhaust their administrative remedies. Generally, a taxpayer must utilize statutory administrative remedies prior to commencing an action against the taxing entity … . That said, there is an exception to this requirement when, as relevant here, a tax statute is attacked as wholly inapplicable to the plaintiff … . “To challenge a statute as wholly inapplicable, the taxpayer must allege that the agency had no jurisdiction over it or the matter that was taxed” … . “This exception to the rule [mandating exhaustion of administrative remedies] is limited to those cases where no factual issue is raised” concerning the subject matter of the tax dispute … .

The remaining plaintiffs qualify for the “wholly inapplicable” exception, as the complaint alleges that DTF [Department of Taxation and Finance] lacks jurisdiction because Tax Law § 1105 (c) (8) does not apply to their site safety services. Further, there are no factual issues at play here. * * * … [T]he complaint simply seeks a declaration that site safety services, as specifically defined in the New York City Building Code, are exempt from sales tax … . Site Safety LLC v New York State Dept. of Taxation & Fin., 2025 NY Slip Op 02255, Third Dept 4-17-25

Practice Point: Here plaintiffs alleged the relevant sales-tax statute was wholly inapplicable to them and sought a declaratory judgment to that effect. The proceeding therefore is excepted from the “exhaustion of administrative remedies” requirement.

 

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MARKETING INFORMATION PROVIDED TO INDIVIDUAL CLIENTS WHICH IS SUBSEQUENTLY INCLUDED IN REPORTS SOLD TO OTHERS IS SUBJECT TO SALES TAX (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Cannataro, over a comprehensive two-judge dissent, affirming the appellate division, determined the Tax Appeals Tribunal properly held that petitioner’s (Dynamic’s) information service was subject to sales tax:

Dynamic markets products to help clients measure the effectiveness of their advertising campaigns. At issue here is one such product, AdIndex, which Dynamic describes as using “a control/exposed methodology to measure the effectiveness of digital advertising at communicating brand messaging.” To create an AdIndex report, Dynamic identifies individuals who have been exposed to a client’s advertisements and then surveys them along with a control group. The survey questions are largely standardized but may contain a small number of campaign-specific questions. The results are compared to broader market data contained in MarketNorms, a database maintained by Dynamic that is also available to clients as a standalone subscription service. Dynamic then generates a report for the client which includes the survey data collected, an analysis of the “story” the data tells, as well as client-specific “insights,” “implications,” “next steps” and “recommendations” gleaned from the data. The data gathered in each AdIndex report is later incorporated into the MarketNorms database for use in reports prepared for future clients. * * *

… [T]he Tribunal’s determination that the inclusion of the information originally generated for individual clients into products eventually sold to others meets the level of substantiality under section [Tax Law] 1105 (c) (1) is reasonable and supported by substantial evidence … . Matter of Dynamic Logic, Inc. v Tax Appeals Trib. of the State of New York, 2025 NY Slip Op 02262, CtApp 4-17-25

Practice Point: Marketing information initially provided to individual clients but subsequently included in reports sold to others is subject to sales tax.

 

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OVERRULING A 2006 OPINION, A PLAINTIFF IN A DOG-BITE ACTION CAN NOW SUE IN STRICT LIABILITY AND COMMON-LAW NEGLIGENCE (CT APP).

The Court of Appeals, reversing the appellate division in this dog-bite case, in a full-fledged opinion by Judge Halligan, reinstating the strict liability and common-law negligence causes of action, overruled the 2006 Court of Appeals case holding that there is no common-law liability for injury caused by a domestic animal:

Plaintiff Rebecca Flanders, a postal carrier, was bitten by a dog owned by Defendants Stephen and Michelle Goodfellow while delivering a package to their residence. She commenced this action to recover damages for her injuries, asserting causes of action sounding in strict liability and negligence. Both causes of action were dismissed, and Flanders asks us to reinstate them.

Under settled law, an owner of a domestic animal who has actual or constructive knowledge of their animal’s vicious propensities will be held strictly liable for harm caused as a result of those propensities. There is a triable issue of fact as to whether the Goodfellows had constructive knowledge of their dog’s vicious propensities, and so summary judgment should not have been granted to them on the strict liability cause of action.

The lower courts dismissed Flanders’s negligence cause of action as barred by Bard v Jahnke (6 NY3d 592 [2006]), which held that there can be no common-law negligence liability when a domestic animal causes harm. Experience has shown that this rule is in tension with ordinary tort principles, unworkable, and, in some circumstances, unfair. Continued adherence to Bard therefore would not achieve the stability, predictability, and uniformity in the application of the law that the doctrine of stare decisis seeks to promote. Accordingly, we overrule Bard to the extent that it bars negligence liability for harm caused by domestic animals, and reinstate Flanders’s negligence cause of action. * * *

Our decision today means that there is a two-pronged approach to liability for harms caused by animals … .. A plaintiff who suffers an animal-induced injury therefore has a choice. If the owner knew or should have known the animal had vicious propensities, the plaintiff may seek to hold them strictly liable. Or they can rely on rules of ordinary negligence and seek to prove that the defendant failed to exercise due care under the circumstances that caused their injury. Of course, a plaintiff might also assert both theories of liability … .  Flanders v Goodfellow, 2025 NY Slip Op 02261, CtApp 4-17-25

Practice Point: A plaintiff in a dog-bite case can now assert both strict liability and common-law negligence causes of action.

 

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ONLY THE COURT CHARGED WITH EMPANELING THE GRAND JURY CAN ORDER THE RELEASE OF THE GRAND JURY MINUTES; IN ORANGE COUNTY THE COURT CHARGED WITH EMPANELING GRAND JURIES IS COUNTY COURT; THEREFORE THE PETITON FOR A WRIT OF PROHIBITION PROHIBITING A SUPREME COURT JUSTICE FROM ORDERING THE RELEASE OF THE GRAND JURY MINUTES WAS GRANTED (SECOND DEPT).

The Second Department granted a petition for a writ of prohibition to prohibit a Supreme Court justice from ordering the release of grand jury minutes to the plaintiff in a civil action. Only the court charged with empaneling the grand jury, in this case County Court, can order release of the minutes:

The orders … directing the release of certain grand jury minutes in the subject criminal action and directing the clerk of the court to provide those minutes to the plaintiff’s counsel in the underlying civil action, are subject to prohibition for exceeding the Supreme Court’s authorized powers, as “only the court in charge of a Grand Jury may release testimony from the secrecy requirements of CPL 190.25(4)” … . In Orange County, only terms of the County Court have been charged with the empaneling of grand juries at the times relevant to this proceeding … , and as such, that was the court in charge of the grand jury in the subject criminal action, and the only court authorized to release those grand jury minutes … . Matter of Hoovler v Vazquez-Doles, 2025 NY Slip Op 02204, Secpmd Dept 5-16-25

Practice Point: If a Supreme Court justice issues an order which exceeds that court’s authorized powers, here an an order to release grand jury minutes to a plaintiff in a civil action, a petition for a writ of prohibition will be granted.

 

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PLAINTIFF INSURER CAN SUE, AS A SUBROGEE, THE CLUB WHICH SERVED ALCOHOL TO ITS INSUREDS, WHO WERE VISIBLY INTOXICATED, PURSUANT TO THE DRAM SHOP ACT; THE INSUREDS WERE INJURED IN A SINGLE CAR ACCIDENT AND THE INSURER PAID OUT MORE THAN $500,000 (SECOND DEPT). ​

The Second Department, in a full-fledged opinion by Justice Love, affirming Supreme Court, determined that plaintiff insurance company, Drive Insurance, could stand in the shoes of its insureds (as a subrogee) and sue the defendant club, Atlantis, pursuant to the Dram Shop  Act. Plaintiff alleged defendant served alcohol to the visibly intoxicated insureds who were then injured in a single-car accident. Plaintiff paid out over $500,000 to the insureds (named Aly, Perez and Abreu-Mateo):

… Drive Insurance alleged that Aly, Perez, and Abreu-Mateo were injured and the vehicle was damaged by Perez, who was visibly intoxicated at the time that Atlantis sold her alcohol. Accordingly, the Supreme Court properly determined that Drive Insurance was entitled to assert, as subrogee, a cause of action pursuant to the Dram Shop Act and that Drive Insurance stated a claim against Atlantis for violation of the Dram Shop Act. If the owner of the vehicle and the passengers have causes of action pursuant to the Dram Shop Act against Atlantis to recover damages arising out of the accident on the theory that Atlantis unlawfully served Perez when she was visibly intoxicated, causing the accident and their injuries, which causes of action do not fall into one of the exclusions discussed supra, then, since Drive Insurance alleges that it made payments as to the damaged vehicle and the injured passengers pursuant to the policy, Drive Insurance is entitled to stand in the shoes of its insured and seek indemnification from Atlantis based on Atlantis’s alleged violation of the Dram Shop Act. Drive N.J. Ins. Co. v RT Hospitality Group, LLC, 2025 NY Slip Op 02188, Second Dept 4-16-25

Practice Point: An insurance company which has paid the insureds’ medical bills and vehicle-repair costs after a single-car accident, can, as a subrogee, sue the bar which served alcohol to the visibly intoxicated insureds under the Dram Shop Act.

 

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