MERTZ v. Niagara Machine and Tool Works, Defendant-Respondent. (1999)

Mark N. Mertz (plaintiff), who was employed by Seibel Modern Manufacturing & Welding Corp., was injured when he slipped and fell in a puddle of water that had accumulated on the floor of a factory owned by Seibel Realty, Inc. (defendant) and leased to plaintiff's employer.   Plaintiff and his wife commenced this negligence action, alleging, inter alia, that defendant had actual notice of a leak in the roof that created a hazardous condition.   Defendant moved for summary judgment dismissing the complaint against it on the ground that the two corporations were alter egos or were engaged in a joint venture and thus that Workers' Compensation Law § 11 barred the action.   Supreme Court properly denied the motion.

 In order for two corporations to constitute alter egos, “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 N.Y.2d 152, 163, 432 N.Y.S.2d 879, 412 N.E.2d 934, rearg. denied 52 N.Y.2d 829, 437 N.Y.S.2d 1030, 418 N.E.2d 694, quoting Lowendahl v. Baltimore & Ohio R.R. Co., 247 App.Div. 144, 155, 287 N.Y.S. 62, affd. 272 N.Y. 360, 6 N.E.2d 56).  “An indispensible element of a joint venture is an understanding ‘to share in the profits of the business and submit to the burden of making good the losses' ” (Bruno v. Dynamic Enters., 132 A.D.2d 964, 965, 518 N.Y.S.2d 494 [emphasis in original] ).   Defendant failed to establish as a matter of law that the two corporations were either alter egos or engaged in a joint venture.   Contrary to defendant's contention, it is not dispositive that the two corporations have the same officers and directors and that one is the landlord of the other.  “ ‘[T]he individual princip[al]s in this business enterprise, for their own business and legal advantage, elected to operate that enterprise through separate corporate entities.   The structure they created should not lightly be ignored at their behest, in order to shield one of the entities they created from * * * common-law tort liability’ ” (Richardson v. Benoit's Elec., 254 A.D.2d 798, 677 N.Y.S.2d 855).

Order unanimously affirmed with costs.

MEMORANDUM: