NASSAU COUNTY v. (and a third-party action). (2008)

In an action, inter alia, to recover damages for breach of contract and negligence, the defendant KeySpan Corporation appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Austin, J.), entered May 25, 2007, as denied its motion for summary judgment dismissing the complaint insofar as asserted against it.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the appellant's motion for summary judgment dismissing the complaint insofar as asserted against it is granted.

In 1996, the defendant Roy Kay, Inc. (hereinafter Roy Kay), signed a contract with the defendant Dormitory Authority of the State of New York to perform heating, ventilation, and air conditioning work as part of the construction of an Aquatic Center for the plaintiff, Nassau County.   Roy Kay completed the project in 1998.   On January 20, 2000, nonparty KeySpan Services, Inc. (hereinafter KSI), acquired all of the stock of Roy Kay.   KSI was then, and remains, a wholly-owned subsidiary of KeySpan Energy Corporation, which is, in turn, wholly owned by the appellant KeySpan Corporation.   Subsequent to KSI's acquisition of Roy Kay, Roy Kay was merged with KSI Contracting, LLC. KSI is the sole member of, and owns, KSI Contracting, LLC.

On February 27, 2004, Nassau County sued, among others, the appellant, alleging that the construction of the Aquatic Center was defective.   Following its joinder of issue, the appellant moved for summary judgment dismissing the complaint insofar as asserted against it.   It argued that when the subject contract was executed, it had no relationship to Roy Kay, and whatever liabilities Roy Kay had at the time it merged with KSI Contracting, LLC, were transferred to, and remain with, the latter company.   In opposition to the motion, the plaintiff argued that there were questions of fact as to whether the appellant could be held liable to it based on a corporate-veil piercing theory, and that since discovery relevant to that issue was necessary, the motion should be denied under CPLR 3212(f).  The Supreme Court denied the appellant's motion, concluding that more discovery was necessary.

 Generally, piercing the corporate veil requires a showing that (1) the corporate owners exercised complete domination and control of the corporation in respect of the transaction attacked, and (2) such domination and control was used to commit a fraud or wrong against the plaintiff which resulted in the plaintiff's injury (see Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135, 141, 603 N.Y.S.2d 807, 623 N.E.2d 1157;  Seuter v. Lieberman, 229 A.D.2d 386, 644 N.Y.S.2d 566;  New York Assn. for Retarded Children, Montgomery County Ch. v. Keator, 199 A.D.2d 921, 922, 606 N.Y.S.2d 784).   Furthermore, a parent company will not be held liable for the torts of its subsidiary unless it can be shown that the parent exercises complete domination and control over the subsidiary (see Serrano v. New York Times Co., Inc., 19 A.D.3d 577, 578, 797 N.Y.S.2d 135).

 Here, the appellant demonstrated its prima facie entitlement to judgment as a matter of law (see generally Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718).   In opposition, the plaintiff failed to raise a triable issue of fact as to whether the appellant dominated and controlled the activities of the subsidiary that owns Roy Kay's successor entity and, moreover, made no showing that discovery might reveal the existence of facts within the appellant's control which would warrant the denial of the motion (see CPLR 3212[f];  Serrano v. New York Times Co., Inc., 19 A.D.3d at 578, 797 N.Y.S.2d 135).   Therefore, the Supreme Court should have granted the appellant's motion for summary judgment dismissing the complaint insofar as asserted against it.

In view of the foregoing, we do not address the parties' remaining contentions.