EVERETT v. EVERETT (2023)

DECISION & ORDER

In an action pursuant to Business Corporation Law § 630 to recover unpaid wages, the plaintiff appeals from an order of the Supreme Court, Westchester County (Charles D. Wood, J.), dated February 4, 2022.  The order granted the defendant's motion for summary judgment dismissing the complaint and denied the plaintiff's motion for summary judgment on the issue of liability.

ORDERED that the order is affirmed, with costs.

In 2019, the plaintiff commenced this action pursuant to Business Corporation Law § 630 to recover unpaid wages arising out of the termination of his employment in October 2012 from a family-owned company in which the plaintiff was a shareholder.  Thereafter, the defendant moved for summary judgment dismissing the complaint, and the plaintiff moved for summary judgment on the issue of liability.  In an order dated February 4, 2022, the Supreme Court granted the defendant's motion and denied the plaintiff's motion.  The plaintiff appeals.

Business Corporation Law § 630(a) imposes personal liability on the 10 largest shareholders of a closely held corporation for the payment of wages and salaries owed to, among others, its “employees.”  The statute was enacted to protect those employed in “subordinate and humble capacities and to whom the hardship would be great, if their wages or salaries were not promptly paid” (Bristor v. Smith, 158 N.Y. 157, 159, 53 N.E. 42;  see Lindsey v. Winkler, 52 Misc.2d 1037, 1038, 277 N.Y.S.2d 768 [Nassau Dist. Ct., 2d Dist.];  Kane v. Benson, 86 F.R.D. 460, 462 [E.D.N.Y.]).  “The statutory provision, being penal in its nature, should receive a strict construction by the courts” (Bristor v. Smith, 158 N.Y. at 158, 53 N.E. 42).

Here, the defendant established, prima facie, that the plaintiff was not an employee within the meaning of Business Corporation Law § 630, as the plaintiff held equity ownership and an executive position in the subject company since 1985 (see Depperman v. Chenango Val. Pet Foods, Inc., 201 A.D.2d 936, 607 N.Y.S.2d 760;  Herman v. Levanne, 77 Misc.2d 653, 354 N.Y.S.2d 361 [Nassau Dist. Ct., 1st Dist.], affd 79 Misc.2d 799, 363 N.Y.S.2d 323 [App. Term, 2d Dept.]).  Moreover, the defendant established, prima facie, that the plaintiff was not entitled to the protections afforded under Business Corporation Law § 630 because he failed to serve the defendant with notice of intent to hold the defendant liable within 180 days after the plaintiff ceased providing services to the subject company in October 2012 (see Ingvarsdottir v. Gaines, Gruner, Ponzini & Novick, LLP, 144 A.D.3d 1099, 1102, 43 N.Y.S.3d 68).  In opposition to the defendant's prima facie showings, the plaintiff failed to raise a triable issue of fact.

Accordingly, the Supreme Court properly granted the defendant's motion for summary judgment dismissing the complaint and denied the plaintiff's motion for summary judgment on the issue of liability.

DUFFY, J.P., CHAMBERS, WOOTEN and DOWLING, JJ., concur.