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WAUSAU BUSINESS INS. CO. v. TURNER CONST. CO.

April 25, 2001

WAUSAU BUSINESS INSURANCE COMPANY AS SUBROGEE TO THE RIGHTS OF CENTRAL SYNAGOGUE, PLAINTIFF,
v.
TURNER CONSTRUCTION COMPANY, AMIS INC. AND ARIS DEVELOPMENT CORPORATION, DEFENDANTS. TURNER CONSTRUCTION COMPANY, THIRD-PARTY PLAINTIFF, V. TRIDENT MECHANICAL SYSTEMS, INC., TRIDENT MECHANICAL SYSTEMS, INC., A DIVISION OF DUALSTAR TECHNOLOGIES CORP., TRIDENT MECHANICAL SYSTEMS, INC., A WHOLLY-OWNED SUBSIDIARY OF DUALSTAR TECHNOLOGIES CORP., DUALSTAR TECHNOLOGIES CORP., ATKINSON KOVEN FEINBERG ENGINEERS LLP, SCHUMAN LICHTENSTEIN CLAMAN EFRON ARCHITECTS, CENTRAL SYNAGOGUE, AND AMTEX ELECTRICAL CORP., THIRD-PARTY DEFENDANTS. CENTRAL SYNAGOGUE, FOURTH-PARTY PLAINTIFF, V. ACCORDIA, INC. AND ACCORDIA, INC., D/B/A ACCORDIA NORTHEAST, FOURTH-PARTY DEFENDANTS.



The opinion of the court was delivered by: Robert W. Sweet, United States District Judge.

OPINION

This action seeks damages for the reconstruction of New York City's Central Synagogue Sanctuary (the "Synagogue"), which was destroyed by a fire while being renovated on August 28, 1998. Third-party defendant Trident Mechanical Systems, Inc. ("Trident"), which contracted with Central Synagogue to do mechanical work associated with the renovations, is a wholly-owned subsidiary of third-party defendant Dualstar Technologies Corp. ("Dualstar"). Pursuant to Fed.R.Civ.P. 56, Dualstar moves for summary judgment on the grounds that (1) it had no contract with any of the parties in this action nor owed them any duty of care; and (2) there is no evidence to support piercing the corporate veil to hold Dualstar liable for Trident's conduct. Defendant/third-party plaintiff Turner Construction Company ("Turner") opposes the motion. For the reasons set forth below, the motion will be denied.

Facts

Both Trident and Dualstar are Delaware corporations. (Dualstar Rule 56.1 Statement ¶¶ 1, 2.) At all times relevant to this action, Trident was a wholly owned subsidiary of Dualstar. (Dualstar Rule 56.1 Statement ¶ 3; Turner Rule 56.1 Statement ¶ 3.)

On February 20, 1998, Trident contracted with Central Synagogue to conduct electrical work on the Synagogue in connection with its renovations. Dualstar was neither a party to nor mentioned in the contract. (McKenna Aff. Ex. B.) Dualstar has no contractual relationship with any other party to this action.

However, another Dualstar subsidiary, Integrated Control Enterprises, Inc. ("Integrated"), was assigned to perform the control wiring for the HVAC system for which Trident conducted the mechanical work. (Turner Rule 56.1 Statement ¶ 11.)

Dualstar alleges that it and Trident were distinct business entities operating at arms length which maintained separate corporate records, bank accounts, officers, employees, offices, addresses and phone numbers. (Dualstar Rule 56.1 Statement ¶¶ 4-9; Del Bono Aff.; Cuneo Aff.) Dualstar has submitted only Trident's contract with Central Synagogue and affidavits from Dualstar's President and Chief Executive Officer since 1995, Gregory Cuneo ("Cuneo") and Trident's former Vice President, Louis Del Bono ("Del Bono"), in support of this contention.

Turner disputes these allegations and contends that Dualstar's practice was to overlap its officers and directors with those of its subsidiaries, to "bundle" contracts of its subsidiaries to service customers such as Central Synagogue, and to control the finances of subsidiaries such as Trident. (Turner Rule 56.1 Statement ¶¶ 4-9, 11-12.) In opposition to Dualstar's affidavits, Turner has submitted portions of deposition testimony provided by Del Bono; Trident's president in 1998, Peter Vrankovic ("Vrankovic"); Craig Patella; and press releases, income statements, an insurance policy, and New York Department of State filings from Dualstar. (Rodgers Aff. Exs. A-H.)

Prior Proceedings

The circumstances giving rise to this action and its early history have been set forth in a prior opinion of his Court, familiarity with which is assumed. See Central Synagogue v. Turner Const. Co., 64 F. Supp.2d 347 (S.D.N.Y. 1999). Relevant proceedings are set forth below. Central Synagogue originally filed a complaint in the New York Supreme Court on February 25, 1999, seeking amounts in subrogation against defendants Turner, Amis Inc. ("Amis"), and Aris Development Corporation ("Aris," and, together with Turner and Amis, the "Defendants"). Central's complaint alleges state law claims of breach of contract, negligence, and breach of fiduciary duty, and seeks damages for uninsured losses sustained in the fire.

On December 27, 1999, Turner filed an Amended Third Party Complaint in this Court against third-party defendants Trident (as both a division and wholly-owned subsidiary of Dualstar), Dualstar, Atkinson Koven Feinberg Engineers, LLP ("AKF"), Schuman Lichtenstein Claman Efron Architects ("SLCE") and Central Synagogue (collectively the "third-party defendants"). Counterclaims were filed in both the state and federal actions. Central Synagogue filed a complaint against the third-party defendants on February 2, 2000.

By order of June 28, 2000, the state action and this action were determined to be "coordinated cases," as a result of which the rights and liabilities of all parties are to be decided by this Court.

On May 22, 2000, Central Synagogue filed a Fourth Party Complaint against Fourth Party Defendant, Acordia, Inc. ("Acordia"). That action was consolidated with the instant case by order of July 28, 2000.

Turner filed a Second Amended Complaint on February 8, 2001, adding Amtex Electrical Corporation ("Amtex") as a third-party defendant. Among other claims, the Second Amended Complaint alleges negligence and breach of contract against Trident and Dualstar. Both Trident and Dualstar have filed counterclaims against Turner and cross-claims against ...


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