United States District Court, S.D. New York
October 13, 2005.
MARION BECK and SOLOMON BECK, Plaintiff,
CONSOLIDATED RAIL CORPORATION, Defendant.
The opinion of the court was delivered by: COLLEEN McMAHON, District Judge
MEMORANDUM DECISION AND ORDER GRANTING DEFENDANT'S MOTION FOR
Plaintiffs bring this action against Consolidated Rail
Corporation ("Conrail") alleging that Defendant negligently
failed to maintain the property under its control, leading to
Plaintiffs' injuries. Defendant moves for summary judgment
pursuant to Rule 56 of the Federal Rules of Civil Procedure on
the ground that, on the date of Marion Beck's accident, Conrail
did not own, manage and/or control the premises, and thus owned
no duty to Plaintiffs. Plaintiffs request a denial of the
Defendant's motion and, in the alternate, request leave to add
two new Defendants as parties to this action.
For the reasons stated below, Defendant's motion for summary
judgment is granted, and, accordingly, the Plaintiffs' claim
against Conrail for negligence is dismissed. Plaintiffs' request
for leave to add new Defendants is denied. I. BACKGROUND
The following material facts are undisputed by the parties. On
September 8, 2001, Plaintiff Marion Beck ("Beck") drove with her
daughter to Callicoon, New York, located in the town of Delaware.
Def. Stmnt. at ¶ 4 . After parking her car in a lot at
approximately 2:30 in the afternoon, Beck walked across a
sidewalk intending to cross the street. Complaint ("Cplt.") at ¶
12. As Beck stepped on the edge of the sidewalk, the concrete
curb broke under her foot, causing her to fall forward into the
street. Id.; Def. Stmnt. at ¶ 11-12. Beck commenced this action
on October 15, 2003, alleging negligence and seeking damages for
her injuries. Simon Beck, Marion Beck's husband, also brings a
claim for loss of services and consortium. Cplt. at ¶ 18-20.
The property in question was the subject of a lease agreement,
dated December 6, 1985, between Conrail, as lessor, and the Town
of Delaware, as lessee. See Defendant's Rule 56.1 Statement of
Undisputed Facts ("Def. Stmnt.") at ¶ 23. Section 10 of the lease
agreement provides, inter alia, that the "[l]essee shall
perform all maintenance and repair of any nature, interior and
exterior, ordinary and extraordinary, to the Premises . . .
necessary to keep the Premises . . . in good order and in safe
condition. . . ." Id. at ¶ 24.
In a deed dated June 1, 1999, Conrail transferred all its
right, title, and interest in the property in question to its
wholly-owned subsidiary Pennsylvania Lines LLC ("Penn Lines").
Def. Stmnt. at ¶ 21. The deed was validly recorded in the
Sullivan County Clerk's Office on August 20, 1999. Id. On the
same date, Penn Lines entered into an agreement with Norfolk
Southern Corporation ("Norfolk"), granting Norfolk the right to
operate and use Penn Lines' assets. Id. at ¶¶ 20, 25; Plaintiffs'
Rule 56.1 Statement of Undisputed Facts ("Pl. Stmnt.") at ¶ 3. Norfolk was receiving rents on the property, pursuant to the 1985
lease agreement with the Town of Delaware, on the date of the
accident. Def. Stmnt. at ¶ 25. There is no new or separate lease
between the Town of Delaware and Norfolk. Id. at ¶ 31.
Defendant now moves for summary judgment on the ground that
Conrail did not own, operate, manage, maintain, repair and/or
control the premises in question, and thus owed no duty to the
Plaintiff Marion Beck on September 8, 2001, the date of her
accident. See Def. Mem. at 1.
II. STANDARD FOR SUMMARY JUDGMENT
A party is entitled to summary judgment when there is no
"genuine issue of material fact" and the undisputed facts warrant
judgment for the moving party as a matter of law. Fed.R.Civ.P.
56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). In addressing a motion for
summary judgment, "the court must view the evidence in the light
most favorable to the party against whom summary judgment is
sought and must draw all reasonable inferences in [its] favor."
Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp.,
475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538, 553
(1986). Whether any disputed issue of fact exists is for the
Court to determine. Balderman v. United States Veterans Admin.,
870 F.2d 57, 60 (2d Cir. 1989). The moving party has the initial
burden of demonstrating the absence of a disputed issue of
material fact. Celotex v. Catrett, 477 U.S. 317, 323,
106 S. Ct. 254, 2552, 91 L. Ed. 2d 265, 273 (1986). Once such a showing
has been made, the non-moving party must present "specific facts
showing that there is a genuine issue for trial." Fed.R.Civ.P.
56(e). The party opposing summary judgment "may not rely on
conclusory allegations or unsubstantiated speculation." Scotto
v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). Moreover, not
every disputed factual issue is material in light of the
substantive law that governs the case. "Only disputes over facts that might affect the outcome of the
suit under the governing law will properly preclude summary
judgment." Anderson, 477 U.S. at 248, 106 S. Ct. at 2510.
Because the district court must determine "whether there is a
need for trial whether, in other words, there are any genuine
factual issues that properly can be resolved . . . in favor of
either party," the non-moving party, in order to defeat the
motion, must produce "sufficient evidence favoring the non-moving
party for a jury to return a verdict for that party. . . . If the
evidence is merely colorable, or is not significantly probative,
summary judgment may be granted." Id. at 249-50,
106 S. Ct. at 2510-11 (citations omitted). While the Court must view the record
"in the light most favorable to the non-moving party," Leberman
v. John Blair & Co., 880 F.2d 1555, 1559 (2d Cir. 1989)
(citations omitted), and "resolve all ambiguities and draw all
reasonable inferences in favor of the party against whom summary
judgment is sought," Heyman v. Commerce and Indus. Ins. Co.,
524 F.2d 1317, 1320 (2d Cir. 1975) (citations omitted), the
non-moving party nevertheless "must do more than simply show that
there is some metaphysical doubt as to the material facts."
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986)
(citations omitted) (emphasis added).
Plaintiffs assert two bases for denial of Defendant's motion
for summary judgment. Neither is sufficient to withstand summary
judgment. III. DISCUSSION
A. Defendant's Duty of Care
1. Direct Duty to Plaintiffs
Plaintiffs contend that Conrail was negligent in failing to
maintain and repair the sidewalk/curb area they allegedly owned,
on which the Plaintiff had her accident. Cplt. at ¶ 13. In order
to maintain an action for negligence, the Plaintiffs must
establish that Defendant owed a duty to Plaintiff as, "[i]n the
absence of duty, there is no breach and without a breach there is
no liability." Dugue v. 1818 Newkirk Mgmt. Corp.,
301 A.D.2d 561, 562, 756 N.Y.S.2d 51, 52 (2d. Dept. 2003) (quoting Pulka v.
Edelman, 40 N.Y.2d 781, 782, 390 N.Y.S.2d 393, 395,
358 N.E.2d 1019, 1020 (1976)).
It is well established under New York law that "liability for a
dangerous condition on property is predicated upon ownership,
occupancy, control or a special use of the property;" the
determinative issue being one of possession and control.
Rodriguez v. Am. Rest. Ventures, Inc., 923 F. Supp. 598, 601
(S.D.N.Y. 1996) (emphasis added) (quoting Millman v. Citibank,
N.A., 216 A.D.2d 278, 627 N.Y.S.2d 451, 452 (2d. Dept. 1995));
Abdul-Azim v. RDC Commercial Ctr., Inc., 210 A.D.2d 191,
620 N.Y.S.2d 70, 71 (2d. Dept. 1994). Where none of these factors are
present, "a party cannot be held liable for injuries caused by a
dangerous or defective condition of the property." Minott v.
City of New York, 230 A.D.2d 719, 720, 645 N.Y.S.2d 879, 880 (2d
Dept. 1996) (quoting Turrisi v. Ponderosa, Inc.,
179 A.D.2d 956, 957, 578 N.Y.S.2d 724, 726 (3rd Dept. 1992)).
It is equally well established that, generally, liability for a
dangerous condition terminates "upon transfer of possession and
control" of the property to another entity. Plasynski v. Econ. Opportunity Council of Suffolk, Inc., 239 A.D.2d 478, 479,
658 N.Y.S.2d 65 (2d Dept. 1997); see also James v. Stark,
183 A.D.2d 873, 584 N.Y.S.2d 137 (2d Dept. 1992) (noting that
liability for condition ceased upon conveyance of the property in
The Plasynski case cited by Defendant in its Memorandum of
Law mirrors the facts at hand. The defendant in that case
transferred title and ownership of the property in question to
another entity, Long Island Day Care Services, Inc., almost two
and one-half years prior to the plaintiff's accident.
Plasynski, 239 A.D.2d at 478. As such, the court held that as
of the date of the transfer, Long Island Day Care Services, Inc.
was the "vendee in possession, and for all practical purposes was
the owner of the property with all of the rights of an owner
subject only to the terms of the agreement." Id. Here, it is
uncontested that Conrail transferred its entire interest in the
property, by deed, to Penn Lines on June 1, 1999, more than two
years prior to the Plaintiff's accident. Def. Stmnt. at ¶ 21. Not
only do Plaintiffs admit to this fact submitted by Defendant in
their 56.1 Statement, but they also acknowledge that "[they]
mistakenly brought suit against defendant, [Conrail] as owner."
Plaintiffs' Memorandum of Law in Opposition to Defendant's Motion
for Summary Judgment ("Pl. Mem.") at 6. Accordingly, it is
apparent that Conrail owed no direct duty to Plaintiff, or anyone
else, with respect to the property in question.
2. Vicarious Liability
Realizing that they have sued the wrong Defendant, Plaintiffs
contend that Conrail exercised sufficient control over its
wholly-owned subsidiary, Penn Lines, to be held vicariously
liable for the alleged negligence in question. See Pl. Mem. at
It should be noted at the outset that Defendant argues that
this Court should disregard the "counter-statement" of facts
submitted in Plaintiff's Rule 56.1 Statement of Undisputed Facts. See Defendant's Reply Memorandum of Law ("Def. Reply") at 2.
Defendant correctly notes that Plaintiffs admitted all of the
facts submitted by the Defendant in its Rule 56.1 Statement, as
Plaintiffs explicitly agreed with Defendant's Statement of
Undisputed Facts in Plaintiffs' own 56.1 Statement. See Pl.
Stmnt. at 1. The Defendant errs, however, when it contests that
Plaintiffs "impermissibly" added facts to their opposition
statement. "Rule 56.1(b) allows the opposing party to `include . . .
additional paragraphs containing a separate short and concise
statement of additional material facts as to which it is
contended that there exists a genuine fact to be tried.'" Wojcik
v. 42nd Street Dev. Project, Inc., 2005 U.S. Dist. LEXIS 18547,
*6 (S.D.N.Y Aug. 26, 2005) (citing Local Civil Rule 56.1(b)). In
Wojcik, this Court held that as long as the plaintiff's
allegations were properly supported by citations to the record,
the Court would consider the statement as "proffering additional
material facts as to which plaintiff contend[ed] that there
exist[ed] a genuine fact to be tried." Id. Accordingly, this
Court will take into consideration the facts proffered by
Plaintiffs in their 56.1 Statement in ruling on the summary
Plaintiffs, relying on their Rule 56.1 Statement, argue that
Conrail exercised sufficient control over Penn Lines in order to
be held vicariously liable and, as such, ask this Court to pierce
Conrail's corporate veil to impose such liability. "Under New
York Law, `a parent company is not automatically liable for the
acts of its wholly-owned subsidiary.'" Degraziano v. Verizon
Communications, Inc., 325 F. Supp. 2d 238, 245 (E.D.N.Y. 2004)
(quoting Manchester Equipment Co., Inc. v. American Way and
Moving Co., Inc., 60 F. Supp. 2d 3, 6 (E.D.N.Y. 1999)).
Generally, the law view corporations as entities
endowed with a separate and distinct existence from
that of its owners. Because a principal purpose for
organizing a corporation is to permit its owners to
limit their liability, there is a presumption of separateness
between a corporation and its owners, . . . which is
entitled to substantial weight.
Am. Protein Corp. v. AB Volvo, 884 F.2d 56, 60 (2d Cir. 1988)
The party who seeks to pierce the corporate veil of a parent
company must make a two-part showing: "(i) that the owner
exercised complete domination over the corporation with respect
to the transaction at issue; and (ii) that such domination was
used to commit a fraud or wrong that injured the party seeking to
pierce the veil." Am. Fuel Corp. v. Utah Energy Dev. Co., Inc.,
122 F.3d 130, 134 (2d Cir. 1997).
With regard to the first element, "[a] parent company will not
be held liable for the torts of its subsidiary unless it can be
shown that the parent exercises complete dominion and control
over the subsidiary." Montes Serrano v. New York Times Co.
Inc., 19 A.D.3d 577, 578, 797 N.Y.S.2d 135, 136 (2d Dept. 2005)
(emphasis added). Such dominion and control is not established
through a mere showing that one corporation is a wholly-owned
subsidiary of the parent or that the parent owns a controlling
interest in the shares of the subsidiary. See Billy v. Consol.
Mach. Tool Corp., 51 N.Y.S.2d 152, 163, 432 N.Y.S.2d 879,
412 N.E.2d 934 (1980). In order to establish such domination over a
subsidiary, courts may consider:
(1) disregard of corporate formalities; (2)
inadequate capitalization; (3) intermingling of
funds; (4) overlap in ownership, officers, directors,
and personnel; (5) common office space, address and
telephone numbers of corporate entities; (6) the
degree of discretion shown by the allegedly dominated
corporation; (7) whether the dealings between the
entities are at arms length; (8) whether the
corporations are treated as independent profit
centers; (9) payment or guarantee of the
corporation's debts by the dominating entity [or
individual], and (10) intermingling of property
between the entities.
Degraziano, 325 F. Supp. 2d at 246 (internal quotations
omitted). It is not necessary for this Court to analyze each factor in
turn, as Plaintiffs have themselves ignored most of them. I will
limit my discussion to the arguments Plaintiffs make. None
suffice to permit piercing the corporate veil. Plaintiffs' first
statement of "fact" "Penn Lines existed solely to serve
[Conrail's] interest in transferring its operations to Norfolk
Southern Corporation" is wholly conclusory and not evidentiary.
It does not support the piercing of Conrail's corporate veil. Pl.
Mem. at 3. See Simmons v. U.S., 88 Fed.Appx. 435, 437-38 (2d
Cir. 2004) (noting that conclusory statements are insufficient to
raise a genuine issue of material fact).
Similarly, the assertion that Penn Lines "had no employees" and
so "it is clear that [Conrail] had to manage the daily
operations of Penn Lines" (emphasis added) is conclusory. Pl.
Mem. at 3. While Plaintiffs offer evidence that Penn Lines had no
employees, they offer no evidence to support the logical leap
that Conrail must, therefore, manage the daily operations of Penn
Lines, rather than Norfolk or anyone else. The Billy case,
cited by both Plaintiffs and Defendant, reiterates the standard
that "`the intervention by the parent in the management of the
subsidiary'" must be "to such an extent that `the subsidiary's
paraphernalia of incorporation, directors and officers' are
completely ignored." Billy, 51 N.Y.2d at 163 (quoting
Lowendahl v. Baltimore & Ohio R.R. Co., 247 App. Div. 144, 155,
(1st Dept. 1936), aff'd 272 N.Y. 360, 6 N.E.2d 56 (1936)).
Plaintiffs submit no evidence to justify such a finding. To the
contrary, Plaintiffs agree that Norfolk was granted the right
to operate Penn Lines as of 1999, and that it was a Norfolk
employee who corresponded on behalf of Penn Lines with the Town
of Delaware to determine whether Plaintiff fell within the
premises leased by the town.
Plaintiffs do not allege that any control Conrail exercised
over Penn Lines was used to commit a fraud or wrong that injured
the party seeking to pierce. Where plaintiffs do not demonstrate that they were "disadvantaged, much less misled or
defrauded" by the separate corporate identities, then they do not
meet the second requirement for piercing the corporate veil.
Sec. Pac. Nat'l Bank v. Nyland Ltd., 1991 U.S. Dist. LEXIS
17478, *14-15 (2d Cir. Dec. 2, 1991). It is, of course, really
unnecessary to reach this second element, because Plaintiffs did
not demonstrate the requisite control.
Finally, Plaintiffs contend that the Defendant's motion for
summary judgment is "improper" because the issue of a parent's
control over its subsidiary in order to determine vicarious
liability is not one that can be properly adjudicated at the
summary judgment stage. Pl. Mem. at 4. Plaintiffs are just plain
wrong. Any issue can be decided on summary judgment if the party
opposing the motion offers no evidence in support of its
position, which is the position in which Plaintiffs find
The cases cited by Plaintiffs do not hold the contrary. First,
Plaintiffs point to Allen v. Oberdorfer Foundries, Inc.,
192 A.D.2d 1077, 1078, 595 N.Y.S.2d 995, 996 (4th Dept. 1993) for the
proposition that issues of control "must be determined at trial."
Second, Plaintiffs cite to Pebble Cove Homeowners' Ass'n, Inc.
v. Fidelity New York FSB, 153 A.D.2d 843, 843-44,
545 N.Y.S.2d 362, 363 (2d Dept. 1989) for the proposition that, generally, the
issue of a parent company's control "is a question of fact to be
decided at trial, rather than on a motion for summary judgment."
Allen, however, stands only for the proposition that where a
plaintiff has "failed to prove as a matter of law the requisite
level . . . of control," then the issue of vicarious liability is
improper for adjudication at the summary judgment stage. Allen,
192 A.D.2d at 1078. Similarly, Pebble stands for the
proposition that where the complaint failed "to adequately allege
the means by which the parent . . . controlled its wholly owned
subsidiary," then disposition of the issue on summary judgment
was proper. Pebble, 153 A.D.2d at 844. In light of the foregoing,
there exists no triable issue of fact warranting denial of
B. Plaintiffs' Motion for Leave to Amend their Complaint to
Add Penn Lines and Norfolk as Defendants
Plaintiffs seek leave to amend their pleading to add as
additional parties Penn Lines and Norfolk under a relation back
theory pursuant to New York CPLR § 203. See New York CPLR §
203. It is too late for Plaintiffs to amend their pleading.
Pursuant to the Consent Scheduling Order, signed by both parties
on June 15, 2004, no amendments to the pleadings were permissible
after September 1, 2004. Consent Scheduling Order at ¶ 3.
Moreover, Plaintiffs' claim against these new Defendants is
time barred unless the claim relates back and it does not.
Therefore, amendment would be futile. Fed.R.Civ.Pro. 15(c)
provides that an amendment of a pleading relates back in time to
the original pleading when "relation back is permitted by the law
that provides the statute of limitations applicable to the
action." Fed.R.Civ.Pro. 15(c). New York's relation back
doctrine permits a plaintiff to amend a complaint and add new
defendants even though, at the time of the amendment, the statute
of limitations has expired. See New York CPLR § 203. The party
seeking to invoke the doctrine must establish three elements in
(1) both claims arose out of the same conduct,
transaction or occurrence; (2) the new party is
`united in interest' with the original party such
that she can be charged with notice of the original
action and will not be prejudiced in maintaining a
defense on the merits; and (3) the new party should
have known that, but for a mistake as to the proper
party, the action would have been brought against her
Blakeslee v. Royal Ins. Co. of Am., 1998 U.S. Dist. LEXIS 5977,
*10 (S.D.N.Y. April 28, 1998), citing Buran v. Coupal,
87 N.Y.2d 173, 178 (1995). Defendants do not allege that Plaintiffs fail on the first or
third elements and, as Plaintiffs state, those two elements
"require little discussion." Pl. Stmnt. at 6. With regard to the
first element, both the original claim against Defendant, and the
proposed amended pleading, concern Plaintiff's accident on
September 8, 2001. With regard to the third element, Penn Lines
should have known that the action would have been brought against
it, as owner of the subject property, were it not for Plaintiffs'
mistake. Def. Stmnt. at ¶ 21-22. Further, Norfolk should have
known that the action would have been brought against it, as
lessee of the subject property, were it not for the incorrect
information received by Plaintiffs in the Town Clerk's office.
Def. Stmnt. at ¶ 25. Finally, in New York, courts considering the
third element "typically deem dispositive the presence or absence
of bad faith on the part of the party seeking the amendment."
Walker v. Agro, 2000 WL 744536, *4 (E.D.N.Y. May 19, 2000). The
requirement will be "satisfied if `the omission to name the new
party in the original complaint was not an attempt to secure some
tactical advantage in the litigation.'" Id. (quoting Yaniv v.
Taub, 256 A.D.2d 273, 275, 683 N.Y.S.2d 35
, 38 (1st Dept.
1998)). As there is no indication that Plaintiffs intentionally
omitted Penn Lines or Norfolk from the original complaint, the
third element is satisfied.
Plaintiffs fail, however, upon analysis of the second element.
For purposes of N.Y. CPLR § 203, a party is united in interest
with another party:
where `the interest of the parties in the
subject-matter is such that they stand or fall
together and that judgment against one will similarly
affect the other.' In other words, `interests will be
united, only where one is vicariously liable for
the acts of the other.' `Underlying the doctrine of
vicarious liability . . . is the notion of control.'
Walker, 2000 WL 744536 at *4, (emphasis added) (citing L & L
Plumbing & Heating, 253 A.D.2d 517
, 677 N.Y.S.2d 153
, 154 (2d
Dept. 1998)). As discussed at length, the mere existence of a parent-subsidiary relationship is insufficient to
establish vicarious liability, and therefore a unity of interest,
between two corporations. See Feszczyszyn v. General Motors
Corp., 248 A.D.2d 939, 940, 669, N.Y.S.2d 1010, 1012 (4th Dept.
1998). In accordance with the discussion supra, Plaintiffs have
failed to proffer evidence sufficient to justify imposing
vicarious liability on Conrail and have thus likewise failed to
establish the unity of interest required for application of the
relation back doctrine.
With regard to the unity of interest and relationship between
Conrail and Norfolk, Plaintiff does no more than to state that
Norfolk employees were produced for depositions on behalf of
Conrail. Pl. Stmnt. ¶ 11-12. It is well established that, for
vicarious liability to exist, the parent corporation must
exercise complete dominion and control over the subsidiary's
operations, and demonstrating only that there are common
shareholders and officers is insufficient to establish that the
two corporations are united in interest. See Achtinger v. Fuji
Copian Corp., 299 A.D.2d 946, 948, 750 N.Y.S.2d 413, 416 (4th
Dept. 2002); Mercer v. 203 East 72nd Street Corp.,
300 A.D.2d 105, 106, 751 N.Y.S.2d 457, 458 (1st Dept. 2002).
Accordingly, Plaintiffs have failed to establish a unity of
interest between Conrail and Norfolk, and they can not,
therefore, prevail on their request for application of the
relation back doctrine.
IV. CONCLUSION It is hereby ordered that the Defendant's motion for summary
judgment is granted and the case is dismissed. Additionally, the
Plaintiffs' request for leave to add new defendants is denied.
The Clerk of the Court is directed to enter judgment for
Defendant and to close the file.
This constitutes the decision and order of the Court.
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