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Gateway I Group, Inc. v. Park Avenue Physicians

March 17, 2009

GATEWAY I GROUP, INC., RESPONDENT,
v.
PARK AVENUE PHYSICIANS, P.C., DEFENDANT, PARK AVENUE HEALTH CARE MANAGEMENT, INC., ET AL., APPELLANTS.



APPEAL by the defendants Park Avenue Health Care Management, Inc., Park Avenue Senior Medicine P.C., Park Avenue Geriatric Management, LLC, and Brad Markowitz in an action, inter alia, to recover damages for breach of a commercial lease, from an order of the Supreme Court (Orazio R. Bellantoni, J.), entered May 17, 2007, in Westchester County, which denied their motion pursuant to CPLR 3211(a)(7) to dismiss the amended complaint insofar as asserted against them for failure to state a cause of action.

The opinion of the court was delivered by: Dickerson, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

PETER B. SKELOS, J.P., DAVID S. RITTER, EDWARD D. CARNI and THOMAS A. DICKERSON, JJ.

(Index No. 3242/06)

OPINION & ORDER

Factual Background And Prior Action

The plaintiff, Gateway I Group, Inc., owns real property located at One North Lexington Avenue in White Plains. The defendant Park Avenue Physicians, P.C. (hereinafter Physicians), was the plaintiff's tenant at that property. In a prior action commenced by the plaintiff to recover unpaid rent from Physicians, the plaintiff was awarded the sum of $183,808.33, and Physicians was evicted from the property.

The Instant Action

The plaintiff commenced the instant action against Physicians, as well as the defendants Park Avenue Health Care Management, Inc. (hereinafter Health Care), Park Avenue Senior Medicine P.C. (hereinafter Senior Medicine), Park Avenue Geriatric Management, LLC (hereinafter Geriatric Management), and Brad Markowitz, by the filing of a summons and verified complaint dated February 10, 2006. In this action, the plaintiff asserts 34 causes of action, and seeks, inter alia, to recover the unpaid judgment as well as post-eviction rent.

On or about July 26, 2006, the plaintiff served an amended complaint, alleging that Physicians, which was dissolved on December 29, 2004, had been undercapitalized and failed to adhere to corporate formalities. The plaintiff also alleged that Markowitz, who was a stockholder, officer, and director of Physicians, used corporate funds for his own personal purposes and exercised complete domination and control over Physicians. The plaintiff further alleged that Physicians was the alter ego and a mere instrumentality of Markowitz. According to the plaintiff, Markowitz thus used Physicians to defraud the plaintiff and commit other wrongful acts against it.

The plaintiff also alleged that there was an overlapping and interlocking of owners, officers, and directors amongst Physicians and the defendants Health Care, Senior Medicine, and Geriatric Management; that Health Care, Senior Medicine, and Geriatric Management (hereinafter together the corporate appellants) used the same office space, equipment, and telephone number as Physicians; that the corporate appellants were stockholders of Physicians; that the corporate appellants exercised complete domination and control over Physicians, which they employed to commit wrongful acts against the plaintiff; that Markowitz and the corporate appellants abused the privilege of doing business in the corporate form of Physicians to perpetrate wrongs against the plaintiff; and that Physicians was the alter ego and a mere instrumentality of the corporate appellants. Based on these allegations, the plaintiff sought to recover from Markowitz, Health Care, Senior Medicine, and Geriatric Management (hereinafter together the appellants) under a theory of piercing the corporate veil.

In the first cause of action, the plaintiff asserted that, based on Physician's default under the lease and its subsequent eviction, Physicians—as well as the appellants under a theory of piercing the corporate veil— were liable to it for, inter alia, rental payments owed for the period beginning August 1, 2004, and ending July 31, 2006. In the second, third, and fourth causes of action, the plaintiff alleged that, on or about June 17, 1999, Physicians orally assigned the lease to the corporate appellants, and that, thereafter, based on a number of alleged factual circumstances, the corporate appellants held themselves out as Physicians' assignees, and that, having assumed the lease, the corporate appellants were obligated to pay rent and additional rent for a specified period of time. In the fifth, sixth, and seventh causes of action, the plaintiff alleged that, having assumed the lease, the corporate appellants were liable, under a theory of piercing the corporate veil, for post-eviction rent. In the eighth, ninth, and tenth causes of action, the plaintiff sought to recover from the corporate appellants in quantum meruit, based on their use and occupation of the subject property. In the remaining causes of action, ...


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