Summary
reversing the grant of summary judgment to the corporate defendants on issue of parent/subsidiary liability and directing further discovery on the same
Summary of this case from Lippens v. Winkler Int'l Corp.Opinion
November 15, 1995
Appeal from the Supreme Court, Erie County, Wolf, Jr., J.
Present — Green, J.P., Pine, Wesley, Callahan and Davis, JJ.)
Order unanimously modified on the law and as modified affirmed without costs in accordance with the following Memorandum: Supreme Court properly determined that plaintiff Carl S. Gmerek lacks standing, as a shareholder, to sue on the basis of injury to the corporate plaintiffs (see, New Castle Siding Co. v Wolfson, 97 A.D.2d 501, affd 63 N.Y.2d 782) and that plaintiff Klein's Elmwood Foods, Inc., lacks standing, as an individual partner in Gmerek's Foods, to assert causes of action belonging to the partnership itself. "[I]t is settled that a partnership cause of action belongs only to the partnership itself or the partners jointly, and that an individual member of the partnership may only sue and recover on a partnership obligation on the partnership's behalf (Stevens v St. Joseph's Hosp., 52 A.D.2d 722)" (Shea v Hambro Am., 200 A.D.2d 371, 371-372).
The court erred, however, in granting summary judgment dismissing the action against Scrivner, Inc., dismissing the third cause of action against Scrivner of New York, Inc. and dismissing the first and second causes of action against defendant Kensington and Harlem, Inc. "As a general rule, a parent corporation is not liable for the acts of a subsidiary" (Dempsey v Intercontinental Hotel Corp., 126 A.D.2d 477, 478, citing Port Chester Elec. Constr. Corp. v Atlas, 40 N.Y.2d 652). The evidence submitted by plaintiffs, however, raises triable issues of fact whether Scrivner, Inc., so completely dominated the activities of its wholly-owned subsidiary, Scrivner of New York, Inc., and that corporation's wholly-owned subsidiary, Kensington and Harlem, Inc., that the separate legal identities of the parent and subsidiary corporations may be disregarded (see, Matter of Morris v New York State Dept. of Taxation Fin., 82 N.Y.2d 135, 140-142; Billy v Consolidated Mach. Tool Corp., 51 N.Y.2d 152, 162-163; Dempsey v Intercontinental Hotel Corp., supra, at 478). Further, plaintiff should have the opportunity, through discovery, to explore further the relationship of defendants with respect to the transactions at issue (see, Youngs v Kissing Bridge Ski Corp., 216 A.D.2d 967).
We modify the order on appeal, therefore, by striking subparagraphs (a), (d) and (e) of the first ordering paragraph and otherwise affirm.