Shtockhammer v. 29th Street Hotel Acquisition, LLC (2014)

Our plain-English summary of Shtockhammer v. 29th Street Hotel Acquisition, LLC (New York Supreme Court, October 24, 2014).

Judith Shtockhammer sued several companies after being diagnosed with mesothelioma in August 2013. She lived from 1993 to 2006 at the Martha Washington Hotel in New York City. She alleged she was exposed to asbestos-laden dust during abatement work at the building from about 1999 to 2001, despite being told the work was safe. The current owner, 29th Street Hotel Acquisition, bought the property in 2012. It and four related companies asked the court to dismiss the complaint. The court denied the motion as to Acquisition. The complaint stated negligence and premises liability claims, and the purchase agreement appeared to transfer all of the property's liabilities, including asbestos, to the buyer. The court also denied dismissal for three parent or affiliated companies, without prejudice to renewal, so plaintiff could take discovery on whether the corporate veil could be pierced. It granted dismissal for Chetrit Group because it never held any interest in the property or the other entities. The case continued against the remaining defendants.

We wrote this summary from the court's opinion with the help of AI. It is not the court's wording, and it is not legal advice. The full opinion is below.

The decision

• Court: New York Supreme Court
• Decided: October 24, 2014
• Citation: 2014 NY Slip Op 32790(U)
• Docket: Docket No. 190393/13, Motion Seq. 001
• Stage: Motion to dismiss
• State: New York

Outcome. The court denied the motion to dismiss by the current property owner (Acquisition) and, without prejudice to renewal after discovery, by Mezz, Hotel and JCMC, but granted it for Chetrit Group, which had never held any interest, so plaintiff Shtockhammer's claims continued against the others.

What the court held. On a motion to dismiss, a complaint and supporting affidavit alleging asbestos exposure at a property state premises liability and negligence claims against the buyer, and the purchase agreement's transfer of the property's liabilities, including asbestos, did not conclusively defeat them. Veil-piercing claims against related entities may proceed to discovery.

Issues decided: Premises Owner Liability, Trial Procedure and Discovery, Successor Liability.

The people and their exposure

• Judith Shtockhammer (resident): mesothelioma

Who	Work	Where	When	Products
Judith Shtockhammer	hotel resident (construction); lived nearby	Martha Washington Hotel, 30 East 30th Street, New York, New York	1999-2001

The defendants

• 29th Street Hotel Acquisition, LLC (premises owner)
• 29th Street Hotel Mezz, LLC
• 29th Street Hotel Member, LLC
• JCMC 29th Street LLC
• Chetrit Group, LLC

The court's opinion

The text below is Google Scholar's copy of the court's opinion, a public record. Numbers in brackets, such as [*921], mark where each page of the printed reporter begins.

SHTOCKHAMMER v. 29th STREET HOTEL ACQUISITION, LLC, 2014 NY Slip Op 32790 - NY: Supreme Court 2014 - Google Sc…

2014 NY Slip Op 32790(U)

JUDITH SHTOCKHAMMER, Plaintiff,

v.

29TH STREET HOTEL ACQUISITION, LLC, etal., Defendants.

Docket No. 190393/13, Motion Seq. 001.

October 24, 2014.

Supreme Court, New York County.

DECISION & ORDER

SHERRY KLEIN HEITLER, Judge.

In this asbestos personal injury action, defendants 29th Street Hotel Acquisition, LLC ("Acquisition"), 29th Street Hotel Mezz, LLC ("Mezz"), 29th Street Hotel Member, LLC ("Hotel"), Chetrit Group, LLC ("Chetrit"), and JCMC 29th Street LLC ("JCMC") (collectively, "Defendants") move pursuant to CPLR 3211(a)(1) and CPLR 3211(a)(7) to dismiss the complaint as against them for failure to state a cause of action and on the basis of documentary evidence. For the reasons set forth below, the motion is granted in part and denied in part.

From 1993 to 2006 plaintiff Judith Shtockhammer resided at what was then the Martha Washington Hotel located at 30 East 30th Street in New York City (the "Property"). This action arises from asbestos abatement at the Property which took place from approximately 1999 to 2001. Plaintiff alleges that she was exposed to a substantial amount of asbestos-laden dust during the abatement process even though she was assured that the work was completely safe and that it posed no health risks. Ms. Shtockhammer was diagnosed with mesothelioma on August 25, 2013 and has no other known history of

asbestos exposure.

In 2012 Acquisition purchased the Property from 30 East 30th St., LLC which had owned the Property throughout the time that Ms. Shtockhammer resided there. The parties memorialized such transaction in a Purchase and Sale Agreement

("PSA").[1]

Acquisition was and continues to be wholly owned by Mezz, which is in turn wholly owned by Hotel. Both are Delaware entities. As of the PSA closing date, Hotel had two members, JCMC and Lola Acquisition, LLC ("Lola"), each of which held a 50% interest. On or about August 16, 2013 JCMC transferred a 49.9% interest in Hotel to Lola. As of this writing Lola holds a 99.9% interest in Hotel, and JCMC holds a 0.1% interest in Hotel.

The Defendants argue that there are no allegations in the complaint which tie Ms. Shtockhammer's alleged asbestos

exposure to Acquisition. They further argue that there are no grounds on which to maintain this action against Mezz, Hotel, Chetrit, or JCMC because they have never had any direct ownership interest in the Property.

On a CPLR 3211 motion to dismiss the court must afford the pleadings a liberal construction, accepting the facts as alleged in the complaint as true, and accord plaintiffs the benefit of every favorable inference. Roni LLC v Arfa, 18 NY3d 846, 848 (2011); Leon v Martinez, 84 NY2d 83, 88 (1994). A motion to dismiss will fail if "from [the complaint's] four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law. . . ." Guggenheimer v Ginzburg, 43 NY2d 268, 275 (1977); see also Weksler v Weksler, 81 AD3d 401 (1st Dept 2011). In assessing a motion

under CPLR 3211(a)(7) a court may "freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint." Leon, supra, at 87-88. Dismissal under CPLR 3211(a)(1) is warranted "only if the documentary evidence

submitted conclusively establishes a defense to the asserted claims as a matter of law." Id.

In light of these liberal principles the court finds that plaintiff's complaint states a cognizable cause of action against Acquisition sounding in common law negligence and premises liability. And, even assuming the complaint as written was insufficient to state a cause of action, plaintiff's counsel's affidavit remedies any such defect by setting out Ms.

SHTOCKHAMMER v. 29th STREET HOTEL ACQUISITION, LLC, 2014 NY Slip Op 32790 - NY: Supreme Court 2014 - Google Sc…

Schtockhammer's allegations in detail, including her claimed asbestos exposure at the Property during renovations and her claim that Acquisition purchased the Property and its liabilities in 2012.

The Defendants' documentary defense is belied by the PSA, the plain language of which suggests that all liabilities associated with the Property transferred from the Seller to Acquisition. In this regard, PSA ¶ 7.4 enumerates certain specific liabilities that were assigned to Acquisition as part of the purchase (id. at 33):

(a) Seller Releases From Liability. Seller is hereby releases from all responsibility and liability to Buyer

regarding the condition (including the presence in the soil, air, structures and surface and subsurface waters,

of Hazardous Materials or substances that have been or may in the future be determined to be toxic. . . .

Significantly, the term "Hazardous Materials" is expressly defined to include asbestos-containing materials (id. at 5, emphasis added):

"Hazardous Materials" means any pollutants, contaminants, hazardous or toxic substances, materials or

wastes (including, without limitation, petroleum, petroleum by-products, radon, asbestos and asbestos

containing materials. . . .

Also of note is PSA ¶ 7.3, referred to by plaintiff as a catch-all provision that conclusively establish's Acquisition's liability (id. at 32):

Buyer acknowledges that the Purchase Price reflects the "as is, where is" nature of this sale and any faults,

liabilities, defects or other adverse matters that may be associated with the Property."

Reading these provisions in the light most favorable to the non-moving party, plaintiff's claims against Acquisition must survive.

The remaining defendants assert that they have never had a direct interest in the Property and that plaintiff has failed to allege any facts which would permit her to pierce the corporate veil and recover from them for Acquisition's torts. While the court is well aware that piercing the corporate veil is a serious remedy which requires particularized pleadings,[2] the plaintiff cannot even begin to assess the relationship between the Defendants without the benefit of some discovery.

The court will however grant the motion by Chetrit. Defendants have alleged, and plaintiff does not dispute, that Chetrit has never held any interest whatsoever in the Property, Acquisition, Mezz, Hotel, or JCMC.

Accordingly, it is hereby

ORDERED that the branch of Defendants' motion which seeks dismissal on behalf of 29th Street Hotel Acquisition, LLC is denied; and it is further

ORDERED that the branch of Defendants' motion which seeks dismissal on behalf of defendants 29th Street Hotel Mezz, LLC, 29th Street Hotel Member, LLC, and JCMC 29th Street LLC is denied without prejudice to renew pending discovery as set forth herein; and it is further

ORDERED that the branch of Defendants' motion which seeks dismissal on behalf of Chetrit Group, LLC is granted; and it is further

ORDERED that this action and any cross-claims against Chetrit Group, LLC are hereby severed and dismissed; and it is further

ORDERED that this action shall continue as against the remaining defendants; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly.

This constitutes the decision and order of the court.

[1] A copy of the PSA is submitted as defendant's exhibit 4.

[2] See, i.e., Morris v State Dep't of Taxation & Fin., 82 NY2d 135, 140-41 (1993) ("The concept of piercing the corporate veil is a limitation on the accepted principles that a corporation exists independently of its owners, as a separate legal entity, that the owners are normally not liable for the debts of the corporation, and that it is perfectly legal to incorporate for the express purpose of limiting the liability of the

SHTOCKHAMMER v. 29th STREET HOTEL ACQUISITION, LLC, 2014 NY Slip Op 32790 - NY: Supreme Court 2014 - Google Sc…

corporate owners. . . . Generally. . . piercing the corporate veil requires a showing that: (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury."); Tap Holdings, LLC v Orix Fin. Corp., 109 AD3d 167, 174 (1st Dept 2013) ("To make out a cause of action for liability on the theory of piercing the corporate veil because the corporation at issue is the defendant's alter ego, the complaining party must, above all, establish that the owners of the entity, through their domination of it, abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against the party asserting the claim such that a court in equity will intervene. . .").

Sources

• The opinion on Google Scholar
• New York asbestos laws
• New York asbestos exposure sites