DEFENDANT SUPERMARKET'S SUMMARY JUDGMENT MOTION DENIED IN DELIVERY CAR ACCIDENT; IT FAILS TO MEET BURDEN OF SHOWING THAT DELIVERY PERSON WASN'T EMPLOYEE

Court: Supreme Court, Kings County, New York

Case: Jamie DeMartino a/k/a Jamie Gullo v. 3858, Inc.

Date: Feb. 16, 2012

From: New York attorney Gary E. Rosenberg (personal injury and accident attorney and lawyer; serving Bronx and Queens; Queens injury attorney)

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RELATED POSTS:

ADULT MENTAL PATIENT'S MOTHER CAN'T BE SUED FOR CAR ACCIDENT; LAWSUIT DISMISSED (Posted by Brooklyn injury attorney Gary E. Rosenberg on Sep 26, 2011)

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DAVID I. SCHMIDT, J.

Upon the foregoing papers, defendants 8772 Meat Corp. s/h/a 8772 Meat Corp. doing business as Key Food Supermarket (8772), moves for an order, pursuant to CPLR 3212, granting summary judgment dismissing the complaint of plaintiff Jamie DeMartino a/k/a Jamie Gullo and all cross claims of defendant 3858, Inc. (3858) and Hani Othman, Jr. (Mr. Othman), against it.

Facts and Procedural Background

Plaintiff commenced this action against 3858; Mr. Othman; 8772; MBA, Inc.; LDCA, Inc.; FDRA, Inc.; DACB, Inc.; CAR 3579 Corporation; ABR451 Inc.; BACD, Inc.; SADC, Inc.; CAMD, Inc.; PBAC, Inc.; MBAA, Inc; and John Does I-XIII, as the shareholders of the defendant corporations, seeking to recover damages for personal injuries allegedly sustained on July 2, 2006 when she was struck by a vehicle registered to 3858 and operated by Mr. Othman. At the time of the accident, plaintiff was walking in the street near the intersection of Shore Parkway and Bay 19th Street in Brooklyn and Mr. Othman was backing up to park the vehicle that he was operating while delivering groceries. 8772 is the owner of the Key Food Supermarket located at 8772 18th Avenue in Brooklyn; the supermarket entered into an agreement with 3858 to provide delivery services to its customers.

In her complaint, plaintiff alleges that the subject accident was caused by the negligence of the defendant employer and Mr. Othman and that the named corporations are shams and instruments of the shareholders, so that the corporate veils should be pierced and/or that the defendants are involved in a joint venture. Plaintiff goes on to allege that the defendant employer is liable to plaintiff pursuant to the doctrine of respondeat superior; that Mr. Othman was provided with a motor vehicle by 8772; and that he held himself out as delivering groceries for 8772 d/b/a Key Food Supermarket, as his employer. Plaintiff also alleges that 8772 d/b/a Key Food Supermarket and the defendant employer are liable to her for negligent hiring, negligent retention and negligent supervision.

8772's Motion

In support of its motion, 8772 argues that it had nothing to do with the subject accident, i.e., discovery has established that Mr. Othman was an employee of 3858; that 3858 owned the vehicle that struck plaintiff; and that since 3858 was retained as an independent contractor, 8772 cannot be held responsible for any negligence on the part of 3858 or its employees. 8772 contends that this conclusion is further supported by the language of its Service Agreement with 3858.

Plaintiff also relies upon the deposition testimony of Azzam Obeid (Mr. Obeid), who testified that he was the sole owner and shareholder of 8772 and that he recalled hiring 3858 to make deliveries for the store. He further testified that the drivers were employed by 3858; that no one from 8772 was in charge of the drivers; that when the drivers were not making deliveries, they sat in their car, outside the store; and that 8772 did not have any procedures in place if one of the drivers was involved in an accident. In an affidavit submitted in support of the motion, Mr. Obeid further alleges that 8772 did not control the manner or methods that 3858 used to deliver groceries; that 3858 provided trucks and drivers, loaded the vehicles and delivered the groceries by whatever means they chose; and that 3858 maintained its trucks/cars and paid all associated expenses.

Plaintiff also relies upon the deposition testimony of Mr. Othman, who explained that he answered an ad in the newspaper to get the job, that he made deliveries at the direction of a man named Sal and that he was paid in cash by Sal at the end of the day. He worked one day a week, either Saturday or Sunday. Mr. Othman further testified that Key Food was not his boss and that 3858 had other clients, which he knew because he had been sent to another store.

Finally, plaintiff relies upon the deposition testimony of Nasir Obeid (Mr. Nasir Obeid), Mr. Obeid's son, who testified that 8772 had no control over the drivers provided by 3858. As is also relevant herein, he testified that 3858 "use[s] our vans."

Plaintiff's Opposition

In opposition to the motion, plaintiff argues that movant fails to make a prima facie showing that Mr. Othman and/or 3858 are not employees of 8772. In this regard, she asserts that the Service Agreement is not dispositive on the issue because it does not include language regarding liability, titles, duties or who is responsible to pay expenses. She thus asserts that the agreement does not evidence a meeting of the minds. In addition, the agreement states that 8772 will pay RR Management Agency Corp each week, but does not state how 3858 would ultimately be paid and its moving papers do not explain the role played by the agency in the arrangement. Moreover, Mr. Obeid testified that he gave a check to the driver each week, which also serves to raise additional issues of fact. Plaintiff goes on to point out that although the agreement states that 3858 will provide delivery services Monday through Saturday, she was injured on a Sunday. Plaintiff accordingly argues that on the day of the accident, Mr. Othman was working for 8772 Meat Corp. d/b/a/ key Food Supermarket, and that 3858 and Key Food are the same company.

In addition, plaintiff contends that Mr. Obeid's testimony that 3858 was responsible for paying all costs associated with the maintenance of their vehicles and that Mr. Othman was never an employee of 8772 and was free to engage in other employment is self‑serving. Plaintiff also notes that although Mr. Othman testified that he was paid by Sal, the man who picked him up and dropped him off, there is no evidence to establish that Sal did not work for 8772. Thus, since Mr. Othman reported to work at Key Food, plaintiff contends that it is clear that that was his place of employment and that he worked for 8772. Plaintiff also points out that Mr. Othman told the police officer who responded to the accident that he was working for Key Food; this contention is supported by an affidavit submitted by that officer. Mr. Othman also testified that he would work on Saturday or Sunday, although the Service Agreement provided that 3858 would provide delivery services Monday through Saturday. Also significant is the fact that Mr. Othman testified that he had never heard of 3858. Plaintiff goes on to argue that because Mr. Othman worked a fixed schedule, i.e., every Saturday or Sunday; that an employee of Key Food put the boxes to be delivered by the door, with a tag indicating where the box was to go and providing any special directions; that any complaints regarding delivery would be made to Key Food; and that Mr. Othman would sometimes do a favor for the workers at Key Food by picking up food for them to argue that Key Food controlled Mr. Othman's work. It must also be noted that there is no evidence presented by 3858 to demonstrate that Mr. Othman was its employee.

Further, plaintiff alleges that Mr. Nasir Obeid's testimony that 3858 used _our vans_ also serves to raise an issue of fact. Plaintiff accordingly retained Glen Hallahan, a licensed private investigator, who photographed a delivery vehicle in front of Key Food Supermarket on January 27, 2007 that had the logo of Key Food across the doors. Plaintiff avers that this information also raises an issue of fact with regard to whether 8772 and 3858 are the same corporations.

In addressing the claim of negligent hiring, negligent retention and/or negligent supervision, plaintiff argues that 8772 has not established that it investigated 3858, its employees or its vehicles prior to entering into the Service Agreement.

Finally, plaintiff argues that 8772's motion for summary judgment should be denied because there is outstanding discovery. More specifically, although a court order dated March 13, 2010 directed 3858 to appear for deposition and 8772 to provide proof of payment to 3858, no such discovery has been provided.

8772's Reply

In reply, 8772 refutes each of plaintiff's allegations. In addition, 8772 contends that the opinion offered by Mr. Hallahan should not be considered, since the photographs were not previously disclosed, the information does not pertain to the time of the accident and he is not an expert. It also asserts that since plaintiff filed a note of issue, all further discovery has been waived.

The Law

It is well established that summary judgment may be granted only when it is clear that no triable issues of fact exist (Alvarez v. Prospect Hosp., 68 N.Y.2d 320 [1986] ). The party moving for summary judgment "bears the initial burden of making a prima facie showing of its entitlement to judgment as a matter of law" (Holtz v. Niagara Mohawk Power, 147 A.D.2d 857, 858 [1989]). Failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see e.g. Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985]; Dat v. City of New York, 271 A.D.2d 635, 635 [2000]).

Once such a showing has been established, "the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" (Alvarez, 68 N.Y.2d at 324, citing Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980] ). In this regard, it is well settled that:

"A summary judgment motion is governed by a well‑established shifting of the burden of proof. A movant's failure to make a prima facie showing of entitlement to judgment as a matter of law requires a denial of the motion, regardless of the sufficiency of the opposing papers' and it is only if the movant succeeds in making this showing that the burden shifts to the party opposing the motion' (Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 [1986])."

(Ferluckaj v. Goldman Sachs & Co., 12 NY3d 316, 321 [2009]). It is equally well settled that in making the determination of whether a movant has satisfied the requisite burden of proof, the nonmovant is entitled to the benefit of every favorable inference (see e.g. Negri v. Stop & Shop, 65 N.Y.2d 625 [1985]; Louniakov v. M.R.O.D. Realty, 282 A.D.2d 657 [2001]). Further, "the motion should not be granted where the facts are in dispute, where conflicting inferences may be drawn from the evidence, or where there are issues of credibility" (Scott v. Long Is. Power Auth., 294 A.D.2d 348, 348 [2002], citing Dolitsky v. Bay Isle Oil Co., 111 A.D.2d 366 [1985]). On such a motion, the court is not to determine credibility, but whether a factual issue exists (Capelin Assoc. v. Globe Mfg., 34 N.Y.2d 338 [1973]).

In addressing the specific issues raised herein, the court also notes that:

"Generally, a party who retains an independent contractor, as distinguished from a mere employee or servant, is not liable for the independent contractor's negligent acts' (Kleeman v. Rheingold, 81 N.Y.2d 270, 273 [1993]). The primary justification for this rule is that one who employs an independent contractor has no right to control the manner in which the work is to be done and, thus, the risk of loss is more sensibly placed on the contractor' (id. at 274)."

Brothers v. New York State Elec. & Gas, 11 NY3d 251, 257-258 [2008]).

"A determination that an employer‑employee relationship exists must rest upon evidence that petitioner exercises control over the results produced ... or the means used to achieve the results" (In re 12 Cornelia St., 56 N.Y.2d 895, 897 [1982], citing Matter of Sullivan Co. [Miller], 289 N.Y. 110 [1942]). "Factors relevant to assessing control include whether the worker (1) worked at his own convenience, (2) was free to engage in other employment, (3) received fringe benefits, (4) was on the employer's payroll and (5) was on a fixed schedule" (Bynog v. Cipriani Group, 1 NY3d 193, 198 [2003], rearg. denied 2 NY3d 794 [2004], citing Lazo v. Mak's Trading Co., 84 N.Y.2d 896, 897 [1994] [applying the standard in a tort context] ). "Incidental control over the results produced'without further evidence of control over the means employed to achieve the results' will not constitute substantial evidence of an employer‑employee relationship" (Hertz v. Commissioner of Labor, 2 NY3d 733, 735 [2004], citing Matter of Ted Is Back, 64 N.Y.2d 725, 726 [1984]).

As is also relevant to the instant dispute:

"The doctrine of respondeat superior renders an employer vicariously liable for torts committed by an employee acting within the scope of the employment (see Judith M. v. Sisters of Charity Hosp., 93 N.Y.2d 932 [1999]). Pursuant to this doctrine, the employer may be liable when the employee acts negligently or intentionally, as long as the tortious conduct is generally foreseeable and a natural incident of the employment (see Riviello v. Waldron, 47 N.Y.2d 297 [1979])."

(State Farm Ins. Co. v. Cent. Parking Sys., 18 AD3d 859, 859 [2005]).

Further, the court notes that "[i]n those instances where an employer cannot be held vicariously liable for torts committed by its employee, the employer can still be held liable under theories of negligent hiring and negligent retention" (Sheila C. v. Povich, 11 AD3d 120, 129 [2004], citing Kenneth R. v. Roman Catholic Diocese of Brooklyn, 229 A.D.2d 159, 161 [1997], lv dismissed 91 N.Y.2d 848 [1997], cert denied 522 U.S. 967 [1997]; Restatement [Second] of Torts Sec. 317). "To hold a party liable under theories of negligent hiring, negligent retention, and negligent supervision, a plaintiff must establish that the party knew or should have known of the ... propensity for the conduct which caused the injury' " (Schiffer v. Sunrise Removal, 62 AD3d 776, 779 [2009], quoting Bellere v. Gerics, 304 A.D.2d 687, 688 [2003]). In this regard, however, an employer is under no duty to inquire as to whether an employee has been convicted of crimes in the past (see e.g. Yeboah v. Snapple, 286 A.D.2d 204, 205 [2001], citing Amendolara v. Macy's, 19 A.D.2d 702 [1963]), nor is there any common‑law duty to institute specific procedures for hiring employees unless the employer knows of facts that would lead a reasonably prudent person to investigate the prospective employee (see e.g, Shor v. Touch-N-Go Farms, 89 AD3d 830, 832 [2011]).

Turning to the issue of whether 8772 and 3858 are the same entities, the court recognizes that piercing the corporate veil requires a showing that the individual defendants exercised complete domination and control to commit a fraud or wrong against the plaintiff which resulted in an injury (see Seuter v. Lieberman, 299 A.D.2d 386 [1996]). Under the doctrine, "[e]quity will intervene to pierce the corporate veil' and permit the assertion of claims against the individuals who control the corporation, in order to avoid fraud or injustice" (Damianos Realty Group v. Fracchia, 35 AD3d 344, 344 [2006]; see also Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135, 140-141 [1993]). The party seeking to pierce the corporate veil must further establish that the "controlling corporation [or person] abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against a party such that a court in equity will intervene" (Weinstein v. Willow Lake, 262 A.D.2d 634, 635 [1999]). "Factors to be considered by a court in determining whether to pierce the corporate veil include failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, and use of corporate funds for personal use" (Millennium Constr. v. Loupolover, 44 AD3d 1016, 1016-1017 [2007]). Such a decision is a fact‑driven inquiry that is "particularly unsuited for resolution on summary judgment" (Forum Ins. Co. v. Texarkoma Transp. Co., 229 A.D.2d 341, 342 [1996]).

Discussion

The court finds that 8772 fails to make a prima facie showing that Mr. Othman was not an employee of 8772. In so holding, the court relies upon the case of Carrion v. Orbit Messenger (192 A.D.2d 366, 367 [1993], affd, certified question answered 82 N.Y.2d 742 [1993]). Therein, quoting Bermudez v. Ruiz (185 A.D.2d 212, 213 [1992]), the Appellate Division, First Department, reasoned that an issue of fact was raised with regard to the alleged employer and its delivery company:

"[T]he IAS Court, in granting summary judgment to the alleged employer, Marba Furniture, relied on the fact that the delivery driver owned and insured his own delivery truck, employed his own workers, paid for all repair costs of the vehicle and decided the time (but not the date) and manner of delivery. Payment was received weekly, without withholding of Social Security or income taxes, based upon the number and types of furniture pieces delivered. In reinstating the complaint, this Court found the evidence insufficient to establish the existence of an independent contractor relationship as a matter of law. Although it was similarly alleged that the driver could perform work for other companies, it was undisputed that the driver made deliveries exclusively for Marba, that the delivery dates were arranged by Marba with its customers and that the only paperwork used in the course of deliveries was that furnished by Marba."

(Carrion, 192 A.D.2d at 367; cf. Hernandez v. Chefs Diet Delivery, 81 AD3d 596, 598 [2011].

Moreover, in moving for summary judgment, 8772 relies upon deposition testimony and affidavits to establish that Mr. Othman was not employed by 8772 at the time of the subject accident. The complaint, however, also alleges that the defendant corporations are shams and that 8772 and 3858 are one and the same. While the court agrees with 8772 that by filing a note of issue in which she certified that all discovery had been completed, plaintiff waived her right to conduct further discovery (see e.g. Chichilnisky v. Trustees of Columbia Univ., 52 AD3d 206, 206 [2008]; Think Pink v. Rim, 19 AD3d 331, 331 [2005]; Malloy v. Madison Forty-Five Co ., 13 AD3d 55, 57 [2004]), 8772 fails to make a prima facie showing that the court should not pierce the corporate veil and hold 8772 liable for injuries sustained by plaintiff. The court also notes that the failure of 3858 to comply with discovery requests and/or to file an affidavit in opposition to the motion is also suspect, as is the fact that 3858 was dissolved by proclamation on April 27, 2011, during the pendency of the instant action.

Further, Mr. Nasir Obeid's testimony that 3858 uses vehicles owned by 8772 raises an issue of fact with regard to whether 3858 and 8772 so commingled assets that the corporate veil should be pierced (see Millennium Constr., 44 AD3d at 1016-1017). This factor is of particular significant, since Vehicle and Traffic Law Sec. 388 holds vehicle owners vicariously liable for the negligence of those whom they allow to drive their vehicles (Country Wide Ins. Co. v. National R.R. Passenger, 6 NY3d 172, 174 [2006], citing Tikhonova v. Ford Motor Co., 4 NY3d 621, 623 [2005]). Similarly, if Mr. Othman was an employee of 8772, the corporation can be held liable for his negligence pursuant to the doctrine of respondeat superior (State Farm Ins. Co., 18 AD3d at 859).

The court finds, however, that 8772 is entitled to summary judgment dismissing plaintiff's claims of negligent hiring, negligent retention and negligent supervision, since plaintiff alleges only that 8772 did not investigate 3858, its employees or its vehicles prior to entering into the Service Agreement. Thus, since it well established that an employer does not have such a duty, and plaintiff does not allege or establish that 8772 knew or should have known of the propensity for the conduct which caused the injury, dismissal of these causes of action is proper (see Schiffer, 62 AD3d at 779; Bellere, 304 A.D.2d at 688; Yeboah, 286 A.D.2d at 205; Shor, 89 AD3d AT 832).

Conclusion

The motion by 8772 is granted only to the extent of dismissing those claims sounding in negligent hiring, negligent retention and negligent supervision. The remaining causes of action are severed and shall continue. All other relief requested is denied.

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