State of New York
Supreme Court : County of Monroe

_______________________________

This opinion is uncorrected and is subject to revision in the official Reports

ANDREW V. SIRACUSE, J.

This case involves an employee who fell on a back staircase in her office building. The staircase is one of two in her place of employment, which is a small office building leased by a construction firm. It had no railing, and she is suing the owner of the property, from whom her employer had leased the entire building.

Although the plaintiff's papers contain arguments on the question of notice, both actual or constructive, and whether or not the stairway complied with the building code, these issues are not germane to the present motion. At present, the defendant has moved for summary judgment on the grounds that it was a lessor out of possession. The general rule is that a lessor out of possession is not liable for the condition of the premises; a lease for these purposes is like a full transfer of ownership. And, indeed, the lease between 7401 Willowbrook Road, the defendant, and the employer, John Danforth Co., is a standard form lease with no warranties on the part of the lessor and with full responsibility for repair and maintenance on the lessee. The lessee is also required to carry a million dollars of insurance and to name the lessor as an additional insured in the policy.

The plaintiff makes two arguments in response. The first, which can be dealt with easily, is that 7401 Willowbrook is a "paper corporation." The basis for this claim is that Nick Optis, a vice-president of Danforth, is also a "partner" in 7401 Willowbrook, along with the president of Danforth, Emmett Riley. (Since 7401 Willowbrook is a limited liability corporation, the plaintiff presumably means "shareholder" rather than "partner.") But this alone is hardly enough to justify piercing the corporate veil. The plaintiff has not shown any other overlap between the two firms nor established how many vice presidents Danforth has and how many also are involved in 7401 Willowbrook, although such information is easily obtainable. No course of dealing between the two entities has been made out. Although some mail comes for 7401 Willowbrook at Danforth's address--a fact which is not surprising, considering the corporation's name--there was no office for the lessor at the location and the entirety of the premises was leased to Danforth. There was no proof that in any way suggested that this structure was a sham or used to avoid liability.

It appears that the plaintiff is trying to use the corporate relationship as a means of avoiding the exclusivity of Workers' Compensation through treating 7401 Willowbrook as separate from her employer; but at the same time she wished it to be treated under negligence principles as if it were her employer's alter ego. She cannot have it both ways.

Interestingly, a similar argument was made in a case cited by the plaintiff, Wernig v Parents & Brothers Two, Inc. (195 AD2d 944), but there the argument was raised as a defense. The court held:

Defendant next argues that because it is an "alter ego" *** of plaintiff's employer ***, this suit is barred by the Workers' Compensation Law. We disagree. Although defendant and Lee's are closely associated corporations and share several directors and officers, they are not "alter egos" of each other. Each was formed for a different purpose--defendant to buy, sell and manage property, Lee's to operate a plumbing and heating business--and there is no evidence that these functions are shared between the two. (195 AD2d 944, 945)

This argument clearly fails.

The more substantial claim made by the plaintiff is that although the defendant is a lessor out of possession and would normally be immune from liability for the condition of the premises, it falls into the exception, under both New York law and the Restatement (Second) of Torts, for lessors who rent out property for "a purpose which involves the admission of the public." (Restat 2d of Torts § 359) This exception is no longer limited to facilities where the admission of large numbers of people is foreseeable, which was the position in the first restatement and is the way the rule is stated in the leading New York case, Campbell v Else S. Holding Co., Inc. (251 NY 446, 449). The question here is whether the broader exception now recognized extends to the present case, where employees and some sales personnel coming to make sales calls would use the back stairs.

The court rules that it does not. There is no reported case that is directly dispositive. The comments in the Restatement, though, make it clear that members of the "public" are to be distinguished from those who, like delivery people for a restaurant, "come upon the premises for a business purpose other than that for which they are open to the public." (Comment e)

For the purposes of the exception, it would appear that a space open to public use is one that provides goods or services to all. This category is not limited to places of mass amusement or retail establishments. It includes the offices of professionals such as doctors, dentists and lawyers, but does not include places of business in which salespeople are essentially representatives of wholesalers.

There mere fact that clients may occasionally meet with representatives of the company in company offices does not make the office a public place--unlike, for example, the "offices" of automobile salespeople partitioned off from a showroom. In one case the business is predominantly one conducted between business people, where face-to face meeting is an exception and in which parties do not ordinarily call in person upon different firms in order to obtain estimates and quotes. In the other the entire space is open to a browsing public, open hours are posted and regularly kept, people are invited and encouraged to visit and browse, and so on.

If the use of the premises by Danforth--as offices entirely, and not as a showroom or the like--is public, then almost every place in the world is public, and the exception would swallow the rule. Here, the only people other than employees who would routinely visit were there for their own business purposes; there would be no point for a member of the public to enter the offices and wander around the building. The plaintiff repeatedly notes that the back staircase led to an exit, but this in itself does not suggest that it was a route of ingress and egress for the public.

The plaintiff presents many cases in hopes of bolstering her position. Few of these cases are on point, and some are totally irrelevant; in Iverso v Whitestone Transit Mix Corp. (30 AD2d 565), as the defendant points out, the court dealt with the question of whether some arguably defective hoppers were realty or personalty subject to an implied warranty of fitness.

The two cases which plaintiff's counsel cited at oral argument are closer to the subject matter of the present motion, but neither of them aids her case. Wernig (supra., 195 AD2d 944) not only calls the alter-ego argument into question; it deals with an outside area with a vending machine for soft drinks that was open to and used by the general public. This is clearly different from the facts as presented here.

In the other case, perhaps surprisingly, the question of the responsibility of a landlord out of possession was never raised. (See, Reynolds v Snead Development Corp. [257 AD2d 940]). In any event, the holding in Reynolds was later explained by the Third Department as concerning a situation where "members of the public are deemed to have been invited to a commercial establishment" (Richardson v Simone, 275 AD2d 576, 577). Clearly, Danforth did not use its offices as a commercial establishment, and there was no invitation extended to the general public.

The defendant has adequately established that it was a landlord out of possession, and the plaintiff has not shown that any interpretation of the facts would support a holding that the exception in section 359 of the Restatement would apply. The defendant is therefore entitled to summary judgment, with costs. Counsel for the defendant may prepare the order.

DATED: Rochester, New York

December 8, 2003

Andrew V. Siracuse, J.S.C.

This opinion is not available for publication in any official or unofficial reports, except the New York Law Journal, without the approval of the State Reporter or the Committee on Opinions (22 NYCRR 7300.1)

Design © 1997 Michael Steinberg. No copyright subsists in the decision texts, which are government documents.

HOME GUIDES CASES ISSUES INDEX