| Peguero v 601 Realty Corp. |
| 2009 NY Slip Op 00443 [58 AD3d 556] |
| January 29, 2009 |
| Appellate Division, First Department |
| Ishmel Peguero et al., Respondents, v 601 Realty Corp. etal., Appellants. |
—[*1] Levy Phillips & Konigsberg, LLP, New York (Daniel J. Woodard of counsel), forrespondents.
Amended judgment, Supreme Court, New York County (Sherry Klein Heitler, J.), enteredJune 27, 2007, after a jury verdict and stipulated reduction, apportioning fault 75% againstdefendant 601 Realty Corp. and 25% against defendant Jeffrey Farkas, and awarding plaintiffs$4,235,464.76, modified, on the facts and in the exercise of discretion, that portion of thejudgment imposing personal liability on defendant Jeffrey Farkas is vacated and the matterremanded for a new trial on the issue of his liability, the awards for future pain and suffering asto both plaintiffs vacated and the matter remanded for a new trial as to those damages only, andotherwise affirmed, without costs, unless plaintiffs stipulate, within 20 days of service of a copyof this order, to accept reduced awards for future pain and suffering of $1,000,000 for plaintiffIshmel Peguero and $750,000 for plaintiff Emmanuel Peguero, and the entry of an amendedjudgment in accordance therewith. Appeal from order, same court and Justice, entered October 5,2006, which partially granted defendants' posttrial motion to set aside the verdict, unanimouslydismissed, without costs, as subsumed in the appeal from the amended judgment. Appeal fromorder, same court and Justice, entered April 11, 2007, which denied defendants' motion toreargue the October 5, 2006 order, unanimously dismissed, without costs.
The infant plaintiffs Ishmel and Emmanuel Peguero are brothers who lived with their motherin a building owned by defendant 601 Realty Corp. (the Corporation). Defendant Jeffrey Farkaswas a 50% shareholder and president of the Corporation and defendant Sidney Farkas was themanaging agent of the building. Plaintiffs commenced this action seeking damages for personalinjuries they sustained as a result of their exposure to lead paint in the apartment they occupiedin the building. Their complaint, as amplified by their bill of particulars, alleged that defendants(1) knew both that the infant plaintiffs resided in the apartment and that the apartment containedhazardous lead paint to which plaintiffs were being exposed, and (2) negligently failed to abatethe hazardous lead paint conditions. In defendants' answer, Jeffrey Farkas asserted as anaffirmative defense that he was acting on behalf of the Corporation and thus could not be heldpersonally liable.[*2]
At trial, Jeffrey Farkas moved at the close of plaintiffs'proof to dismiss the action as against him on the ground that, with respect to his involvementwith the building, he acted on behalf of the Corporation and could not be held personally liablefor its negligence. Supreme Court reserved decision on that motion, which Jeffrey Farkasrenewed after the close of defendants' proof. While Supreme Court did not expressly rule onJeffrey Farkas' renewed motion to dismiss the action as against him, it did so implicitly bysubmitting the issue of whether he was negligent to the jury.
The jury returned a verdict in favor of plaintiffs against the Corporation and Jeffrey Farkas,apportioning 75% of the liability to the Corporation and 25% to Jeffrey Farkas; the jury alsodetermined that Sidney Farkas was not negligent. The jury awarded Ishmel $350,000 for pastpain and suffering and $3,000,000 for future pain and suffering, and Emmanuel $250,000 forpast pain and suffering and $2,500,000 for future pain and suffering. Supreme Court partiallygranted defendants' posttrial motion to set aside the verdict, directing a new trial on the issue ofdamages unless plaintiffs stipulated to reduce the awards for Ishmel to $200,000 for past painand suffering and $2,000,000 for future pain and suffering, and for Emmanuel to $100,000 forpast pain and suffering and $1,000,000 for future pain and suffering. Plaintiffs so stipulated andan amended judgment was entered. Defendants' appeal from, among other things, the amendedjudgment ensued.
Jeffrey Farkas asserts that the court erred in submitting the issue of his negligence to the juryand that it should have dismissed the complaint as against him because he acted in his capacityas an officer of the Corporation and thus could not be held personally liable. Even assuming thatJeffrey Farkas is correct that he was acting solely in his capacity as an officer of the Corporation,he would not be entitled to dismissal of the complaint as against him on that ground. That heacted solely in his capacity as an officer of the Corporation is not a sufficient ground fordismissal. Rather, "a corporate officer who participates in the commission of a tort may be heldindividually liable, regardless of whether the officer acted on behalf of the corporation in thecourse of official duties and regardless of whether the corporate veil is pierced" (Espinosa v Rand, 24 AD3d 102,102 [2005] [emphasis added, internal quotation marks omitted]; see W. Joseph McPhillips,Inc. v Ellis, 278 AD2d 682 [2000]). The "commission of a tort" doctrine permits personalliability to be imposed on a corporate officer for misfeasance or malfeasance, i.e., an affirmativetortious act; personal liability cannot be imposed on a corporate officer for nonfeasance, i.e., afailure to act (Michaels v Lispenard Holding Corp., 11 AD2d 12, 14 [1960]; see MLM LLC v Karamouzis, 2 AD3d161 [2003]).
Jeffrey Farkas, who bore the burden of proof on his affirmative defense that he was notpersonally liable because he acted as an officer of the Corporation (see generally Brignoli vBalch, Hardy & Scheinman, 178 AD2d 290, 290 [1991]), did not assert before SupremeCourt that his alleged negligence consisted merely of nonfeasance and instead argued onlyinaccurately and more generally that personal liability could not be imposed upon him becausehe acted in his capacity as an officer of the Corporation (see 220-52 Assoc. v Edelman, 18 AD3d 313, 315 [2005] [forargument to be preserved for appellate review it must have been fully articulated before the courtof original jurisdiction]; see also Robillard v Robbins, 78 NY2d 1105, 1106 [1991]). Asa result of Jeffrey Farkas' failure to argue before Supreme Court that his alleged negligenceconsisted merely of nonfeasance, the issue of whether he engaged in affirmative acts ofnegligence or negligently failed to act was not submitted to the jury and, as discussed below,[*3]the sufficiency of the evidence must be gauged in light of thecharge as given to the jury.
The court's charge regarding the principles of negligence on which the jury was to base itsverdict did not differentiate between affirmative acts of negligence and negligent failures to act.Because Jeffrey Farkas did not object to this portion of the charge or request contraryinstructions, "the law as stated in that charge became the law applicable to the determination ofthe rights of the parties in this litigation . . . and thus established the legal standardby which the sufficiency of the evidence to support the verdict must be judged" (Harris vArmstrong, 64 NY2d 700, 702 [1984], citing Up-Front Indus. v U.S. Indus., 63NY2d 1004 [1984]; Rajeev Sindhwani,M.D., PLLC v Coe Bus. Serv., Inc., 52 AD3d 674, 676-677 [2008]; see Loughry vLincoln First Bank, 67 NY2d 369, 376-377 [1986]). The law stated in that portion of thecharge was as follows:
"In this case the plaintiff[s'] claim is that the defendants did not act reasonably and that theinfants suffered damages as a result. The defendant[s] claim that they did act reasonably and assuch are not liable. The plaintiff[s] ha[ve] the burden of proving that the defendant[s] w[ere]negligent and the defendant[s'] negligence was a substantial factor in causing lead poisoningdamages to the children. The defendant[s] ha[ve] the burden of proving that the plaintiff[s]w[ere] negligent and that the plaintiff[s'] negligence was a substantial factor in causing thedamage to the children.
"Negligence is the lack of ordinary care. It is a failure to use that degree of care that areasonably prudent person would have used under the same circumstances. Negligence may arisefrom doing an act that a reasonably prudent person would not have done under the samecircumstances or, on the other hand, from failing to do an act that a reasonably prudent personwould have done under the circumstances."
Evaluating the evidence according to the charge as given, we conclude that it is sufficient tosupport the jury's determination that Jeffrey Farkas was negligent. Notably, plaintiffs adducedevidence that a lead paint hazard existed in their apartment, that Jeffrey Farkas was responsiblefor inspecting the apartments in the building, that he was in plaintiffs' apartment on numerousoccasions, that he had notice of the lead paint hazard in the apartment, and that he ultimatelyhired workers to abate the hazard.
We disagree with our dissenting colleague's conclusion that Jeffrey Farkas preserved forappellate review his argument that the complaint should be dismissed as against him because theevidence was legally insufficient to establish that he should be held personally liable. As notedabove, because Jeffrey Farkas did not object to this portion of the charge or request contraryinstructions, the law as stated in the charge became the law applicable to the determination of therights of the parties.
To be sure, plaintiffs do not argue in their brief that the failure of Jeffrey Farkas to object tothe court's charge requires that the sufficiency of the evidence be assessed in light of the chargeas it actually was given. But the dissent cites no authority for the proposition that we nonethelessshould or are required to assess the sufficiency of the evidence in accordance with a differentlegal standard. Moreover, as the appellant on this appeal, Jeffrey Farkas bears the burden ofestablishing that he is entitled to relief (see Appleby v Erie County Sav. Bank, 62 NY 12,18 [1875]). Accordingly, plaintiffs' failure to argue preservation is of no moment. For the same[*4]reason, our dissenting colleague misses the point with hischaracterization of our position on preservation as "newly minted."
Nor does our dissenting colleague cite any authority supporting his contention that, "[b]ymoving to dismiss the claim against him before the case was submitted to the jury, [Jeffrey]Farkas effectively objected to all of the court's subsequent instructions as applied tohim." In fact, that contention is undercut by the governing statute, CPLR 4110-b,[FN1] and case law (see Hunt v Bankers & Shippers Ins. Co. of N.Y., 50 NY2d 938, 940[1980] ["other than restating requests to charge that had previously been submitted to the court(which requests themselves were erroneous in significant detail), defendant took no sufficientexception to the charge as given and did not otherwise assist the Trial Judge in clarifying ordistilling the legal issues as to which it now seeks our review. In consequence of its failure toaddress the charge with particularity, appellant has failed to preserve legal issues"];Carrasquillo v American Type Founders Co., 183 AD2d 410, 410 [1992], lvdenied 81 NY2d 703 [1993]). At bottom, what is required is a sufficient objection to thecharge that assists the trial judge in clarifying or distilling the legal issues in the charge (seeHunt, supra) and Jeffrey Farkas made no such objection.
The dissent's reliance on Loughry v Lincoln First Bank (supra) is misplacedand does not support its conclusion that we should evaluate the sufficiency of the evidence inaccordance with the actual legal standard governing the liability of officers of a corporationinstead of the legal standard stated in the charge. In Loughry, the Court determined thatthe issue of whether a particular employee was a "superior officer" for the purpose ofascertaining whether his employer could be held liable for punitive damages for that employee'sconduct was preserved for appellate review. In this regard, the Court wrote "[a]fter the jury'sverdict, proof was taken on damages . . . and the jury was charged with respect tocompensatory and punitive damages. The court instructed the jury that punitive damages couldbe assessed against each defendant based on the earlier findings on liability: 'You have alreadydetermined by your answers to the questions submitted to you on Monday that the Defendantsdid act with malice, the individual Defendants. You may award under those circumstancespunitive damages, and you may fix as punitive damages, the amount you fix need bear norelationship to the amount you award for compensatory damages.' But malice for one purpose isnot malice for every purpose. The court's error—equating an agent's malicesufficient under the doctrine of respondeat superior for compensatory damages against theemployer, with [*5]the employer's own complicity necessary forpunitive damages—drew timely objection from defense counsel, who protestedthat there was no basis for punitive damages against the bank. Counsel objected,first, because a finding that malice solely motivated Lee and Dovidio [i.e., the individualdefendants] necessarily precluded a finding that they acted in the scope of employment and,second, because 'there's nothing showing sufficient proof of authorization, ratification orcondonation of the acts of Lee and Dovidio.' While the first objection was properlyrejected—'culpable recklessness' (which was charged to the jury) being one form of malicethat can be fully consistent with scope of employment—the second should havealerted the trial court to the need for further instruction regarding a predicate for punitivedamages against the bank, but the court declined to give any" (67 NY2d at 379 [emphasisadded]). Thus, defense counsel made a specific objection to the portion of the charge with whichhe took issue after the charge was given. Here, of course, no objection (or request to charge) waslodged by Jeffrey Farkas at any point to the relevant portion of the charge. What waspresent in Loughry—a sufficient objection to the charge that should have assistedthe trial judge in clarifying or distilling the legal issues in the charge (Hunt,supra)—is not present here. Far from demonstrating a "striking parallel to this case,"Loughry is distinguishable in this key respect.[FN2]
Similarly misplaced is our dissenting colleague's reliance on Greelish v New York Cent.R. R. Co. (29 AD2d 159 [3d Dept 1968], affd 23 NY2d 903 [1969]) andGallagher v Citizens Water Works of Town of Highlands (278 App Div 792 [2d Dept1951], affd 303 NY 805 [1952]). In both of these cases the defendant moved to dismissan action at the close of the plaintiff's case or the close of the evidence, and in both the AppellateDivision held that because the motion should have been granted, the defendant was entitled todismissal of the complaint regardless of the content of the charge to which no objection wasmade.[FN3]Critically, however, nothing in either decision suggests that the motions to dismiss did not raisethe same specific objection that the defendant pressed on appeal. Accordingly, neither decision isat odds with the wealth of precedent holding that, when no timely and specific objection is takento a charge, "the law as stated in th[e] charge became the law applicable to the determination ofthe rights of the parties in th[e] litigation and thus established the legal standard by which thesufficiency of the evidence to support the verdict must be judged" (Harris, 64 NY2dat 702 [emphasis added]; see Cohen v St. Regis Paper Co., 64 NY2d 656 [1984],revg 99 AD2d 659, 660 [1984]; Ramos v New York City Hous. Auth., 249AD2d 59 [1998]; Kroupova v Hill, 242 AD2d 218 [1997], lv dismissed in part anddenied in part 92 NY2d 1013 [1998]; Rodriguez v Davis Equip. Corp., 235 AD2d222 [1997]).
Jeffrey Farkas also argues that Supreme Court should have directed the jury to determinewhether, on the occasions he engaged in the negligent conduct alleged by plaintiffs, he wasacting outside the scope of his authority as a corporate officer. According to Jeffrey Farkas, had[*6]the jury been so directed and had it determined that he wasnot acting outside the scope of his authority as an officer of the Corporation, no personal liabilitycould be imposed on him. This argument is not preserved for our review since Jeffrey Farkasneither sought jury instructions on that issue nor objected to the court's charge on the ground thatit did not contain such instructions (see CPLR 4110-b; Harris, supra;CBB Entertainment v Korn, 240 AD2d 184 [1997]; Carrasquillo, supra).In any event, as discussed above, this argument is based on an inaccurate statement of the law.
Notwithstanding Jeffrey Farkas' failure to preserve his argument that the charge waserroneous because it failed to articulate the correct legal standard regarding his personal liability,we reach the issue in the interests of justice. "[W]here [an] error is so fundamental as to precludeconsideration of the central issue upon which the claim of liability is founded, the court may, inthe interests of justice, proceed to review the issue even in the absence of objection or request [tocharge]" (Pivar v Graduate School of Figurative Art of N.Y. Academy of Art, 290 AD2d212, 213 [2002]). Here, the central issue on which plaintiffs' claim of liability against JeffreyFarkas was founded is whether any basis exists for holding him personally liable for actions hetook as an officer of the corporation, and the court's charge precluded the jury from consideringthat issue.
Although we can review Jeffrey Farkas' claim in the interests of justice, we of course are notrequired to do so. For two reasons, however, we conclude that we should review it in theinterests of justice. First, although it is possible that Jeffrey Farkas was prompted by strategicconsiderations not to press at trial the specific contention that he could not be held liable becausehis alleged negligence consisted solely of nonfeasance, we think it more likely that this failurerepresented nothing more than an omission that was inadvertent or ignorant. Second, we think itunlikely that plaintiffs could have responded to a specific objection by offering additionalevidence against Jeffrey Farkas that would have established a proper basis for holding himpersonally liable. Thus, Jeffrey Farkas should have a new trial on the issue of liability (seeid.; see also Clark v InterlakenOwners, 2 AD3d 338 [2003]; Breitung v Canzano, 238 AD2d 901 [1997];Kelly v Tarnowski, 213 AD2d 1054 [1995]; Aragon v A & L Refrig. Corp., 209AD2d 268 [1994]; Kearse v Food Fair Stores, 104 AD2d 582 [1984]; Rivera vBronx-Lebanon Hosp. Ctr., 70 AD2d 794 [1979]). The case law regarding the remedy for afundamental error in the charge is clear and consistent—the matter should be remandedfor a new trial.[FN4]In light of that case law, we cannot agree with our dissenting colleague's contention that, becausethe charging error was fundamental, we can dismiss the complaint as against him. We reachJeffrey Farkas' argument in the interests of justice, but that does not warrant a finding thatplaintiffs could not offer any additional relevant evidence. They may well be unable to do so, butwe cannot lawfully so assume.
Supreme Court providently exercised its discretion in precluding defendants from callingtheir liability expert since they served their expert disclosure only a few days before the start ofthe trial, failed to provide the substance of the expert's anticipated testimony with the requisite"reasonable detail" mandated by CPLR 3101 (d) (1) (i), and failed to demonstrate good cause for[*7]their failure to comply with that statute (see Lissak v Cerabona, 10 AD3d308, 309 [2004]; Hudson v Manhattan & Bronx Surface Tr. Operating Auth., 188AD2d 355 [1992]).
Both plaintiffs sustained the following injuries as a result of their exposure to lead paint inthe apartment: permanent cognitive, attentional and behavioral deficits, learning disabilities,attention deficit disorder, hyperactivity, and diminished IQ. Ishmel was awarded future pain andsuffering damages for a period of 65 years and Emmanuel was awarded such damages for aperiod of 67. The awards for past pain and suffering, as reduced by Supreme Court, arereasonable compensation for plaintiffs' past physical and emotional injuries. However, theawards for future pain and suffering as to both plaintiffs, even as reduced by Supreme Court,deviate materially from reasonable compensation to the extent indicated above (seeCPLR 5501 [c]; see generally Woolfalkv New York City Hous. Auth., 10 AD3d 524 [2004], lv denied 4 NY3d 711[2005]; Jiminez v City of NewYork, 7 AD3d 268 [2004]; Mayi v 1551 St. Nicholas, 6 AD3d 219 [2004]; Seay vGreenidge, 292 AD2d 173 [2002]; Sampson v New York City Hous. Auth., 256AD2d 19 [1998], lv denied 93 NY2d 808 [1999]). Concur—Gonzalez, McGuireand Moskowitz, JJ.
Friedman, J.P., dissents in part in a memorandum as follows: I respectfully dissent insofar asthe majority remands the matter for a new trial as to the liability of defendant Jeffrey Farkas, ashareholder and officer of defendant 601 Realty Corp.[FN1]On this record, I would dismiss the complaint as against Farkas. I concur with the majority'sdecision in all other respects, including the affirmance of the judgment as to liability against 601Realty.
Plaintiffs, having been injured by a lead paint condition in their former apartment, broughtthis action against 601 Realty, the corporate landlord, and Farkas, who, as indicated above, is ashareholder and officer of 601 Realty. Plaintiffs' claims are based entirely on tortiousnonfeasance, specifically, the failure to abate the lead paint condition, a duty that, on this record,was owed by 601 Realty only, not by Farkas as an individual. Twice during trial, at the close ofplaintiffs' case and again at the close of all of the evidence, Farkas unsuccessfully moved todismiss the complaint as against himself on the ground that the evidence afforded no basis forimposing liability on him as an individual. The dismissal motions were denied, and the juryreturned a verdict against both 601 Realty and Farkas individually.
The majority agrees with me on the "actual legal standard governing the liability of officersof a corporation," and does not suggest that the record discloses any basis for holding Farkaspersonally liable, under that "actual legal standard," for 601 Realty's failure to perform acorporate duty. Nonetheless, the majority deems itself powerless to dismiss the claim againstFarkas because, in the majority's view, Farkas failed to preserve his objection to the submissionof the claim against him, notwithstanding the two dismissal motions he made during trial, eachone on the specific ground that any cause of action that had been proven lay against thecorporation only. The majority further argues that the point is unpreserved because, after the[*8]denial of the dismissal motions, Farkas did not object to thejury charge. Having thus constructed its own rationale for affirming the judgment against Farkas,the majority splits the difference between plaintiffs and Farkas by vacating the judgment asagainst the latter, and remanding for a new trial on the issue of his liability, on the ground thatthe trial court committed fundamental error in instructing the jury that Farkas could be heldliable for corporate nonfeasance.
For several reasons, I decline to join the majority in keeping alive a claim the trial recordestablishes to be legally insufficient. To begin, I am astonished by the majority's view that thetwo dismissal motions Farkas made during trial failed to preserve for appellate review hisargument—a correct one on the merits, as the majority concedes—that plaintiffsfailed to make out a prima facie case against him individually. Plaintiffs themselves have neverasserted that Farkas failed to preserve his objection to being held personally liable; it is themajority, rather, that has fashioned this contention from a strained and artificial reading of therecord, and has done so at its own initiative. Moreover, the majority's position that the trial courtcommitted fundamental error in instructing the jury that Farkas could be held liable for thecorporation's failure to act is wholly at odds with the majority's position that the motions todismiss, although expressly predicated on the legal distinction between Farkas and thecorporation, were somehow too "general" to alert the IAS court to the principle that Farkas couldnot be held liable for corporate nonfeasance. The point here is that the trial court's error, both indenying the motions to dismiss and in framing the jury charge, consisted in its overlookingprecisely the same legal principle. If this principle is fundamental (and I agree that it is), does itnot follow that the motions to dismiss, which were expressly based on the corporate/individualdistinction, should have sufficed to bring that fundamental principle to the trial court's attention?The majority's additional contention that any point Farkas may have preserved by moving todismiss was retroactively waived by his subsequent failure to object to the jury charge is not onlywithout support in either case law or logic, it is contrary to two Appellate Division decisions,each affirmed by the Court of Appeals. Finally, it is pointless to send this matter back for a newtrial when plaintiffs make no claim that they have any evidence not in the existing record thatwould support imposing liability on Farkas individually.
As stated above, the majority and I are in agreement on the relevant point of substantive law.The majority acknowledges that, under "the actual legal standard governing the liability ofofficers of a corporation," a corporate officer, while liable for personal participation in thecorporation's affirmative commission of a tortious act by malfeasance or misfeasance (see e.g. Espinosa v Rand, 24 AD3d102 [2005]), cannot be held personally liable for the corporation's tortious nonfeasance, i.e.,failure to act (see MLM LLC vKaramouzis, 2 AD3d 161, 162 [2003], citing Michaels v Lispenard HoldingCorp., 11 AD2d 12, 14 [1960]). In this case, the tort at issue—failure to abate apreexisting lead paint condition in plaintiffs' apartment—is plainly one of nonfeasance, forwhich only the corporate landlord, 601 Realty, may be held liable, absent special circumstancesnot present here.[FN2][*9]
At the close of plaintiff's case at trial, Farkas preservedthe issue of whether he could be held liable for the failure to abate the lead paint condition bymoving to dismiss the complaint as against himself individually. In moving, defense counselstated that "there has been no evidence submitted by plaintiff[s] that [Farkas] does have personalresponsibility" for the alleged wrongdoing. The motion was renewed, and implicitly denied, atthe close of the defense case.
The oral motions by Farkas's counsel at trial plainly placed at issue the propriety of holdingFarkas personally liable for the allegedly tortious conduct of his corporation.[FN3] In response to each motion, it was the obligation of plaintiffs' counsel to identify any possiblebasis in the record for imposing personal liability on Farkas. Plaintiffs' counsel did not identify,and does not succeed in identifying now, a single instance of Farkas's active commission of anaffirmatively tortious act.
In essence, the majority holds that Farkas failed to preserve the dispositive legal issue in thecase against him because his counsel stated the rule protecting corporate shareholders andofficers from liability for corporate torts in what the majority considers a somewhat overbroadmanner that perhaps fell short of the precision one would expect of a law school seminar. Thepurpose of a trial, however, is to achieve substantial justice between the parties, not to produce alaw review article. Plaintiffs undeniably received notice from the dismissal motion at theconclusion of their case that Farkas was denying that they had proven any grounds for holdinghim personally liable for 601 Realty's alleged torts. Thus, that motion afforded plaintiffs anopportunity to come forward with any additional evidence in their possession of activewrongdoing by Farkas that would have supported holding him personally liable. Plaintiffs havenever suggested that they possessed but failed to present any such evidence in their case at trial.Indeed, it defies reason to imagine that plaintiffs' experienced counsel would have withheldevidence of Farkas's active wrongdoing from trial if they had it.
In fact, one of the Court of Appeals decisions cited by the majority supports my view that anobjection to the submission of a claim to the jury, even if imprecisely stated, suffices to preservean issue for appellate review so long as the objection was stated in a way that reasonably shouldhave alerted the court and the adverse party to the issue sought to be reviewed. In Loughry vLincoln First Bank (67 NY2d 369 [1986]), a defamation case, one of the issues was whetherthe defendant bank had preserved for appellate review its contention that neither of the twoindividual defendants—bank employees who actually defamed the plaintiff—wasa[*10]"superior officer" whose conduct could provide a predicatefor an award of punitive damages against the bank. At the damages phase of a bifurcated trial,the bank timely "protested that there was no basis for punitive damages against [it]," arguing,inter alia, " 'there's nothing showing sufficient proof of authorization, ratification or condonationof the acts of [the individual defendants]' " (id. at 379). The bank did not, however,specifically argue that neither individual defendant was a "superior officer," and failed to requestthat the jury be given a "superior officer" charge. The Court of Appeals nonetheless held that theissue of whether the higher ranking individual defendant was a "superior officer" was preservedfor appellate review. The Court held that the bank's objection that there was insufficient evidenceof " 'authorization, ratification or condonation' " of the individual defendants' maliciouslydefamatory conduct "should have alerted the trial court to the need for further instructionregarding a predicate for punitive damages against the bank, but the court declined to give any.Had plaintiff at that point perceived that a 'superior officer' finding in particular furnished thenecessary predicate for punitive damages against the bank, he might have sought such aninstruction; his theory, however—like that of the trial court at the time the charge wasgiven—was that punitive damages could be awarded against the bank on the showing ofmalice already made as to the individuals. In these circumstances, the failure to request a'superior officer' charge cannot be laid at [the bank's] door, or place the issuebeyond our review" (id. at 379-380 [emphasis added]).[FN4]
Loughry makes for a striking parallel to this case. In Loughry, to reiterate,the Court of Appeals held that the "superior officer" issue had been preserved by the bank'sargument that there was " '[in]sufficient proof of [the bank's] authorization, ratification orcondonation' " (67 NY2d at 379) of the employees' malicious conduct, notwithstanding that thebank had not argued specifically that only the malice of a "superior officer" could be imputed tothe bank for purposes of the punitive damages claim. The bank's argument sufficed to preservethe "superior officer" issue because it "should have alerted" (id.) the plaintiff and the trialcourt to that issue. Here, by a parity of reasoning, the objection defense counsel articulated to thesubmission of the claim against Farkas, on the specific ground that no evidence had beenpresented on which liability for 601 Realty's failure to abate the lead condition could be imposedon him as an individual, "should have alerted" plaintiffs and the trial court to the need forevidence that Farkas had personally engaged in affirmative tortious conduct by malfeasance ormisfeasance as a predicate [*11]for holding him individuallyliable. While the argument could have been made in the manner preferred by the majority, thekey point—that any liability was that of the corporation, not the corporateofficer—was expressed. Thus, this is not a case in which defense counsel merely voiced"general objections" (Robillard v Robbins, 78 NY2d 1105, 1106 [1991]) to thesubmission of the claim against Farkas to the jury. To paraphrase Loughry, "[i]n thesecircumstances, the failure to request a . . . charge [differentiating betweenaffirmative acts of negligence and negligent failures to act] cannot be laid at [Farkas's] door, orplace the issue beyond our review" (id. at 379-380).
In seeking to distinguish Loughry on the ground that "a sufficient objection" wasraised in that case, the majority begs the question of what standard is used to determine whetheran objection was "sufficient." Loughry, to reiterate, clarifies that the standard for a"sufficient" objection is one that, even if not articulated with the precision of a legal treatise,"should have alerted" (67 NY2d at 379) the court and opposing counsel to the issue sought to bereviewed. The majority also seeks to distinguish Loughry on the additional ground that(as the majority would have it) the bank was excepting to the punitive damages charge, ratherthan moving to dismiss a claim (as Farkas did here). Contrary to the majority's reading of thecase, however, the bank's motion in Loughry was addressed, not to the contents of thecharge, but to whether the claim for punitive damages against the bank should have beensubmitted to the jury at all (see id. ["defense counsel . . . protested thatthere was no basis for punitive damages against the bank" on the ground, inter alia, that "'there's nothing showing sufficient proof of authorization, ratification or condonation ofthe (defamatory) acts' " (emphasis added)]). In any event, even if (as the majority claims) thebank in Loughry was excepting to the charge rather than seeking dismissal of the claim,the majority adduces no reason, and cites no authority, for holding a motion to dismiss to astandard of sufficiency higher than the standard applied to an exception to a charge.
Relatedly, the majority, making another point plaintiffs themselves have not made, arguesthat an additional ground for deeming the argument for dismissal of the claim against Farkasunpreserved, notwithstanding his motions to dismiss at trial, is his subsequent failure to object tothe form of the court's negligence instruction. However, the law is that "the failure of thedefendant to except to the charge of the [trial] court is neither binding nor controlling on [anappellate] court [where] the action should have been dismissed on the motion made at the end ofthe plaintiff's case and renewed at the close of all of the evidence" (Greelish v New YorkCent. R. R. Co., 29 AD2d 159, 161 [1968], affd 23 NY2d 903 [1969] [reversing ajudgment upon a jury verdict in a negligence action and dismissing the complaint, wheredefendant, although it failed to except to the jury charge, had moved for a trial order ofdismissal, and the evidence established plaintiff's contributory negligence, which was then anabsolute bar to recovery, as a matter of law]; see also Gallagher v Citizens Water Works ofTown of Highlands, 278 App Div 792, 792-793 [1951], affd 303 NY 805 [1952]["The question as to the sufficiency of the proof of negligence, presented by defendant's motionsto dismiss the complaint and for a directed verdict, made at the close of the case, survived thecourt's charge; and, under the circumstances, the portions of the charge to which no exceptionswere taken by defendant may not be considered as establishing the law of the case"]; 4 NY Jur2d, Appellate Review § 612, at 565 n 5; 8A Carmody-Wait 2d § 57:53, at 65 n 2; 10Carmody-Wait 2d § 70:102, at 310 n 6; 1 Newman, New York Appellate Practice §2.05 [6], at 2-72 to 2-73 n 107 [2008]).
In the present case, by the time the jury was instructed, Farkas, like the defendant in[*12]Greelish, had already twice moved to dismiss theclaim against him on the ground of insufficient evidence, first requesting dismissal "at the end ofthe plaintiff's case and [then] renew[ing] [the motion] at the close of all of the evidence" (29AD2d at 161). By moving to dismiss the claim against him before the case was submitted to thejury, Farkas effectively objected to all of the court's subsequent instructions as applied tohim, inasmuch as he argued that the claim against him should not be submitted to the jury atall. Any failure by Farkas to object to the particular instructions the jury received on theclaim against him did not retroactively nullify the objection he had already interposed to thesubmission of that claim to the jury, and the majority cites no authority supporting theproposition that it did. Contrary to the argument the majority makes on plaintiff's behalf, Farkas'smotions to dismiss the claim against him were, in effect, objections in advance to the portion ofthe charge that submitted the claim against him to the jury, which is, for purposes of this appeal,"the relevant portion of the charge" (to use the majority's phrase).[FN5]
By the majority's own admission, none of the appellate decisions cited in support of itsargument based on the failure to object to the jury charge is inconsistent with Greelish orGallagher. Essentially, the majority concedes that Greelish and Gallagherestablish that a party, having timely but unsuccessfully moved to dismiss a claim before itssubmission to the jury, does not thereafter forfeit the right to appellate review of the denial of thedismissal motion by failing to object to the charge given on the claim, a proposition entirelyconsistent with CPLR 4110-b. While the majority seeks to distinguish Greelish andGallagher from this case on the ground that "nothing in either decision suggests that themotions to dismiss [in Greelish and Gallagher] did not raise the same specificobjection that the defendant pressed on appeal," this argument is not persuasive. As previouslydiscussed, Farkas's motions to dismiss in this case did raise the same specific objection that hepresses on appeal, namely, the lack of any evidentiary basis for holding him personally liable fora corporate tort.
The majority takes the position that Farkas's failure to object to the charge precludes ourreviewing the sufficiency of the evidence against him under any standard other than that set forthin the trial court's erroneous charge to the jury. Nonetheless, the majority, recognizing that theerror in the charge was fundamental, vacates the judgment against Farkas and remands for a newtrial as to his liability, to be determined under the correct legal standard. I agree, of course, thatthe trial court committed fundamental error in charging the jury as it did, but the majority'saction raises several questions. First, if the error in the charge was fundamental, was not the errorin denying the motions to dismiss also fundamental? If so, would it not be equally appropriate todismiss the complaint as against Farkas on the ground of fundamental error in the denial of hismotions to dismiss, even if he technically failed to preserve his argument regarding [*13]the legal sufficiency of the evidence against him?[FN6] Further, as I previously suggested, if the principles governing when a corporate officer may beheld personally liable for a corporate tort are fundamental to this case (as the majority and Iagree they are), does it not follow that Farkas's motions to dismiss, by focusing on the distinctionbetween the corporation and the individual, "should have alerted" (Loughry, 67 NY2d at379) the trial court and plaintiffs' counsel to those fundamental principles, thereby preserving theissue for appellate review as a matter of law? And, to reiterate, plaintiffs, who have already hadan opportunity to make their case against both 601 Realty and Farkas at the prior trial, give noindication that they have any additional evidence that could support a verdict imposing liabilityon Farkas as an individual. Indeed, even the majority "think[s] it unlikely that plaintiffs couldhave responded to a [more] specific objection by offering additional evidence against JeffreyFarkas that would have established a proper basis for holding him personally liable." This beingthe case, what purpose is served by ordering a new trial?
To recapitulate, the record reflects that Farkas denied any personal liability in his answer andat trial, a position he again maintains on appeal. In response, plaintiffs contend that there isevidence supporting imposition of personal liability, a contention so lacking in merit that themajority does not even address it. The majority nevertheless declines to dismiss the claim againstFarkas, contrary to the dictates of the substantive law (as to which the majority and I are inagreement), and not for any reason ever mentioned by plaintiffs, but instead based on the newlyminted theory that the issue is not preserved. The lack of preservation is said to consist inFarkas's failure to state that the matters complained of were entirely instances of nonfeasance,and his failure to request a charge that he could be held liable only for personally participating inaffirmative acts of misfeasance and malfeasance. It is patently unfair, however, to recast thisappeal as turning on a preservation theory never even hinted at by plaintiffs, where (as themajority concedes) there is no evidence to support holding Farkas personally liable underestablished legal principles, and there is no suggestion by plaintiffs that they would have offeredany additional evidence even if Farkas had phrased the objection in the precise manner themajority says was required. Accordingly, as the record shows that plaintiffs failed to make out aprima facie case against Farkas individually and that Farkas preserved this issue at trial, I wouldmodify the judgment to dismiss the complaint as against him.
Footnote 1: CPLR 4110-b states that "At theclose of the evidence or at such earlier time during the trial as the court reasonably directs, anyparty may file written requests that the court instruct the jury on the law as set forth in therequests. The court, out of the hearing of the jury, shall inform counsel of its proposed actionupon the requests prior to their arguments to the jury, but the court shall instruct the jury after thearguments are completed. No party may assign as error the giving or the failure to give aninstruction unless he objects thereto before the jury retires to consider its verdict stating thematter to which he objects and the grounds of his objection" (emphasis added).
Footnote 2: Accordingly, our dissentingcolleague is wrong in claiming that our quotation from Loughry "abruptly" ends beforethe relevant passages.
Footnote 3: Neither Greelish norGallagher cited any authority supporting that conclusion and neither appears to havebeen cited for that proposition.
Footnote 4: Indeed, our dissenting colleaguecites to no case where, in reversing a judgment in the interests of justice based on a fundamentalerror in the charge, the Appellate Division afforded the appellant any remedy other than a newtrial.
Footnote 1: The jury exonerated the otherindividual defendant, Sidney Farkas. In the remainder of this writing, the name "Farkas" refers toJeffrey Farkas only.
Footnote 2: In the trial court, plaintiffsargued that Farkas could be held personally liable for the failure to address the lead conditionbased on Administrative Code of the City of New York § 27-2114 (e), which expandsliability to officers, directors and certain shareholders of a corporate landlord "[w]henever amultiple dwelling shall have been declared a public nuisance . . . pursuant tosubdivision b of this section" (emphasis added). On appeal, plaintiffs have abandoned thisargument, apparently recognizing that section 27-2114 (e) is inapplicable because the building inquestion was never declared a public nuisance through the procedures (including notice andhearing) prescribed by section 27-2114 (b). Instead, plaintiffs attempt on appeal to cast Farkas ashaving actively committed a tort against them. This attempt fails so completely that the majoritydoes not even deem it worthy of discussion.
Footnote 3: The same is true of the fourthaffirmative defense pleaded in defendants' answer, which, on behalf of Farkas, "denie[d]ownership . . . of the premises in question."
Footnote 4: The majority abruptly cuts offits extended quotation from Loughry immediately before the language italicized above.The language omitted by the majority makes it plain that the Court of Appeals regarded thebank's objection that there was no showing of its " 'authorization, ratification or condonation' " ofthe employees' conduct as sufficient to "have alerted" (67 NY2d at 379) the trial court andplaintiff to the need for proof of the involvement of a "superior officer," notwithstanding thatcounsel did not specifically refer to the "superior officer" issue. Indeed, the Court of Appealsspecifically concluded that, under the circumstances presented, "the failure to request a'superior officer' charge cannot be laid at [the bank's] door, or place the issue beyond ourreview" (id. at 379-380 [emphasis added]).
Footnote 5: If, as the majority says, "what isrequired is a sufficient objection to the charge that assists the trial judge in clarifying or distillingthe legal issues in the charge," Farkas met this standard. For purposes of this appeal, the keylegal issue in the charge was whether the court should submit to the jury any claim at all againstFarkas as an individual. Farkas sufficiently "clarif[ied]" and "distill[ed]" that issue by moving,before the submission of the case to the jury, to dismiss the claim against himself on the groundthat plaintiffs' causes of action, if any, lay against the corporation only.
Footnote 6: The majority does not citeany case holding that the Appellate Division, in reversing a judgment based on fundamentalerror, has no power to dismiss a claim that lacks legally sufficient support in the trial record,even where the proponent of the claim has had an opportunity to present all available evidencesupporting it and gives no indication that any additional evidence in support of the claim wouldbe forthcoming at a new trial.