SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
533
CA 12-01222
PRESENT: SCUDDER, P.J., PERADOTTO, SCONIERS, VALENTINO, AND MARTOCHE, JJ.
RICHARD HOTALING, PLAINTIFF-APPELLANT,
V MEMORANDUM AND ORDER
CHARLES M. SPROCK, ESQ., ROBERT F.
BALDWIN, JR., ESQ., JAMIE L. SUTPHEN, ESQ.
AND BALDWIN & SUTPHEN, LLP,
DEFENDANTS-RESPONDENTS.
(APPEAL NO. 2.)
COSTELLO, COONEY & FEARON, PLLC, SYRACUSE (NICOLE MARLOW-JONES OF
COUNSEL), FOR PLAINTIFF-APPELLANT.
SMITH, SOVIK, KENDRICK & SUGNET, P.C., SYRACUSE (LAURENCE F. SOVIK OF
COUNSEL), FOR DEFENDANTS-RESPONDENTS.
Appeal from a judgment of the Supreme Court, Onondaga County (James
P. Murphy, J.), entered September 26, 2011. The judgment awarded costs
and disbursements to defendants.
It is hereby ORDERED that the judgment so appealed from is
unanimously modified on the law by denying the motion in part, and the
third amended complaint, as amplified by plaintiff’s response to
defendants’ interrogatories, is reinstated to the extent that it seeks
damages for loss of rent based on legal malpractice and as modified the
judgment is affirmed without costs.
Memorandum: Plaintiff commenced this legal malpractice action
seeking damages for the alleged negligence of defendants in failing to
determine that a Town of Dewitt zoning ordinance prohibited him from
operating an “adult use” business in the building he purchased for that
purpose. Zonen, Ltd. (Zonen), the corporation formed by plaintiff to
operate the business, has operated a retail establishment in the
building, which includes “adult use” inventory, since 2001. Supreme
Court granted defendants’ motion for summary judgment dismissing the
third amended complaint on the ground that plaintiff failed to raise an
issue of fact whether he sustained actual and ascertainable damages, an
“ ‘essential element[] of [a] legal malpractice cause of action’ ”
(Malachowski v Daly, 87 AD3d 1321, 1321; see generally Dombrowski v
Bulson, 19 NY3d 347, 350).
As a preliminary matter, we reject plaintiff’s contention that he
should be permitted to recover damages for personal funds that he alleged
were expended through the corporate account on a theory of reverse-
-2- 533
CA 12-01222
piercing of the corporate veil. It is well established that “[t]he
doctrine of piercing the corporate veil is typically employed by a third
party seeking to go behind the corporate existence in order to circumvent
the limited liability of the owners and to hold them liable for some
underlying corporate obligation” (Matter of Morris v New York State Dept.
of Taxation and Fin., 82 NY2d 135, 140-141). “ ‘[T]he courts are loathe
to disregard the corporate form for the benefit of those who have chosen
that form to conduct business’ ” (Baccash v Sayegh, 53 AD3d 636, 639),
and we conclude that the court properly refused to disregard the
corporate form here.
Nevertheless, viewing the submissions of the parties in the light
most favorable to plaintiff, as we must (see Victor Temporary Servs. v
Slattery, 105 AD2d 1115, 1117), we conclude that the court erred in
determining that plaintiff failed to raise an issue of fact whether he
has sustained damages for loss of rent (cf. Malachowski, 87 AD3d at
1323). We therefore modify the judgment accordingly. Plaintiff alleges
in the third amended complaint, as amplified by his response to
defendants’ interrogatories, that he is unable to lease a portion of the
property to Zonen or any other entity because defendants failed to advise
him of zoning ordinances governing parking restrictions. Plaintiff also
averred in his affidavit in opposition to the motion that his efforts to
lease the warehouse were prohibited by the Town of Dewitt inasmuch as the
property lacks the required number of parking spaces. Moreover, in
response to defendants’ interrogatories, plaintiff submitted documentary
evidence establishing that he has been damaged by the loss of rent for
2,500 feet at a rate of $3.50 per square foot.
Entered: June 7, 2013 Frances E. Cafarell
Clerk of the Court