The trial in this commercial nonpayment summary proceeding was held before this Court on March 22 and 23, 2005. Petitioner, Kee Yip Realty Corp., seeks to recover the amount of $10,500 as rent for the months of January, February, and March 2005 at $3,500 per month.

Turning first to the issue concerning the commercial landlord-tenant relationship between petitioner and respondent, Apple International Corp. (respondent or "Apple"), petitioner's principal, Pao Chung Lee ("Mrs. Lee"), testified that petitioner entered into a commercial lease with Apple for five years with the current monthly rental at $3,500. She further testified that respondent's principal, Kai Leung ("Mr. Leung") a/k/a "Tommy", signed the lease in her presence. The lease was introduced into evidence as P1.

Mr. Leung testified that he did not sign the lease proffered into evidence. Instead, Mr. Leung testified that he signed a one-page lease. He further testified that the signature on the lease was not his signature. Mr. Leung did testify that the monthly rental for the premises was $3,500. When pressed to produce the one-page lease, Mr. Leung testified that he does not know where it is and that someone may have taken it. He insinuated that Mrs. Lee's sons, who were employed by him, may have taken the one-page lease.

Petitioner called Peter Ng to offer testimony that Mr. Leung signed the lease and respondent called Mona Leung as rebuttal witnesses. [*2]

This Court finds that Mrs. Lee and Mr. Ng credibly testified that Mr. Leung signed the lease in her presence. This Court does not credit Mr. Leung's testimony that he did not sign the lease in Mrs. Lee's presence. Nor does this Court credit Ms. Leung's testimony that Mr. Leung could not have signed the lease in Mrs. Lee's presence because he was not present when the lease was allegedly signed by him. This Court also cannot credit Mr. Leung's testimony that there exists a one-page lease. Critical is the fact that he did not testify that he placed the one-page lease in a particular location. Instead, he merely testified that he did know of its whereabouts. His further testimony insinuating that Mrs. Lee's sons may have taken it is not supported or substantiated at all either by way of testimony or documentary evidence.

Accordingly, this Court finds P1 as the lease entered into between petitioner and respondent.

As to the issue of the nonpayment of rent, respondent Apple asserts an affirmative defense alleging that it has paid the rent. In that regard, Apple alleges the following:

45. Pao Chung Lee, Kee Yip Realty LLC, Kee Yip Realty Corp., and other various entities owned by Pao Chung Lee have in their possession the funds misappropriated from Apple's two bank accounts.

46. Upon information and belief, Kee Yip Realty Corp. has actual possession of some of the misappropriated funds.

47. Even if Kee Yip Realty Corp. does not have actual possession of the misappropriated funds, they have constructive possession of the funds.

48. Pao Chung Lee should not be able to use Kee Yip Realty, LLC, or other business entities owned by her as means to defraud and embezzle Apple's corporate funds.

49. Plaintiff/landlord has the funds in their possession, either actually or constructively, and therefore Apple is not in default of the rent agreement.

Much testimony was elicited from Mrs. Lee concerning two entities, petitioner, Kee Yip Realty Corp. (the "Corporation"), and Kee Yip Realty, LLC (the "LLC"). The testimony is clear that Mrs. Lee holds controlling interests in the Corporation and the LLC. What is also clear from Mrs. Lee's testimony is that she invested in respondent Apple with monies from herself personally ($338,000) and from the LLC ($500,000). Her personal investment in respondent Apple was via the Lee Brothers, who are her sons. She also testified that the monies from the LLC was a loan, but [*3]that there was no written agreement evidencing that loan. According to Mrs. Lee, "we Chinese trust each other".

Mrs. Lee testified that she discovered respondent Apple was losing money and the Mr. Leung was being uncooperative with her. She further testified that she was concerned about her personal guaranty that she gave respondent in order for it to secure a line of credit from the bank. According to her testimony, her concern compelled her to act and she had withdrawn from respondent's bank account a total of $278,900. Mrs. Lee testified that she deposited the monies into the LLC as repayment for the loan.

This Court finds that the documentary and testimonial evidence clearly establish that Mrs. Lee removed monies from respondent Apple and deposited those funds with the LLC. None of the funds reached the Corporation. The question that remains is whether the LLC and the Corporation are one in the same so as to compel this Court to find for respondent on the issue that rent has been paid.

Initially, respondent's argument appears to be one based on piercing the corporate veil. The doctrine of piercing the corporate veil is typically employed by a 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 (Morris v NYS Dept. of Taxation and Finance, 82 NY2d 135, 140-141 [1993]). This Court, however, does not have jurisdiction to entertain or grant that form of equitable relief (Steinberg v The Campanella Group, Inc., __ AD2d __, 2002 WL 576068 [1st Dept 2002]). Upon closer evaluation of the testimony and the argument, respondent is essentially arguing that the Corporation and the LLC, two separate entities, are essentially one in the same, or merely alter egos of each other, which is not the set of facts and assertions necessary in piercing the corporate veil.

Closely associated corporations, even ones that share directors and officers, will not be considered alter egos of each other if they were formed for different purposes, neither is a subsidiary of the other, their finances are not integrated, assets are not commingled, and the principals treat the two entities as separate and distinct (Longshore v Paul Davis Systems of the Capital District, 304 AD2d 964 [3d Dept 2003]).

The evidence clearly demonstrates that Mrs. Lee holds a controlling interest in both the Corporation and the LLC. Such a fact appears sufficient for this Court to find that the Corporation and the LLC are closely associated. That fact, standing alone, however, is insufficient to establish that they are alter egos of each other or that they are one in the same (Wernig v Parents and Brothers Two, Inc., 195 AD2d 944 [3d Dept 1993]). As such, respondent has failed to establish facts [*4]sufficient to satisfy the requirements set out in Longshore, supra, and Wernig, supra, to support its argument.

Based on the foregoing, this Court finds that rent has not been paid to petitioner Corporation notwithstanding Mrs. Lee's actions to the contrary.

For the reasons set forth above, this Court finds that petitioner landlord is the prevailing party and, as such, is entitled to an award of attorney's fees. Accordingly, the matter is restored to the calendar for a hearing on the issue of the amount of legal fees to be awarded. The matter will appear on the Part 52 calendar for a hearing on attorney's fees on May 23, 2005 at 9:30 a.m.

Accordingly, the Court awards petitioner landlord a judgment of possession against respondent tenant for the demised premises and a money judgment against respondent tenant in the amount of $10,500. Issuance of the warrant of eviction is stayed for five days from the date of entry hereof.

This memorandum opinion constitutes the decision and order of the Court. The respective exhibits of the parties have been mailed to the parties along with a copy of this decision and order.

Dated:

HON. JEFFREY K. OING, C.C.J.