Requested Relief

Plaintiff, BARBARA SULLIVAN-PARRY, moves for an order, pursuant to CPLR §3025(b), granting leave to serve the proposed amended complaint and granting fees costs and disbursements. Defendants, PILLAR TO POST, INC. (hereinafter referred to as "PTP"), SUBURBAN CONSULTANTS LTD. (hereinafter referred to as "SUBURBAN") and WILLIAM P. MURPHY (hereinafter referred to as "MURPHY"), oppose the motion and cross-move for an order, pursuant to CPLR §3211(a)(7), dismissing all causes of action in the complaint against the individual defendant, MURPHY, together with all costs and legal fees incurred herewith and, pursuant to CPLR §§3216, 3126 and 3124, dismissing the complaint as to all defendants for failure to prosecute and to provide necessary discovery. Additionally, defendants seek dismissal, pursuant to CPLR §3211, for failure to satisfy a condition precedent to commencing the action and, in the alternative, limiting plaintiff's recovery to $475. 00, in accordance with the parties Agreement. The motion and cross-motion are determined as follows:

This litigation arises from the alleged breach of a home inspection agreement in which plaintiff claims that defendants made false representations and negligently inspected the electrical systems at the subject premises located at 190 Ivy Street, Oyster Bay, New York. The complaint alleges that defendant, PTP, a Delaware corporation, is engaged in [*2]the business of professional home inspections. Defendant, SUBURBAN, a New York corporation whose President is MURPHY, a licensed professional home inspector, conducts its business pursuant to a certain Franchise Agreement with PTP. It appears that, on April 5, 2005, David Haggerty, a licensed real estate broker and agent for plaintiff, engaged the services of SUBURBAN, as Franchisee, to perform a pre-contract/pre-purchase inspection of the subject premises that plaintiff was interested in buying. The Inspection Agreement provided that, for the sum of $475.00, SUBURBAN would conduct a visual inspection of the premises in accordance with the Standards of the American Society of Home Inspectors ("ASHI") and applicable State provisions, including, inter alia, the inspection of the electrical system and wiring, and would provide plaintiff with a written report detailing the results.

The complaint further alleges that inspection of the home occurred on April 5, 2005 and, thereafter, the written Inspection Report issued by defendants indicated "that the electrical systems throughout the Premises consisted of copper wiring and that the electrical components had been updated, professionally installed and were in functional condition". Exhibit "C", p.6. It is alleged that, in reliance upon defendants Inspection Report, plaintiff contracted to purchase the subject home and closed title on or about June 23, 2005. The complaint further alleges that, in accordance with ASHI standards, defendants were required, inter alia, to inspect the electrical system and to describe the wiring methods and report on the presence of aluminum wiring. Exhibit "B", ¶7.1. However, plaintiff alleges that subsequent to purchasing the home, she learned of the presence of aluminum wiring, the lack of ground wires and the improper splicing of copper and aluminum wires throughout the home, which plaintiff alleges violated federal, state and local laws and constitutes a dangerous and defective condition which is a fire hazard, all of which did not appear in the Inspection Report.It is plaintiff's position that the defective condition should have been obvious upon visual inspection of a professional home inspector and that she has been damaged by defendants' breach of contract, negligence, negligent misrepresentation, gross negligence, professional malpractice and deceptive trade practices.

In support of the motion, plaintiff seeks to amend the complaint to set forth the causes of action alleged in the original complaint, but with more particularity. Plaintiff seeks to add two (2) additional numbered paragraphs which assert, in essence, that systems other than the electrical system were found to be defective after closing, which were not reported in the Inspection Report. Counsel argues that the changes sought merely constitute an amplification of the causes of action and damages previously sought and that leave to amend a pleading should be freely given.

In opposition to the motion, counsel for defendants' asserts that it has been more than one (1) year since the service of plaintiff's complaint, and that plaintiff has failed in that period to prosecute the action, to request a Preliminary Conference or to correspond with defendants counsel. Moreover, defendants contend that plaintiff has willfully failed to appear for her deposition or to respond to defendants' other discovery demands. Counsel urges that the action be dismissed for failure to prosecute (CPLR §3216) and for failure to provide discovery (CPLR §3126) or, in the alternative, that plaintiff be compelled to produce responses to the discovery demands (CPLR §3124). Additionally, counsel for defendants states that the proposed amendments, which alter ten (10) paragraphs of the [*3]original complaint, are untimely and prejudicial to the defendants, as they have had no notice of the other allegedly "defective conditions" at the premises and the proposed complaint provides no basis for including the "bald and baseless allegations."

On the cross-motion, defendants contend that all claims against defendant MURPHY must be dismissed, with prejudice, because plaintiff has not plead any allegations to support piercing the corporate veil or that MURPHY acted individually or outside the scope of his authority as a principal of defendant, SUBURBAN. Counsel argues that it is well settled that a director is not personally liable for his corporations contractual breaches unless he assumed personal liability, acted in bad faith or committed a tort in connection with the performance of the contract, citing Mills v Polar Molecular Corporation, 12 F3d 1170 (2nd Circuit 1993) and Murtha v Yonkers Child Care Association, Inc., 45 NY2d 913, 411 NYS2d 219, 383 NE2d 865 (C.A.1978).

Defendants also argue for dismissal of the entire complaint because plaintiff has failed to satisfy a condition precedent in the parties' Agreement which provides, as follows:

Client guarantees Inspector a right to examine the subject matter and area of any claim and offer a resolution prior to Client's performance of remedial measures (except in the event of an emergency, or to protect personal safety, or to reduce or avoid damage to property). This is a condition precedent to Client's claim

Inspector and its employees are limited in liability to the fee paid for the inspection services and report in the event that Client or any third party claims that Inspector is in any way liable for negligently performing the inspection or in preparing the Inspection Report, or for any other reason or claim that Inspector has not fully satisfied all its obligations hereunder. Client hereby agrees to indemnify, defend and hold harmless the Inspector and Pillar to Post Inc. if any third party brings a claim against Inspector or Pillar to Post Inc. relating to the inspection or Inspection Report.

The statutory provision authorizing amendment of pleadings reflects a liberal attitude in its discretion, that leave to amend "shall be freely given" (CPLR § 3025, subd.[b]). Permission to amend is to be restricted only by the imposition "as may be just" Tucker v Tucker, 55 NY2d 378, 449 NYS2d 683, 434 NE2d 1050 (C.A. 1982). It is well settled that CPLR §3025 (b) provides that leave shall be freely given to applications to amend the pleadings, even after filing the Note of Issue. (Cf., Flanagan v Cho, 13 Misc 3d 1328A, 831 NYS2d 353 [Supreme Westchester Co. 2006]). Lateness is not a barrier to the amendment which must be coupled with prejudice to warrant denial of the application. (Abrahamian v Tak Chan, 33 AD2d 947, 824 NYS2d 117 [2nd Dept. 2006]).

Failure to Prosecute or Provide Discovery

As to requested discovery, CPLR §3101(a) requires the "full disclosure of all information that is material and necessary to the defense or prosecution of an action". The "material and necessary" requirement directed in CPLR §3101(a) is to be liberally construed to require disclosure where the matter sought will assist in trial preparation by sharpening the issues and reducing delay. Andon v 302-304 Mott Street Associates, 94 NY2d 746, 709 NYS2d 873, 731 NE2d 589 (C.A. 2000), citing Allen v Crowell-Collier Publishing Co., 21 NY2d 403.

" It is well settled that an action should be resolved on the merits wherever possible, and the harsh remedy of the striking of a pleading should not be employed without a showing of a deliberate or willful refusal to disclose'." Hinds v Price Club, 2 AD3d 585, 768 NYS2d 361 (2nd Dept. 2003), quoting Cruzatti v St. Mary's Hosp., 193 AD2d 579, 597 NYS2d 457 (2nd Dept. 1993). However, pursuant to CPLR §3216, dismissal may not be granted for failure to prosecute unless, inter alia, the party seeking dismissal serves a 90-day demand upon the party against whom dismissal is sought requiring such party to resume prosecution, something which has not occurred herein.

Pierce Corporate Veil

Generally, the Courts will not pierce the corporate veil to reach a shareholder since the corporate form is a legitimate means of avoiding personal liability (see, Bartle v Home Owners Co-op., 309 NY 103, 127 NE2d 832 [C.A. 1955]). When, however, a corporation has been so dominated by an individual or corporation, and its separate identity so ignored that it transacts the dominator's business instead of its own, and can be called the other's alter ego, the corporate form may be disregarded to achieve an equitable result (Austin Powder Co. v McCullough, 216 AD2d 825, 628 NYS2d 855 [3rd Dept. 1995])

In Morris v New York State Department of Taxation and Finance, 82 NY2d 135, 603 NYS2d 807, 623 NE2d 1157 (C.A. 1993), the New York Court of Appeals stated as follows:

Because a decision whether to pierce the corporate veil in a given instance will necessarily depend on the attendant facts and equities, the New York cases may not be reduced to definitive rules governing the varying circumstances when the power may be exercised (see Presser, Piercing the Corporate Veil § 2.33[1], at 2-291-2-293). Generally, however, piercing the corporate veil requires a showing that: (1) the owners exercised complete [*5]domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury (citations omitted).

While complete domination of the corporation is the key to piercing the corporate veil, especially when the owners use the corporation as a mere device to further their personal rather than the corporate business (see Walkovszky v Carlton, 18 NY2d 414), such domination, standing alone, is not enough; some showing of a wrongful or unjust act toward plaintiff is required (citations omitted). The party seeking to pierce the corporate veil must establish that the owners, through their domination, abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against that party such that a court in equity will intervene (citations omitted).

"A contractual provision which limits damages is enforceable unless the special relationship between the parties, a statute, or public policy imposes liability. . ." (Peluso v Tauscher Cronacher Professional Engineers, P.C. , supra , citations omitted).

. . . Although such clauses in commercial contracts are enforceable to limit recovery for claims based on ordinary negligence, they will not preclude recovery in tort or breach of contract where the losses are the result of gross negligence . . . Gross negligence in this context is defined as "conduct that evinces a reckless disregard to the rights of others or smacks' of intentional wrongdoing. . . "

On a motion to dismiss pursuant to CPLR §3211, the facts as alleged must be accepted as true, the pleader must be accorded the benefit of every favorable inference, and the court must determine only whether the facts as alleged fit within any cognizable theory (Arnav Indus., Inc. Retirement Trust v Brown Raysman, Millstein, Felder & Steiner, LLP, 96 NY2d 300, 727 NYS2d 688, 757 NE2d 936 [C.A. 2001]). Where the ground for dismissal is failure to state a cause of action under CPLR §3211(a)(7) and evidentiary material is submitted, the criterion is whether plaintiff has a cause of action, not whether plaintiff has stated one, and the Court may, upon adequate notice, treat the motion as one for summary judgment (See, CPLR §3211 (c); Guggenheimer v Ginzburg, 43 NY2d 268, 401 NYS2d 182, 372 NE2d 17 [C.A.1977]; see also, Leon v Martinez, 84 NY2d 83, 614 NYS2d 972, 638 NE2d 511 [C.A.1994])

After a careful reading of the submissions herein, the plaintiff's motion to amend the [*6]complaint is granted. It is the judgment of the Court that the proposed amended complaint virtually mirrors the original complaint and defendants have not identified any significant prejudice or unfair surprise sufficient to defeat the motion. The particularization of "other defective conditions" can be obtained in Interrogatories or a Supplemental Bill of Particulars after service of the Amended Complaint.

That portion of defendants' cross-motion for dismissal based upon a failure to prosecute or to provide discovery is denied. Defendants have not served a 90-day demand on plaintiff to resume prosecution of the action and dismissal under CPLR §3216 is not warranted. See, CPLR §3216(b)(3). Moreover, it is the Court's judgment that there is no clear showing of a deliberate or willful refusal to disclose. Given the circumstances herein, where no Preliminary Conference has been scheduled or held, the Court is reluctant to dismiss the action for failure to disclose, but rather directs the parties to schedule and attend a Preliminary Conference and to adhere to the discovery schedule arranged at that time.

That portion of defendants' cross-motion for dismissal of all causes of action in the complaint against defendant, WILLIAM P. MURPHY, with prejudice, and granting him all costs and legal fees incurred in connection with the action is granted to the extent that the complaint against defendant, WILLIAM P. MURPHY, is dismissed, with prejudice. Neither the complaint, proposed amended complaint nor the affidavit of plaintiff in opposition to the motion contain any allegations sufficient to demonstrate MURPHY's dominion and control of the defendant companies in his individual capacity to warrant that the corporate form of the businesses should be disregarded. Although plaintiff has asserted that MURPHY was the sole shareholder of SUBURBAN and, thus, "is the corporation", plaintiff has not demonstrated that MURPHY had complete domination of the companies and used same to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injuries. Based on the record herein, it appears that all of MURPHY's involvement with the subject premises was in his capacity as an officer or employee of the defendant entities and not as an individual.

That portion of defendant's cross-motion for dismissal of the complaint for failure to satisfy the condition precedent to commencing the action or, in the alternative, to limit plaintiff's recovery to $475.00 is denied. Plaintiff alleges that the condition precedent, that defendant be permitted to examine the subject matter and offer a resolution prior to performance of remedial measures, does not apply herein as discovery of the allegedly defective and illegal condition posed a fire hazard and an emergency, which is an exception to the provision of the Agreement. It appears to the Court that dismissal of the action is not warranted when giving plaintiff every favorable inference. Moreover, plaintiff's allegations in the complaint and amended complaint of the defendants' gross negligence in failing to observe and report the obviously "faulty, dangerous and patently defective and illegal conditions" at the residence raise triable issues of fact which preclude summary dismissal of the action. Gold Connection Discount Jewelers, Inc. v American District Telegraph Company, Inc., supra .

ORDERED, that within twenty (20) days from the date of this order, the plaintiff shall [*7]file and serve the proposed amended complaint and, within twenty (20) days thereafter, defendants shall answer said pleadings; and it is further

ORDERED, that the parties shall appear for a Preliminary Conference on January 8, 2008, at 2:30 P.M. in Differentiated Case Management Part (DCM) at 100 Supreme Court Drive, Mineola, New York, to schedule all discovery proceedings. A copy of this order shall be served on all parties and on DCM Case Coordinator Richard Kotowski. There will be no adjournments, except by formal application pursuant to 22 NYCRR §125; and it is further

ORDERED, that the action and all cross-claims against defendant, WILLIAM P. MURPHY, are dismissed, with prejudice, and the caption shall henceforth read as follows:

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NASSAU

_______________________________________

BARBARA SULLIVAN-PARRY,

Plaintiff,

-against-INDEX NO: 5753/06

PILLAR TO POST INC., SUBURBAN

CONSULTANTS LTD.,

Defendants.

_______________________________________

All further requested relief not specifically granted is denied.

This constitutes the decision and order of the Court.

Dated: November 29, 2007

________________________

WILLIAM R. LaMARCA, J.S.C.

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