Landlord's Corporate Shareholder Might Be Liable for Lead Paint Injuries

Facts: Tenant sued landlord for negligence. Tenant claimed that his two children were injured by lead-based paint conditions in their apartment. The court ruled for tenant, finding that landlord knew that the children lived in the apartment, knew that the apartment contained hazardous lead paint, and negligently failed to abate the condition. At trial, tenant proved that the children suffered permanent learning disabilities from the lead paint exposure. The jury awarded tenant’s children over $4 million for past and future damages. The jury also divided the liability. It found that landlord, a corporation, was 75 percent liable, and that landlord’s individual shareholder, who owned 50 percent of the corporation, was 25 percent liable. Individual landlord appealed. He claimed that he wasn’t responsible at all because he acted as an officer of the corporation, and therefore couldn’t be held personally responsible. He said the court should have dismissed the case against him.

Court: Landlord wins, in part. The fact that landlord acted solely as an officer of the corporation wasn’t sufficient grounds to dismiss the case against him individually. A corporate officer who takes part in an injury can be held personally responsible, regardless of whether he acted in the course of his official duties. At trial, tenant showed that: (1) individual landlord was responsible for inspecting the apartment; (2) he was in tenant’s apartment on many occasions; (3) he had notice of the lead paint hazard; and (4) he hired workers to abate the condition. Landlord could have raised another defense and argued that he merely failed to act. If he didn’t deliberately act to commit injury he wouldn’t be personally responsible. But landlord didn’t raise this defense at trial, and failed to ask for certain jury instructions that might have helped his position. The appeals court ruled that, in the interest of justice, a new trial should be held to allow landlord to raise the defenses not raised in the first trial. Notably, one judge dissented and would have ruled to dismiss the case against individual landlord.

Peguero v. 601 Realty Corp.: NYLJ, 2/2/09, p. 26, col. 1 (App. Div. 1 Dept; Friedman, JP [dissenting], Gonzalez, McGuire, Moskowitz, JJ)