Opinion
600370/07.
Decided May 6, 2008.
Proskauer Rose LLP New York, New York Bettina B. Plevan, Esq. Harris Mufson, Esq., for Plaintiff.
Phillips Nizer LLP New York, New York Helen Davis Chaitman, Esq. Bruce J. Turkle, Esq., for Defendant.
This action involves a disagreement as to the performance of agreements between the parties to create an endowment fund. Defendant, The Jeffrey Modell Foundation, Inc. (JMF), moves for summary judgment on its first counterclaim for breach of contract, while plaintiff, Mount Sinai Medical Center, Inc. (Mount Sinai), cross-moves for partial summary judgment dismissing that counterclaim.
Mount Sinai is a well-established not-for-profit teaching hospital, with a world-wide reputation for, among other things, its research facilities. JMF is a 501 (c) (3) charity established in 1987 by non-parties Frederick Modell and Vicki Modell (the Modells), to fund research for the eradication, and to raise awareness of, the genetic disorder known as primary immunodeficiency disease, which caused the untimely death of the Modell's teenage son, Jeffrey.
In 1996, the parties contemplated an agreement in which, for an endowment of $1.5 million from JMF, Mount Sinai would re-name its Division of Clinical Immunology the "Jeffrey Modell Division of Clinical Immunology." There is a letter signed by Frederick Modell, dated July 29, 1996, in which he proposes the name change, and states that the endowment of $1.5 million would be "an irrevocable pledge to be paid at no less than $150,000 per year for a period of ten years to reach the total gift amount." Aff. of Lloyd Mayer, M.D., Ex. 1, at 7.
A ceremony, which Mount Sinai describes as "elaborate" (Aff. of Bettina B. Plevan, at 3), was held on December 3, 1996, to dedicate the newly named Jeffrey Modell Division of Clinical Immunology (JM Division or Division). At that time, JMF provided Mount Sinai with a check in the sum of $150,000, presumably as a first payment under the agreement. However, according to Mount Sinai, Frederick Modell "insisted" ( id.) that Mount Sinai put the check to use "to support the current operations" of the JM Division, rather than apply it to fund the endowment. Id. Mount Sinai claims that Mr. Modell promised that a second check would be issued for the endowment, but that this did not occur.
As promised, a sign "of substantial size not ordinarily seen at Mount Sinai" was placed on the wall in the area of the new JM Division ( id.), and that later, after the Division was moved in 1998, new signage was appropriately placed, in the form of a "dignified metal plaque, 12 inches square, consistent with the type and size plaque used for other divisions and departments at Mount Sinai," identifying the JM Division. Id.
Disputes arose after the ceremony, which Mount Sinai attributes to JMF's alleged failure to make payments under the endowment. In response, the parties entered into a new, two-page letter agreement in 1998 (the 1998 Agreement) (Notice of Motion, Ex. D).
The 1998 Agreement called for the Modells to create a fund in the sum of $1.5 million, to be held by Merrill Lynch (the Fund). According to the 1998 Agreement, the principal of the Fund was to be "kept intact and not to be invaded for any purpose." 1998 Agreement, ¶ 2. The 1998 Agreement further provided that the total amount of the Fund would be turned over to Mount Sinai as an endowment on December 31, 2006 ( id.), but that, until that date, "the income (up to an annual total of $150,000) earned from the investment of the [Fund] identified in point No. 2 will be given to Mount Sinai to be used for operating the Division of Clinical Immunology." Id., ¶ 4.
In return for the endowment, Mount Sinai agreed that (1) "[t]he Division will be named the Jeffrey Modell Division of Clinical Immunology" ( id., ¶ 1); and (2):
[t]he Jeffrey Modell Division of Clinical Immunology signage will be on the wall designated by the Modells and agreed to at the meeting of January 12, 1998. Signage for the Jeffrey Modell Center for Research and Comprehensive Care will be placed in a suitably framed board and put up as designated by the Modells until the permanent site is selected at 5 East 98th Street in the clinical space for the Division of Immunology.
Id., ¶ 6. The 1998 Agreement further provided that JMF would give Mount Sinai "a payment of $150,000 representing income earned for 1997," as soon as the signage was in place. Id., A strain in the relationship between the parties developed after the execution of the 1998 Agreement. JMF was unsettled because it did not believe that Mount Sinai was living up to its part of the bargain. Allegedly, Mount Sinai was not using the full name of the JM Division when it referred to the Division in its annual reports and elsewhere, but was instead using the name "Division of Clinical Immunology." For this, and other unspecified reasons, a new letter agreement was entered into in 2002 (the 2002 Agreement) (Notice of Motion, Ex. 3) (together with the 1998 Agreement, the Agreements).
The 2002 Agreement commenced with the proviso that "[a]ll provisions of the contract executed on February 18th 1998 between Mount Sinai and the JMF are in full force and re-confirmed subject to this agreement." Id. Among other things, the 2002 Agreement provided that:
[a] minimum of 5% of the corpus of the fund as of December 31st of the proceeding year shall be the minimum support to the Division of Clinical Immunology for the following year. By way of example, if the fund value is $1.5 million as of December 31, 2002 (including all income and appreciation), then a minimum of $75,000 support shall be paid in to the Division of Clinical Immunology in 2003.
Id., ¶ 4. It also specified that "[o]n or before December 31, 2006, the Foundation will turn over a minimum of $1.5 million to Mount Sinai, regardless of the value of the corpus of the fund on that date." Id., ¶ 5.
JMF's plaint is that Mount Sinai has breached, and continues to breach, the two agreements by failing to call the JM Division by that name. JMF contends that Mount Sinai regularly, and in, perhaps, most, instances refers to the Division as the Division of Clinical Immunology, without reference to Jeffrey Modell. In its reply, JMF states most concisely that, for Mount Sinai to be in compliance with the agreements,
[t]he Division of Clinical Immunology must be referenced with the name [Jeffrey Modell Division of Clinical Immunology] in all instances. This includes, but is not limited to the following places: Mount Sinai's website, the curriculum vitae of the Division Chief, of the Laboratory Director, of the JMF Fellows, the signature block below the Division Chief's signature, scientific publications of the Division Chief, of the Laboratory Director, and of the JMF fellows, symposia presentations, posters of Fellows at scientific meetings, grant applications, official correspondence, and news articles referencing the Division.
Reply Aff. of Frederick Modell, at 3. In short, JMF maintains that "we agreed to pay $1.5 million for the name of the Division to be changed for all purposes" ( id.), and that Mount Sinai is failing in its obligation to ensure that the Division is so identified. For example, JMF notes that Lloyd Mayer, M.D., Chief of the JM Division, only recently began to identify himself as such, and that in 2007, and as in previous years, Mount Sinai only included the full name of the JM Division in approximately 5% of its website mentions of the Division.
JMF produces the affidavit of Yevgeny Klimov, as an alleged expert in data forensics, who, having done a search using the latest technology, claims to have found that Mount Sinai's website refers to the Division as the JM Division less than 5% of the time the Division is referred to.
Mount Sinai first responds that it certainly has re-named the Division in a manner satisfactory to the agreements, and did so even before any agreement in writing was reached with, or payment made by, JMF. Mount Sinai contends that:
Mount Sinai does not have any specific protocol or guideline for implementing "naming" gifts. The precise manner in which the name is used varies depending on the situation and the donor's request as agreed to by Mount Sinai in the denotive instrument. Sometimes the written agreement memorializing the gift will contain specific requirements of the donor that must be complied with (such as the particular location of a sign). In other situations (as here) no such detailed instructions are given and no such obligations are imposed. The one fairly universal practice is to place a dignified metal plaque on the wall in the area of the Department or Division being named. Fixing a sign to a wall in this fashion is the accepted method used by Mount Sinai to designate or "name" a particular Department, Division or Center of the Institution. In addition to the plaque marking the Jeffrey Modell Division of Clinical Immunology, there is a large sign using the JMF logo in the same physical area, which is of such a substantial size that it is almost unique at Mount Sinai.
Aff. of Roberta Mark, at 4. Mount Sinai also notes that it has named the JM Division as such in "various publications that highlight donor contributions approximately each year. The Annual Reports and Development Reports of Mount Sinai have in some years included reference to the named division" and that JMF was listed in all but one of Mount Sinai's Annual Reports and Development Reports from 1996-2006." Id. Mount Sinai also claims that there are many references to the JM Division as such on its website since 2007. Mount Sinai further claims that JMF got the benefit of its bargain, in that, within its rights under the agreements, JMF used the name JM Division freely in its own publications, and brought dignitaries to the Division for fund-raising purposes. Mount Sinai further claims that it had no idea that JMF cared whether Dr. Mayer identified himself as the Chief of the JMF Division in his letters, as he uses generic Mount Sinai letterhead stationary in his correspondence, and he is chief of two other divisions, the names of which he also never identifies below his name. Apparently, Dr. Mayer has since agreed to comply with JMF's wishes in this matter.
Mount Sinai's major argument, however, is that JMF breached the Agreements by failing to turn over the funds required yearly thereunder, and has failed to turn over to Mount Sinai the full endowment of $1.5 million in 2006, as JMF was obligated to do. Mount Sinai characterizes the omissions in identifying the JM Division as such are "technical, inadvertent, and trivial." Mount Sinai Memorandum of Law, at 11. Thus, Mount Sinai concludes that, because JMF failed in its obligations to make payments as called for under the Agreements, while Mount Sinai honored its obligations, JMF waived any right to claim a breach of contract.
Mount Sinai acknowledges that JMF did provide certain cash donations to the JM Division from time to time, and in a substantial amount. However, it claims that these donations were, at the instruction of JMF, to be applied to the ongoing operations of the Division, and were made exclusive of the $1.5 endowment.
In contrast, JMF maintains that, while Mount Sinai complied with the paragraph 6 in the 1998 Agreement, regarding signage, Mount Sinai failed to name the Division as promised under paragraph 1. In consequence, JMF maintains that Mount Sinai was the first to breach, vitiating any obligation JMF had to comply with the remainder of the provisions of the agreements. As a result, JMF argues that it is entitled to the return of $789,543, as the amount it contributed to Mount Sinai since 1998; an accounting of $1,830,461 contributed to Mount Sinai "for special purpose" (JMF's Memorandum of Law, at 1); and the "return of all misappropriated funds." Id.
"[T]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact.'" Ayotte v Gervasio, 81 NY2d 1062, 1062 (1993), quoting Alvarez v Prospect Hospital, 68 NY2d 320, 324 (1986); see also Winegrad v New York University Medical Center, 64 NY2d 851 (1985); Kesselman v Lever House Restaurant , 29 AD3d 302 , 303 (1st Dept 2006). Upon the presentation of a prima facie case by the movant, the burden then shifts to the motion's opponent to offer evidentiary facts sufficient to raise a triable issue of fact. See Alvarez v Prospect Hospital, 68 NY2d 320, supra; Kesselman, 29 AD3d 302 , supra.
JMF argues that it is established New York law that the donee of an endowment has the duty to "do whatever acts [are] customary or reasonably necessary to maintain the memorial fairly and justly in the spirit of its creation." Allegheny College v The National Chautauqua County Bank of Jamestown ( 246 NY 369, 375). However, the question of whether Mount Sinai fulfilled its duty under the Agreements is a question of fact which cannot be resolved on a motion for summary judgment. The parties are at complete odds as to what qualifies as "naming" the Division under the Agreements, and it will be up to the parties at trial to establish the intent behind the ambiguous contract language. While parol evidence may be accessed to clarify contract language when an ambiguity exists ( see American Committee for Weizmann Institute of Science v Dunn , 10 NY3d 82 ), the evidence educed thus far does not resolve the issue.
There is also a question of fact concerning JMF's obligations to pay certain sums to Mount Sinai after it perceived that Mount Sinai had breached the Agreements, so as to release JMF from having to complete the contract. "In the absence of some factor excusing compliance with the terms of a contract, a [party] seeking to maintain the action for . . . damages for nonperformance of a contract must demonstrate a tender of his or her own performance was made [internal quotation marks and citation omitted]." First Frontier Pro Rodeo Circuit Finals LLC v PRCA First Frontier Circuit, 291 AD2d 645, 645 (3d Dept 2002); see also Roberts v Borg , 35 AD3d 617 (2d Dept 2006) (failure of performance by one party to a contract can excuse the other party from continuing to perform). Therefore, JMF will have to establish that Mount Sinai's alleged breach predated JMF's alleged nonperformance before it can prove a right to cease making payments as called for under the Agreements. This, too, is an unresolved questions of fact.
Mount Sinai also is not entitled to summary judgment based on its theory that JMF failed to timely complain that the Division had not been properly renamed. "Waiver is the intentional relinquishment of a known right, and therefore may be inferred from conduct or a failure to act that [e]vinces an intent not to claim the purported advantage.'" Fundamental Portfolio Advisors, Inc. v Tocqueville Asset Management, L.P. , 22 AD3d 204 , 209 (1st Dept 2005), quoting Hadden v Consolidated Edison Company of New York, 45 NY2d 466, 469 (1978). The waiver must be "clear, unequivocal and deliberate [internal quotation marks and citation omitted]." Silverman v Silverman, 304 AD2d 41, 46 (1st Dept 2003). Here, there is no evidence that, merely because JFM complained only infrequently about Mount Sinai's alleged failure to name the Division after their son (assuming that that is so), it knowingly, clearly, unequivocally and deliberately relinquished its right to do so.
Accordingly, it is
ORDERED that defendant The Jeffrey Modell Foundation, Inc.'s motion for partial summary judgment on its first counterclaim is denied; and it is further
ORDERED that plaintiff The Mount Sinai Medical Center, Inc.'s cross motion for partial summary judgment dismissing defendant's first counterclaim is denied.