Opinion
Index Nos. 653772/2014 595024/2017 MOTION SEQ. No. 011
10-21-2022
NORTHWELL HEALTH, INC. f/k/a NORTH SHORE - LONG ISLAND JEWISH HEALTH SYSTEM, INC. and LENOX HILL HOSPITAL, Plaintiffs, v. W. NORMAN SCOTT, M.D. Defendant. W. NORMAN SCOTT. M.D. Plaintiff, v. ST. FRANCIS HOSPITAL and STEPHEN SILVER M.D. Defendants.
Unpublished Opinion
MOTION DATE 06/03/2022
PRESENT: HON. NANCY M. BANNON Justice
DECISION + ORDER ON MOTION
Nancy M. Bannon Judge
The following e-filed documents, listed by NYSCEF document number (Motion 011) 301, 302, 303, 304, 305, 306, 307, 308, 309, 310, 311, 312, 313, 314, 315, 316, 317, 318, 319, 320, 321, 322, 323, 324, 325, 326, 327, 328, 333, 334, 335, 337, 338, 339 were read on this motion to/for JUDGMENT - SUMMARY.
I. INTRODUCTION
In this action to recover damages for breach of a commercial lease, commenced in 2014 by Northwell Health, Inc. f/k/a North Shore - Long Island Jewish Health Care System, Inc. (Northwell) and its affiliate Lenox Hill Hospital (Lenox Hill), the tenant, Norman Scott, M.D. (Scott), commenced a third-party action in January 2017 against St. Francis Hospital and Stephen Silver, M.D. (Silver) as sublessors. The main action, which sought $218,132.00 in unpaid rent, was settled, and the third-party action was dismissed as against Silver and severed from the main action. Scott now moves pursuant to CPLR 3212 for summary judgment against St. Francis Hospital, as the remaining third-party defendant, seeking $210,600.00 in unpaid rent, dismissal of the counterclaims and an inquest on damages. St. Francis Hospital opposes the motion and cross-moves for a declaratory judgment on its counterclaims. The motion is granted to the extent that the counterclaims asserted by St. Francis Hospital are dismissed, and the cross-motion of St. Francis Hospital is denied.
II. BACKGROUND
On June 24, 2005, Scott entered into a lease agreement with Manhattan Eye, Ear, and Throat Hospital (MEETH), which later merged into Lenox. The lease was for a portion of a building located at 210 East 64th Street in Manhattan (the Master License Agreement). The initial lease term was from March 1, 2006 to February 28, 2009, with an option to extend the lease for two additional three-year terms. On October 27, 2011, Scott notified MEETH that he wished to renew the lease for the second three-year term beginning on March 1, 2012 and ending on February 28, 2015. In December 2011, Northwell informed Scott that the fair market value (FMV) rent was raised from $50 to $64 per square foot starting on March 1, 2012, per the lease terms. Scott did not object in writing and was deemed to have accepted the price, as per the lease terms. Scott subsequently defaulted.
In the meantime, in July 2011, during Dr. Scott's second renewal term, he entered into an agreement (the Session License Agreement) with St. Francis Hospital in which he sublet a portion of the leased premises for a fee proportionately calculated by square footage price in accordance with the Master License Agreement for a 40-month period. Scott sublet 172 of the 320 examination rooms on the premises to St. Francis Hospital and, as such, the Session License Agreement provided that St. Francis Hospital pay Scott 53.75% of Scotts' obligations or payments to Northwell. Specifically, section three of the Session License Agreement provides:
Licensee shall pay to Licensor for the use of the Licensed Space... equal to (i) the total actual out-of-pocket amount paid by Licensor pursuant to the Master License for the applicable month, divided by three hundred twenty (320) (that being the total number of monthly examination room sessions available at the Premises), multiplied by (ii) one hundred seventy-two (172) (that being the number of monthly examination room sessions used by physicians who use the Premises during such month and are employed by Licensee) (the "Fee").
If the amount required to be paid by Licensor under the Master License shall increase in the future, then the Fee paid to Licensor by Licensee shall be increased by a percentage equal to the percentage increase in the amount required to be paid by Licensor under the Master License.
In December 2014, Northwell sued Scott for money damages of $218,132.00 for failure to pay rent pursuant to the Master License Agreement. Upon Northwell bringing suit against Scott for non-payment, he and St. Francis Hospital agreed that no increase would be paid by St. Francis Hospital until the primary dispute was resolved.
On January 10, 2017, Scott commenced the third-party action, seeking to recover $210,600.00 in unpaid rent from St. Francis Hospital in accordance with the Session License Agreement. Denominated as breach of contract claim, the gravamen of the single cause of action asserted by Scott is that St. Francis Hospital was obligated to pay more than agreed because Scott was asked to pay more by Northwell in the main action. It alleges that "the amount that plaintiffs Lenox Hill and Northwell sought from Dr. Scott in the [main] action was in excess of the amount Dr. Scott used to calculate the fee paid by St. Francis under the [Session License Agreement]. St. Francis Hospital filed an answer with three counterclaims, all sounding in conversion and unjust enrichment, and alleging that Scott should not be permitted to retain $45,871.33 it paid to him as "equipment use payments" or fees prior to July 22, 2015, as it did not use any medical equipment on the premises during that period.
In the main action, a Note of Issue was filed and, by an order dated November 26, 2017, the main action was severed from the third-party action. The parties subsequently settled the main action. There is no indication that Scott paid any amount to Northwell under the terms of the settlement agreement. By an order dated June 26, 2020, the court, inter alia, granted a motion by St. Francis Hospital to compel Scott to produce the settlement agreement with Northwell in the main action as it was "material and necessary" to the third-party action since St. Francis Hospital was asserting, based on its interpretation of the contract, that its obligations of a proportional payment were dependent on what Scott was required to pay in the settlement or actually paid to Northwell, and not what Scott was contractually obligated to pay by the Master License Agreement. The court stated, in part, "to the extent that the letter propounded by Northwell may demonstrate the amount that Dr. Scott was supposed to pay, it does not demonstrate the amounts that Dr. Scott actually paid under the settlement agreement, and thus the amounts which St. Francis could be liable for under the Session License Agreement."
By an order dated April 27, 2021, the court granted a motion by Scott to restore the third-party action to the active calendar under the main index number. By an order dated October 25, 2021, the court granted a motion by St. Francis Hospital to reargue the motion to restore and, upon re-argument, vacated so much of its prior order dated April 27, 2021, as indicated that the Note of Issue filed in the main action precluded further discovery in the third-party action. This motion and cross-motion ensued. In the meantime, by an order dated September 27, 2022, a motion by St. Francis Hospital to seal the settlement agreement was denied.
III. DISCUSSION
A. Legal Standard
On a motion for summary judgment, the movant "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case." See Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 (1985). The motion must be supported by evidence in admissible form (see Zuckerman v City of New York, 49 N.Y.2d 557 [1980]), and the pleadings and other proof such as affidavits, depositions, and written admissions. See CPLR 3212. Once the movant meets its burden, it is incumbent upon the non-moving party to establish the existence of material issues of fact. See id. (citing Alvarez v Prospect Hosp., 68 N.Y.2d 320 [1986]). However, if the initial burden is not met by the movant, summary judgment must be denied regardless of the sufficiency of the opposing papers. See Winegrad v New York University Medical Center, 64 N.Y.2d 851; Giaquinto v Town of Hempstead, 106 A.D.3d 1049 (2nd Dept. 2013); O'Halloran v City of New York, 78 A.D.3d 536 (1st Dept. 2010). This is because "summary judgment is a drastic remedy, the procedural equivalent of a trial. It should not be granted if there is any doubt about the issue." Bronx-Lebanon Hosp. Ctr. v Mount Eden Ctr., 161 A.D.2d at 480 (1st Dept. 1990) (quoting Nesbitt v Nimmich, 34 A.D.2d 958, 959 [2nd Dept. 1970] [internal citations omitted]).
B. Scott's Motion for Summary Judgment
Scott seeks summary judgment in his favor on the amended third-party complaint which asserts a single cause of action seeking payment from his sublessor St. Francis Hospital for its use of the subject premises based on the amount he was required to paid to Northwell. In support of his motion, Scott submits, inter alia, the pleadings, an affirmation of counsel, his own affidavit, the Master License Agreement with Northwell, the Session License Agreement with St. Francis Hospital, and the Northwell letter to Scott stating the increased rent amount owed. In opposition, St. Francis Hospital, which maintains that it owes Scott, at most, 53.75% of the amount he actually paid to Northwell under the settlement agreement, submits, inter alia, an affirmation of counsel, the Session License Agreement, and an affidavit of Patricia Daye, the then-Vice President of Ambulatory services at St. Francis Hospital.
In his affidavit in support, Scott avers that when he renewed his lease with Northwell for a second term, the rent increased from $50 to $64 per square foot to begin March 1, 2012, and that that St. Francis Hospital's rental obligation to him was to increase proportionately as per the Session License Agreement terms. Scott argues that the amount owed by St. Francis Hospital is determined by the amount he was initially required to pay Northwell, not what he was required to pay in settlement or what he actually paid, such that St. Francis Hospital owes the full $210,600.00 in rent he has demanded. That is, Scott maintains that neither his default nor any reduced amount he may have paid to Northwell pursuant to the settlement agreement relieves St. Francis Hospital of its obligations to him under their agreement.
Initially, the court notes that while Scott's present argument, based on his interpretation of the contract, that St. Francis Hospital should pay the amount required by their contract and his contract with Northwell rather than the amount he actually paid to Northwell in settlement, presents a pure breach of contract theory. However, certain allegations in his third-party complaint sound in contribution, which is not applicable here. "[W]here, as here, the underlying claim seeks purely economic damages, a claim for common-law contribution is not available" because "purely economic loss resulting from a breach of contract does not constitute 'injury to property'." Children's Corner Learning Ctr. v. A. Miranda Contracting Corp., 64 A.D.3d 318, 324 (1st Dept. 2009).
In any event, Scott's submissions do not establish his entitlement to judgment as a matter of law on his breach of contract claim, which requires a claimant to demonstrate (1) the existence of a contract, (2) the plaintiff's performance under the contract, (3) the defendant's breach of that contract, and (4) resulting damages. See Second Source Funding, LLC v Yellowstone Capital, LLC, 144 A.D.3d 445 (1st Dept. 2016); Harris v Seward Park Housing Corp., 79 A.D.3d 425 (1st Dept. 2010). While there is no dispute that Scott and St. Francis Hospital entered into a contract and that St. Francis Hospital's obligations to Scott would be measured proportionately, Scott has not established that he performed in full or that St. Francis Hospital breached the agreement. The contract variously states that St. Francis Hospital's liability would be based on the "total actual out-of-pocket amount paid by [Scott] to [Northwell]" and that any increase would be determined "by a percentage equal to the percentage increase in the amount required to be paid by [Scott]." The parties each proffer reasonable but differing interpretations of their agreement. Scott's resistance to disclosure of the settlement agreement did not weigh in his favor. For that reason, the existence of damages is also not established. Although "a contract should be read to give meaning and effect to each of its provisions" (Biotrinik A.G. v Conor MEdsystems Ireland, Inc., 117 A.D.3d 551 [1st Dept. 2014] citing Perlbinderv Board of Mors, of 411 E. 53rd Condo.. 65 A.D.3d 985, 986-987 [1st Dept. 2009]), that cannot be done here since the key terms of the contract between Scott and St. Francis Hospital appear to be conflicting and susceptible to more than one interpretation. This ambiguity renders the dispute inappropriate for summary disposition. See Chimart Assocs. v Paul, 66 N.Y.2d 570 (1986); Biotrinik A.G. v Conor Medsystems Ireland, Inc., supra; US Oncology, Inc. v Wilmington Trust FSB. 102 A.D.3d 401 (1st Dept. 2013); Sumitomo Mitsui Banking Corp.. v Credit Suisse. 89 A.D.3d 561 (1st Dept. 2011); Prince Assocs. v Warner Bros. Inc., 180 A.D.2d 483 (1st Dept. 1992).
In that regard, the parties appear to misapprehend this court's prior order dated June 26, 2020. Addressing discovery issues, the court directed that Scott disclose his settlement agreement with Northwell as demanded by St. Francis Hospital, since it was material and relevant to a core issue in the case as St. Francis was alleging in its defense that its obligations to Scott were to be determined by his settlement payments to Northwell. Thus, the court had identified the factual issue of St. Francis Hospital's payment obligations for purposes of discovery but had not determined the issue in favor of either party. Indeed, the court directed discovery on that issue. Nor do the submissions on this motion warrant a summary determination on that issue.
Scott also moves for dismissal of St. Francis Hospital's counterclaims which seek to recover certain use fees it paid to Scott for medical equipment not actually used for a period of time. In support, the plaintiff relies upon Daye's deposition testimony, in which she states that payment for equipment was not based on its actual use, but based on "expected utilization of our space, the equipment, the service cost of the equipment and any staff that we might utilize when using the equipment". Daye further states that even if St. Francis Hospital never used the equipment, its monthly fees would not change. By this evidence, Scott has met his burden in the first instance on this branch of his motion. St. Francis Hospital does not address this part of Scott's motion in its opposition and thus fails to raise any triable issue in that regard.
The counterclaims for unjust enrichment and conversion fail for additional reasons. As a general rule, where a plaintiff seeks to recover under an express agreement, no cause of action lies to recover for unjust enrichment. See Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 N.Y.2d 382 (1987); JDF Realty, Inc. v Sartiano, 93 A.D.3d 410 (1st Dept. 2012). Similarly, "the conversion claim also fails because such a cause of action cannot be predicated on a mere breach of contract, and no independent facts are alleged giving rise to tort liability [citation omitted]." Kopel v Bandwidth Technology Corp.. 56 A.D.3d at 320 (1st Dept. 2008); see Markov v Spectrum Group Intern.. Inc. 136 A.D.3d 413 (1st Dept. 2016); Yeterian v Heather Mills N.V. Inc.. 183 A.D.2d 493 (1st Dept. 1992).
C. St. Francis Hospital's Cross-Motion for Declaratory Relief
St. Francis Hospital's cross-motion, purportedly seeking the equitable relief of a declaratory judgment in its favor on the counterclaims pursuant to CPLR 3001, is denied for several reasons. First, as stated above, the counterclaims are without merit. As previously noted, St. Francis Hospital offers nothing to dispute Scott's proof that the hospital's contractual obligation to pay fees is not reduced for any period it did not actually use the medical equipment. Therefore, there is no triable issue of material fact in regard to the counterclaims.
Secondly, the declaratory relief sought on the counterclaims is newly requested as it was not mentioned in St. Francis Hospital's counterclaims. In addition to the requirement that all "[statements in a pleading ... be sufficiently particular to give the court an parties notice" of the claim (CPLR 3013), each claim "shall contain a demand for the relief to which the pleader deems himself entitled." CPLR 3017(a). For declaratory judgments, the statute further provides that the demand for relief in the pleading "shall specify the rights and other legal relations on which a declaration is requested and state whether further or consequential relief is or could be claimed and the nature and extent of any such relief which is claimed." CPLR 3017(b). That was not done here. St. Francis Hospital's answer with counterclaims does not mention declaratory relief at all; it merely seeks to recover $45,871.33 from Scott for alleged overpayments.
The request for the equitable relief of a declaratory judgment is inappropriate in this breach of contract action, a purely legal action where only money damages are demanded or warranted. It is well settled that a "cause of action for declaratory judgment is 'unnecessary and inappropriate when the [claimant] has an adequate, alternative remedy in another form of action, such as a breach of contract' or injunctive relief (Apple Records v Capitol Records, 137 A.D.2d 50 [1st Dept. 1988]; Arthur Young & Co. v Fleischman, 85 A.D.2d 71 [1st Dept. 1981])." Ithilien Realty Corp. v 180 Ludlow Dev. LLC. 140 A.D.3d 621, 622 (1st Dept. 2016). St. Francis Hospital cannot argue that it has no remedy at law. See Sky Coverage Inc. v Al-Wex Inc., 206 A.D.3d 583 (1st Dept. 2022); Chicago Research and Trading v New York Futures Exchange, Inc., 84 A.D.2d 413 (1st Dept. 1982).
For these reasons, Scott's motion is granted to the extent that the counterclaims of St. Francis Hospital are dismissed, and the cross-motion of St. Francis Hospital is denied, leaving for trial the issue of whether St. Francis Hospital breached its agreement with Scott and, if so, the amount of damages due.
Any relief not expressly granted herein is denied.
IV. CONCLUSION
Accordingly, it is
ORDERED that the motion of third-party plaintiff W. Norman Scott, M.D. pursuant to CPLR 3212 for summary judgment against third-party defendant St. Francis Hospital is granted to the extent that the counterclaims asserted by St. Francis Hospital are dismissed, and the motion is otherwise denied, and it is further
ORDERED that the cross-motion of third-party defendant St. Francis Hospital is denied.
This constitutes the Decision and Order of the court.