Opinion
Index No. 152388/2023
11-16-2023
14 Street Medical, P.C., Plaintiff, v. Nahida S. Khan, Defendant.
Law Offices of Kenneth L. Kutner, Garden City, NY (Kenneth L. Kutner of counsel), for plaintiff. Harnik Law Firm, New York, NY (Stephen M. Harnik of counsel), for defendant.
Unpublished Opinion
Law Offices of Kenneth L. Kutner, Garden City, NY (Kenneth L. Kutner of counsel), for plaintiff.
Harnik Law Firm, New York, NY (Stephen M. Harnik of counsel), for defendant.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82 were read on this motion to DISMISS COUNTERCLAIMS.
The following e-filed documents, listed by NYSCEF document number (Motion 002) 28, 29, 30, 62, 63, 64, 65, 66, 67, 68, 69, 70, 83, 84 were read on this motion to DISMISS COMPLAINT.
This is a breach-of-contract action by plaintiff, 14 Street Medical, P.C., against defendant Nahida S. Khan, M.D.
In September 2022, plaintiff, a multi-specialty medical group consisting of licensed physicians and other health-care professionals, hired defendant, a licensed physician with a specialty in internal medicine. The parties' relationship was governed by a physician-employment agreement.
In March 2023, plaintiff filed a complaint against defendant for damages and legal fees arising out of defendant's alleged breach of the agreement. Plaintiff alleges that defendant breached the terms of the agreement on February 21, 2023, by resigning without fulfilling the 90-day notice requirement and refusing to repay plaintiff for commissions it paid to the recruitment agency through which plaintiff hired defendant. (NYSCEF No. 1 at 3.) Defendant answered and counterclaimed. (NYSCEF No. 4.)
In motion sequence 001, plaintiff moves to dismiss defendant's counterclaims under CPLR 3211 (a) (1) and (7). Defendant cross-moves under rules 1.7 and 3.7 (a) of the New York Rules of Professional Conduct to disqualify Kenneth L. Kutner, Esq., plaintiff's attorney. In motion sequence 002, defendant moves to dismiss plaintiff's complaint under CPLR 3211 (a) (1) and (7).
Motion sequences 001 and 002 are consolidated for disposition. Plaintiff's motion to dismiss defendant's counterclaims is granted in part and denied in part. Defendant's cross-motion is denied. Defendant's motion to dismiss the complaint is denied.
DISCUSSION
On a CPLR 3211 (a) (1) motion to dismiss based on documentary evidence, a defendant must present evidence that "utterly refutes" plaintiff's allegations and establishes a defense as a matter of law. (See Goshen v Mut. Life Ins. Co., 98 N.Y.2d 314, 326 [2002].) When considering a motion to dismiss under CPLR 3211 (a) (7), "the allegations in the complaint are to be afforded liberal construction, and the facts alleged therein are to be accepted as true, according a plaintiff the benefit of every possible favorable inference and determining only whether the facts alleged fit within any cognizable legal theory." (M & E 73-75, LLC v 57 Fusion LLC, 189 A.D.3d 1, 5 [1st Dept 2020].)
I. Plaintiff's Motion to Dismiss and Defendant's Cross-Motion to Disqualify (Mot Seq 001)
A. Plaintiff's Motion to Dismiss Defendant's Counterclaims
(i) Breach of Covenant of Good Faith and Fair Dealing
Defendant claims that plaintiff violated the implied covenant of good faith and fair dealing. Defendant asserts that Yan Feldman, plaintiff's administrator, required defendant to order unnecessary tests for her patient in order for defendant to obtain a performance bonus. (NYSCEF No. 41 at 3-4.) Plaintiff, however, contends that this claim is duplicative because it is based on the same facts as the breach-of-contract claims raised in the third and fifth counterclaims.
Implicit in every contract is a covenant of good faith and fair dealing. (Dalton v Educational Testing Serv., 87 N.Y.2d 384, 389 [1995].) The covenant "is a pledge that neither party to the contract shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruit of the contract, even if the terms of the contract do not explicitly prohibit such conduct." (Gutierrez v Government Empls. Ins. Co., 136 A.D.3d 975, 976 [2d Dept 2016].) Moreover, when "there is an express contract addressing the issue in dispute," a claim for breaching the implied covenant must fail. (Cambridge Capital Real Estate Invs., LLC v Archstone Enter. LP, 137 A.D.3d 593, 595 [1st Dept 2016].) When a cause of action for breach of the covenant "is based on the same operative facts and seeks the same damages as a cause of action for breach of contract, the good faith claim is duplicative and should be dismissed." (AEA Middle Mkt. Debt Funding LLC v Marblegate Asset Mgt., LLC, 214 A.D.3d 111, 132-133 [1st Dept 2023]; cf. Mill Fin., LLC v Gillett, 122 A.D.3d 98, 104-105 [1st Dept 2014].) But "[a] good faith claim... is not duplicative of a breach of contract claim where the complaint alleges conduct that is separate from the conduct constituting the alleged breach of contract and such conduct deprived the other party of the benefit of its bargain." (AEA Middle Mkt. Debt Funding, 214 A.D.3d at 133.)
This court disagrees with plaintiff's contention that defendant's counterclaim is based on the same set of facts as relied on in the third and fifth counterclaims. The third counterclaim pertains specifically to outstanding salary payments; the fifth counterclaim relates to attorney fees. The first counterclaim, in contrast, relates to plaintiff allegedly impeding defendant's ability to benefit under the agreement. (NYSCEF No. 4 at 3.) The claims are not duplicative. Plaintiff's motion to dismiss the first counterclaim is denied.
(ii) Constructive Termination and Retaliation
Defendant alleges that she resigned because of patient dissatisfaction and a hostile work environment. Defendant further alleges that plaintiff retaliated against defendant and that the retaliation amounted to constructive termination and breach of contract. (NYSCEF No. 4 at 4-5.) Plaintiff, however, contends that there was no constructive termination and that defendant voluntarily resigned from the practice. Plaintiff contends that the elements of retaliation are not satisfied here.
The standard for alleging a claim of constructive discharge "is higher than the standard for establishing a hostile work environment where, as here, the alleged constructive discharge stems from the alleged hostile work environment." (Gaffney v City of New York, 101 A.D.3d 410, 411 [1st Dept 2012].) To establish constructive discharge, plaintiff must produce evidence that her employer "deliberately created working conditions so intolerable, difficult or unpleasant that a reasonable person would have felt compelled to resign." (Mascola v City Univ. of NY, 14 A.D.3d 409, 410 [1st Dept 2010].)
To establish a prima facie case of retaliation under the New York State Human Rights Law (NYSHRL), a defendant must show that "(1) [defendant] has engaged in a protected activity, (2) [defendant's] employer was aware of such activity, (3) [defendant] suffered an adverse employment action based upon the activity, and (4) a causal connection exists between the protected activity and the adverse action." (Harrington v City of New York, 157 A.D.3d 582, 585 [1st Dept 2018].) Under the New York City Human Rights Law (NYCHRL), defendant "must show only that the [plaintiff] 'took an action that disadvantaged'" defendant "rather than an adverse action." (Id., quoting Fletcher v Dakota, Inc., 99 A.D.3d 43, 51-52, [1st Dept 2012].) Filing complaints with the EEOC and Human Rights Commission are protected activities. (See Forrest v Jewish Guild for the Blind, 3 N.Y.3d 295, 327 [2004].)
Here, defendant has failed to establish constructive termination. The documentary evidence shows that defendant voluntarily tendered her resignation. She expressed her will to do so in her communication addressed to Kutner dated February 21, 2023, where she states, "I want out and don't want to deal with [sic] anymore" and "I am not returning to this practice starting tomorrow." (NYSCEF No. 25 at 1.) While defendant found the working conditions unpleasant and difficult, defendant has not shown that plaintiff's conduct was so intolerable that she had no choice but to resign.
Defendant has not shown that plaintiff retaliated, either. While this court agrees that defendant's filing of the discrimination charge with the EEOC amounted to protective activity, no evidence suggests that plaintiff took adverse employment action against defendant. Nor is there any evidence of a causal connection between plaintiff's commencement of litigation and any allegedly adverse actions against her.
Plaintiff's motion to dismiss defendant's counterclaim for constructive termination and retaliation is granted.
(iii) Outstanding Salary Payments
According to section 4 of the physician employment agreement, defendant was entitled to an hourly pay of $125.00. (NYSCEF No. 2 at ¶ 4). Defendant alleges that she regularly remained unpaid for one additional hour of work l she performed in lieu of her lunch break. Plaintiff contends that defendant was properly paid under the terms of their agreement. To support this contention, plaintiff submits defendant's payroll records. (NYSCEF No. 11 at 1.) The records indicate that defendant has been paid at the hourly rate. (See id.) Plaintiff also submits a generic log of defendant's schedule that includes time marked as "Z," during which defendant was not required to furnish her services. (NYSCEF No. 76 at 1.) But the log is not detailed enough to conclusively refute defendant's contention that she was required to work during periods for which she was not paid.
Plaintiff also contends that defendant cannot recover Labor Law § 198 damages for unpaid salary, because defendant is outside the coverage of § 198 in light of her employment as a professional (a physician). But defendant's unpaid-salary counterclaim, as pleaded, does not rely on, or even mention, § 198, but instead appears to sound in breach of contract. (See NYSCEF No. 4 at 5-6.)
Plaintiff's motion to dismiss defendant's counterclaim for outstanding salary payments is denied.
(iv) Intentional Infliction of Emotional Distress
Defendant contends that plaintiff inflicted severe emotional distress on her by making false insinuations regarding ZocDoc reviews of defendant, defendant's bedside manner, and defendant's work manner. Defendant claims that plaintiff further inflicted emotional distress on her by directing her to take advantage of patients by ordering tests that were not necessary for those patients' care. Plaintiff contends that defendant does not show how plaintiff's conduct was so extreme and outrageous that it constitutes intentional infliction of emotional distress.
A claim for "intentional infliction of emotional distress 'has four elements: (i) extreme and outrageous conduct; (ii) intent to cause, or disregard of a substantial probability of causing, severe emotional distress; (iii) a causal connection between the conduct and injury; and (iv) severe emotional distress.'" Brown v New York Design Ctr., Inc., 215 A.D.3d 1, 6 [1st Dept 2023], quoting Howell v New York Post Co., 81 N.Y.2d 115 [1993].) The conduct at issue must be" 'so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.'" (Howell, 81 N.Y.2d at 122, quoting Murphy v Am. Home Prods. Corp., 58 N.Y.2d 293, 303 [1983].)
Defendant has not shown that plaintiff's conduct was sufficiently extreme and outrageous for a claim of intentional infliction of emotional distress. Accordingly, plaintiff's motion to dismiss this counterclaim is granted.
(v) Attorney Fees
Defendant claims reasonable attorney's fees from plaintiff under Labor Law § 198 and the attorney-fee provision in the physician employment agreement.
Under New York law, the prevailing party in a breach-of-contract action may not collect attorney fees from the losing party "unless such award is authorized by agreement between the parties, statute or court rule." (TAG 380, LLC v ComMet 380, Inc., 10 N.Y.3d 507, 515 [2008].) And one may not recover attorney fees under Labor Law § 198 for a common-law contractual remuneration claim unless the underlying action is a wage claim brought under Labor Law article 6. (See Gottlieb v Kenneth D. Laub & Co., 82 N.Y.2d 457, 464-465 [1993].)
According to § 14 of the agreement, only plaintiff is entitled to seek attorney fees, not defendant. And defendant can resort to remedies under Labor Law § 198 only after showing that plaintiff violated Labor Law §§ 191 and 193, not for common-law contractual claims. (Zdanowitz v Queens-Long Is. Med. Group, P.C., 2022 NY Slip Op 32050(U), *20 [Sup Ct, NY County 2022].) Defendant has not alleged any violation of Labor Law §§ 191 or 193. Defendants have failed to set out a valid claim under § 198.
Plaintiff's motion to dismiss defendant's attorney-fee counterclaim is granted.
B. Defendant's Cross-Motion to Disqualify Plaintiff's Attorney
Defendant cross-moves to disqualify Kutner, plaintiff's attorney. Defendant claims that Kutner was integrally involved in defendant's allegedly wrongful constructive termination and has a personal interest in the case. Plaintiff contends that defendant's cross motion is a stalling tactic. Plaintiff asks the court to impose sanctions against defendant and her counsel.
The decision to disqualify an attorney is in the trial court's discretion. (Mayers v Stone Castle Partners, LLC, 126 A.D.3d 1, 6 [1st Dept 2015].) To disqualify an attorney, the attorney's testimony must be necessary and prejudicial to the movant's interests. (Ullmann-Schneider v Lacher & Lovell-Taylor PC, 110 A.D.3d 469, 470 [1st Dept 2013].) In determining necessity, the court will consider "the significance of the matters, weight of the testimony, and availability of other evidence." (S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., 69 N.Y.2d 437, 446 [1987].) An attorney's relevant knowledge or involvement "in the transaction at issue does not make that attorney's testimony necessary." (Talvy v Am. Red Cross, 205 A.D.2d 143, 152 [1st Dept 1994] [internal quotation marks omitted].) Further, untimeliness or undue delay in moving to disqualify counsel may support a finding that the motion was made in bad faith. (See e.g. Lucci v Lucci, 150 A.D.2d 650, 652 [2d Dept 1989].)
Kutner is not a necessary witness. Kutner's testimony may be relevant to the case, but other evidence is available, including the testimony of Dr. Epstein, Dr. Warner, and Feldman, and written communications about Kutner. Further, defendant's claim that Kutner has a personal interest in plaintiff is supported only by Dr. Warner's statement in her affidavit that it is her "understanding" that "Kutner may be a principal" in an LLC "that has an operating agreement with the plaintiff clinic," such that "Kutner may have a personal interest in the plaintiff clinic." (NYSCEF No. 27 at ¶ 4.) But Dr. Warner does not identify (or document) the basis for her "understanding." And written communications between Feldman and Dr. Warner indicate that Kutner was acting only as plaintiff's legal counsel.
Dr. Epstein raised a similar argument concerning Kutner in his litigation against plaintiff. The court, however, granted the motion to quash the subpoena issued against Kutner on the grounds that other evidence, namely Dr. Epstein's testimony, was available to support his claims.
Plaintiff asks this court to impose sanctions against defendant and her counsel for seeking to disqualify Kutner, asserting that the disqualification request is frivolous. Under 22 NYCRR 130-1.1 (a), the court may impose sanctions on a party and attorney whose claims are (1) "completely without merit in law"; (2) "undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another"; or (3) "assert material factual statements that are false." But defendant's cross-motion was not completely devoid of merit, especially given the combination of Kutner's involvement in plaintiff's day-to-day activities and his acting as attorney for plaintiff in this action. Nor does the record reflect that defendant delayed unduly in moving to disqualify Kutner: Defendant first sought disqualification in its motion to dismiss, brought only four months after plaintiff filed the complaint. Plaintiff's request for sanctions against defendant and her counsel is denied.
II. Defendant's Motion to Dismiss Plaintiff's Complaint (Mot Seq 002)
In motion sequence 002, defendant moves under CPLR 3211 (a) (1) and (7) to dismiss plaintiff's complaint. Defendant contends that the physician employment agreement never took effect. Defendant alleges that under ¶ 15.2 of the agreement, the agreement was not supposed to take effect until both parties signed it. And defendant claims that she never received a countersigned copy of the agreement until she was allegedly terminated. (NYSCEF No. 30 at 1.)
Defendant's reliance on ¶ 15.2 of the agreement is misplaced. That subparagraph provides that the agreement can be executed in counterparts and that "each such counterpart, when taken together, shall constitute a single and binding agreement." Paragraph 15.2 does not directly require that both parties must sign before the agreement becomes effective. In any event, Feldman represents that he manually signed the agreement on behalf of plaintiff right after the defendant signed it. (NYSCEF No. 69 at 4.) And defendant, although pointing out that the signature is illegible and undated (NYSCEF No. 30 at 2), does not provide evidence that might show Feldman's representation to be false.
Further, even assuming that Feldman did not sign the agreement, "where the evidence supports a finding of intent to be bound, a contract will be unenforceable for lack of signature only if the parties "positive[ly] agree[d] that it should not be binding until so reduced to writing and formally executed.'" (Lerner v Newmark & Co. Real Estate, Inc., 178 A.D.3d 418, 420 [1st Dept 2019], quoting Matter of Municipal Consultants & Publs. v Town of Ramapo, 47 N.Y.2d 144, 149 [1979].) The parties do not allege any affirmative signature precondition of this kind. The cases on which defendant relies, in which this precondition was present (in one, by agreement of the parties, in the other, by statute), are thus inapposite. (See NYSCEF No. 29 at 7-8 [mem. of law], citing Longo v Shore & Reich, Ltd., 25 F.3d 94, 97 [2d Cir 1994] [parties intended the agreement to be non-binding until signed]; Anderson v Anderson, 37 N.Y.3d 444, 448 [2021] [unsigned agreement unenforceable due to noncompliance with the signature-acknowledgement requirements of Domestic Relations Law § 236].)
In any event, defendant has effectively conceded that the agreement is enforceable. Defendant did not deny in her answer that she entered into the agreement with plaintiff. (See NYSCEF No. 4 at 1 [answer].) Defendant asserts counterclaims in this action for breach of the covenant of good faith and fair dealing and outstanding salary payments, which are premised on the agreement. (See id.) Previously, defendant also sought to modify the agreement. (See NYSCEF No. 67.) Defendant does not allege that she sought a copy of the fully signed agreement before her purported termination. Defendant only refers to a letter that her friend, Mr. Michaels, sent to plaintiff's counsel requesting the fully-signed version of the agreement. (See NYSCEF No. 12.) And this letter was sent to plaintiff's counsel at the time that plaintiff allegedly terminated defendant. (Compare NYSCEF No. 12, with NYSCEF No. 30 at 2.)
Defendant's motion to dismiss is denied.
Accordingly, it is
ORDERED that plaintiff's CPLR 3211 motion to dismiss defendant's counterclaims (mot seq 001) is granted only to the extent of dismissing the second, fourth, and fifth counterclaims, and otherwise denied; and it is further
ORDERED that defendant's cross-motion to disqualify plaintiff's counsel (mot seq 001) is denied; and it is further
ORDERED that plaintiff's request for sanctions against defendant and defendant's counsel (mot seq 001) is denied; and it is further
ORDERED that defendant's CPLR 3211 motion to dismiss plaintiff's complaint (mot seq 002) is denied.