Opinion
870 CA 19–00463
10-04-2019
HEALTHNOW NEW YORK, INC., Doing Business as Blue Cross Blue Shield of Western New York, Plaintiff–Appellant, v. DAVID HOME BUILDERS, INC., Doing Business as David Homes, Defendant, and Employer Services Corporation, Defendant–Respondent.
WEBSTER SZANYI LLP, BUFFALO (D. CHARLES ROBERTS, JR., OF COUNSEL), FOR PLAINTIFF–APPELLANT. GROSS SHUMAN P.C., BUFFALO (KEVIN R. LELONEK OF COUNSEL), FOR DEFENDANT–RESPONDENT.
WEBSTER SZANYI LLP, BUFFALO (D. CHARLES ROBERTS, JR., OF COUNSEL), FOR PLAINTIFF–APPELLANT.
GROSS SHUMAN P.C., BUFFALO (KEVIN R. LELONEK OF COUNSEL), FOR DEFENDANT–RESPONDENT.
PRESENT: WHALEN, P.J., PERADOTTO, LINDLEY, DEJOSEPH, AND NEMOYER, JJ.
MEMORANDUM AND ORDER It is hereby ORDERED that the order so appealed from is unanimously modified on the law by denying the motion of defendant Employer Services Corporation in its entirety and reinstating the first cause of action and as modified the order is affirmed without costs.
Memorandum: Plaintiff commenced this action seeking to recover health insurance benefits paid on behalf of an employee of defendant Employer Services Corporation (ESC), a professional employment organization that provided work site employees to, inter alia, defendant David Home Builders, Inc., doing business as David Homes. According to plaintiff, ESC knew, at the time it enrolled the employee in plaintiff's health care plan, that the employee did not meet the eligibility requirements for coverage. As a result, plaintiff alleged that ESC breached its Group Health Care Contract (Contract) with plaintiff and engaged in fraud.
Shortly after ESC was added as a defendant, it moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the amended complaint against it. Plaintiff opposed the motion and requested that Supreme Court convert that part of the motion with respect to the first cause of action to one for summary judgment and award judgment to it on that cause of action. The court granted the motion in part, dismissing the breach of contract cause of action against ESC, and denied plaintiff's request.
We agree with plaintiff that the court should have denied the motion in its entirety. Accepting as true all of plaintiff's allegations in the amended complaint (see generally Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ), we conclude that it sufficiently pled a breach of contract cause of action by setting forth factual allegations establishing " ‘the existence of a contract, ... plaintiff's performance under the contract, [ESC's] breach of that contract, and resulting damages’ " ( Niagara Foods, Inc. v. Ferguson Elec. Serv. Co., Inc., 111 A.D.3d 1374, 1376, 975 N.Y.S.2d 280 [4th Dept. 2013], lv denied 22 N.Y.3d 864, 2014 WL 1243559 [2014] ). We thus conclude that dismissal of that cause of action was not warranted under CPLR 3211(a)(7).
We further conclude that dismissal under CPLR 3211(a)(1) was not warranted. In granting the motion insofar as it sought dismissal of the breach of contract cause of action, the court determined that the provision of certain remedies in the Contract precluded plaintiff from seeking additional damages from ESC under the "canon of contract construction expressio unius est exclusio alterius, that is, that the expression of one thing implies the exclusion of the other" ( Mastrocovo v. Capizzi, 87 A.D.3d 1296, 1298, 930 N.Y.S.2d 141 [4th Dept. 2011] ). The court further determined that the indemnification provision in the Contract did not apply to disputes between the parties. We conclude that the court erred in determining that plaintiff was limited to the remedies set forth in the Contract.
"[I]t is a basic tenet of the law of damages that where there has been a violation of a contractual obligation the injured party is entitled to fair and just compensation commensurate with [the] loss" ( Terminal Cent. v. Modell & Co., 212 A.D.2d 213, 218, 628 N.Y.S.2d 56 [1st Dept. 1995] ). "Limitations on a party's liability will not be implied and to be enforceable must be clearly, explicitly and unambiguously expressed in a contract" ( id. ; see PRO Net v. ACC TeleCom Corp., 294 A.D.2d 857, 858, 741 N.Y.S.2d 795 [4th Dept. 2002] ). As a result, "[u]nder New York law, a provision must be included in the agreement limiting a party's remedies to those specified in the contract in order for courts to find that th[o]se remedies are exclusive" ( RCN Telecom Servs., Inc. v. 202 Ctr. St. Realty, LLC, 204 Fed Appx 920, 922 [2d Cir.2006] ; see Sutton Madison, Inc. v. 27 E. 65th St. Owners Corp., 8 A.D.3d 90, 92, 779 N.Y.S.2d 461 [1st Dept. 2004] ; Locke v. Aston, 1 A.D.3d 160, 161, 767 N.Y.S.2d 23 [1st Dept. 2003] ; cf. Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 31 N.Y.3d 569, 581–582, 81 N.Y.S.3d 816, 106 N.E.3d 1176 [2018] ; CIFG Assur. N. Am., Inc. v. Goldman, Sachs & Co., 106 A.D.3d 437, 438, 966 N.Y.S.2d 369 [1st Dept. 2013] ).
Here, the Contract provided that, in the event an ineligible person was enrolled in the health care plan, plaintiff "may elect" certain remedies. It also addressed the obligations of the person who had received such benefits. There was nothing in the Contract stating that the contractual remedies were plaintiff's sole and exclusive remedies against ESC, i.e., the other party to the Contract (see Sutton Madison, Inc., 8 A.D.3d at 92, 779 N.Y.S.2d 461 ; Locke, 1 A.D.3d at 161, 767 N.Y.S.2d 23 ; Terminal Cent., 212 A.D.2d at 218, 628 N.Y.S.2d 56 ; Hidden Val. Co. v. Paris, 95 A.D.2d 771, 772, 463 N.Y.S.2d 250 [2d Dept. 1983], appeal dismissed 60 N.Y.2d 644, ––– N.Y.S.2d ––––, ––– N.E.2d –––– [1983] ). "Such statement of exclusivity or remedial bar could have been, but was not, set forth" in the Contract ( Hidden Val. Co., 95 A.D.2d at 772, 463 N.Y.S.2d 250 ). We further agree with plaintiff that the court erred in determining that the indemnification provision of the Contract did not apply to intra-party disputes. "The indemnification clause at issue provides for coverage of extremely broad claims, and is consistent with other clauses that have been held to provide for indemnification ... for intra-party disputes" ( Square Mile Structured Debt [One], LLC v. Swig, 110 A.D.3d 449, 449, 973 N.Y.S.2d 39 [1st Dept. 2013] ; see Crossroads ABL LLC v. Canaras Capital Mgt., LLC, 105 A.D.3d 645, 646, 963 N.Y.S.2d 645 [1st Dept. 2013] ). As in Crossroads ABL LLC, the parties here "chose to use highly inclusive language in their indemnification provision, which they chose not to limit by listing the types of proceedings for which indemnification would be required" ( 105 A.D.3d at 646, 963 N.Y.S.2d 645 ; see Matter of 2–4 Kieffer Lane LLC v. County of Ulster, 172 A.D.3d 1597, 1601, 102 N.Y.S.3d 126 [3d Dept. 2019] ; Colonial Sur. Co. v. Genesee Val. Nurseries, Inc., 94 A.D.3d 1422, 1424, 942 N.Y.S.2d 723 [4th Dept. 2012] ; cf. Autocrafting Fleet Solutions, Inc. v. Alliance Fleet Co., 148 A.D.3d 1564, 1566, 51 N.Y.S.3d 285 [4th Dept. 2017] ).
Finally, plaintiff contends that the court erred in denying its application to convert that part of ESC's motion with respect to the breach of contract cause of action into a motion for summary judgment and to award plaintiff judgment on that cause of action. We reject that contention inasmuch as summary resolution of the issues was premature and discovery was necessary to offer sufficient evidentiary proof on the merits of plaintiff's causes of action (see generally DeAngelis v. Timberpeg E., Inc., 51 A.D.3d 1175, 1176, 858 N.Y.S.2d 410 [3d Dept. 2008] ; County of Nassau v. Velasquez, 44 A.D.3d 987, 989, 844 N.Y.S.2d 439 [2d Dept. 2007] ). In any event, plaintiff failed to establish its entitlement to judgment as a matter of law on the breach of contract cause of action (see generally Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ).
We therefore modify the order by denying ESC's motion in its entirety and reinstating the first cause of action.