| Westfield Family Physicians, P.C. v HealthNow N.Y., Inc. |
| 2009 NY Slip Op 00879 [59 AD3d 1014] |
| February 6, 2009 |
| Appellate Division, Fourth Department |
| Westfield Family Physicians, P.C., et al., Respondents, vHealthNow New York, Inc., Appellant. |
—[*1] Brautigam & Brautigam, LLP, Fredonia (Daryl P. Brautigam of counsel), forplaintiffs-respondents.
Appeal from an order of the Supreme Court, Chautauqua County (Timothy J. Walker, A.J.),entered December 17, 2007 in a breach of contract action. The order denied defendant's motionfor summary judgment dismissing the complaints and amended complaint.
It is hereby ordered that the order so appealed from is unanimously reversed on the lawwithout costs, the motion is granted and the complaints and amended complaint are dismissed.
Memorandum: In February 1998 defendant entered into separate contracts with plaintiffsWestfield Family Physicians, P.C. (WFP) and Robert Berke, M.D., doing business as FamilyHealth Services (FHS), pursuant to which those plaintiffs would be members of an incentive riskpool, i.e., "a joint risk sharing agreement" (hereafter, group agreement), and thus would share inthe apportionment of budget surplus and deficits. The group agreement set forth acompensation schedule and, in 1999, defendant paid FHS and WFP their shares of the annualsurplus, as calculated by defendant. FHS and WFP did not object to defendant's calculation oftheir shares, and they accepted the payment.
In 2000, while the group agreement was still in effect, WFP's physicians entered intoindividual participating physician agreements (PPAs) that, inter alia, set forth compensationmethods for payment and apportionment of the surplus and deficits that differed from those setforth in the group agreement. Later that same year, FHS terminated the group agreement. WFPand its individual plaintiff physicians (collectively, WFP plaintiffs) commenced an actionalleging that the terms of the PPAs governed over those of the group agreement and thatdefendants thus owed them a specified surplus for the calendar year 2001. The WFP plaintiffs,with the exception of plaintiff Bruce A. Barker, also commenced a second action seeking, in anamended complaint, a specified surplus for the calendar [*2]years2003 through 2005. WFP and FHS commenced a separate action alleging that defendant owedboth WFP and FHS a surplus in a specified amount for the calendar year 1999 based on theterms of the group agreement. The three actions thereafter were consolidated. We conclude thatSupreme Court erred in denying defendant's motion for summary judgment dismissing "thisaction," i.e., the two complaints and the amended complaint.
We agree with defendant with respect to the WFP plaintiffs that the terms of the groupagreement, not those of the PPAs, governed the apportionment of WFP's annual budget surplusfor the years in question. It is well settled that, where parties have set forth their agreement in anunambiguous and complete document, that agreement should be enforced according to its terms(see Uribe v Merchants Bank of N.Y., 91 NY2d 336, 341 [1998]; W.W.W. Assoc. vGiancontieri, 77 NY2d 157, 162 [1990]). Thus, our "initial inquiry must center on whetherthe written contract, 'read as a whole to determine its purpose and intent' . . . , isreasonably susceptible to differing interpretations" with respect to whether the terms of the groupagreement or those of the PPAs control (Comprehensive Health Solutions v Trustco Bank,N.A., 277 AD2d 861, 863 [2000]).
Here, the language of the group agreement unambiguously establishes that the groupagreement, not the PPAs, governs WFP's compensation, including division of any surplus.Indeed, pursuant to the terms of the group agreement, it was contemplated that the individualphysicians would enter into PPAs with defendant, which would "remain in full effect except thatcompensation shall be pursuant to this [Group] Agreement." The group agreement furtherprovided that, "[i]n the event of a conflict between the terms of this Agreement and the [PPAs],this Agreement shall control." Thus, although each PPA states that it supersedes prioragreements, we conclude that the PPAs do not override the clear and unambiguous language inthe group agreement that it controls in the event of a conflict between the group agreement andthe PPAs. Moreover, the PPAs were not entered into on behalf of WFP and thus there were noprior agreements between defendant and the individual plaintiff physicians who entered into thePPAs.
Having determined that the terms of the group agreement are controlling, we must nextdetermine whether defendant complied with those terms in calculating each surplus for the yearsset forth in the complaint of the WFP plaintiffs and the amended complaint, i.e., 2001 and 2003through 2005, and the year set forth in the complaint of WFP and FHS, i.e., 1999. We rejectdefendant's contention that the group agreement unambiguously provided that the annual surplusshares of WFP and FHS were limited to 50% of the surplus, capped at the amount of thewithhold. The group agreement provides in relevant part that, "in no event shall FHS['s] andWFP's share of any net deficit and surplus exceed the sum of amounts of the withhold," but itsubsequently provides that, "in the event of a surplus, the full withhold plus 50% of the surplusshall be paid to FHS and WFP." We agree with the court that those provisions of the groupagreement "cannot be interpreted in a way to avoid the inconsistenc[ies] and [that], although thespecific provision controls when there is an inconsistency between a general provision and aspecific provision . . . , here both provisions are specific" (Contacare, Inc. v CIBA-Geigy Corp.,49 AD3d 1215, 1217 [2008], lv denied 10 NY3d 714 [2008]), and thus that thegroup agreement is as a matter of law inconsistent with respect to the surplus apportionmentprovision.
"It is a basic principle of contract law that a written document is to be construed against theparty who prepared it where there are . . . contradictory provisions" (Gillette vHeinrich Motors, 55 AD2d 841, 841 [1976], affd 44 NY2d 661 [1978]; see Rochester Home Equity vGuenette, 6 AD3d 1119 [2004]; see also Jacobson v Sassower, 66 NY2d 991,993 [1985]; Brodsky v Levy, 161 AD2d 1120, 1121-1122 [1990]). Nevertheless, thatprinciple is not applicable where, as here, the party seeking to apply it participated in [*3]negotiating the terms of the document (see Coliseum Towers Assoc. v County ofNassau, 2 AD3d 562, 565 [2003], lv denied 2 NY3d 707 [2004]; see also 67Wall St. Co. v Franklin Natl. Bank, 37 NY2d 245, 249 [1975]). Thus, we are relegated to theintent of the parties to the group agreement, and the "best evidence of [their] intent. . . is their conduct after [it was] formed" (Waverly Corp. v City of New York, 48 AD3d 261, 265 [2008]).
Here, we conclude that defendant established as a matter of law, based on the conduct of theparties to the group agreement after it was formed (see id.), that the parties intended thatthe group agreement cap the apportionment of the annual surplus, if any, at the amount of theirwithhold. As noted, plaintiffs did not object to their compensation when defendant capped theparties' surplus in 1999 at the amount of the withhold. In addition, in support of its motiondefendant submitted the deposition testimony and an affidavit of plaintiff Donald F. Brautigam,WFP's president and chief executive officer, in which he confirmed that it was not untilapproximately the year 2000 that WFP concluded that the group agreement provided that WFPwas entitled to receive 50% of the annual surplus, if any, without a cap.
In opposing the motion, plaintiffs failed to present any evidence establishing that WFP andFHS did not intend to agree to defendant's cap of the surplus allotment in 1998, when theyentered into the group agreement. Indeed, plaintiffs merely offered evidence of uncommunicatedsubjective intent, and subsequent interpretations of the group agreement, and plaintiffs thereforefailed to raise an issue of fact to defeat the motion (see Wells v Shearson Lehman/AmericanExpress, 72 NY2d 11, 24 [1988], rearg denied 72 NY2d 953 [1988]; Sally vSally, 225 AD2d 816, 818 [1996]). Present—Scudder, P.J., Smith, Peradotto and Pine,JJ.