| Anesthesia Assoc. of Mount Kisco, LLP v Northern Westchester Hosp.Ctr. |
| 2009 NY Slip Op 01073 [59 AD3d 473] |
| February 10, 2009 |
| Appellate Division, Second Department |
| Anesthesia Associates of Mount Kisco, LLP, et al.,Appellants-Respondents, v Northern Westchester Hospital Center et al.,Respondents-Appellants. |
—[*1] Garfunkel Wild & Travis, P.C., Great Neck, N.Y. (Roy W. Breitenbach and Justin M. Vogelof counsel), for respondents-appellants Northern Westchester Hospital Center, Joel Seligman,and Michael Finkelstein. McDonough Marcus Cohn Tretter Heller & Kanca, LLP, New Rochelle, N.Y. (Eli S. Cohenand Randy J. Heller of counsel), for respondents-appellants Northern Westchester AnesthesiaServices and David Miller.
In an action, inter alia, to recover damages for breach of contract, (1) the plaintiffs appeal, aslimited by their notice of appeal and brief, from so much of an order of the Supreme Court,Westchester County (Donovan, J.), entered March 8, 2007, as granted those branches of themotion of the defendants Northern Westchester Hospital Center, Joel Seligman, and MichaelFinkelstein which were for summary judgment dismissing the fifth, eighth, and fourteenth causesof action insofar as asserted against them, and granted those branches of the motion of thedefendants Northern Westchester Anesthesia Services and David Miller which were forsummary judgment dismissing stated portions of the ninth cause of action and the fourteenthcause of action insofar as asserted against them, (2) the defendants Northern WestchesterHospital Center, Joel Seligman, and Michael Finkelstein cross-appeal, as limited by their noticeof cross appeal and brief, from so much of the same order as denied those branches of theirmotion which were for summary judgment dismissing the first and second causes of actionalleging breach of contract and breach of the implied covenant of good faith and fair dealing,respectively, and (3) the defendants Northern Westchester Anesthesia Services and David Millerseparately cross-appeal from so much of the same order as denied those branches of their motionwhich were for summary judgment dismissing the [*2]twelfthcause of action and so much of the ninth cause of action as alleged unfair competition based onthe wrongful diversion of business from the plaintiffs to Northern Westchester AnesthesiaServices.
Ordered that the order is modified, on the law, by deleting the provisions thereof grantingthose branches of the motion of the defendants Northern Westchester Hospital Center, JoelSeligman, and Michael Finkelstein which were for summary judgment dismissing so much of thefifth cause of action as alleged tortious interference with the plaintiffs' contractual relationshipwith Dr. Andrew Duffy, and so much of the eighth cause of action as alleged unfair competitionbased on a theory of conspiracy to improperly divert business, and substituting thereforprovisions denying those branches of the motion; as so modified, the order is affirmed insofar asappealed and cross-appealed from, without costs or disbursements.
This action was commenced by Anesthesia Associates of Mount Kisco, LLP (hereinafterAAMK), and its individual partners against the defendants Northern Westchester HospitalCenter (hereinafter the Hospital), Joel Seligman, the Hospital's president and CEO, MichaelFinkelstein, the Hospital's senior vice president for medical affairs (hereinafter collectively theHospital defendants), and the defendants Northern Westchester Anesthesia Services (hereinafterNWAS), a competing anesthesiology group, and David Miller, a member of NWAS and thechief of anesthesiology at the Hospital (hereinafter together the NWAS defendants). Theplaintiffs seek damages based on the defendants' alleged breach of contract, tortious interferencewith the plaintiffs' practice and business relations, unfair competition, and other related claims.
The Supreme Court properly granted that branch of the Hospital defendants' motion whichwas for summary judgment dismissing so much of the fifth cause of action as alleged tortiousinterference with AAMK's contractual relationship with Dr. Robert Rauch and Dr. James Sonn,two anesthesiologists who were interested in joining AAMK. However, the Supreme Courtshould have denied that branch of the motion which was for summary judgment dismissing somuch of the fifth cause of action as alleged tortious interference with AAMK's contractualrelationship with Dr. Andrew Duffy. "The elements of tortious interference with contractualrelations are (1) the existence of a contract between the plaintiff and a third party, (2) thedefendant's knowledge of the contract, (3) the defendant's intentional inducement of the thirdparty to breach or otherwise render performance impossible, and (4) damages to the plaintiff"(Bayside Carting v Chic Cleaners, 240 AD2d 687, 688 [1997]; see Kronos, Inc. vAVX Corp., 81 NY2d 90, 94 [1993]; M.J. & K. Co. v Matthew Bender & Co., 220AD2d 488, 490 [1995]). The Court of Appeals has recognized that "inducing breach of a bindingagreement and interfering with a nonbinding 'economic relation' can both be torts, but that theelements of the two torts are not the same" (Carvel Corp. v Noonan, 3 NY3d 182, 189 [2004]). "[T]he degreeof protection available to a plaintiff for a [defendant's] tortious interference with contract isdefined by the nature of the plaintiff's enforceable legal rights. Thus, where there is an existing,enforceable contract and a defendant's deliberate interference results in a breach of that contract,a plaintiff may recover damages for tortious interference with contractual relations even if thedefendant was engaged in lawful behavior . . . Where there has been no breach ofan existing contract, but only interference with prospective contract rights, however, plaintiffmust show more culpable conduct on the part of the defendant" (NBT Bancorp vFleet/Norstar Fin. Group, 87 NY2d 614, 621 [1996] [ citations omitted]; see CarvelCorp. v Noonan, 3 NY3d at 190; Guard-Life Corp. v Parker Hardware Mfg. Corp.,50 NY2d 183, 193-194 [1980]).
As a member of AAMK, Duffy had an existing contract with the plaintiffs. In opposition to[*3]the Hospital defendants' motion for summary judgment, theplaintiffs submitted, inter alia, an affidavit of Douglas Kornreich, a member of AAMK, stating,among other things, that Duffy breached his partnership agreement and fiduciary obligations tohis partners in AAMK by entering into a secret agreement with Joel Seligman, whereby hewould receive a supplemental salary of $50,000 per year, plus indemnification from the Hospitalfor any claims, liability, etc., arising out of his negotiations and service as chief of thedepartment or "alleged violation of the partnership agreement" between him and AAMK.Attached to Kornreich's affidavit was a copy of the indemnification agreement between Duffyand the Hospital, dated February 11, 2002, pursuant to which the Hospital agreed to indemnifyDuffy for "any and all claims, demands, actions, loss, liability, costs or expenses. . . arising out of or in connection with your negotiations to become and yourservice as Chief of the Department." Indemnification would not apply "to allegations of acts oromissions arising out of or in connection with . . . your alleged violation of anyagreements," except for "alleged violations of the partnership agreement between youand Anesthesia Associates of Mt. Kisco with respect to your negotiations to become or service asChief of the Department." In reply, the Hospital defendants submitted Duffy's affirmation, inwhich he stated that the reason he resigned from AAMK in September 2002 was because hewould not agree to sign AAMK's new partnership agreement containing a certain restrictivecovenant.
Kornstein's affidavit and the evidence of the February 11, 2002 indemnification agreementraised a triable issue of fact as to whether the Hospital defendants intentionally induced Duffy toleave AAMK. Duffy's statements in his affirmation did not establish as a matter of law that theHospital defendants did not induce him to leave AAMK. Rather, they merely presented acredibility issue to be resolved by the factfinder in light of Kornstein's affidavit and the evidenceof the indemnification agreement (see Computer Strategies v Commodore Bus. Machs.,105 AD2d 167, 175 [1984]). Accordingly, the Supreme Court erred in granting that branchof the Hospital defendant's motion which was for summary judgment dismissing so much of thefifth cause of action as alleged tortious interference with AAMK's contractual relationship withDuffy.
With regard to the Hospital defendants' alleged tortious interference with AAMK'scontractual relationship with Rauch and Sonn, two anesthesiologists who were only consideringjoining AAMK, the plaintiffs were required to show "that the defendant's interference with itsprospective business relations was accomplished by wrongful means or that the defendant actedfor the sole purpose of harming the plaintiff" (Caprer v Nussbaum, 36 AD3d 176, 204 [2006] [internal quotationmarks and citation omitted]; see Carvel Corp. v Noonan, 3 NY3d at 190-191). "'Wrongful means' include physical violence, fraud or misrepresentation, civil suits and criminalprosecutions, and some degrees of economic pressure" (Guard-Life Corp. v Parker HardwareMfg. Corp., 50 NY2d at 191). If a defendant shows that the interference is intended, at leastin part, to advance its own interests, then it was not acting solely to harm the plaintiff (seeCarvel Corp. v Noonan, 3 NY3d at 190; Guard-Life Corp. v Parker Hardware Mfg.Corp., 50 NY2d at 191; NewportServ. & Leasing, Inc. v Meadowbrook Distrib. Corp., 18 AD3d 454, 455 [2005]).
The plaintiffs alleged that the Hospital defendants interfered with their prospective businessrelations with Rauch and Sonn by refusing to process their applications for medical staffprivileges at the Hospital, making it impossible for these doctors to join AAMK. Since they didnot allege illegal or improper acts, the plaintiffs had to show that the Hospital defendants actedfor the sole purpose of harming the plaintiffs.
The Hospital defendants established their prima facie entitlement to judgment as a matter of[*4]law by submitting an affidavit of Joel Seligman, in which heexplained that the doctors' applications were not processed because a general hiring freeze wasimposed during the search for a new chief of anesthesiology so that the new chief could haveinput in the selection of new anesthesiologists. Thus, the Hospital defendants demonstrated thattheir failure to process the applications was, at least partially, due to the hiring freeze imposed tofurther their own interests, and not solely to harm the plaintiffs.
In opposition to the motion, the plaintiffs failed to raise a triable issue of fact as toSeligman's statements. The plaintiffs' repeated allegations, without any evidence, that theHospital defendants acted solely out of malice are merely speculation and insufficient to defeatthe motion for summary judgment on this issue (see Alvarez v Prospect Hosp., 68 NY2d320, 324 [1986]).
Contrary to the NWAS defendants' contention, the Supreme Court properly denied thatbranch of their motion which was for summary judgment dismissing so much of the ninth causeof action as alleged unfair competition based on the wrongful diversion of business from theplaintiffs to NWAS (see LoPresti vMassachusetts Mut. Life Ins. Co., 30 AD3d 474, 476 [2006]; Beverage Mktg. USA, Inc. v South BeachBeverage Co., Inc., 20 AD3d 439, 440 [2005]; McRoberts Protective Agency vLansdell Protective Agency, 61 AD2d 652, 654 [1978]). In opposition to the NWASdefendants' submissions establishing their prima facie entitlement to judgment as a matter of law,the plaintiffs submitted extensive evidence raising triable issues of fact as to whether, bydiverting to NWAS members cases that should have been assigned to AAMK members, theNWAS defendants deprived the plaintiffs of the business to which they had a right pursuant tothe Hospital bylaws, and that they did it purposely and in bad faith.
Contrary to the plaintiffs' contention, the Supreme Court properly granted that branch of themotion of the NWAS defendants which was for summary judgment dismissing so much of theninth cause of action as alleged wrongdoing based on a donation of Miller and his group to theHospital Foundation. In opposition to the NWAS defendants' submissions establishing theirprima facie entitlement to judgment as a matter of law, the plaintiffs failed to raise a triable issueof fact as to whether the donation constituted a kickback. Similarly, the plaintiffs failed to raise atriable issue of fact as to the same kickback allegations asserted in the eighth cause of action,alleging unfair competition on the part of the Hospital defendants.
The remaining part of the eighth cause of action alleged unfair competition based on a theoryof conspiracy. "Although an independent cause of action for civil conspiracy is not recognized inthis State . . . a plaintiff may plead the existence of a conspiracy in order to connectthe actions of the individual defendants with an actionable, underlying tort and establish thatthose actions were part of a common scheme" (Litras v Litras, 254 AD2d 395, 396[1998]; see Alexander & Alexander of N.Y. v Fritzen, 68 NY2d 968, 969 [1986];Gouldsbury v Dan's Supreme Supermarket, 154 AD2d 509, 510 [1989]; BurnsJackson Miller Summit & Spitzer v Lindner, 88 AD2d 50, 72 [1982], affd 59 NY2d314 [1983]). "The allegation of conspiracy carries no greater burden, but also no less, than toassert adequately common action for a common purpose by common agreement or understandingamong a group, from which common responsibility derives" (Goldstein v Siegel, 19AD2d 489, 493 [1963]; see Green v Davies, 182 NY 499, 503-504 [1905]; MBFClearing Corp. v Shine, 212 AD2d 478, 479 [1995]; Silver v Mohasco Corp., 94AD2d 820, 821 [1983]).
The plaintiffs alleged, inter alia, that the NWAS defendants conspired with the Hospitaldefendants to destroy AAMK by, among other things, "unfairly and improperly assigning and[*5]allocating cases between members of [NWAS] andPlaintiffs." In support of their motion for summary judgment, the Hospital defendants submittedno documentation as to whether they conspired with the NWAS defendants in the latter's allegedacts of unfair competition with the plaintiffs, failing even to address the issue in their attorney'saffirmation or affidavits in support. Accordingly, they failed to meet their prima facie burden ofdemonstrating the absence of a triable issue of fact as to this allegation, and the court shouldhave denied that branch of their motion which was for summary judgment dismissing so much ofthe eighth cause of action as was based on allegation that they conspired with the NWASdefendants to improperly divert business from the plaintiffs to NWAS (see CPLR 3212[b]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).
The Supreme Court properly granted those branches of the defendants' respective motionswhich were for summary judgment dismissing the cause of action alleging a violation of GeneralBusiness Law § 349. Although the affidavits submitted by the plaintiffs in opposition tothe motions do raise triable issues of fact as to whether the defendants were purposely failing toassign cases to AAMK members, and whether several patients were adversely affected by this,the alleged acts did not have a "broad impact on consumers at large" (Canario v Gunn,300 AD2d 332, 333 [2002] [internal quotation marks omitted]), as contemplated by the statute,nor did they involve representations or omissions "likely to mislead a reasonable consumeracting reasonably under the circumstances" (Gaidon v Guardian Life Ins. Co. of Am., 94NY2d 330, 344 [1999] [internal quotation marks omitted]; see Karlin v IVF Am., 93NY2d 282, 294 [1999]; Oswego Laborers' Local 214 Pension Fund v Marine MidlandBank, 85 NY2d 20, 25 [1995]). Rather, this case involves precisely the type of "[p]rivatecontract dispute[ ], unique to the parties, [that] would not fall within the ambit of the statute"(Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 25).
The Supreme Court also properly denied that branch of the Hospital defendants' motionwhich was for summary judgment dismissing the first and second causes of action allegingbreach of contract and breach of the implied covenant of good faith and fair dealing,respectively. The Hospital's bylaws in this case were sufficiently clear and specific to form thebasis of a claim alleging breach of contract (see Mason v Central Suffolk Hosp., 3 NY3d 343, 348-349 [2004];Chuz v St. Vincent's Hosp., 186 AD2d 450, 451 [1992]; Saha v Record, 177AD2d 763, 764 [1991]; Giannelli v St. Vincent's Hosp. & Med. Ctr. of N.Y., 160 AD2d227, 232 [1990]; Chalasani v Neuman, 97 AD2d 806 [1983], revd on othergrounds 64 NY2d 879 [1985]). Moreover, in opposition to the Hospital defendants'submissions establishing their prima facie entitlement to judgment as a matter of law, theplaintiffs submitted sufficient evidence to raise a triable issue of fact as to whether the Hospitaldefendants breached the contract with the plaintiffs by diminishing their privileges withoutcause. There is no merit to the Hospital defendants' contention that the bylaws are not supportedby consideration. "Consideration consists of either a benefit to the promisor or a detriment to thepromisee. It is enough that something is promised, done, forborne, or suffered by the party towhom the promise is made as consideration for the promise made to him" (Anand v Wilson, 32 AD3d 808,809 [2006]; see Weiner v McGraw-Hill, Inc., 57 NY2d 458, 464 [1982]). Here, thecontract contained in the bylaws was supported by consideration in the form of the plaintiffs'years of services provided to the Hospital under the terms of the bylaws (see Rooney vTyson, 91 NY2d 685, 692 [1998]; Weiner v McGraw-Hill, Inc., 57 NY2d 458[1982]; Matter of Ball [SFX Broadcasting], 236 AD2d 158, 161 [1997]).
Lastly, the court properly denied that branch of the NWAS defendants' motion which was forsummary judgment dismissing the twelfth cause of action alleging unjust enrichment. "Toprevail on a claim of unjust enrichment, a party must show that (1) the other party was enriched,(2) [*6]at that party's expense, and (3) that 'it is against equityand good conscience to permit [the other party] to retain what is sought to be recovered' " (Citibank, N.A. v Walker, 12 AD3d480, 481 [2004], quoting Paramount Film Distrib. Corp. v State of New York, 30NY2d 415, 421 [1972], cert denied 414 US 829 [1973]; see Cruz v McAneney, 31 AD3d54, 59 [2006]; Lake Minnewaska Mtn. Houses v Rekis, 259 AD2d 797, 798 [1999]).In opposition to the NWAS defendants' submissions establishing their prima facie entitlement tojudgment as a matter of law, the plaintiffs submitted sufficient evidence to raise a triable issue offact as to whether cases that should have been assigned to AAMK doctors were assigned toNWAS doctors, whether the NWAS defendants were unjustly enriched at the expense of theplaintiffs, and whether it would be "against equity and good conscience to permit the [NWAS]defendant[s] to retain" the money they earned for services that the plaintiffs should have beengiven the opportunity to provide (see Paramount Film Distrib. Corp. v State of NewYork, 30 NY2d 415, 421 [1972]). Miller, J.P., Dickerson, Leventhal and Belen, JJ., concur.