| Hytko v Hennessey |
| 2009 NY Slip Op 03662 [62 AD3d 1081] |
| May 7, 2009 |
| Appellate Division, Third Department |
| Theodore M. Hytko, Individually and as Administrator of theEstate of Kim A. Hytko, Deceased, Plaintiff, v William J. Hennessey et al., Defendants, andOB/GYN Health Center Associates, Defendant and Third-Party Plaintiff-Respondent-Appellant.Jane E. Szary, Third-Party Defendant-Appellant-Respondent. |
—[*1] Bartlett, McDonough, Bastone & Monaghan, L.L.P., White Plains (Edward J. Guardaro Jr.of counsel), for defendant and third-party plaintiff-respondent-appellant.
Peters, J. Appeals (1) from an order of the Supreme Court (Malone Jr., J.), entered April 13,2005 in Albany County, which structured the judgment to be entered upon a verdict in favor ofplaintiff pursuant to CPLR article 50-A, and (2) from a judgment of said court, entered August31, 2005 in Albany County, upon, among other things, a verdict rendered in favor of plaintiff.
At the time of the events giving rise to this medical malpractice and wrongful death action,defendants Mary S. Elacqua and William J. Hennessey (hereinafter collectively referred to as thephysicians) practiced as members of a partnership, defendant OB/GYN Health CenterAssociates. Third-party defendant, Jane E. Szary, a nurse practitioner employed by OB/GYN,was the primary caregiver to Kim A. Hytko (hereinafter decedent). Beginning in June 1994 andon several other occasions during the months that followed, decedent presented to defendantswith complaints of abdominal pain and was seen and treated by Szary. Decedent was admitted tothe hospital in October 1994 and died the following month, the cause of death being listed as"[p]robable choriocarcinoma."[FN1]Plaintiff, individually and as administrator of decedent's estate, sued Szary, the physicians andOB/GYN[FN2]alleging, among other things, that Szary was negligent in failing to diagnose decedent'schoriocarcinoma and that the physicians failed to properly collaborate with Szary in accordancewith certain provisions of the Education Law. Plaintiff subsequently settled with Szary, releasingall claims against her, but reserving his right to proceed against the other defendants. Inresponse, OB/GYN commenced a third-party action against Szary for indemnification.
A jury trial ensued and, at the close of plaintiff's proof, the physicians moved for a directedverdict in their favor. Supreme Court ultimately granted the motion and the complaint wasdismissed against the physicians prior to submission of the case to the jury. At the conclusion ofthe trial, the jury rendered a verdict finding that Szary was negligent in her care and treatment ofdecedent and that such negligence was a substantial factor in bringing about her death. The juryawarded damages in favor of plaintiff in the amount of $1.89 million, and Supreme Courtawarded OB/GYN judgment as a matter of law on its indemnification claim against Szary. Theseappeals by OB/GYN and Szary ensued.[FN3]
Subsequently, Physicians' Reciprocal Insurers (hereinafter PRI) disclaimed coverage for[*2]the verdict (Elacqua v Physicians' Reciprocal Insurers, 21 AD3d 702, 703[2005], lv dismissed 6 NY3d 844 [2006]). The physicians and OB/GYN thereaftercommenced an action against PRI seeking money damages for breach of contract for its failureto properly defend and indemnify them (id. at 703-704). PRI then settled plaintiff's claimon behalf of its insureds for $2.4 million (Elacqua v Physicians' Reciprocal Insurers, 52 AD3d 886, 887[2008] [hereinafter Elacqua II]), but the physicians and OB/GYN continued their actionagainst PRI, seeking to recoup the counsel fees they expended in their attempt to compel it toindemnify them (id.). Ultimately, this Court found that PRI had engaged in deceptivebusiness practices pursuant to General Business Law § 349 (id. at 889).
We begin by addressing Szary's assertion that Supreme Court improperly and prematurelydismissed the direct claims against the physicians. A directed verdict pursuant to CPLR 4401 isappropriate when, viewing the evidence in a light most favorable to the nonmoving party andaffording such party the benefit of every inference, there is no rational process by which a jurycould find in favor of the nonmovant (see Szczerbiak v Pilat, 90 NY2d 553, 556 [1997];Gold v Di Cerbo, 41 AD3d1051, 1052-1053 [2007], lv denied 9 NY3d 811 [2007]; Ciocca v Park, 21 AD3d 671, 672[2005], affd 5 NY3d 835 [2005]). In a medical malpractice action, establishment of aprima facie case requires expert testimony that there was a deviation from accepted standards ofmedical care and that such deviation was the proximate cause of the injury (see Turcsik v Guthrie Clinic, Ltd., 12AD3d 883, 886 [2004]; Postlethwaite v United Health Servs. Hosps., 5 AD3d 892, 895[2004]; Giambona v Stein, 265 AD2d 775, 776 [1999]).
As previously noted, the essence of plaintiff's case against the physicians was that they failedto adequately "collaborate" with Szary concerning decedent's care, within the meaning ofEducation Law § 6902 (3) (a). Upon the physicians' motion for a directed verdict, plaintiffconceded that there was no expert testimony that the physicians deviated from any acceptedstandard of care or that any such deviation was a substantial factor in causing the death ofdecedent. In fact, Richard Waldman, a physician specializing in obstetrics and gynecology,testified that the degree of collaboration with Szary was in keeping with good and acceptedstandards of practice. Contrary to Szary's assertion that the directed verdict was granted beforeshe had the opportunity to offer any proof, the record reveals that Supreme Court appropriatelyreserved on the motion and, before finally granting it, twice gave Szary the opportunity to submitevidence against the two physicians, which she failed to do. As the evidence presented wasinsufficient to establish a prima facie case against the physicians, Supreme Court appropriatelygranted them a directed verdict.
Szary next contends that, because her treatment of decedent was in furtherance of heremployer's business, she cannot be held independently liable for negligent acts committed withinthat scope. Under well-settled principles of respondeat superior, it is fundamental that in orderfor an employer to be held vicariously liable for the torts of an employee, a viable cause ofaction must lie against that employee for his or her individual negligence (see Karaduman vNewsday, Inc., 51 NY2d 531, 545-546 [1980]; Sanderson v Bellevue MaternityHosp., 259 AD2d 888, 891-892 [1999]; see also Lopez v Master, 58 AD3d 425 [2009]; Magriz v St. Barnabas Hosp., 43AD3d 331, 332-333 [2007], lv denied 10 NY3d 790 [2008]). Thus, where theemployee commits negligence, a cause of action lies against both the employee and theemployer, and the employer has the right to seek indemnification (see McDermott v City ofNew York, 50 NY2d 211, 218 n 4 [1980]; Ditingo v Dreyfuss, 27 AD3d 1024, 1026-1027 [2006]; seealso Macari v Parsons Hosp., 26 AD2d 584, 584 [1966]). Here, plaintiff brought an actionagainst both [*3]OB/GYN and Szary, among others. Althoughplaintiff subsequently settled with Szary, he specifically reserved his right to maintain his actionagainst OB/GYN and the other defendants on the theories of both active negligence andrespondeat superior. As the jury verdict established that the only active negligence was on thepart of Szary, liability on the part of OB/GYN was solely vicarious. As such, Supreme Court didnot err in awarding judgment as a matter of law in favor of OB/GYN on its indemnificationclaim against Szary (see Ditingo v Dreyfuss, 27 AD3d at 1026-1027).[FN4]
Nevertheless, we agree with Szary's contention that OB/GYN's insurer, PRI, should bebarred from invoking the equitable remedy of common-law indemnification due to its uncleanhands. Although not raised in Supreme Court, this argument flows directly from our decision inElacqua II and, therefore, was previously unavailable to Szary. Moreover, as this issueconcerns public policy implications regarding an insurer's obligations and the consequences offailing to live up to those obligations (see Elacqua v Physicians' Reciprocal Insurers, 52 AD3d 886[2008], supra; Elacqua vPhysicians' Reciprocal Insurers, 21 AD3d 702 [2005], supra), we are compelledto address the argument (see Matter of Niagara Wheatfield Adm'rs Assn. [NiagaraWheatfield Cent. School Dist.], 44 NY2d 68, 72 [1978]; Pesta v City of Johnstown, 53 AD3d 884, 886-887 [2008];Matter of Heslin v City of Cohoes, 74 AD2d 393, 396 [1980], revd on othergrounds 53 NY2d 903 [1981]).
PRI seeks indemnification against Szary on behalf of OB/GYN through subrogation. Bothsubrogation (see Dominion Ins. Co., Ltd. v State of New York, 305 AD2d 779, 781[2003]; Loctite VSI v Chemfab N.Y., 268 AD2d 869, 871 [2000]) and impliedindemnification (see Mas v Two Bridges Assoc., 75 NY2d 680, 690 [1990];McDermott v City of New York, 50 NY2d at 216-217; State of New York vPosillico, Inc., 277 AD2d 753, 754 [2000]) are equitable causes of action. The purpose ofthese equitable remedies is to shift a debt or obligation to a party who more properly should beaccountable in order to prevent unjust enrichment and an unfair result (see State of NewYork v Stewart's Ice Cream Co., 64 NY2d 83, 88 [1984]; State of New York v Posillico,Inc., 277 AD2d at 754; Phillips v Young Men's Christian Assn., 215 AD2d 825, 827[1995]). However, equitable remedies are barred by the doctrine of unclean hands where theparty seeking to assert them "has committed some unconscionable act that is 'directly related tothe subject matter in litigation' and has injured the party attempting to invoke the doctrine"(PenneCom B.V. v Merrill Lynch & Co., Inc., 372 F3d 488, 493 [2d Cir 2004], quotingWeiss v Mayflower Doughnut Corp., 1 NY2d 310, 316 [1956]; see Hickland vHickland, 100 AD2d 643, 645 [1984], appeal dismissed 63 NY2d 951 [1984];see also Sardanis v Sumitomo Corp., 282 AD2d 322, 324 [2001]). Additionally, publicpolicy precludes indemnification for those who commit intentional torts or active negligence(see Town of Massena v Healthcare Underwriters Mut. Ins. Co., 281 AD2d 107, 111[2001], mod 98 NY2d 435 [2002]; State of New York v Posillico, Inc., 277AD2d at 755). Thus, the equitable powers of the courts should not be exerted on behalf of onewho has acted fraudulently or has gained an advantage by deceit (see PenneCom [*4]B.V. v Merrill Lynch & Co., Inc., 372 F3d at 493; Sardanisv Sumitomo Corp., 282 AD2d at 324).
As the insurer of the physicians and OB/GYN, PRI had an affirmative obligation, once itdetermined that its interests were adverse to those of its insureds in this action, to inform them oftheir right to select counsel of their own choosing at PRI's expense (see Elacqua v Physicians'Reciprocal Insurers, 52 AD3d at 888-889). As described in our decision in ElacquaII, PRI failed in this regard, the practical impact being that its interests were advanced at theexpense of its insureds (id. at 889-891). The impact of this failure was most evidentwhen counsel for the physicians successfully moved to dismiss the direct claims against them,leaving only uncovered claims against OB/GYN through vicarious liability for the negligence ofSzary (id. at 890). Additionally, counsel provided by PRI for OB/GYN joined in themaking of the motion, despite having legally sufficient evidence to oppose it, exposing his ownclient to an uncovered multimillion dollar judgment (id.). Because of the failure of PRIto advise its clients of their rights, and the attendant negative impact it had on the clients'interests, this Court found that PRI was guilty of deceptive business practices pursuant toGeneral Business Law § 349 (id. at 888-889).
In addition to prejudicing its clients, PRI's conduct likewise caused injury to Szary. Thedeceptive business practices by PRI allowed the directed verdict to be rendered in favor of thephysicians, which deprived Szary of the possibility that a jury would have rendered a verdictfinding the physicians at least partly negligent for decedent's injuries. Significantly, had the juryfound any negligence on behalf of either of the physicians, this would have convertedOB/GYN's third-party claim against Szary from one for indemnification to contribution (seeMas v Two Bridges Assoc., 75 NY2d at 689-690; McDermott v City of New York,50 NY2d at 216; Johnson City Cent. School Dist. v Fidelity & Deposit Co. of Md., 272AD2d 818, 822 [2000]), rendering Szary immune from liability by virtue of her settlement(see General Obligations Law § 15-108; McDermott v City of New York,50 NY2d at 220; Johnson City Cent. School Dist. v Fidelity & Deposit Co. of Md., 272AD2d at 819; State of New York v U.W. Marx, Inc., 209 AD2d 784, 784 n 1 [1994];see also Williams v New York City Health & Hosps. Corp., 262 AD2d 231, 232 [1999]).Thus, in light of the deceptive business practices in which PRI engaged and the adverse effectsthat flowed from such conduct, equity demands that PRI be barred from recovery against Szaryunder the equitable remedy of implied indemnification due to its unclean hands (see Town ofMassena v Healthcare Underwriters Mut. Ins. Co., 281 AD2d at 111; Hickland vHickland, 100 AD2d at 645).
Szary's remaining contentions are either unpreserved or have been rendered academic by ourdecision.
Cardona, P.J., Lahtinen, Kane and McCarthy, JJ., concur. Ordered that the appeal from theorder entered April 13, 2005 is dismissed, without costs. Ordered that the judgment enteredAugust 31, 2005 is modified, on the law, without costs, by reversing so much thereof as granteddefendant OB/GYN Health Center Associates [*5]judgment onits third-party complaint seeking indemnification against third-party defendant, Jane E. Szary;third-party complaint dismissed; and, as so modified, affirmed.
Footnote 1: Choriocarcinoma is amalignant, aggressive cancer, usually of the placenta.
Footnote 2: Although physician JockularFord was also a named defendant, the action was discontinued against him prior to trial.
Footnote 3: Counsel for OB/GYN hasinformed this Court that OB/GYN's appeals have been rendered moot by subsequent events.Accordingly, and inasmuch as OB/GYN now only seeks affirmance of Supreme Court'sjudgment, its appeals are deemed abandoned (see Czynski v State of New York, 53 AD3d 881, 882 n [2008],lv denied 11 NY3d 715 [2009]). Since OB/GYN is the only party that appealed from theorder entered April 13, 2005, the appeal from that order is dismissed. In addition, by orderentered September 14, 2007, this Court granted plaintiff's motion to withdraw and discontinuehis appeals.
Footnote 4: There is no merit to Szary'sadditional argument that the complaint must be dismissed because there was no finding ofliability directly against OB/GYN, as OB/GYN's liability was solely premised upon its vicariousliability for Szary's negligence (see McDermott v City of New York, 50 NY2d at 218 n4; Ditingo v Dreyfuss, 27 AD3d at 1026-1027; see also Nobel v Ambrosio, 120AD2d 715, 717 [1986]).