| Troy Nursing & Rehabilitation Ctr., LLC v Naylor |
| 2012 NY Slip Op 03243 [94 AD3d 1353] |
| April 26, 2012 |
| Appellate Division, Third Department |
| Troy Nursing & Rehabilitation Center, LLC, Doing Business as TheSprings Nursing & Rehabilitation Centre, Respondent, v Ernest Naylor, Defendant, andDiana Gaetano, Individually and as Responsible Party and Attorney-in-Fact for Ernest Naylor,Appellant. |
—[*1] Tuczinski, Cavalier, Gilchrist & Collura, P.C., Albany (Alison M. Coan of counsel), forrespondent.
Spain, J. Appeals (1) from an order of the Supreme Court (Hummel, J.), entered March 24,2011 in Rensselaer County, which, among other things, granted plaintiff's motion for summaryjudgment, and (2) from the judgment entered thereon.
In this action to collect fees due plaintiff for nursing home care rendered to defendant ErnestNaylor, now deceased (hereinafter decedent), at plaintiff's Springs Nursing & RehabilitationCentre in the City of Troy, Rensselaer County, Supreme Court awarded summary judgment toplaintiff on its account stated and breach of contract causes of action, holding decedent'sdaughter, defendant Diana Gaetano (hereinafter defendant) personally liable to plaintiff forfailing to use her access to decedent's property to pay his nursing home bills. Since [*2]suffering a massive stroke in December 2005 until his death inOctober 2008, decedent was a full-time resident of the Springs, except for periods ofhospitalization. On two occasions when decedent was readmitted to the Springs after spendingtime in the hospital, defendant executed agreements with plaintiff in which she promised toutilize her access to decedent's assets—by virtue of her power of attorney—to payfor his care.[FN*]Defendant also agreed to pay damages to plaintiff for any breach of that obligation. Defendantnow appeals from Supreme Court's order and judgment holding her personally liable to plaintifffor $80,509.55, plus interest, reflecting the unpaid balance due to plaintiff for decedent's care atthe time of his death.
Decedent died soon after the commencement of this action and prior to Supreme Court'sissuance of the judgment on appeal, yet no estate representative has been substituted fordecedent. As we find that decedent's estate is a necessary party to this action, we must modifySupreme Court's judgment and remit the matter for further proceedings (see Sorbello v Birchez Assoc., LLC, 61AD3d 1225, 1226 [2009]; Matter ofRomeo v New York State Dept. of Educ., 41 AD3d 1102, 1104-1105 [2007]). Indeed, asthe account stated cause of action necessitates an assessment of the debt owned to plaintiff by theestate (see Jim-Mar Corp. v Aquatic Constr., 195 AD2d 868, 869-870 [1993], lvdenied 82 NY2d 660 [1993]), we find that summary judgment on that issue cannot beawarded without the estate's participation.
We do, however, reach the issue of defendant's personal liability for breach of contract andconclude that Supreme Court correctly held that defendant accepted personal responsibility toutilize her access to decedent's funds to pay for his care and then breached that agreement byfailing to apply available assets to pay decedent's nursing home bills. In so holding, we rejectdefendant's assertions that the agreements that she executed to secure decedent's residency atplaintiff's facility violate the Federal Nursing Home Reform Act. Although that act prohibits anursing facility from "requir[ing] a third party guarantee of payment to the facility as a conditionof [a resident's] admission" (42 USC § 1396r [c] [5] [A] [ii]; see also 10 NYCRR415.3 [b] [1]), it also expressly permits a nursing facility to "requir[e] an individual, who haslegal access to a resident's income or resources available to pay for care in the facility, to sign acontract (without incurring personal financial liability) to provide payment from the resident'sincome or resources for such care" (42 USC § 1396r [c] [5] [B] [ii]; see also 10NYCRR 415.3 [b] [6]). The agreements in question here clearly fall into the latter category(see generally Putnam Nursing & Rehabilitation Ctr. v Bowles, 239 AD2d 479, 481[1997]).
Further, we reject defendant's contention that one of the two agreements she signed cannot beenforced against her in her personal capacity because she executed the agreement with the letters"POA" following her signature. The agreement's clear terms define defendant's obligations as theresponsible party by means of her control over decedent's assets, leaving no room to suggest thatthe document was signed on decedent's behalf. Indeed, defendant did not [*3]sign the agreement on the line reserved for the "SIGNATURE ORMARK OF RESIDENT" but on the line expressly reserved for the "SIGNATURE OFRESPONSIBLE PARTY." As defendant's claims that the agreements were the product of fraudor are otherwise invalid are wholly unsupported, no issues of fact preclude a finding that plaintiffwas obligated to use her authority to access decedent's property to pay his debts to plaintiff.
Likewise, the record is replete with evidence of defendant's breach of her agreement to usedecedent's funds to pay his debts to plaintiff. Specifically, we concur with Supreme Court'sconclusion that defendant's spending of decedent's monthly income for upkeep of the residentialproperty held in the Naylor Family Trust—property where decedent clearly would neveragain reside—including not only paying the mortgage and taxes, but also such things asmaintaining telephone and cable television service, lawn service, housecleaning, newspaperdelivery, birdseed, garbage collection and structural repairs, clearly violated her agreement toutilize decedent's funds to pay his debts to plaintiff. Defendant's argument that she was obligatedto maintain the home in accordance with her duties under the trust is belied by the clear terms ofthe trust document. Decedent's income was not part of the trust—its sole asset was thesingle, non-income producing residential real property—and, although decedent retained aright to reside on the property, neither he, nor defendant as trustee, carried an obligation tomaintain it with his other resources should he cease to reside there. Supreme Court properlyrejected, as a matter of law, defendant's attempt to establish that decedent continued to use theproperty as a residence by virtue of defendant taking him and his wife—defendant's motherwho was also a resident of plaintiff's nursing home—to the house to visit for a few hours ata time.
Further, defendant admitted that she refused to use an undisclosed amount of decedent'ssavings to pay his bills and that, instead of paying plaintiff, she used decedent's income to payongoing living expenses for both of her parents, including, among other things, magazinesubscriptions, automobile insurance and maintenance (although her parents could no longerdrive), gifts to family members and charitable donations. Given defendant's contractualobligation to utilize decedent's resources to pay his debt to plaintiff, this admitted spending of hisincome and refusal to utilize his other available resources to pay his bills was clearly a breach ofher agreements with plaintiff.
We cannot at this juncture, however, affirm the damage award assessed against defendant forher breach of contract because insufficient evidence exists to determine, as a matter of law andwithout representation by decedent's estate, the extent that liability might be limited by theamount of assets available to defendant, which decedent held prior to his death. Although wehave found that defendant was obligated to utilize decedent's income to satisfy his obligation toplaintiff rather than for maintenance of the trust property, his income appears to have beeninsufficient to meet his financial obligation to the Springs. Supreme Court calculated his incomefor a two-year period to be approximately $45,000. Further, defendant asserts that she was unableto sell decedent's Florida property and that proceeds she received from selling decedent's stockshad already been remitted to the Springs. The record does not contain the value of the bankaccounts that defendant controlled prior to decedent's death or the value of his other property.Accordingly, factual issues exist precluding summary judgment on the amount of defendant'sliability. Given that the matter must be remitted to Supreme Court for substitution of arepresentative of decedent's estate, we leave it to that court to reassess the proper amount ofdamages after further discovery or a trial.[*4]
Mercure, J.P., Lahtinen, McCarthy and Garry, JJ., concur.Ordered that the order and judgment are modified, on the law, without costs, by reversing somuch thereof as granted plaintiff's motion for summary judgment on the account stated cause ofaction and awarded damages to plaintiff; matter remitted to the Supreme Court for furtherproceedings not inconsistent with this Court's decision; and, as so modified, affirmed.
Footnote *: At a minimum, decedent's assetsincluded two New York properties, six undeveloped lots in Florida, three savings accounts, onechecking account, various stocks and two motor vehicles. During his lifetime, he also receivedmonthly Social Security and pension benefits. Prior to his permanent admission at the Springs,decedent created an irrevocable trust by which he transferred his residence by deed to defendantas trustee of a newly created Naylor Family Trust.