| Zuley v Elizabeth Wende Breast Care, LLC |
| 2015 NY Slip Op 02591 [126 AD3d 1460] |
| March 27, 2015 |
| Appellate Division, Fourth Department |
[*1]
| Margarita Zuley, M.D., Appellant, v ElizabethWende Breast Care, LLC, et al., Respondents. |
Woods Oviatt Gilman LLP, Rochester (Donald W. O'Brien, Jr., of counsel), forplaintiff-appellant.
Underberg & Kessler LLP, Buffalo (Thomas F. Knab of counsel), fordefendants-respondents Elizabeth Wende Breast Care, LLC, Stamatia Destounis, M.D.,Philip Murphy, M.D., Posy Seifert, D.O. and Patricia Somerville, M.D.
Boylan Code LLP, Rochester (David K. Hou of counsel), for defendant-respondentWende Logan-young, M.D.
Appeal from an order and judgment (one paper) of the Supreme Court, MonroeCounty (Matthew A. Rosenbaum, J.), entered January 24, 2014. The order and judgmentgranted the cross motions of defendants for summary judgment dismissing the secondthrough fifth causes of action and determined all other pending applications moot.
It is hereby ordered that the order and judgment so appealed from is unanimouslymodified on the law by denying that part of the cross motion of defendants ElizabethWende Breast Care, LLC, Stamatia Destounis, M.D., Philip Murphy, M.D., Posy Seifert,D.O., and Patricia Somerville, M.D. with respect to the second cause of action againstthem and reinstating that cause of action to that extent and as modified the order andjudgment is affirmed without costs, and the matter is remitted to Supreme Court, MonroeCounty, to determine plaintiff's motion.
Memorandum: Plaintiff, a former employee of defendant Wende Logan-Young,M.D. (Logan-Young), and defendants Stamatia Destounis, M.D., Philip Murphy, M.D.,Posy Seifert, D.O. and Patricia Somerville, M.D. (physician defendants) formed a limitedliability corporation (LLC) in 2006 for the purpose of purchasing Logan-Young'smedical practice. The physician defendants, however, withdrew from that LLC inSeptember 2006 and formed defendant Elizabeth Wende Breast Care, LLC (collectively,EWBC defendants), which thereafter purchased the practice for $500,000, plus othercosts, in December 2007. Plaintiff was not in Logan-Young's employ at the time of theclosing. Plaintiff commenced this action alleging, inter alia, causes of action forpromissory estoppel, constructive trust and unjust enrichment. Plaintiff alleged that, since1999, Logan-Young had been advising plaintiff that she would sell the practice to thephysicians she employed and that she intended to do so by means of a "leveraged buyout"whereby she would apply a certain amount of the profits toward the eventual purchase ofthe practice. Plaintiff alleged that in 1999 Logan-Young informed her that she wouldapply $1.2 million per year toward a prospective sale price of $8.2 million. In 2004,Logan-Young's attorney discussed a purchase price of $3 million with the attorneyretained by plaintiff and the physician defendants in connection with discussions of apotential purchase of the practice. Logan-Young's attorney indicated that the $3 millionpurchase price would be decreased by the profits from the practice pending the closing in2006. The attorney for plaintiff and the physician defendants responded that the priceviolated the "core deal that was struck years ago." It appears [*2]from the record that negotiations were ongoing until thephysician defendants withdrew from the LLC in September 2006. Plaintiff leftLogan-Young's employ in December 2006.
We conclude that Supreme Court properly granted those parts of the respective crossmotions of the EWBC defendants and Logan-Young for summary judgment dismissingthe promissory estoppel cause of action against them. " 'The elements of a causeof action based upon promissory estoppel are a clear and unambiguous promise,reasonable and foreseeable reliance by the party to whom the promise is made, and aninjury sustained in reliance on that promise' . . . However, the doctrine ofpromissory estoppel is limited to cases where the promisee suffered an 'unconscionableinjury' " (AHA Sales,Inc. v Creative Bath Prods., Inc., 58 AD3d 6, 20-21 [2008]; see ChemicalBank v City of Jamestown, 122 AD2d 530, 531 [1986], lv denied 68 NY2d608 [1986]). Both the EWBC defendants and Logan-Young met their initial burden byestablishing, with plaintiff's deposition testimony, that neither Logan-Young nor any ofthe physician defendants made a clear and unambiguous promise to plaintiff that shewould be part of the group that eventually purchased the practice. Although plaintiffestablished the basis for her understanding that she would be part of the purchase, shefailed to raise an issue of fact whether the representations of the respective defendantsconstituted a " 'clear and unambiguous promise' " to her (DiPizio Constr. Co., Inc. v NiagaraFrontier Transp. Auth., 107 AD3d 1565, 1567 [2013]).
We further conclude that the court properly granted those parts of the respectivecross motions of the EWBC defendants and Logan-Young for summary judgmentdismissing the constructive trust cause of action against them. It is well established that"a constructive trust may be imposed '[w]hen property has been acquired in suchcircumstances that the holder of the legal title may not in good conscience retain thebeneficial interest' " (Sharp v Kosmalski, 40 NY2d 119, 121 [1976]). Therequisite elements of such a cause of action are a fiduciary relationship, a promise, atransfer in reliance on the promise, and unjust enrichment (see id.; Plumitallo v Hudson Atl. LandCo., LLC, 74 AD3d 1038, 1039-1040 [2010]). We conclude with respect to thephysician defendants that, although they had a fiduciary relationship with plaintiff asmembers of the LLC (see Plumitallo, 74 AD3d at 1040), and even assuming,arguendo, that they promised plaintiff that she would be part of the group that purchasedthe practice, they established that plaintiff made no transfer to them in reliance on thatpromise, and plaintiff failed to raise an issue of fact (cf. Sharp, 40 NY2d at 122;Plumitallo, 74 AD3d at 1040). We conclude with respect to Logan-Young thatshe established that she had no fiduciary relationship with plaintiff, and plaintiff failed toraise an issue of fact whether there was such a relationship between them (cf.Sharp, 40 NY2d at 121-122; Plumitallo, 74 AD3d at 1040).
We conclude, however, that the court erred in granting that part of the cross motionof the EWBC defendants for summary judgment dismissing the cause of action for unjustenrichment against them, and we therefore modify the order and judgment accordingly.As a preliminary matter, we conclude that the court erred in determining that the unjustenrichment cause of action was duplicative of the breach of contract cause of action(cf. DiPizio Constr. Co., Inc., 107 AD3d at 1567). We previously affirmed anorder that, inter alia, granted those parts of their motions for summary judgmentdismissing the breach of contract cause of action against them based on the statute offrauds (Zuley v ElizabethWende Breast Care, LLC, 82 AD3d 1673 [2011]). Inasmuch as we concludethat plaintiff's cause of action for unjust enrichment is distinguishable from the cause ofaction for breach of contract, dismissal of the cause of action for unjust enrichment is notrequired based upon the dismissal of the cause of action for breach of contract (cf.DiPizio Constr. Co., Inc., 107 AD3d at 1566-1567).
"[T]he theory of unjust enrichment lies as a quasi-contract claim and contemplates anobligation imposed by equity to prevent injustice, in the absence of an actual agreementbetween the parties" (GeorgiaMalone & Co., Inc. v Rieder, 19 NY3d 511, 516 [2012] [internal quotationmarks omitted]). Even assuming, arguendo, that the EWBC defendants met their initialburden, we conclude that plaintiff raised an issue of fact whether Logan-Young used aportion of profits earned in part from plaintiff's efforts during her employment aspayment toward the eventual purchase of the practice for a price far below the fair marketvalue. Plaintiff raised an issue of fact whether Logan-Young intended in 1999 eventuallyto sell the practice for $8.2 million and thus whether, by virtue of Logan-Young's annualapplication of a portion of the profit toward that price and plaintiff's willingness toforego raises or higher bonuses, the EWBC defendants were unjustly enriched byplaintiff's revenue-producing efforts during that time, in order that [*3]there would be a sufficient amount of profit to apply to thepurchase price. Plaintiff also established that Logan-Young discussed a sale price of $8.2million in 1999; that the sale price in 2004 was $3 million; and that the sale price waseventually reduced to $500,000, with the addition of certain other costs. Further, plaintiffestablished that the physician defendants were paid at the time of closing for "deferredbonuses" in an aggregate amount in excess of $3.5 million for 2006 and 2007. Thus, weconclude that plaintiff raised an issue of fact whether the EWBC defendants wereenriched at plaintiff's expense when they excluded her from the purchase of the practiceand, if so, whether it is " 'against equity and good conscience' " to denyplaintiff a remedy against them (id.).
We nevertheless conclude that the court properly granted that part of Logan-Young'scross motion with respect to the unjust enrichment cause of action against her, inasmuchas she established that she was not unjustly enriched at plaintiff's expense, and plaintifffailed to raise an issue of fact (see generally id.).
Inasmuch as the court determined that the issues raised in plaintiff's motion tocompel further discovery were moot in light of its determination to dismiss the complaintin its entirety and we are now reinstating the complaint in part, we remit the matter toSupreme Court to determine the motion. Present—Scudder, P.J., Centra,Peradotto, Lindley and Whalen, JJ.