Radiosurgery NY L.L.C. v Cabrini Med. Ctr.

[*1] Radiosurgery NY L.L.C. v Cabrini Med. Ctr. 2008 NY Slip Op 50470(U) [19 Misc 3d 1102(A)] Decided on March 13, 2008 Supreme Court, Richmond County McMahon, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 13, 2008
Supreme Court, Richmond County

Radiosurgery New York L.L.C., and Gilbert S. Lederman, M.D., Plaintiff(s),

against

Cabrini Medical Center, Ronald Gade, M.D., Alan Sickles, M.D., and Peter Buscemi, Defendant(s).



100393/08

Judith N. McMahon, J.

This matter came before the Court, pursuant to an Order to Show Cause, wherein plaintiff's petition alleged that Cabrini Medical Center breached a contract with plaintiffs, dated February 24, 2004. Petitioners alleged, in brief, that the Respondent Cabrini Medical Center failed to admit a patient who had come from Italy to receive radiology oncology treatment by Dr. Lederman. Ultimately, when all parties appeared before this Court the issue of this particular patient had become moot because Dr. Lederman had paid the hospital that portion of the fee that the hospital had indicated it was due.

Thereafter, the Court directed that a hearing be held to ascertain the status of the contract of February 24, 2004, and also, what effect the New York State Department of Health Berger Commission [FN1] mandate that Cabrini Medical Center tender its operating certificate no later than June 30, 2008, had on the subject contract.

A hearing was held on March 11, 2008, wherein all parties were present and Dr. Gilbert Lederman and Dr. Alan Sickles, Vice President and Chief Medical Office of Cabrini Hospital, testified. After receiving the testimony, this Court issued an Order, on the record, indicating that the status quo of the contract was to be maintained until the operating certificate was tendered to the New York State Department of Health and that this Court would render a decision concerning the effect of said tender on the aforementioned contract.

This Court directed that all the parties comply with the February 24, 2004, contract and specifically indicated that the following was to be complied with by all parties until further Order of this Court:

(1)With reference to patients receiving radiation oncology procedures, those patients who are "self-pay" patients must register at the Cabrini Medial Center for services rendered at Cabrini and pay the hospital's share of the self-pay fee. The Cabrini fee for such patients as self-paying is usually calculated under the terms of the [*2]Agreement as $10,000 or otherwise agreed upon between the parties, pursuant to calculations previously used between the parties.

(2)The plaintiffs will provide Cabrini Medical Center with advance notice with reference to all incoming patients at least ten (10) days prior to the anticipated date of admission. RNY/Lederman agree to comply with the standards of care applicable to the treatment of such patients, including, but not limited to sterotatic radiology patients. RNY/Lederman agree that every patient's diagnosis of cancer will be confirmed in the manner required by the applicable standard of care and Cabrini regulations. It is also required that the patients be properly cleared for any surgical procedure involved in any radiation oncology procedure. In the care provided to foreign national patients, such clearance must be provided by physicians in the U.S.A. of acceptable qualifications. Likewise, pathological confirmation of the cancer diagnosis must be evidenced by either review of pathology slides at Cabrini and/or other recognized diagnostic confirmatory pathological studies.

(3)Radiosurgery New York/Gilbert S. Lederman, M.D. will provide Cabrini Medical Center with a list of prospective patients to be admitted to Cabrini Medical Center for the requested services. This list must provide the patient's name, date of birth, diagnosis, and planned radiation oncology service. It is further understood that Radiosurgery of New York/Gilbert S. Lederman, M.D. will provide this information in advance of any planned admission of such patients and provide Cabrini Medical Center with copies of the requisite confirming diagnostic data including obtaining confirmatory pathology slides where applicable.

(4)RNY/Lederman may identify other such self-pay patients within ten (10) days' prior notice to Cabrini. Each patient shall pay Cabrini and RNY/Lederman depending upon the diagnosis and procedures.

The only remaining issue is the effect of Cabrini Medical Center losing its operating license as an acute medical facility. As previously indicated, the Berger Commission, mandated the closing of Cabrini Medical Center and as such it will tender its operating certificate no later than June 30, 2008. Upon the tender of its operating certificate Cabrini Medical Center can no longer operate as an acute care facility. The contract between Dr. Lederman and Cabrini, represented/warranted that it would possess a valid operating agreement from the State of New York (see Contract [2][iii][a]). The parties also included a termination clause whereby it was indicated that

[t]his Agreement shall be subject to termination:

©) by the Company upon the Medical Center's (1) loss of its license to operate a general hosptial in the State of New York, (2) failure to maintain, qualify for, or loss of malpratice insurance as currently maintained and required by law

(d) In the event that a final decision of a government or quasi-governmental agency results in any material term of this Agreement being held to be void or unenforceable or in violation of applicable federal, state or local law or regulation, the parties agree to enter into good faith negotiations to modify this Agreement to eliminate such Agreement Infirmity, and if the parties cannot come to an agreement on such meodificiation to the Agreement, then either party may terminate this Agreement upon sixty (60) days written notice to the other party (see Contract [*3][8][iii]).

As conceded by both parties at the hearing before this Court, Cabrini has negotiated with Dr. Lederman, for approximately one year in an attempt to formulate a mutually beneficial agreement. Cabrini has indicated that they can lease out portions of the building to private doctors on a landlord/tenant basis and has attempted to do so with Dr. Lederman as they have done with other medical professionals. However, as indicated by Dr. Sickles, the negotiations lasted about one year and were terminated when neither side could agree on terms. This Court finds that good faith negotiations took place between the parties pursuant to the Contract. As a result, this Court finds that defendant Cabrini Medical Center has substantially complied with all the terms feasible under the contract and as a result of the impossibility of future performance, upon the tender of the operating agreement, the contract will become void.

It is well settled that performance of a contract should be excused only in extreme circumstances (Kel Kim Corp. v. Central Markets, Inc., 70 NY2d 900, 902 [1987]). Specifically, "[i]mpossibility excuses a party's performance only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible. Moreover, the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in contract" (id.; see County of Orange v. Grier, 30 AD3d 556, 557 [2d Dept., 2006][holding that conveyance of land not owned by the county was "impossible ab initio" and rendered the contract for sale void]; Chateau Rive Corp. v. Enclave Development Assocs., 22 AD3d 447, 449-450 [2d Dept., 2005][finding that a contract was void when completion required a special act of the New York State Legislature that was not given]; cf. Macalloy v. Metallurg, 284 AD2d 227, [1st Dept., 2001][deciding that voluntary closure of a facility and financial distress does not render performance of the contract impossible]).

Here, it is undisputed that Cabrini Medical Center is closing involuntarily as a result of the Berger Commission report, at the latest, on June 30, 2008. Upon closure, Cabrini can no longer operate its acute care facility nor can it perform in accordance with the terms of the contract with Dr. Lederman. This Court finds that the decision of the Berger Commission and approval by the New York State Legislature was a subsequent unforseen circumstance that renders Cabrini's performance under the contract impossible and thus the contract void as of the date that Cabrini tenders its operating agreement (see Kel Kim Corp. v. Central Markets Inc., 70 NY2d 900, 902-903 [1987]).

Alternatively, this Court finds that, if the Berger Commission was a foreseen circumstance, Cabrini, upon losing its operating agreement, would be eligible to rescind the contract. It is clear that "there is no hard and fast rule on the subject of rescission, for the right usually depends on the circumstances of the particular case. It is permitted [inter alia] for [the] . . . inability to perform [the contract] after it is made (Callanan v. Powers, 199 NY 268, 284-285 [1910]; RR Chester LLC v. Arlington Buildings Corp., 22 AD3d 652, 654 [2d Dept., 2005]). Further, while rescission is not permitted for "slight, causal, or technical breach[es]", when a breach is "so substantial and fundamental as to strongly . . . defeat the object of the parties in making the contract" rescission is permitted (id.; Clanton v. Smith, 170 AD2d 643, 643 [2d Dept., 1991][finding that defendant's failure to perform part of his consideration for a sale of property was a material breach so substantial as to make rescission proper]).

Here, where the contract between Dr. Lederman and Cabrini provided that Cabrini [*4]possess an operating agreement valid in New York State, the involuntary forfeiture of that operating agreement results in Cabrini's inability to perform under the contract. A breach of this nature is so substantial and fundamental that it defeats the entire contract, and as a result rescission of the contract would be a feasible alternative, had the Berger Commission been a foreseen circumstance that could have been provided for in the contract (Callanan v. Powers, 199 NY 268, 284-285 [1910]; RR Chester LLC v. Arlington Buildings Corp., 22 AD3d 652, 654 [2d Dept., 2005]).

Accordingly, it is

ORDERED that forthwith and until Cabrini Medical Center tenders its operating agreement in accordance with the Berger Commission report to New York State, the parties are to comply with this order, specifically numbers 1 through 4 delineated above; and it is further

ORDERED that immediately upon Cabrini Medical Center tendering its operating agreement the contract between the parties is hereby void, and the parties are relieved from all obligations required thereunder; and it is further

ORDERED that this decision does not in any way impede or prevent any party from litigating what monies are due, if any, pursuant to the agreement of February 24, 2004, and it is further

ORDERED that the Clerk enter Judgement accordingly.

E N T E R,

Dated: March 13, 2008____________________________________

Hon. Judith N. McMahon

Justice of the Supreme Court Footnotes

Footnote 1:Formally known as the "Commission on Health Care Facilities in the 21st Century".