New York Cong. Nursing Ctr. v Gilchrist

[*1] New York Cong. Nursing Ctr. v Gilchrist 2008 NY Slip Op 52394(U) [21 Misc 3d 1136(A)] Decided on November 25, 2008 Supreme Court, Kings County Demarest, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 November 25, 2008
Supreme Court, Kings County

New York Congregational Nursing Center, Plaintiff,

against

Dorritt Gilchrist, Defendant.



3966/07



Attorney for Plaintiff:

Cye E. Ross, Esq.

30 Vesey Street, Suite 1800

New York, NY 10007

Attorney for Defendant:

Aaron M. Feldman, Esq.

Goldfarb & Goldfarb

2774 Coney Island Avenue

Brooklyn, NY 11235

Carolyn E. Demarest, J.

Plaintiff New York Congregational Nursing Center moves for summary judgment pursuant to CPLR 3212(b). Defendant Dorritt Gilchrist cross-moves for summary judgment dismissing the plaintiff's complaint pursuant to CPLR 3212(b) based on documentary evidence demonstrating there is no account stated between the parties.[FN1][*2]BACKGROUND

This action arises out of defendant Dorritt Gilchrist's ("Gilchrist") actions taken on behalf of non-party Violet Welsh ("Resident") who is a resident of the nursing home operated by plaintiff New York Congregational Nursing Center ("NYCNC"). The issue before the court is whether Gilchrist can be held liable for the fees incurred by the Resident at a nursing home based on Gilchrist's signature as a "designated representative" of the Resident and Gilchrist's subsequent improper distribution of the Resident's assets.

The Resident was married to Herman Welsh and, prior to his death, the couple owned the property 840 Brooklyn Avenue in Brooklyn, New York ("Property"). The Resident and Herman Welsh took tile to the Property on April 17, 1979 by the entireties as husband and wife. Gilchrist is the daughter of Herman Welsh and step-daughter of the Resident.In the affidavit submitted in support of the motion, the chief financial officer of the New York Congregational Nursing Center ("NYCNC") alleged the following: the Resident was admitted to NYCNC's facility on October 7, 2004 and an admissions agreement ("Agreement") was signed by Gilchrist as "Designated Representative" of the Resident; Gilchrist advised NYCNC that she held a power of attorney for the Resident and would pay the Resident's bills from the proceeds of the sale of the Property owned by the Resident; NYCNC sent the Resident's monthly statements to Gilchrist and her attorney; on May 25, 2005, Gilchrist's attorney faxed a letter to NYCNC indicating that "the proceedings are currently pending for the appointment of an Administrator on the Estate of [the Resident's] husband" and upon the completion of those proceedings, "arrangements can be made to resolve [the Resident's] obligations"; on August 23, 2006, acting as attorney in fact for the Resident, Gilchrist conveyed the Property to her daughter and son in law, Beverly Gilchrist Hobson and Kendall Hobson, for $245,000.00; on or about September 13, 2006, Gilchrist sent NYCNC a bank check for $1400.00, the balance of the Resident's savings account, a check for $108,830.34 from the IOLA account of Gilchrist's attorney, and an undated letter stating that the check from the IOLA account represented the Resident's "1/2 interest in the property after expenses" and that "There is no more money, please file for Medicaid assistance for my father's wife"; by December 31, 2006, after applying the $110,230.34 payment from Gilchrist, the Resident's outstanding balance was $101,115.76.

The complaint alleges, "[NYCNC] rendered nursing home services to [the Resident] at the special instance and request of [Gilchrist] who, acting as responsible party for [the Resident], promised and agreed to pay, from the funds of [the Resident] [*3]coming into her hands, the sum of $107,260.24, no part of which sum, except $6,144.48, has been paid, although duly demanded, despite [Gilchrist] having come into possession of funds belonging to [the Resident] sufficient to pay the amount claimed." NYCNC argues in the present motion that there is no defense to the causes of action in the complaint and judgment should be directed in favor of NYCNC. NYCNC noted that, although Medicaid accepted a pickup date of April 1, 2006 for the Resident, Medicaid had not made any payments for services rendered to the Resident at the time of this motion. Should Medicaid make any payments to NYCNC in the interim, NYCNC indicated that they will refund Medicaid any sum it recovers for the period of April 1, 2006 to December 31, 2006.

DISCUSSION

NYCNC moves for summary judgment pursuant to CPLR 3212 (b) on the grounds that there is no defense to the causes of action set forth in the complaint. NYCNC argues that Herman Welsh and the Resident took title to the Property as husband and wife, thus creating a tenancy by the entirety, and upon Herman Welsh's death, the Resident acquired absolute ownership of the Property by operation of law. Thus, all of the proceeds from the sale of the Property accrued to the Resident and were available to satisfy her debt to NYCNC. Accordingly, NYCNC argues that Gilchrist violated the Agreement by transferring only half of the proceeds from the sale of the Property to NYCNC and claiming that the Resident was insolvent.

Gilchrist argues she signed the Agreement solely because NYCNC forced her to sign the Agreement as a condition of admission for the Resident in violation of federal law and she should not be personally responsible for the Resident's expenses under the terms contained within the Agreement. Gilchrist argues that there was no account stated between NYCNC and Gilchrist and the action should be dismissed as the Agreement did not contain a promise to pay a stated sum. Gilchrist also argues that the sale of the Property was not raised in the complaint and therefore NYCNC should not be permitted to raise any arguments involving the sale in support of their motion for summary judgment.

In order to obtain summary judgment, the movant must establish its cause of action or defense sufficiently to warrant a court's directing judgment in its favor as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; CPLR 3212 [b]). Where the proponent of the motion makes a prima facie showing of entitlement to summary judgment, the burden shifts to the party opposing the motion to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action (Vermette v Kenworth Truck Company, 68 NY2d 714, 717 [1986]). The parties' competing contentions are viewed in the light most favorable to the party opposing the motion (Marine Midland Bank, N.A. v Dino & Artie's Automatic Transmission Co., 168 AD2d 610 [2d Dept 1990]). [*4]

Based upon the deed dated April 17, 1979 conveying the Property to "HERMAN WELSH and VIOLET WELSH, his wife," by operation of law, complete ownership in the Property was conferred on the Resident upon Herman Welsh's death thus making the Resident entitled to all of the proceeds from the sale of the Property. "A matrimonial relationship between parties at the time of acquisition of a premises creates a tenancy by the entirety,' which is a special type of ownership that is not severable by partition as long as the marriage exists. Further, [w]here persons live and cohabit as husband and wife, and are reputed to be such, a presumption arises that they have been legally married, and this presumption . . . can be rebutted only by the most cogent and satisfactory evidence.'" (Scarison, Inc. v Paracha, 7 AD3d 605, 606 [2d Dept 2004] (citations omitted).) Tenancy by the entirety "confers on the surviving spouse a right to absolute ownership of the property upon the other spouse's death" (V.R.W., Inc. v Klein, 68 NY2d 560, 564 [1986]). Gilchrist has not alleged or demonstrated that Herman Welsh and the Resident were not married on April 17, 1979, the date the Property was acquired by Herman Welsh and the Resident, or at the time of Herman's death, the date of which has not been revealed. Gilchrist even referred to the Resident as her "father's wife" in the undated letter addressed to NYCNC. Therefore, as a tenant by the entirety, the Resident acquired absolute ownership of the Property upon Herman Welsh's death (see V.R.W., 68 NY2d at 564). Accordingly, NYCNC has demonstrated that the Resident was entitled to all of the proceeds from the sale of the Property.

Gilchrist's contention that NYCNC is not permitted "to raise any matter regarding the sale of the [Property]" in the summary judgment motion because the sale of the Property was not raised in the complaint is unfounded. The complaint alleges Gilchrist "promised and agreed to pay, from the funds of [the Resident] coming into her hands" the Resident's bills but failed to do so "despite Gilchrist having come into possession of funds belonging to [the Resident] sufficient to pay the amount claimed." NYCNC supported it's assertion in the complaint that Gilchrist came into the possession of funds belonging to the Resident with proof of the sale of the Property and correspondence indicating that Gilchrist improperly applied only half of the proceeds of the sale of the Property to NYCNC debts and did not intend to make any further payments.

NYCNC submitted the signed contract pursuant to which Gilchrist agreed to pay the nursing home bills from the Resident's financial resources as the Resident's designated representative. Pursuant to both Federal and State law, while a nursing home may not require a third party guarantee of payment to the facility as a condition of admission or continued stay in the facility, a nursing home may require an individual with legal access to a resident's financial resources to sign a contract to provide payments for the facility from the resident's financial resources without incurring personal financial liability (42 CFR 483.12 [d] [2]; 10 NYCRR 415.3 [b] [1] and [6]). Gilchrist signed the Agreement on October 7, 2004 as a "Designated Representative" above the signature of a representative of NYCNC. The Agreement states, "The resident and/or designated [*5]representative agree to pay these charges on presentation of monthly bills." The Agreement also contains a description for "Designated representative":

Designated representative: The resident is requested to appoint a relative or other person to act as his/her "designated representative." This person shall accept this responsibility in writing. In the event that the resident cannot act on his/her own behalf in financial matters the Home shall notify the designated representative and expect him/her to act on the resident's behalf.

Gilchrist stated in an affidavit in support of the motion, "I signed the admission agreement solely because I was forced to by [NYCNC] as a condition of admission for [the Resident]. [NYCNC's] actions in forcing my signature as a condition of admission was in violation of law." However, contrary to Gilchrist's argument, the Agreement did not require Gilchrist to personally guarantee payments to the facility for the Resident's incurred debts. "In construing a contract, the document must be read as a whole to determine the parties' purpose and intent . . . giving a practical interpretation to the language employed so that the parties' reasonable expectations are realized" (Sunrise Mall Assoc., 211 AD2d 711 [2d Dept 1995]; see also Abramo v HealthNow NY, Inc., 23 AD3d 986, 987 [4th Dept 2005]; Benderson v Wiper Check, 266 AD2d 903, 904 [4th Dept 1999], affd 96 NY2d 855 [2001]). "Moreover, the contract must be interpreted so as to give effect to, not nullify, its general or primary purpose" (Vill. of Hamburg v Am. Ref-Fuel Co., 284 AD2d 85 [4th Dept 2001]). The clear import of the language in the Agreement is that Gilchrist, as a "designated representative" of the Resident, was to "act on the resident's behalf . . . [i]n the event that the resident cannot act on [her] own behalf in financial matters", paying debts incurred by the Resident from the Resident's income or resources. Therefore, the Agreement does not violate state or federal law with regards to a third party acting as a designated representative of a nursing home resident (see 42 CFR 483.12 [d] [2]; 10 NYCRR 415.3 [b] [1] and [6]). Pursuant to the plain language of the Agreement, Gilchrist agreed to act as a representative of the Resident and pay NYCNC's monthly bills on the Resident's behalf using the Resident's financial resources. In fact, this is what Gilchrist did, but not to the full extent of the Resident's resources. It appears that Gilchrist diverted some of the Resident's resources to her own daughter and son in law. Whether this was done with the knowledge and consent of the Resident is not known.

Although NYCNC demonstrated that the Resident maintained an interest in all of the proceeds from the sale of the Property and the Resident was apparently rendered insolvent and unable to pay NYCNC's bills as a result of Gilchrist's transfer of the Property to her daughter and son in law, NYCNC has not demonstrated that the Resident authorized Gilchrist to act on the Resident's behalf in financial matters with NYCNC. The Agreement's definition of "Designated representative" specifically gives the Resident the authority "to appoint a relative or other person to act as his/her designated [*6]representative'" and there is a line for the "Resident Signature" on the Agreement (emphasis added). As the Resident did not sign the Agreement, Gilchrist was not actually appointed as her "Designated representative" pursuant to the terms of the Agreement and the Agreement did not authorize Gilchrist to act on behalf of the Resident. Although the deed conveying the Property, the Real Property Transfer Report, and the affidavit of compliance with the smoke detector requirement dated August 23, 2006 are all signed by Gilchrist as "atty-in fact" or "attorney in fact" for the Resident, NYCNC has not provided the power of attorney confirming Gilchrist's authority to act on behalf of the Resident. As the Agreement does not itself authorize Gilchrist to act on the Resident's behalf with respect to her property, and NYCNC has not established that Gilchrist actually possessed a power of attorney, NYCNC's motion for summary judgment must be denied since Gilchrist cannot be held personally liable for the Resident's charges based solely on the Agreement (see Amsterdam Nursing Home Corp. v Lang, 16 Misc 3d 1138A [Sup Ct, New York County 2007] (denying nursing home's motion for default judgment against "legally authorized representative" of resident as the nursing home presented no evidence that the representative had power of attorney or other legal control over the resident's assets and income); see also Prospect Park Nursing Home, Inc. v Goutier, 12 Misc 3d 1192A [Sup Ct, Kings County 2006]).

However, the documentation submitted regarding the transfer of the Resident's Property by Gilchrist as attorney in fact gives rise to a question of fact as to the enforceability of the Agreement by Gilchrist to apply the Resident's assets to the payment of NYCNC's bills (see Prospect Park, 12 Misc 3d at 1192A (noting that a designated representative's "use of power of attorney to transfer assets to himself that could have been used for the resident's nursing home care would constitute a breach of the [a]dmission [a]greement")). Gilchrist's motion seeking dismissal of the complaint is therefore denied.

As this is an action for outstanding charges for nursing home services rendered to the Resident who would be personally liable to NYCNC, NYCNC is directed to amend the complaint to add the Resident, Violet Welsh, as a necessary party defendant (see Putnam Nursing & Rehabilitation Ctr. v Bowles, 239 AD2d 479 [2d Dept 1997] (holding that the nursing home was allowed to proceed against the resident's representative in a breach of contract action to void the transfer of the resident's property, but directing that the estate of the resident be joined as a necessary party)). There is no evidence that the Resident is not competent to defend herself. Should the proceeds from the improperly distributed one half interest in the Property sought by NYCNC be insufficient to satisfy the damages demanded in the amended complaint, NYCNC is granted leave to amend the complaint to add causes of action seeking equitable relief pursuant to Putnam. Should NYCNC bring such a cause of action disputing the transfer of the Property pursuant to Putnam, the current deed holders of the Property must also be added as defendants since their title may be directly affected by a judgment (see Putnam [*7]Nursing, 239 AD2d at 479; McLaughlin v McLaughlin, 155 AD2d 418 [2d Dept 1989]). As Medicaid has purportedly agreed to pay for a portion of the Resident's outstanding fees, NYCNC is ordered to serve the New York Department of Social Services with a copy of this decision.

CONCLUSION

The plaintiff's motion for summary judgment is denied. Defendant's cross motion for summary judgment dismissing the complaint is also denied. Plaintiff is granted leave to serve and file an amended complaint consistent with this decision within 30 days. Plaintiff is directed to serve a copy of this decision on the New York Department of Social Services. The case will be calendared for February 18, 2009 to determine the status of the action.

The foregoing constitutes the decision and order of the Court.

E N T E R :

J.S.C. Footnotes

Footnote 1:The notice of cross motion indicates that the cross motion is made "pursuant to CPLR 3215(c)" which is a provision regarding default judgments and is inapplicable to this action. The affirmation states that, "based upon the documentary evidence submitted by the Plaintiff in support of their motion, . . . there is no account stated between the parties based upon the account dated December 31, 2006. Since there is no other cause of action pled, and no other statement of account presented; there are no other issues to be determined. Defendant's Cross Motion to dismiss this cause of action should be granted." However, the affirmation in support of the cross motion is titled, "Affirmation in Support of Cross Motion for Summary Judgment and in Opposition to Motion for Summary Judgment" and the affidavit of the defendant is made "in support of my Cross Motion for Summary Judgment." As the defendant waived the motion to dismiss based on documentary evidence defense under CPLR 3211 (a) (1) (see Masada Universal Corp. v Goodman System Co., 121 AD2d 518, 519 [2d Dept 1986]; CPLR 3211 [e]), the Court is treating the defendant's cross motion as a motion for summary judgment pursuant to CPLR 3212 (b).