Falk v Gallo
2012 NY Slip Op 31012(U)
April 3, 2012
Sup Ct, Nassau County
Docket Number: 019472-06
Judge: Timothy S. Driscoll
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[* 1]
SUPREME COURT- STATE OF NEW YORK
SHORT FORM ORDER
Present:
HON. TIMOTHY S. DRISCOLL
Justice Supreme Court
------------------------------------------------------------------- x
JEFFREY F ALK , M. D. and ANESTHISYSTEMS,
TRIAL/IAS PART: 16
NASSAU COUNTY
INC.,
Index No: 019472-
Plaintiff
Motion Seq. Nos: 6 & 7
Submission Date: 2/14/12
-against-
VICTOR A. GALLO, M. D., VICTOR A.
GALLO, M. D., P. c., and GARDEN CITY
MEDICAL PLAZA CORP.,
Defendants.
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Papers Read on these Motions:
Notice of Motion , Affirmation in Support,
Exhibits......................
Affidavit in Support and
Defendants ' Memorandum of Law in Support..............................................
Notice of Motion , Affdavit in Support and Exhibits..................................
Plaintiffs ' Memorandum of Law in Support............................................
Deposition of
V.
Gallo........................................................... .... ... .... ... ..I......,.,I....,
Affirmation in Opposition to Plaintiffs ' Motion and Exhibits......................
Affidavit in . Opposition and
Exhibit.............................................. ...,......,I.,I.,.,.
Memorandum of Law in Opposition to Defendants ' Motion......................
Affidavit of Reply and Exhibits............................................................................
Reply Affirmation
in.
Further ' Support................................................................
This matter is before the court on 1) the motion by Defendants Victor A. Gallo , M.
Dr. Gallo ), Victor A. Gallo , M.
GC Medical"
, P. C. (" Gallo PC" ) and Garden City Medical Plaza Corp.
Defendants ) fied November 9 , 2011 , and 2) the motion by Plaintiffs Jeffrey
Falk , M. D. (" Dr. Falk" ) and Anesthisystems , Inc. (" AI"
Plaintiffs ) filed December 20 , 2011
both of which were submitted February 14 2012. For the reasons set forth below , the Court
1) grants Defendants ' motion and dismisses the Amended Complaint; and 2) denies Plaintiffs
[* 2]
motion. The Cour notes that Defendants ' counterclaims remain viable , and reminds counsel
for the parties of their required appearance before the Court for a pre- trial conference on
May 17 2012 at 9:30 a.
BACKGROUND
A.
Relief Sought
Defendants move for an Order , pursuant to CPLR
3212 , granting Plaintiff summar
judgment dismissing the Amended Complaint (" Complaint"
Plaintiffs move for an Order , pursuant to CPLR 93212 , granting Plaintiffs ' motion for
summar judgment and setting the matter down for a hearing as to the amount of damages.
B.
The Paries ' History
The paries '
June 11 ,
history is set forth in detail in prior decisions of the Court (Austin , J. ) dated
2007 (" 2007
Aff. in Supp. ).
Decision
In addition ,
) and Februar 25 , 2008 (" 2008 Decision ) (Exs. E and F to Falk
this Court outlined the background of this action in its decision dated
June 30 , 2009 (" 2009 Decision ) in which the Court granted Defendants ' motion to disqualify
Plaintiffs ' counsel. The Court incorporates the 2007 , 2008 and 2009 Decisions by reference as if
set forth in full herein.
As noted in the prior Decisions , Plaintiffs commenced this action to recover money
damages , including lost profits , resulting from the Defendants ' alleged breach of an oral
agreement entered into in or about April 2006 , pursuant to which 1) Plaintiffs would pay
$15;500 monthly rent for continued use of the Premises; and 2) Plaintiffs would employ and
compensate specified employees that Dr. Gallo designated , including his son s fiancee, at a
salar of$85 000 annually. The Complaint (Ex. 1 to Vogel Aff. in Supp. ) alleges , further , that in
or about August 2006 , Defendants insisted on changing the terms of the paries ' Oral Agreement
by 1) requiring Dr. Falk to enter into an employment agreement with Defendants whereby he
would receive a salar; and 2) providing that checks from patients or medical plans , payable to
Dr. Falk , would be assigned to Defendants and become the propert
would assign to Gallo PC the right to bil
Complaint alleges ,
patients for his
of Gallo PC, and
Dr. Falk
reimbursable medical services. The
fuher , that Dr. Falk advised Defendants that this proposed agreement , which
Plaintiffs characterize in the Complaint as " improper fee splitting, "
was ilegal.
Plaintiffs allege
that Dr. Gallo then informed Dr. Falk that he would be denied further access to the Premises , and
that Defendants have barred him from the Medical Plaza since September 12 , 2006 , thereby
preventing him from performing medical services for patients. Plaintiffs seek damages for
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Defendants ' alleged breach of the paries ' Oral Agreement.
The Complaint contains five (5) causes of action: 1) breach of the paries ' agreement
causing Falk to sustain losses of income from September 2006 , for the balance of the contract
year , in the sum of $1 , 500 000 , 2) failure of Gallo to pay Plaintiff that par of the fees allocated
by Vytra Health Plan (" Vytra ) for his medical services , 3) Defendant' s failure , since September
of2006 , to deliver to Plaintiff payments from patients and. insurance companies , or third par
payers , for services rendered by Plaintiff to the respective patients , 4) the notice ("Notice ) that
Gallo provided to his patients beginning in 2005 , regarding his anesthesiologist' s willingness to
provide services for a "nominal fee " was a reference to Dr. Falk , and was improper and
interfered in Plaintiffs business and economic relationship with his patients , and 5) Defendants
actions constituted a
prima facie
tort.
Defendants have interposed three counterclaims based on their allegations that Plaintiffs
breached the paries '
Oral Agreement. They seek damages resulting from Plaintiffs ' alleged
failure to pay back rent and a portion of the salar owing to a medical assistant.
The Notice (Ex. 12 to Vogel Aff. in Supp. ) provided , in pertinent par , as follows:
This office utilizes the services of a board certified anesthesiologist who does not
paricipate with any insurance companies. However , most Insurance companies
consider this a reimbursable service and will pay for it. The anesthesiologist wil bil
the insurance company separately and wil accept their reimbursement as payment in
full in most cases. For those patients whose cariers do not pay, a nominal fee wil be
charged by the anesthesiologist. If any further bils are received or there are any
questions please
contact our offce immediately . This offce does not anticipate any
out-of- pocket expenses with most cariers. Don t hesitate to call this office and speak to
oan.
In the 2007 and 2008 Decisions , Justice Austin concluded inter alia that 1) the first
cause of action, " when read broadly, " stated a cause of action for wrongful eviction (2008
Decision at p. 4); 2) the second cause of action alleged a cause of action for breach of contract;
and 3) the third cause of action alleged a cause of action for conversion.
C.
The Parties ' Positions
Defendants submit that Justice Austin s determinations that 1) Plaintiffs ' first cause of
action is effectively a wrongful eviction claim; and 2) Dr. Gallo s alleged promise that Dr. Falk
would provide anesthesia to Gallo PC' s patients " for the rest of Dr. Falk' s life " is unnecessar
and irrelevant to the wrongful eviction claim, constitute the law of the case binding all paries
and this Court.
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Defendants contend ,
further , that 1) in light of Justice Austin s binding determinations
and the fact that Plaintiffs have no lost profits or actual damages arising from the alleged
wrongful eviction , the Court should dismiss the first cause of action; 2) the second cause of
action , based on Plaintiffs ' claim for fees involving Vytra members , cannot be sustained in light
of evidence that Vytra changed its policy to allow anesthesiologists to bil
Vytra patients
directly, rendering the letter agreement between Dr. Falk and Gallo PC null and void , and
because Plaintiffs have submitted no evidence to support their claim that Defendants failed to
pay Dr. Falk Vytra fees for services rendered to " at least 100 patients " (Ds ' Memo. of Law in
Supp. at p. 25), a failure in proof that Defendants describe as " not surprising since Plaintiffs
were clearly not entitled to such payments from the Gallo P. C. once Vytra allowed direct
anesthesia biling...
(id);
3) the Cour should dismiss the third cause of action in light of
Plaintiffs ' failure to produce evidence supporting their claim that Defendants failed to
tur over
checks that were delivered to Medical Plaza after the oral lease terminated , and in consideration
of Dr. Falk' s sworn testimony that he does not know whether any such checks remain
outstanding; 4) the Court should dismiss the fourth cause of action , alleging tortioius
interference with contractual relations , in light of Plaintiffs ' failure to prove the necessary
elements , including a) the existence of a valid contract between Dr. Falk and the Gallo PC
patients , b) Defendants ' intentional inducement of Gallo PC' s patients to breach any alleged
contract with Dr. Falk , and c) damages resulting from the alleged interference with contract
relations; and 5) the Cour should dismiss the fifth cause of action , alleging
prima facie
tort , in
light of Plaintiffs ' failure to allege or prove the required elements , including that a) Defendants
motivation was solely malicious; and b) Plaintiffs suffered special damages.
Plaintiffs oppose Defendants ' motion , and submit that the Court should grant their
motion for sumar judgment , on the grounds that 1) applying the law of the case doctrine , the
2008 Decision established that there was a wrongful eviction of Plaintiffs by Defendants;
2) there is a basis for determining Plaintiffs ' damages , based on the prior history of the paries as
well as the number of colonoscopies performed from the time of the alleged eviction through the
end of the lease agreement on March 31 , 2007 , as well as evidence of malice waranting punitive
and treble damages; 3) the cause of action for breach of contract is not barred by the Statute of
Frauds because the payment of monies by Plaintiffs to Defendants was unequivocally referable
to the oral agreement; 4) Plaintiffs have established the elements of tortious interference with
contract , in part by alleging and demonstrating that the Notice was "done deliberately and
[* 5]
maliciously in order to cause economic har to the Plaintiff' (Ps ' Memo. of Law in Supp. at
p. 15); and 5) Plaintiffs have established their cause of action for
tort by
prima facie
demonstrating that Dr. Falk suffered severe financial damages as a result of being deprived of
his ability to practice his profession as agreed upon with the Defendants , without excuse or
justification.
RULING OF THE COURT
Summar Judgment Standards
On a motion for summary judgment , it is the proponent' s burden to make a
prima facie
showing of entitlement to judgment as a matter of law , by tendering sufficient evidence to
demonstrate the absence of any material issues of fact.
Financial Corp.
v.
JMD Holding Corp.
4 N. Y.3d 373 , 384 (2005);
Andre
v.
Pomeroy,
35 NY.2d 361 (1974). The
showing,
aprimafacie
Court must deny the motion if the proponent fails to make such
Congress
Liberty Taxi Mgt. Inc. v. Gincherman , 32
regardless of the sufficiency of the opposing papers.
3d 276 (1st Dept. 2006). If this showing is made , however, the burden shifts to the par
opposing the summary judgment motion to produce evidentiar
proof in admissible
Alvarez v.
sufficient to establish the existence of material issues of fact that require a trial.
Prospect Hospital 68 N. Y.2d
320 324 (1986). Mere conclusions or
wil not defeat the moving par' s
right to summar judgment.
form
unsubstantiated allegations
Zuckerman v. City of New York
49 N. Y.2d 557 , 562 (1980).
B. Law of the Case
In
Wells Fargo Bank Minnesota, National Association v. Perez 70 AD. 3d 817 (2d Dept.
2010), the Appellate Division , Second Deparment held that , (a)s a general rule , the law of the
case doctrine precludes this Court from re-examining an issue that has been raised and decided
against a par on a prior appeal where that pary had a full and fair opportunity to address the
issue. Id.
quoting
Wiliamson Tobacco Corp. 67 A. DJd 213 217 (2d
Frankson v. Brown
Dept. 2009). The doctrine forecloses re-examination of an issue absent a showing of subsequent
evidence or change of law.
Id.
citing
A.D. 3d 809 (2d Dept. 2007), quoting
Mar Servo Ctr. , Inc. v. Mahoney, Connor
Matter ofYeampierre V. Gutman 57 AD. 2d
Hussey, 45
898 , 899 (2d
Dept. 1977).
C.
Relevant Causes of Action
The measure of compensatory damages for wrongful eviction is the value of the
unexpired term of the lease over and above the rent the lessee must pay under its terms , together
[* 6]
with any actual damages flowing directly from the wrongful eviction , including lost profits
ascertainable with a reasonable degree of certainty and loss of personal property.
v.
St. Bagel Corp
Duncan 37 AD. 3d 785 , 786 (2d Dept. 2007), quoting
Limousine Servo Corp.
V.
Northwest Airlines 124 AD. 2d
North Main
Long Is. Airports
711 712 (2d Dept. 1986).
To establish a cause of action for breach of contract , one must demonstrate: 1) the
existence of a contract between the plaintiff and defendant , 2) consideration , 3) performance by
the plaintiff,
4) breach by the defendant , and 5) damages resulting from the breach.
Furia
116 AD.2d 694 (2d Dept. 1986).
Furia,
A conversion takes place when someone , intentionally and without authority, assumes or
exercises control over personal property belonging to someone else , interfering with that person
right of possession.
(2006), citing
Colavito
V.
8 N.
New York Organ Donor Network Inc.,
Seventh Regiment Fund Inc. 98 N. Y.2d 249 (2002). Two
v.
State of New York
3d 43, 49-
key elements of conversion are 1) plaintiffs possessory right or interest in the propert,
8 N. Y.3d at 50 , citing
Pierpoint
Hoyt 260 N. Y. 26 (1932) and
V.
Colavito
Seventh Regiment Fund Inc.
supra at 259 , and 2) defendant' s dominion over the property or interference with it , in
derogation of plaintiffs rights Colavito 8 N. Y.3d at 50 , citing Employers ' Fire Ins. Co.
Cotten 245 N. Y.
102 (1927).
A par claiming tortious interference with contractual relations must establish the
following elements: 1) the existence of a valid contract with a third par,
2) defendants
knowledge of the contract , 3) defendants ' intentional procurement of the third par'
the contract without justification ,
Lama Holding CO.
therefrom.
V.
s breach of
4) actual breach of the contract, and 5) damages resulting
Smith Barney,
The elements of a claim for
prima facie
88 N. Y.2d 413, 424 (1996).
tort that must be alleged and proven are 1) the
intentional inflction of harm , 2) which results in special damages , 3) without any excuse or
justification , 4) by an act or series of acts which would otherwise be lawful.
Corp:,
V.
Freihofer
65 N. Y.2d 135, 142- 143 (1985). There is no recovery in
prima facie
Hearst
tort unless
disinterested malevolence is the sole motive for defendant' s otherwise lawfl act Burns Jackson
Miler Summit
Spitzer
Lindner 59 N. Y.2d
disinterested malevolence id.
350
358 (1921). A claim of
quoting
prima facie
, 559 (2d Dept. 2011), citing
333 (1983), or unless defendant acts from
American Bank
Trust CO.
V.
Federal Bank 256 U.
tort does not lie where a defendant's action has any
motive other than a desire to injure the plaintiff.
AD. 3d 557
314 ,
Smith
Weaver
V.
V.
Meridian Technologies, Inc. , 86
Putnam Hosp. Ctr. 142 A.
2d 641 ,
641- 642
[* 7]
(2d Dept. 1988), quoting
D.
v.
Global Casting
Daley-Hodkin Corp. 105 Misc. 2d 517 (1980).
Application of these Principles to the Instant Action
Preliminarily, the Court notes that the Complaint contains no request for treble damages
and Plaintiffs have made no request to further amend their pleading. Under these circumstances
there is no basis for Plaintiffs ' request for treble damages (Ps ' Memo. of Law in Supp. at p. 6).
With respect to the first cause of action for wrongful eviction, Plaintiffs rely entirely on
the availability of lost profits as the basis for their claim for lost income resulting from the
wrongful eviction. As Defendants note ,
however , Justice Austin concluded that the allegations
that Dr. Falk was to be the anesthesiologist at the Med Plaza premises as long as Dr. Gallo
practiced medicine at that location and for the rest of his life are " irrelevant and unnecessary to
this cause of action. "
As
this finding is a legal determination that was necessarily resolved on
the merits in Judge Austin s decision denying dismissal of the first cause of action , it is the law
of the case and the Cour concludes that Defendants have made out a
prima facie
case that
Plaintiffs have no damages resulting solely from the wrongful eviction.
Given the nature of the paries ' relationship, the lease had no value , in and of itself. The
value lay in the payments received by Dr. Falk for anesthesia treatment he provided for the
patients of Dr. Gallo. Dr. Falk admits that he provided " ancilar
services "
to other physicians
and , therefore , that his work could " only be done in conjunction with a physician who was
performing medical procedures "
that required anesthesia (Falk Reply Aff. at
21). Dr. Falk
argues that the lease agreement was intertwined with the services agreement and , therefore , the
breach of the former entitles him to his lost income for services that he would have provided for
the rest of the lease year.
The clear implication of Judge Austin s determination set forth above , however , is that
any agreement as to services is irrelevant and unnecessar with respect to the claim of wrongful
eviction. Under these unusual circumstances , Plaintiffs canot bootstrap their claim for lost
income to the wrongful eviction claim. Consequently, they have failed to raise a triable issue of
fact as to damages sustained by reason ofthe Defendants ' breach of the oral lease and , therefore
the Court grants Defendants ' motion for summar judgment dismissing the first cause of action.
In the second cause of action , Plaintiffs allege that Defendants failed to pay Dr. Falk that
par of his fees allocated by Vytra for services he performed between May 2005 and
September 12
2006 (Compi. at
25- 26).
Vytra and Gallo
PC had an agreement that Gallo PC
would accept a flat fee for each colonoscopy procedure performed , and that the flat fee of $500
[* 8]
paid by Vytra would include payment for anesthesia services. As a result ofthis arangement
Gallo PC and Dr. Falk entered into a separate letter agreement which provided that Dr. Falk
would accept the fees paid by Gallo PC as full payment for the anesthesia services rendered by
Dr. Falk to patients insured by Vytra. Plaintiffs assert that , in the aforementioned time period,
Dr. Falk was not paid for services rendered to at least 100 patients insured by Vytra.
Defendants , however , have demonstrated that once Vytra changed its policy to allow
direct anesthesia biling, their letter agreement with Dr. Falk no longer had any purose
Dr. Falk could now bil
Vytra himself. This
because
change occurred around the end of 2005 (Falk
Deposition transcript , Ex. 4 to Vogel Aff. in Supp. , at p. 145). Furhermore , Defendants have
submitted evidence that they made all payments for Vytra patients through September 25, 2005
and that Dr. Falk conceded his date of May, 2005 , could be " a tyographical error
p.146). On this record , Defendants have made out
aprimafacie
(id.
Case that there was no breach of
the agreement for payment of proceeds received from Vytra while that agreement was viable.
In opposition , Plaintiffs simply argue that there are factual disputes that preclude summar
judgment (Falk Aff. in Opp. at
24). Without more , this conclusory statement does not suffce to
raise a triable issue of fact. Accordingly, Defendants are entitled
to
summar judgment
dismissing the second cause of action.
The third cause of action for conversion concerns checks for services rendered by Dr.
Falk in the sum of at least $25 000 , from patients and insurance companies. Plaintiffs allege that
these checks were withheld from them from September 2006, to date (CompI. at
27- 28).
Defendants contend that they are entitled to summar judgment dismissing this cause of action
in light of the fact that Dr. Falk admitted receiving some checks after September 2006 , and Dr.
Falk is unable to state whether there are any outstanding checks. Dr. Gallo avers that " each and
every check for anesthesia services " was forwarded after the paries ' relationship ended (Gallo
Aff. in Supp. at
9(iii)). On this record , Plaintiffs have presented
aprimafacie
case that they
have not withheld any checks for anesthesia services from Dr. Falk. Again , in opposition , Dr.
Falk simply states in conclusory fashion that there are clearly factual disputes regarding this
cause of action. Under these circumstances , Plaintiffs have failed to raise a triable issue of fact
to defeat Defendants ' entitlement to summar judgment , and the Cour grants Defendants
summary judgment dismissing the third cause of action.
With respect to the cause of action for tortious interference with contract , Plaintiffs allege
that the Notice that Dr. Falk would charge a " nominal fee " for his services in the event that his
/) .
[* 9]
patients ' insurance companies refused payment , constituted interference by Defendants in the
35- 37). Plaintiffs
contractual relationship that Dr. Falk had with his patients (CompI. at
further allege that as a consequence of the Notice , Dr. Falk' s invoices to various patients were
largely ignored and not paid or , when paid , yielded less than the reasonable value of his services
(id.
at
36).
Defendants submit inter alia that there is no evidence that specific patients " ignored"
invoices or paid less than the amount of the invoices as alleged in the Complaint. Plaintiffs have
failed to produce such evidence and , accordingly, have failed to establish the damages element
of this cause of action. Thus , Defendants have demonstrated their entitlement to summary
judgment dismissing the fourth cause of action.
The factual basis for Plaintiffs ' claim of
prima facie
tort in the fifth cause of action is the
same as that for the fourh cause of action discussed above , specifically the alleged impropriety
of the Notice. Dr. Gallo has provided sworn affirmations regarding his concern "that the Gallo
C. would lose patients if they received exorbitant anesthesia bils
procedure " (Gallo Aff. in Supp. at
72;
see also
in addition to the cost of the
16). Under these circumstances , where losing
patients was , at least in par , the reason Dr. Gallo discussed anesthesia fees in the Notice , Dr.
Falk cannot establish that a disinterested malevolence was the sole motive behind the Notice.
Therefore , Defendants are entitled to summar judgment dismissing the fifth cause of action.
All matters not decided herein are hereby denied.
This constitutes the decision and order of the Cour.
The Cour notes that Defendants ' counterclaims remain viable , and reminds counsel for
the paries of their required appearance before the Court on May 17 2012 at 9:30 a. m. for a pre-
trial conference regarding the counterclaims.
ENTER
DATED: Mineola, NY
April 3, 2012
\) 0
(JtJr
TIMOTHY S. DRI
0iL
ENTERED
APR 11 2012
MAIIAU COUNTY
' o,'tCE
COUMTY CLIRK.
