Island Gastroenterology v Island Anesthesiologists, PC
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Island Gastroenterology v Island Anesthesiologists, PC 2012 NY Slip Op 31371(U) May 17, 2012 Sup Ct, Suffolk County Docket Number: 08178-2008 Judge: Emily Pines Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] Mntioii Date: Suhrnit Date: Motion No.: ISLAND GASTROENTEROLOGY, Plaintiff, -againstISLAND ANESTHESIOLOGISTS, PC and ANIL PATIL, Defendants. X OS- 16-10 I I 05- 17-20 I 2 004 MI) Attorney of Plaintiff Garfunkel Wild, PC 1 1 1 Great Neck Road Great Neck, New York 1 1021 Attorney of Defendant Helwig, Henderson Ryan & Spinola One Old Country Road, Suite 428 Carle Place, Ne w York I 15 14 111this action for, inter alia, breach of contract, defendants Islal1d Anesthesiology, P.C. ( ,A ) arid its President/sharc:holder, Ani1 Patil, move h r suimiliary judgment dismissing the complaint and on their counterclainis. 11 t t c C oiiip I ai i i t, I) I ai11t i ff I sI ai1d Gasti oeii tero 1ogy C o i i s ~tan t s, P.C . i 1i ( Plaintiff ) clainis that in May 2007 it entered into ai1 oral agrcenient purs~iaiit which IA was to provide anesthesia services as ail independent to collti-actiir-to Plaintiff at Plaintiff s premises in its endoscopy unit. Plaintiff claiiiis that the oral agreement provided that IA was to forward all payiiients received fi.01~1 third-party payors for the prow isioii of anesthesia services to Plaintiff s patients to Plaintiff, and that Plaintiff would then pay IA 60% and retain 40% of tlie funds. Plaintiff claiiiis tlial. IA breached tlie agreement by n [* 2] rc f iising to forward all payments received f r m thii-d-party payors to Plaintiff thus retaining more than 6006. Plaintiff alleres that IA provided services pursuant to the oral agreement for several months, billing third-party payors and depositing funds received into an IA account. On August 21, 2007, IA provided Plaintiff with a check for $180,000, which was cashed by Plaintiff. I laintiff alleges that over time the aniount of payments withheld by IA increased to niillions of dollars. Plaintiff claims that the parties discussed potential revisions to the agreement in mid-October 2007, including the n~anner compensation. According to Plaintiff, by that time, IA had of collected approximately $3,000,000 in fees, which it had not remitted to Plaintiff as required pursuant to the agreement. 1 4 On October 24, 2007, IA issued a check to Plaintiff in the amount of $200,000, which was cashed by Plaintiff. IA issued a check dated October 29, 2007, signed by non-party Dr. Raul Masakayari (who was authorized to sign checks and claims that he was a 50% shareholder in IA), to Plaintiff in the amount of $590,000. The check bounced. !0. Plaintiff alleges that IA terminated the agreement on October 29, 2 0 7 Plaintiff asserts seven causes of action: (1) breach of contract, (2) unj List enrichment, (3) fraud, (4) negligent misreprr=sentation,( 5 ) conversion, (6) an accounting, and (7) piercing corporate veil to impose personal liability upon Patil. A rzsw er In their answer, Defendants deny the material allegations in the conplaint. Defendants admit, among other things, that fro111 May 2007 through October 2007, [A collected more thm $4,000,000 from third-pairty payors f i r the anesthesia services it provided to Pl;iinti rf s patients. IDelcndants contcnd that there were nuniero~is proposed written agrceiiients eschanged between the parties which denioiistrate that the parties never I agc 2 of 9 [* 3] c m o to an alrreeiiie~it material terms, i~icluding amount of OII the conipensation, such that there was never a iiieeting of the minds. According to Defendants, it 1.1as Liiiderstood that pending the iwxution of a writteii agreenient, IA would provide anesthesia sen ices atid make payments to Plaintiff coiisistent with those made by its predecessor, Dr. Rernholc. Defendants claim that the parties contiiiued to negotiate ai1 agreement arid that a second draft agreement, with differeni. compensation t e r m was provided by Plaintiff. 1A did not accept. c Defendants claim that the $120,000 check issued by IA on July 9, 2007, was payment for two months at the monthly rate of$60,000, the same amount that had been paid by Dr. Bernholc, equal to fair market value rent and overhead. Defendants contend that the $180,C100 check issued by TA on August 2 1 , 2007, was for three months at the same monthly rate ($60,000) paid by Dr. Bernholc. Defendants claim that by the end of August 2007, it had paid Plaintiff $240,000 ($60,000 per months for four months). Defendants allege that a meeting of the parties and their counsel was held on September 5 , 2007, in an attempt to negotiate the material terms of the proposed agreement. An agreement was, not reached at that time. Defendants claim that Plaintiff offered yet another proposed agreement with different compensation terms in October 2007. Defendants claim that the $200,000 check it provided to Plaintiff 0 1 1 October 24, 2007, was not based on percentage compensation and was provided under great duress from Plaintiff. Dr. Patil alleges that he told Dr. Masaliayaii not to write a substantial check on October 29, 2007, as there were insufficient firlids in the account at that time. Ilefeiida~its assert counterclaiiiis sounding in ( 1 conversioii (anestl~csiology quipment), ( 2 ) an accoimtitig, and ( 3 ) tortious interferelice u it11 busiiicss relatioiis. Defendaiits also assert an a f t h i a t h e defense that the alleged oral agreement is contrary to applicable statutes, rules and [* 4] regulations and, therefore, recovery by PlaiiitifT is barred as a matter of p LI b 1i c po 1 i c> I n support of their motion, Defendants subnii t an attorney s affiriiiation ;iniiesed to which are, among other things, cl.)pies of the various draft written agreements, checks from 1A to Plaintiff, and unsigned transcripts of esanJiiiations bef ore trial of Dr. Saxena, Dr. I atil, Ilr. Mariwalla. Defendants argue that summary judgment sliould be granted dismissing the complaint because the multiple draft agreements and deposition testimony establish that the parties never came to an agreement regarding the provision of anesthesia services by IA to Plaintiff :; patients, as there was never mutual assert on all essential terms of the contract. Specifically, Defendants argue that the multiple draft agreements demonstrate, as a matter of law, that the parties never agreed on the amount of compensation for the provision of services. Defendants rely on D r. Patil s deposition testimony that he proposed that he take over the provision of anesthesia services from Dr. Bernholc under the same terms (paying I laintif f $60,000 per month) that Plaintiff had with Dr. Bernholc until a final agreerrient could be reached. Dr. Patil testified that IA did not agree to spilt revenue 40/60 with Plaintiff once IA started rendering services at Plaintiffs office. -i Iius, according to Defendants, there was never a contract betwzen tlie parties for any split of revenue generated from the provision of anesthesia services. Defendants claim that the parties merely had an agi-eeinent to agree. Additionally, Defendants argue that Plaintiffs breach of contract claim is based on an illegal fee splitting agreement, rendering the alleged contract void as against public policy. Defendants contend that Education Law tj 6509-a sub-jects a physician s I icense to revocation, suspension or aiinuIiment fhr participation in a fee splitting agreement as same constitiites professional ~ i ~ i s c o r i d ~ ~ that 8 NYCRR 29.1(b)(4) states that unprofessionaI conduct and t , Page 4 of 9 [* 5] inclirdcs perinittine an\ person to share in the fees for professional services. L r Finall> , Defendants argue that the) are entitled to siiniiiiary -judgment 011 their counterclaim for conversion because the evidence establishes that Iltfendaiits have legal title to and right of possession of the anesthesiology equipment held at Plaintiff3 premises, whim Plaintiff continues to withhold li-oni Defendants despite demands for return of the equipment Plaintijjys Opposition In opposition, Plaintiff submits, among other things, an affidavit from DI. Saxena wherein he states, among other things, that Dr. Bernholc paid Plkintiff $60,000 per month for the overhead costs associated with the services he provided. In early 2007, Dr. Saxena discussed with Dr. Patil that Dr. Patil could provide the same services as those provided by Dr. Bernholc o n ternis more financially favorable to Plainiciff. Dr Saxena states that i i ~ May 2007, based on Dr. Patil s proposal, Plaintiff 1;erminated its relationship with Dr. Bernholc and entered into an oral a;geem<:ntwith T to provide A anesthesia services at Plaintiffs facility. Dr. Saxeiia claims that both Plaintiff and IA agreed to act pursuant to the oral contract which would eventually be put in writing. Dr. Saxena states that the oral contract provided for T to bill and collect fees for its services and forward the funds A to Plaintiff, which was then obligated to pay IA 60%. Dr. Saxeiia further states that after the parties began operating under the oral agreement, 1A 1-efiised to remit tlie full amount of fees collected, although IA made partial payiiient to Plaintiff. According to Dr. Saxena, after the oral agreement was rcached, efforts were undertaken to transcribe it in! o a formal written contract, including the exchange of proposed draft agreements. Dr. Saxena claims that in the fall of2007, in ai? effort to save tlie fading rekitionship between the parties, potential modifications to tlie wal agreement were disc~issed, including a change in tlie coinpensatioii terms. 1 lowever, the situation continued to deteriorate arid Dr. Patil uiiilaterally terminated the Page 5 01 0 [* 6] igrcc'nit'nt 011 October 39, 3007. DI-.Saxena states that Dr. Patil abandoned the anestliesiologj- equipment at Plaintiff-s facility and ne\ er asked to get it back o r have it returned. Plaintiff also provides an affidavit from non- party Dr. Masakayan who states, among other things, that based on representations made to him by Dr. Patil that they were equal partners in IA, he believed that he was a 50% shareholder in IA during the events that are h e subject of this action. Dr. Masaltayan states that based on Dr. Patil's proposal, Plaintiff terminated its relationship with Dr. Bernholc and entered into an oral agreement with IA pursuant to which IA agreed to provide anesthesia services for Plaintiff in exchange for payment of 60% of the revenues generated therefrom. Essentially, Dr. Masaltayan corroborates Dr. Saxeria's version of events. Plaintiff contends that Defendants' reliance cln Education Law 5 6.509a is misplaced as that statute does not apply to gastroenterologists or anesthesiologists. Rather, the applicable statute, Education Law 5 6530(19), specifically states that a contractual arrangement such as the oral agreement between the parties is permissible. Thus, Plaintiff argues that Defendants have not demonstrated their entitlement to -judgment as a matter of law. Additionally, Plaintiff contends that the con flicting versions of the parties as to whether an oral agreement was entered into creates issues of fact. Plaintiff also contends that Defendants have failed to address their conversion claim, and that Defendants have failed to establish that t h y demanded return of the anesthesia equipment. P1aiiitii-E asserts that based on Dr. Masakayan's alleged ownership interest in IA, there are issues offact as to who owns the eq 1-1i p 111 en 1. A party iiioving for suiiiiiw-y iudginenL has the burden of making a prima iacie showing oi'entitlei-~~ent judginent a5 a matter of' law, offering to sufficient evidence demonstrating the absence of any matel-ial issues of Fact Page 6 of 9 [* 7] ALfedCtr., 64 W 3 d 85, 487 NYS2d 3 16 j 19851; Z K ~ W I ~ I I>.IC I n of7,\ elt>h a k , 49 NY2d 557, 427 NYS2d 595 L Ii 1 1980 1 ). Once a prima facie showing has been made bq the movant, the burdcn shifts to the party opposing the motion to pl-oduce evidentiary PTOOE in admissible form sufficient to establish inaterial issues of fact which require a trial (see, Zuyus Hulf Hollow Hills Cent. School Disf.,226 AD2d 7 13, 64I NYS2d 701 [2 Dept. 19961). [Iln determining a motion for wmniary judgment, evidence must be viewed in the light most favorable: to the iioniiiovai~t (Pecrrson v Dix McBride,LLC, 63 AD3d 895 [2d Dept 30091). Since suniniary judgment is the procedural equivalent of a trial, the motion should be denied if there is any doubt as to the existence o f a triable issue or when a inaterial issue offact is arguable (Salino v IPT Trucking, h c . , 203 AD2d 352 [2d Dept 19941). ( f f r i t 7 q i * l d .\ ai,I ~ o r k CJ7i\l. 11 11. Assuming that there was an oral contract between the parties to split the fees generated from IA s provision of anesthesia services at PlaintifP s facility, Defendants have failed to demonstrate that: the agreement was illegal and therefore unenforceable. Rather, such an agreement does not appear to violate Education Law 5 6530( 19), which defines professional misconduct for physicians as including: Permitting any person to share in the fees for professional services, other than: a . . .projessional subcontractor or coizsultaizt iccitlzorized to practice medicine . . . (emphasis added). Here, it appears that T may be a professional subcontractor or consultant A authorized to practice niedicine niaking it plermissible for Plaintiff to share in IA s fees. Thus, summary judgment to D(:fendaiits 011 this ground is den i e d . One of the recpirements for the formation of a contract is niutual atsseiit to the terms of the contract. The manifestation of niutual assent mist be sufficiently definite to assure that the parties are truly in agreement with rcspect to al I material terms ( E k p ~ e s/Hdzrstc~*iesi i d Terminal Corp v. IVew s uf h k Sfciic Dept. of k m . ,93 NY2d 584, 589 [1999]). I ftlie parties contcniplate a fornial written contract and that they will not be bound iiiitil [* 8] S L I C ' contract ~ is signed. there is no binding agreement absent such contract Pciti-oImo~i ,Bc.izci~ I,cs 'ii of'Ci<i. ,VTcii* '.s of I'or-k. I i i ~ 1'. ,J7eii9 'f'or-k,37 NY2d ~ 410 I 19711; .-1IJCO Elec. c ' o i p H R H C ' o i i ~ t r . Ll,c', 63 AD3d 6 5 3 [3d , Ilept. 3009 1). A qucstioii of fact arises as to the parties intent to enter into an enforceable ob1 igation wliere the intent iii~isi. determined by disputed be zvidence or intixiices outside the written words o -.the instrunicnt (id.). iiierc agreement to agree, in which a material term is left for future negotiations is ~iiienforceable( I 66 M~~17i~ii~meck C o p v. 151 Eust Yo,rt A vc. R o ~ i d C ' o r p . ,78 NY2d 88 [199i]). 13. I- ¬ere,the conflicting factual accounts given by the parties (Dr. Patil and Dr. Saxena) together with the affidavit of non-party Dr. Masakayan., clearly demonstrate tlie existence of triable issues of fact as to whether there was inutual assent on all essential terms of the alleged oral contract. 'Therefore, Defendants motion for suminary judgment dismissing Plaintiff s complaint is denied. Moreover, the evidence demonstrates 1he existence of an issue of fact as to legal ownership of the anesthesia equipment at issue on Defendants' counterclaim for conversion. To prove a cause of action for conversion, plaiiitit'f must establish legal ownership of a specific identifiable piece of property and the defendant's exercise over c ~ interference with tlie property r in defiance of plaintiffs rights (Huinlet ut HWow Creek Development GI., LLC v. Northeast Lund Development Coi~p., AD3d 85 [2d Dept. 2009]). 64 Where oiie is rightfirlly in possession of property, one's continued custody of thc property and reiiisal to deliver it on demand of the owner until the owner proves his or her riglit to the property does riot coiistitute a conversion ( TrLiii,Y- CVoi*ld Tiwdirzg, Ltd. v. North S/ioi*cUniv. Hosp. u Plwinview, 64 f AD3d 608 [2d Dept. 20091). I lei*c,altliougli Dr. Patil states that 1~ is the owner oftlie equjpiiient, i l l . M;isah;lyaii claiii~s that lie had an owneriliip interest ii-i TA. Therefore, tlic Det'eiidarits have not demonstrated their exclusive riglit to the anesthesia Page 8 o f 9 [* 9] quipiiient and that branch of Defendants' motion is denied. With regard to IA's statements, set fori11 in its reply papers, for the l h t tinit', concerning allegations that the so called 60/40 agreement is in violation of Federal La\+, such will be referred to trial, as it was not properly raised in the initial motion papers. Tliis constitutes the DECfS'ION and ORDER of the Court. [ ] Final [ x ] Non Final Page 0 of 9
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