A & T Healthcare, LLC v Markstein

[*1] A & T Healthcare, LLC v Markstein 2012 NY Slip Op 51513(U) Decided on August 7, 2012 Supreme Court, Rockland County Jamieson, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 7, 2012
Supreme Court, Rockland County

A & T Healthcare, LLC f/k/a A & T HEALTHCARE INC., Plaintiff,

against

Paul Markstein and MENSCHIK & MARKSTEIN, Defendants.



8138/2009



Counsel: Counsel for Plaintiff: Judith Bachman; Counsel for Defendant: Furman Kornfeld; Counsel for Third Party Defendant: Camacho Mauro.

Linda S. Jamieson, J.

The following papers numbered 1 to 9 were read on these motions:

PaperNumber

Notice of Motion, Affirmation and Exhibits1

Memorandum of Law2

Notice of Cross-Motion3

Affidavit and Exhibit4

Memorandum of Law5

Affirmation and Exhibits in Opposition6

Memorandum of Law7

Affirmation in Reply and in Opposition8

Affirmation in Reply9

There are two motions before the Court (with three sequence numbers; sequences 2 and 3 are the same motion). The first, brought by third-party defendants, seeks to dismiss the complaint. The second motion, brought by plaintiff, seeks leave to amend the complaint.

This is a legal malpractice case arising out of defendants' representation of plaintiff back in 2004-2005. Summarized briefly, defendants settled a litigation for plaintiff in January 2005 (the "Settlement") brought by the New York Healthcare Facilities Workers Compensation Trust (the "Trust"). In that [*2]litigation, defendants represented plaintiff. Defendants retained third-party defendants, National Risk Services, Inc. and Monte J. Gale, as experts in the area of workers compensation law, the subject of the lawsuit.

Thereafter, plaintiff was sued again in November 2005 by the same party, the Trust, despite the Settlement. The court in that action determined that the Settlement would not bar the second action.

Without detailing the complicated history that followed, suffice it to say that ultimately, plaintiff was involved in a third action, in Albany County. After that case was commenced, plaintiff filed this legal malpractice action in 2008, contending that defendants must have mishandled the Settlement in order for the Trust to have brought the second litigation. The Court stayed this case while the Albany County case was litigated.[FN1] Plaintiff recently settled the Albany County case by paying a substantial sum.

In 2009, defendants brought the third-party action, seeking contribution and indemnification against third-party defendants. Defendants contend in the contribution cause of action that Mr. Gale "held himself out as an expert in the field of Workers Compensation law. As an expert . . . Monte J. Gale owed a duty to A & T to give competent expert advice. . . . ." The complaint goes on to state that Mr. Gale "breached that duty," by "giving negligent, reckless and careless advice." It is well-settled that contribution claims "may be asserted if there has been a breach of a duty that runs from the contributor to the defendant who has been held liable." Raquet v. Braun, 90 NY2d 177, 659 N.Y.S.2d 237 (1997).

The complaint continues in a similar vein for the indemnification cause of action. Indemnification claims "permit[] one who has been compelled to pay for the wrong of another to recover from the wrongdoer the damages it paid to the injured party." Curreri v. Heritage Property Inv. Trust, Inc., 48 AD3d 505, 852 N.Y.S.2d 278 (2d Dept. 2008).

Now, third-party defendants seek to dismiss the third-party complaint on statute of limitations grounds. They argue that although framed as claims for contribution and indemnification, which have a six-year statute of limitations, third-party plaintiffs' claims are really for malpractice (which has a three-year statute of limitations). Third-party plaintiffs, of course, disagree. Third-party plaintiffs argue that "a plain examination of the Third-Party Complaint reveals that the claims sets forth against the Third-Party Defendants are for contribution and [*3]indemnification not for professional malpractice." Plaintiff agrees with this assertion, arguing that "the limitations period for a claim for contribution/indemnification is six years regardless of the nature of the actual allegation of wrongdoing and its contaminant [sic] limitations period."

Having reviewed the law on claims for contribution, it appears that the Court need not reach the issue of the statute of limitations for the cause of action for contribution in this case, which is essentially for breach of contract. Structure Tone, Inc. v. Universal Services Group, Ltd., 87 AD3d 909, 929 N.Y.S.2d 242 (1st Dept. 2011) (subcontractor's alleged tort claims were really based on contract). Contribution "is unavailable in the context of a contract action. As the Court of Appeals has noted, purely economic loss resulting from a breach of contract does not constitute injury to property' within the meaning of New York's contribution statute.'" Pilewski v. Solymosy, 266 AD2d 83, 698 N.Y.S.2d 660 (1st Dept. 1999). The First Department has expanded on this holding, in the case of Children's Corner Learning Center v. A. Miranda Contracting Corp., 64 AD3d 318, 879 N.Y.S.2d 418 (1st Dept. 2009). In that case, the Court dismissed a third-party claim for common-law contribution because the underlying claim sought purely economic damages. The Court explained that

while claims for professional malpractice and breach of contract may co-exist, even though both arise out of the professional's contractual obligations, Loheac's argument must be rejected. This is because the touchstone for purposes of whether one can seek contribution is not the nature of the claim in the underlying complaint but the measure of damages sought therein. Here, the damages sought from Loheac are economic only. That is, plaintiff seeks only to be returned "to the point at which the breach arose and to [be placed] in as good a position as it would have been" had Loheac not committed the alleged malpractice.

The same is true here. Third-party plaintiffs seek money damages from third-party defendants and, thus, there is no claim for contribution. See also N & S Supply, Inc. v. Simmons, 305 AD2d 648, 761 N.Y.S.2d 668 (2d Dept. 2003) (in malpractice action, no claim for contribution; "Since LaPolla's liability to N & S in the main action, if any, will be purely economic based upon a contract, he has no claim for contribution against the appellant."); Pilewski v. Solymosy, 266 AD2d 83, 698 N.Y.S.2d 660 (1st Dept. 1999); Structure Tone, 87 AD3d at 911, 929 N.Y.S.2d at 245 ("Claims for contribution are governed by CPLR 1401 and apply to damages for personal injury, injury to property or wrongful death. Here, there was no personal injury, and a purely economic loss resulting from a breach of contract does not constitute an [*4]"injury to property" within the meaning of CPLR 1401."). Accordingly, the First Cause of Action is dismissed.

Turning to the Second Cause of Action, which seeks indemnification from Mr. Gale and National Risk Services, Inc., the complaint states that Mr. Gale "held himself out as an expert. . . [and third-party plaintiff] relied on the expert advice provided by Monte J. Gale in recommending that A & T agree to execute the Settlement Agreement. . . ." Based on this allegedly negligent advice, A & T entered into the ill-fated Settlement. The complaint states that it seeks indemnification from Mr. Gale should third-party plaintiffs be found liable for malpractice. Third-party defendants argue that this cause of action is time-barred, because it really is seeking damages for malpractice.

Having read all of the papers, the Court finds that third-party defendants have not adequately addressed the issue of whether this claim is actually one for malpractice or negligence,[FN2] rather than a claim for indemnification. Moreover, the motion fails to address the issue of whether a timely indemnification claim can lie when it is based on malpractice or negligence claims which would be untimely. See generally Germantown Cent. School Dist. v. Clark, Clark, Millis & Gilson, AIA, 294 AD2d 93, 743 N.Y.S.2d 599 (3d Dept. 2002) ("Permitting plaintiffs to add these tort claims by recasting them in indemnification and restitution language would improperly circumvent the Statute of Limitations' bar on these claims."). Accordingly, the Court denies third-party defendants' motion with respect to the Second Cause of Action, without prejudice.

Turning to plaintiff's motion to amend the complaint, the Court grants it, because pursuant to CPLR § 3025(b), "leave to amend a pleading should be freely granted in the absence of prejudice to the nonmoving party where the amendment is not patently lacking in merit." Tinch-McNeill v. Alcohol and Drug Dependency Services, Inc., 96 AD3d 1407, 946 N.Y.S.2d 356

(4th Dept. 2012). Here, third-party defendants have not objected to the amendment on the basis of prejudice or surprise, so the Court will allow the amendment. However, the Court is concerned that the new Second Cause of Action, against National Risk Services, Inc. and Mr. Gale for negligence, may well be time-barred. Should it be appropriate, the Court will entertain a [*5]

motion to dismiss based upon the statute of limitations.

The foregoing constitutes the decision and order of the Court.

Dated:New City, New York

July __, 2012

____________________________

HON. LINDA S. JAMIESON

Justice of the Supreme Court Footnotes

Footnote 1:The Court issued a stay because one potential outcome of the Albany County case would have mooted this action.

Footnote 2: The Court notes that the statute of limitations for negligence is three years, the same as the statute of limitations for malpractice. Santiago v. 1370 Broadway Associates, L.P., 96 NY2d 765, 725 N.Y.S.2d 599 (2001). Thus, even if the underlying claim is for negligence and not malpractice, the limitations period is the same.