Falk v Gallo

[*1] Falk v Gallo 2008 NY Slip Op 50451(U) [18 Misc 3d 1146(A)] Decided on February 25, 2008 Supreme Court, Nassau County Austin, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 25, 2008
Supreme Court, Nassau County

Jeffrey Falk, M.D. and Anesthisystems, Inc., Plaintiffs,

against

Victor A. Gallo, M.D., Victor A. Gallo M.D., P.C. and Garden City Medical Plaza Corp., Defendants.



19472-06



ounsel for Plaintiffs

Allen H. Weiss, Esq.

1979 Marcus Avenue - Suite 210

Lake Success, New York 11042

Counsel for Defendant

Garfunkel, Wild & Travis, P.C.

111 Great Neck Road

Great Neck, New York 11021

Leonard B. Austin, J.

Plaintiffs, Jeffrey Falk ("Falk") and Anesthisystems, Inc. ("Anesthisystems"), moves to dismiss Defendants' affirmative defenses.

BACKGROUND

Falk is a physician specializing in anesthesiology. He is the principal of, and sole shareholder in, Anesthisystems. [*2]

Defendant, Victor A. Gallo, M.D. ("Gallo"), is a physician specializing in gastroenterology. Gallo practices medicine through a professional corporation, Victor M. Gallo, MD, PC ("MDPC"), a Defendant herein.

Defendant, Garden City Medical Plaza Corp. ("Med Plaza"), is a corporation that owns real property located at 1075 Franklin Avenue, Garden City, New York. Gallo maintains his offices for the practice of medicine at Med Plaza's premises. Although it is denied, it appears that Gallo and/or MDPC have an ownership or management interest in Med Plaza (Answer ¶ 11).

In 2002, Gallo opened an ambulatory surgery facility at Med Plaza's premises. He uses these facilities primarily to perform colonoscopies. In order to perform surgery or colonoscopies at the ambulatory surgical facility, Gallo needed an anesthesiologist.

In 2002, Gallo and Falk purportedly entered into an oral agreement whereby Falk was to have the exclusive right to administer anesthesia and pain relief to Gallo's patients for the rest of Falk's life or as long as Gallo provided medical services at the Med Plaza ambulatory surgery facility.

Falk was to function as an independent contractor. As such, Falk would maintain his own medical malpractice insurance and liability insurance and bill the patients directly for his services.

In November 2002, Falk opened an office in the Med Plaza facility of Gallo and began to pay Med Plaza a monthly rent.

Falk provided anesthesiology and pain relief services at Gallo's ambulatory surgery facility through September 2006.

On September 12, 2006, Gallo advised Falk that he was terminating Falk's services as the anesthesiologist at the Med Plaza ambulatory surgery facility. Falk has not worked at the facility since that date.

Falk claims that he has been locked out of the facility including his office since that time even though he had paid his rent through September 2006.

Plaintiffs' original complaint alleged three causes of action. The first cause of action alleges a breach of contract and seeks to recover the income lost by Falk from September 2006 through the end of the contract year. The second cause of action alleged that Falk and Gallo entered into an agreement pursuant to which Gallo agreed to pay Falk $300 per patient from fees received from patients covered by Vytra Health Plan. Falk alleges that, between May 2005 and September 2006, Gallo treated at least 100 patients insured by Vytra Health Plan. Gallo has failed to make payment to Falk for services rendered to these patients. The third cause of action alleged that Gallo has received checks and other payments for medical services rendered by Falk which Gallo has failed and refused to turn over to Falk. Falk seeks to recover the money withheld from him.

Defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(7). By order dated June 11, 2007, this Court granted Defendants' motion to the extent of dismissing Plaintiffs' demand for punitive damages on the third cause of action. The motion was, in all other respects, denied. This Court found that the first cause of action, when read broadly, stated a cause of action for wrongful eviction. The second cause of action alleged a cause of action for breach of contract. The third cause of action alleged a cause of action for conversion. [*3]

The order directed Defendants to serve an answer within twenty (20) days of the date of the order.

In August 2007, Plaintiffs served an amended complaint which added a fourth and fifth cause of action. The first, second and third causes of action were the same as those alleged in the original complaint.The fourth cause of action alleges that in 2005, Gallo began to notify his patients that the ambulatory surgery facility used the services of a board certified anesthesiologist who did not participate in any insurance plans. The notice indicated that most insurance plans would pay for the anesthesiologist's services. If the patient's insurance plan did not pay for the anesthesiologist's services, the anesthesiologist would charge a nominal fee. Falk alleges the nominal fee was far less than the fair and reasonable value of the services he rendered and also was not in accordance with his usual and customary fees for the services rendered. Falk did not consent to Gallo giving this notice to patients. As a result of having been given this notice, many patients have failed or refused to pay the bills sent to them by Falk or have paid less than the amount billed. Falk alleges this conduct by Gallo and MDPC constitutes a tortious interference with contract.

The fifth cause of action alleges that the actions by Gallo and MDPC in advising Falk's patients that they would be charged only a nominal fee for Falk's medical services constitutes a prima facie tort.

Defendants' answer to the amended complaint generally denies all of the substantive elements of Plaintiffs' five causes of action, alleges seven affirmative defenses and three counterclaims. Defendants' affirmative defenses are failure to state a cause of action (first affirmative defense), estoppel (second affirmative defense), failure to mitigate damages (third affirmative defense), unclean hands (fourth affirmative defense), failure or lack of consideration (fifth affirmative defense), Plaintiffs' claims are barred by their material breach of the agreement (sixth affirmative defense) and Statute of Frauds (seventh affirmative defense). All of the affirmative defenses are plead in single, conclusory sentences.

Defendants do make factual allegations supporting their counterclaims. Defendants allege that on or about November 1, 2002, Med Plaza, as landlord, entered into a three year lease with Anesthisystems, as tenant. Pursuant to the lease, Anesthisystems leased 2,500 square feet of office space at 1075 Franklin Avenue, Garden City which was to be used by Falk in connection with his anesthesiology practice. Although Med Plaza makes reference to the lease in its answer and states a copy of the lease is annexed to the answer as an exhibit, the copy of the answer provided to the Court by both Plaintiffs and Defendants does not contain a copy of the lease.

Defendants allege that Anesthisystems' original lease expired on October 31, 2005. Upon the expiration of the lease, Gallo and Falk entered into negotiations regarding a new lease. In March 2006, the parties allegedly agreed to the terms of a new lease. However, Falk and Gallo never prepared or executed a new lease incorporating their agreement.

At the same time as they were negotiating the terms of the lease, Gallo and Falk also discussed arrangements regarding the payment of the salary and benefits of a [*4]registered nurse and medical technician who worked in the ambulatory surgery facility. Gallo alleges Falk agreed to pay the salary and benefits of the nurse and technician. Like the new lease, this agreement was not reduced to a writing signed by the parties. Gallo alleges Falk failed to pay some of the nurse's salary and all of her benefits and that he paid these items.

Since the parties never reduced the terms of the lease to a writing, in September 2006, Gallo orally terminated Falk and Anesthisystems' occupancy of the premises.

In their counterclaims, Defendants seek to recover what they allege is the difference between the rent paid by Anesthisystems and the rent that it should have paid from November 1, 2005 to March 2006 based upon the new lease. Gallo also seeks to recover the salary and benefits Gallo paid the registered nurse which he claims Falk agreed to pay. Finally, Gallo seeks to recover the rent due from September 1, 2006 through September 14, 2006.

DISCUSSION

CPLR 3211(b) permits the court to dismiss defenses on the grounds that a defense is not stated or on the grounds that the defense has no merit.

When considering such a motion, the court must give the defendant "...the benefit of every reasonable intendment of the pleading, which is to be liberally construed.(see, Abney v. Lunsford, 254 AD2d 318) If there is any doubt as to the availability of the defense, it should not be dismissed. (see, Becker v. Elm Air Conditioning Corp., 143 AD2d 965; Duboff v. Board of Higher Educ., 34 AD2d 824). " Warwick v. Cruz, 270 AD2d 255 (2nd Dept. 2000). See also, Amerada Hess Corp. v. Town of Southold, 39 AD3d 442 (2nd Dept. 2007). When considering such a motion, the court must assume the truth of all factual allegations made supporting the defense and must give the defendant the benefit of all reasonable inferences which may be drawn from those facts. Siegel, New York Practice 4th §269.

Affirmative defenses plead as conclusions of law that are not supported by any facts are insufficient and should be dismissed. Plemmenou v. Arvanitakis, 39 AD3d 612 (2nd Dept. 2007); Petracca v. Petracca, 305 AD2d 566 (2nd Dept. 2003); and Bentivegna v. Meenan Oil Co., 126 AD2d 506 (2nd Dept. 1987).

A.First and Seventh Affirmative Defenses

By letter dated November 7, 2007, Defendants withdrew the first affirmative defense. By letter dated November 14, 2007, Defendants withdrew their seventh affirmative defense. Therefore, these affirmative defenses are no longer before the Court on this motion.

Since the Defendants have withdrawn the first and seventh affirmative defenses, the court must determine whether the second, third, fourth, fifth and sixth affirmative defenses should be dismissed.

All of these affirmative defenses are pleaded as single sentence conclusions without any supporting factual basis. To counter this defect in the pleading, Defendants rely upon the facts alleged in support of their counterclaims.

B.Second Affirmative Defense - Estoppel

"The party asserting estoppel must show with respect to himself: (1) lack of knowledge of the true facts; (2) reliance upon the conduct of the party estopped; and (3) a prejudicial change in his position'. (Airco Allys Div. v. Niagara Mohawk Power Corp., 76 AD2d 68, 81-82)". BWA Corp v. Alltrans Express U.S.A., Inc., 112 AD2d 850, 853 (1st Dept. 1985). [*5]

The answer does not make any factual allegations that would support this defense. The factual allegation supporting the counterclaims all relate to Falk's failure to abide by the terms of the oral agreements he reached with Gallo regarding the renewal or extension of the lease and the payment of a nurse's salary and benefits. Defendants do not allege Falk made any misrepresentations to them.

Thus, the second affirmative defense is without merit and should be stricken.

C.Third Affirmative Defense - Failure to Mitigate Damages

A plaintiff must make a reasonable effort to mitigate its damages. See, Jewish Press, Inc. v. Willner, 190 AD2d 841 (2nd Dept. 1993). Failure to mitigate damages should be plead as an affirmative defense. Alhstrom Machinery Inc. v. Associated Airfreight Inc., 251 AD2d 852 (3rd Dept. 1998).

Defendants offer no factual support to their claim that Plaintiffs have failed to mitigate damages. However, discovery has not been conducted and the parties have not been deposed. Under such circumstances, the court should reserve decision on whether this affirmative defense should be dismissed pending completion of discovery. Seiler v. Ricci's Towing Services, Inc., 210 AD2d 972 (4th Dept. 1994).

Therefore, the motion to strike the third affirmative defense should be denied without prejudice and with leave to renew.

D.Fourth Affirmative Defense - Unclean Hands

This affirmative defense should be stricken. It is pleaded as a conclusion of law not supported by any facts. Additionally, unclean hands is an equitable defense that is not available in action at law for damages. Manshion Joho Center Co., Ltd. v. Manshion Joho Center, Inc., 24 AD3d 189 (1st Dept. 2005); and County of Nassau v. Eagle Chase Assocs., 144 Misc 2d 641 (Sup.Ct. Nassau Co. 1989). All of the causes of action alleged in the complaint seek the legal remedy of money damages. Thus, this affirmative defense is inapplicable to this action and should be stricken.

E.Fifth and Sixth Affirmative Defense - Failure of Consideration and Breach of Contract

The fifth affirmative defense alleges failure or lack of consideration. The sixth affirmative defense alleges that Plaintiffs materially breached the agreement. The complaint and the counterclaim allege a series of oral agreements. These affirmative defenses do not allege which of Plaintiffs' causes of action are barred by the failure or lack of consideration, which agreement Plaintiffs materially breached or how Plaintiffs materially breach of the agreement. These single sentence affirmative defenses do not contain a single factual allegation. Reference to the counter claims does not cure the defect in the pleading of the fifth and sixth affirmative defenses. Therefore, these affirmative defenses must be stricken as well.

Accordingly, it is,

ORDERED, that Plaintiffs' motion to dismiss the Defendants' affirmative defenses is granted on consent in connection with the first and seventh affirmative defenses, is granted as to the second, fourth, fifth and sixth affirmative defenses and denied without prejudice with leave to renew as to the third affirmative defense.

This constitutes the decision and Order of the Court.

Dated: Mineola, NY_____________________________ [*6]

February 25, 2008Hon. Leonard B. Austin, J.S.C.