Scharge v Waterview Nursing Care Ctr., Inc.

[*1] Scharge v Waterview Nursing Care Ctr., Inc. 2010 NY Slip Op 50353(U) [26 Misc 3d 1232(A)] Decided on March 8, 2010 Supreme Court, Queens County Weiss, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 8, 2010
Supreme Court, Queens County

Ashley Scharge, Plaintiff,

against

Waterview Nursing Care Center, Inc., Defendant.



18444 2009

Allan B. Weiss, J.

This action to recover the sum of $75,000.00, together with interest, attorney's fees and punitive damages, was commenced on July 10, 2009. Defendant served its motion to dismiss the complaint on August 3, 2009. Plaintiff served his cross motion for summary judgment in his favor on October 20, 2009, and the motions were fully submitted on December 12, 2009.

Although plaintiff's counsel states that on September 30, 2009 plaintiff was granted permission to treat the defendant's motion as a motion for summary judgment, and to serve its cross motion for summary judgment, counsel has not submitted a written order to that effect, or evidence that such an order was granted on the record. Therefore, the court declines to treat plaintiff's motion as a motion for summary judgment pursuant to CPLR 3211(c), and the cross motion for summary judgment is denied as premature, as issue has not been joined (CPLR 3212). Plaintiff's cross motion therefore will be considered in opposition to the defendant's motion.

It is noted that the "affidavit" submitted by defendant's administrator in its reply papers is incomplete and is neither executed or verified. This "affidavit" therefore will not be considered.

In considering a motion to dismiss pursuant to CPLR 3211(a)(7), the court should "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 NY2d 83, 87-88 [1994]; see Vitarelle v Vitarelle, 65 AD3d 1034[2009]; Sinensky v Rokowsky, 22 AD3d 563, 564 [2005]). Although bare legal [*2]conclusions and factual claims which are contradicted by the record are not presumed to be true, the party bringing the action is not required to prove the allegations in order to survive a dismissal pursuant to CPLR 3211(a)(7) (see Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). Moreover, when, as here, a motion to dismiss is not converted to a motion for summary judgment, affidavits may be received for the limited purpose of remedying defects in the complaint, thereby preserving inartfully pleaded, but potentially meritorious, claims (see Rovello v Orofino Realty Co., 40 NY2d 633, 635 [1976]; Davis v CCF Capital Corp., 277 AD2d 342, 343 [2000]). Upon review, it is clear that plaintiff has stated claims on several theories to recover the sum of $75, 000.00 paid to the defendant.

It is undisputed that plaintiff Ashley Scharge's father, Erwin Scharge, sustained severe injuries, including head trauma and a broken brainstem as a result of a work related accident which occurred on October 21, 1994. Erwin Scharge, was a resident at defendant Water View Nursing Care Center Inc. (Water View), from July 1995 until his death on August 10, 1999. Plaintiff's submissions establish that a workers' compensation claim was filed on behalf of Erwin Scharge, and that the carrier, the State Insurance Fund, made payments to Water View between March 14, 1996 and November 26, 1999.

Plaintiff alleges that Water View demanded payment of $75,000.00 and threatened to immediately discharge his father if payment was not made, and that on May 14, 2009, Water View accepted a check in the sum of $75,000.00, drawn on the account of Erwin Scharge and John R. Dietz, Guardian. Plaintiff further alleges that on August 2, 2005, the Workers' Compensation Board ordered the carrier, the State Insurance Fund, to audit and pay medication and transportation and all related medical bills including the hospital and nursing home bill. It is alleged that Ashley Scharge was appointed the executor of his father's estate on November 8, 2005, although the documentary evidence states that letters testamentary were issued to Ashley Scharge on October 8, 1999.

The pleadings and documentary evidence establishes that Ashley Scharge filed a death benefits claim on behalf of his father's estate with the Workers' Compensation Board and following a hearing held on November 8, 2005, the Board in an order filed November 15, 2005 directed the carrier to pay a death benefit of $50,000.00 to the decedent's estate. The Board also ordered the carrier, the State Insurance Fund, to audit and pay causally related medical, hospital and nursing home bills within 60 days. The Board thereafter issued a decision filed on March 13, 2006, directing the carrier to pay the nursing home bills. The State Insurance Fund filed on objection to the decision dated March 17, 2006, stating that it had paid Water View. The documentary evidence establishes that between 1996 and 1999 the State Insurance Fund paid Water View a total of $275,000.00, which includes an identical sum of $75,000.00. The statutory death benefit paid to the estate is independent of the medical and nursing home payments, and is not a reimbursement of funds paid by Erwin Scharge to Water View.

Plaintiff alleges that as Water View participates in the workers' compensation system, it is barred by the provisions of Workers' Compensation Law § 13-f from demanding payment from [*3]the claimant Erwin Scharge, his guardian, and his family, and could only have sought payment from the employer/carrier. It is further alleged that as Water View was paid by the carrier, the State Insurance Fund, it is not entitled to retain the sum of $75,000.00 paid by plaintiff's father or guardian.

Contrary to defendant's assertions, this is not an action predicated upon a breach of contract. Plaintiff does not allege a contractual relationship with the defendant or a breach of contract. Furthermore, as plaintiff alleges that his father was a workers' compensation claimant, Water View's right to payment under a contract for services rendered to Erwin Scharge could only have arisen in the event that the Workers' Compensation Board determined that he was not entitled to workers' compensation benefits, which did not occur here.

Workers' Compensation Law § 13-f provides, in pertinent part, that "no provider of health care rendering medical care or treatment to a compensation claimant, shall collect or receive a fee from such claimant within this state, but shall have recourse for payment of services rendered only to the employer under the provisions of this chapter. Any compensation claimant who pays a fee to a provider of health care for medical care or treatment under this chapter shall have a cause of action against such provider of health care for the recovery of the money paid...".

To plead a claim for common-law fraudulent inducement, a plaintiff must assert the misrepresentation of a material fact, which was known by the defendant to be false and intended to be relied on when made, and that there was justifiable reliance and resulting injury (see Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d 330, 348,[1999]; Braddock v Braddock, 60 AD3d 84, 86,[2009]). The complaint, although inartfully drawn, sufficiently sets forth these elements. It is specifically alleged that Water View with an intent to deceive orally misrepresented to plaintiff that if he did not pay the sum of $75,000.00, his father would be discharged from the nursing home onto the streets, at a time when Water View was a participant in the Workers' Compensation system and was being paid the identical sum or sums by the State Insurance Fund. Plaintiff alleges he relied upon defendant's claim of a right to payment, and paid said sum, and that he sustained damages as the executor of his father's estate and sole heir, including attorney's fees incurred in this action. The foregoing allegations satisfy the particularity requirement for a fraud claim (CPLR 3016[b]). It is noted that to the element of justifiable reliance, it is not amenable to determination as a matter of law on a 3211 (a)(7) motion, as the issue is generally one of fact (see Talansky v Schulman, 2 AD3d 355, 361, [2003]). Furthermore, "[w]hether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss" (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 20, [2005]).

"Conversion is the unauthorized exercise of dominion or control over specifically identified property which interferes with the owner's rights (see Gilman v Abagnale, 235 AD2d 989, 991 [1997]; Republic of Haiti v Duvalier, 211 AD2d 379, 384 [1995]). Money may be the subject of conversion if it is specifically identifiable and there is an obligation to return it or treat it in a particular manner (see Republic of Haiti v Duvalier, supra at 384). Proof [*4]of a demand for the return of the subject property "is an essential ingredient in a conversion action" (Tache-Haddad Enters. v Melohn, 224 AD2d 213 [1996]; Cash v Titan Fin. Servs., Inc., _5_ AD3d 785,[ 2009]; see Apex Ribbon Co. v Knitwear Supplies, 22 AD2d 766, 767 [1964]). Here, the complaint sufficiently states claim for conversion of the $75,000.00, paid by check to the defendant in 1999, which the defendant was not entitled to receive or retain. The affidavits and documentary evidence establishes that plaintiff made demands for the return of this sum in either 2005 or 2006, when he discovered that the payment had been wrongfully made, and that Water View has wrongfully continued to retain the sum paid.

The third cause of action alleges that the plaintiff was "compulsed" to pay the defendant the sum of $75,000.00 in order to avoid the consequences of having his father discharged from the nursing home. There is no cognizable action for "compulsion" or duress. However, plaintiff's allegations are sufficient to state a claim pursuant Workers' Compensation Law § 13-f, to recover the $75,000.00 paid by his father, as his father made a workers' compensation claim which was determined to be covered by the workers' compensation statute (see generally, Valley Rehabilitation & Med. Offs., P.C. v Cash, 6 Misc 3d 541 [2004]; Ellis v Symonds, 96 Misc 2d 643, [1978]; Tandet v Levolite Co., Inc., 22 NYS2d 557 [1940]; Sprague v Spencer, 172 Misc. 123, [1939]). In addition, where money has been extracted in violation of statute, a cause of action for money had and received will lie, whether or not there is a statute expressly conferring such a right of action (see, e.g., Kamhi v Town of Yorktown, 74 NY2d 423,[1989]; see also Kidd v Delta Funding Corp., 2000 NY Misc. LEXIS 29, 24-25 [2000]).

With respect to defendant's statute of limitations defense,

plaintiff's claims appear to be time barred (CPLR 213, 214). Contrary to plaintiff's assertions, the statute of limitations set forth in the CPLR is applicable to the within causes of actions, as this is not a proceeding before the Workers' Compensation Board. However, it is well settled that "[A] defendant may be estopped to plead the Statute of Limitations where plaintiff was induced by fraud, misrepresentations or deception to refrain from filing a timely action" (Simcuski v Saeli, 44 NY2d 442, 448-449, [1978]; see Matter of Steyer, 70 NY2d 990, 992-993, [1988]). Here, the plaintiff's affidavits and documentary evidence reveals that although plaintiff sought the return of the money paid to defendant in 2006, defendant allegedly told him to seek recovery from the State Insurance Fund, at a time when the defendant had already received payment of the identical sum from the carrier, leading plaintiff to believe that he was without recourse, other than appealing to the Workers' Compensation Board for assistance. Generally, the issue of whether a defendant should be equitably estopped from asserting the Statute of Limitations as an affirmative defense to the plaintiff's complaint is not a question of law, but rather a question of fact, which should be fully developed and determined upon the trial of the action (see, McIvor v Di Benedetto, 121 AD2d 519, 523 [1986]). Therefore, as an issue of fact exists here as to whether the defendant should be equitably estopped from raising the statute of limitations, that branch of defendant's motion which seeks to dismiss the complaint is denied.

Accordingly, defendant's motion to dismiss the complaint is denied, and plaintiff's cross motion for summary judgment is denied, as it is premature. In view of the fact that the payment to Water View was made by the decedent or the guardian, and as plaintiff has sufficiently alleged [*5]and established that he has been granted letters testamentary, and as plaintiff does not allege that he personally provided the funds, plaintiff is given leave to amend the complaint in order to assert additional claims as the Administrator of the Estate of Erwin Scharge. Plaintiff is directed to serve an amended summons and complaint upon the defendant within 20 days from the date of service of this order together with notice of entry, and defendant shall thereafter serve its answer within 20 days of service of the amended pleading.

Dated: March 8, 2010

J.S.C.