Morningside Acquisition I, LLC v Gandy

[*1] Morningside Acquisition I, LLC v Gandy 2019 NY Slip Op 29338 Decided on November 8, 2019 Supreme Court, Bronx County Franco, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Decided on November 8, 2019
Supreme Court, Bronx County

Morningside Acquisition I, LLC d/b/a MORNINGSIDE NURSING AND REHABILITATION CENTER, Plaintiff,

against

Drewan Gandy AND FREDRICKA FRAZIER, Defendants.



300774/2016
Ruben Franco, J.

This is an action to recover a money judgment for services rendered, breach of contract, and unjust enrichment.

Plaintiff moved, pursuant to CPLR 3126, to strike defendant Fredricka Frazier's (Frazier) Answer for failure to provide certain discovery. Frazier cross-moved to compel plaintiff to respond to her interrogatories, and for dismissal for failure to state a cause of action pursuant to CPLR 3211 (a) (7). The discovery branches of the parties' motions were referred to another justice of this court who denied plaintiff's motion and granted Frazier's cross motion to the extent that plaintiff was compelled to respond to certain items requested in two of Frazier's interrogatories. The branch of Frazier's cross motion seeking dismissal was referred to this court for decision. Plaintiff is a nursing facility which furnished room, board, and nursing services to defendant Drewan Gandy (Resident) from December 7, 2014 through April 15, 2015. Frazier avers that on December 23, 2014, while visiting Resident, who is her sister, they went to plaintiff's office where Resident signed the Admission Agreement. Over Frazier's objection, the facility representative insisted that she sign the Agreement "in case of an emergency," which plaintiff alleges in the Complaint that Frazier signed as Resident's "designated representative/sponsor." (The Complaint also indicates that this occurred in 2015, in fact, it was in 2014.) Frazier was not provided with a copy of the Agreement, nor any bills, or other correspondence. Resident is fully functional and able to handle her finances and she does not reside with Frazier and they do not share a bank account or any other finances. Moreover, Frazier does not have a power of attorney for her sister, nor does she have access to her income or any other resources that her sister may have available to pay for the care that she received at plaintiff's facility.

The Admission Agreement, ¶ IV (a), sets forth the obligations of the Designated Representative:

The Designated Representative shall ensure that the Resident has a continuing payment source and/or shall pay the Facility on a private pay basis, with private [*2]insurance, and/or by means of a third-party government payor, such as Medicare or Medicaid . The Designated Representative is responsible for providing payment from the Resident's income and resources to the extent he/she has access to such income and resources without the Designated Representative incurring personal financial liability. By signing this Agreement, however, the Designated Representative personally guarantees a continuity of payment from the Resident's funds to which he/she has access or control and agrees to arrange for third-party payment, if necessary, to meet the Resident's cost of care . [T]he Designated Representative is not obligated to pay for the cost of the Resident's care from his/her own funds . The Designated Representative agree[s] to provide or arrange for payment for any portion or all of the applicable private pay room and board rate, the ancillary charges incurred for services not covered by third party payors and/or any required deductibles, co-insurance or monthly income budgeted by the Medicaid program (NAMI) and may be responsible to the Facility for the damages arising from his/her breach of this Agreement The execution of this Agreement by the Designated Representative cannot, and shall not, serve as a third-party guarantee of payment in violation of applicable law and regulation. Notwithstanding the foregoing, the Designated Representative will be held personally responsible and liable for a breach of his/her actions or omissions under the terms of this Agreement caused or contributed to non-payment of the Facility's fees . Such actions or omissions constituting a breach of this Agreement include, but are not limited to the following: (i) failing to utilize the Resident's funds to pay for the Resident's care at the Facility when the Designated Representative has control over the Resident's funds through a Power-of-Attorney, access to joint accounts and/or the like; (ii) misappropriation diversion and/or transfer(s) of the Resident's funds which result in the Resident having insufficient private resources to pay for the cost of the Resident's care and/or in being ineligible to receive third-party benefits (i.e. Medicaid); (iii) failure to remit the Resident's social security and/or pension income to the Facility; (iv) failure to provide requested information and/or documentation to the Facility or to third-party payor(s), such as an Insurer or Medicaid; and/or (v) the provision of false misleading or incomplete information and/or documentation, regarding matters including, but not limited to, the Resident's financial resources, citizenship or immigration status, and/or third-party insurance coverage, to the extent that the Facility relies on such information and/or documentation to its detriment. Any failure of the Designated Representative to use the Resident's funds in accordance with the terms of this Agreement will constitute a breach of contract on the part of the Designated Representative .

On a motion to dismiss pursuant to CPLR 3211 (a) (7), the Complaint must be liberally construed, the factual allegations set forth must be accepted as true, the plaintiff must be given the benefit of all favorable inferences therefrom, and the court must decide only whether the facts alleged fall under any recognized legal theory (Miglino v Bally Total Fitness of Greater NY, Inc., 20 NY3d 342 [2013]; Lee v. Dow Jones & Co., Inc., 121 AD3d 548 [1st Dept 2014]). Affidavits may be considered freely "to preserve inartfully pleaded, but potentially meritorious, claims" in a Complaint (Rovello v Orofino Realty Co., 40 NY2d 633, 635 [1976]; Finkelstein Newman Ferrara LLP v Manning, 67 AD3d 538, 540 [1st Dept 2009]).

In 10 NYCRR § 415.2 (f), a "Designated Representative" is defined as "the individual or [*3]individuals designated in accordance with this subdivision to receive information and to assist and/or act in behalf of a particular resident to the extent permitted by State law." In 10 NYCRR §415.2 (s), a "sponsor" is defined as "the agency or the person or persons, other than the resident, responsible in whole or in part for the financial support of the resident, including the costs of care in the facility." As set forth in 10 NYCRR § 415.3 (b) (1), 42 USC § 1396r (c) (5) (A) (ii), and the Agreement (¶ IV [a]), plaintiff is prohibited from requiring a third-party guarantee of payment to the facility. Plaintiff can require an individual who has legal access to a resident's income or resources available to pay for care, to sign a contract without incurring personal financial liability (10 NYCRR § 415.3 [b] [6]; 42 USC § 1396r [c] [5] [B] [ii]). In Troy Nursing & Rehabilitation Ctr., LLC v Naylor (94 AD3d 1353, 1355 [3rd Dept 2012]), the Court explained:

Although that act prohibits a nursing facility from "requir[ing] a third party guarantee of payment to the facility as a condition of [a resident's] admission" (42 USC § 1396r [c] [5] [A] [ii]; see also 10 NYCRR 415.3 [b] [1]), it also expressly permits a nursing facility to "requir [e] an individual, who has legal access to a resident's income or resources available to pay for care in the facility, to sign a contract (without incurring personal financial liability) to provide payment from the resident's income or resources for such care" (42 USC § 1396r [c] [5] [B] [ii]; see also 10 NYCRR 415.3 [b] [6]). (emphasis added).

In a case similar to the instant matter, Amsterdam Nursing Home Corp. v Lang (16 Misc 3d 1138 [A], *4 [Sup Ct, NY County]), where the defendant signed the admission form as the resident's "Legally Authorized Representative," the court reviewed the statutes and determined that, "Amsterdam has presented no evidence that Lang has any legal control over or access to his grandmother's financial resources . Therefore, based upon the record before this Court, Amsterdam has failed to establish that Lang is liable to pay for the services rendered to his grandmother." (See also Prospect Park Nursing Home, Inc. v Goutier, 12 Misc 3d 1192 [A], *2 [Civ Ct, Kings County 2006].)

Neither the statutes, nor the Agreement require a Designated Representative to make payment to plaintiff with the latter's own funds. In Hillside Manor Rehabilitation & Extended Care Ctr., LLC v Barnes (27 Misc 3d 1229 [A], * 3 [Civ Ct, Queens County]), the court stated: "[I]n the relatively thin body of case law in New York State regarding third-party liability for nursing home bills, the Court, in considering the federal and state regulations cited herein, has held that third parties are not responsible for paying such bills . [D]espite the defendant's signature on an admission agreement ([in the] Amsterdam [opinion]) and designation as attorney-in-fact ([in the] Prospect Park [opinion]), the Court found no third-party liability."

In its zeal to obtain payment from Frazier, plaintiff erroneously alleges in the Complaint that Frazier signed the Admission Agreement as "designated representative/sponsor." The court reviewed the Agreement and it is clear that Frazier signed on the line for the "DESIGNATED REPRESENTATIVE" and that the signature line for the "SPONSOR" is blank. The Complaint does not allege, nor has plaintiff shown, that Frazier is required to ensure payment, or that she had legal access to Resident's funds and failed to use them to pay plaintiff, or that Frazier is in a position to secure a third-party payor (see10 NYCRR § 415.3 [b] [1]; 42 USC § 1396r [c] [5] [A] [ii]; Amsterdam Nursing Home Corp. v Lang, 16 Misc 3d 1138 [A], *4; Prospect Park Nursing Home, Inc. v Goutier, 12 Misc 3d 1192 [A], [at *2]).

The elements of a breach of contract "include the existence of a contract, the plaintiff's performance thereunder, the defendant's breach thereof, and resulting damages" (Harris v Seward Park Hous. Corp., 79 AD3d 425, 426 [1st Dept 2010]). An Admission Agreement can only require the signatory to use his or her access to a resident's funds. If the signatory does not have access to a resident's funds, for example, through a power of attorney, joint bank account, or through an appointment as a Guardian, the individual would not be liable to the facility in a breach of contract cause of action.

The second cause of action is based on the theory of unjust enrichment, which is a quasi-contract claim. It contemplates an obligation imposed by equity to prevent injustice in the absence of an actual agreement between the parties. However, the existence of a valid and enforceable written agreement governing the parties' dispute, "precludes recovery in quasi contract for events arising out of the same subject matter" (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388 [1987]). The Complaint relies on the Admission Agreement. In this instance, unjust enrichment would be duplicative of plaintiff's claim for breach of contract (see Robinson v Oz Master Fund, Ltd., 139 AD3d 639 [1st Dept 2016]).

Accordingly, Frazier's cross motion to dismiss the Complaint is granted.

This constitutes the Decision and Order of the court.

Dated: November 8, 2019

______________________________

Rubén Franco, J.S.C.