Kanner v. Westchester Med. Grp.

• Citation: 2023 NY Slip Op 50877 (U)
• Docket Number: Index No. 814373/22E
• Decision Date: 25 August 2023
• Parties: Barry Kanner, M.D., Plaintiff, v. Westchester Medical Group, P.L.L.C. D/B/A Westmed Medical Group, a New York Professional Limited Liability Company, "John Doe 1-300" and "Jane Doe 1-300," Defendant(s).
• Court: United States State Supreme Court (New York)

2023 NY Slip Op 50877(U)

Barry Kanner, M.D., Plaintiff,
v.
Westchester Medical Group, P.L.L.C. D/B/A Westmed Medical Group, a New York Professional Limited Liability Company, "John Doe 1-300" and "Jane Doe 1-300," Defendant(s).

Index No. 814373/22E

Supreme Court, Bronx County

August 25, 2023

Unpublished Opinion

Counsel for Plaintiff: Salamon, Gruber, Blaymore & Strenger, PC

Counsel for Westmed: Jackson Lewis, PC

Fidel E. Gomez, J.

In this action for, inter alia, breach of contract, plaintiff moves seeking the entry of a default judgment pursuant to CPLR § 3215 against all defendants on grounds that despite being served with the summons with notice, defendants have failed to answer or otherwise appear. Defendant WESTCHESTER MEDICAL GROUP, P.L.L.C. D/B/A WESTMED MEDICAL GROUP (Westmed) opposes the instant motion asserting, inter alia, that the failure to interpose an answer is excusable inasmuch as after it received the summons with notice the delay in forwarding the same to counsel was due to an illness of its Senior Vice President's family member. Moreover, Westmed contends that the compulsory arbitration clause to which plaintiff is bound constitutes a meritorious defense to this action. Westmed also cross moves seeking an order pursuant to CPLR § 7503(a), compelling arbitration and thereafter, pursuant to CPLR 3211(a)(5), dismissing this action based on arbitration. Alternatively, Westmed moves for an order pursuant to CPLR § 7503(b) staying this action until the conclusion of the arbitration. Westmed avers that the agreements between the parties compel arbitration of all disputes arising therefrom, which therefore includes all issues interposed by plaintiff in his summons with notice. Plaintiff opposes Westmed's cross-motion asserting that the arbitration clauses within the agreements between the parties are ambiguous, rendering them enforceable.

For the reasons that follow hereinafter, plaintiffs' motion is denied and Westmed's cross-motion is granted, in part.

The instant action is for breach of contract, fraudulent misrepresentation, and breach of the covenant of good faith and fair dealing. The summons with notice ^[1], filed on September 28, 2022, states the following. On July 1, 2016, plaintiff, an interventional radiologist, became a shareholder at Westmed, an entity, which provided medical services to the public. Westmed was comprised of shareholders, who would meet quarterly. At the foregoing meetings, the shareholders would discuss any matters relevant to Westmed's business and if necessary, vote on any matters requiring the same. Defendants "JOHN DOE 1-300" AND "JANE DOE 1- 300," (Doe) inter alia, managed Westmed. On the foregoing date, plaintiff executed an Income Agreement as well as a Shareholders Agreement, and as a result, became a shareholder and acquired five shares of common stock and fifteen shares of preferred stock in Westmed. Plaintiff attended all quarterly shareholder meetings. Westmed structured its business such that shareholders and non-shareholders employed by it practiced medicine at Westmed in individual practice groups. Each practice group was a separate profit center responsible for all operational costs, including the cost of medical malpractice insurance. Compensation for the members of each practice group was calculated based on fees generated by the group as well as the costs necessary to operate each group. Each group was directly overseen by Doe. On or about 2015, a member of plaintiff's practice group engaged in acts, which resulted in a disproportionate number of medical malpractice claims against the member. As a result, the cost of the malpractice insurance for plaintiff's group significantly increased. The instant increase was charged equally to plaintiff's group, thereby increasing the group's costs, which in turn reduced plaintiff's compensation. Plaintiff complained about the foregoing to management resulting in a change whereby each member of plaintiff's group had to pay for his/her own malpractice insurance. Thereafter, the member of plaintiff's group who had the disproportionate share of malpractice claims was charged more for malpractice insurance. As a result, the foregoing member began to openly harass plaintiff, thereby creating a hostile and toxic work environment. Despite complaints to Westmed's management, the foregoing environment was allowed to persist. In April 2021, plaintiff notified Westmed that effective June 30, 2021, he was resigning. Thereafter, plaintiff attempted to withdraw his resignation but was not allowed to do so. Plaintiff alleges that during the time that he was employed by Westmed, unbeknownst to him, Westmed and Doe were engaged in negotiations to sell Westmed to WP CityMD Bidco, LLC (Summit Health) for hundreds of millions of dollars in a structure that would value each of Westmed's shareholder's stock holdings in excess of $1 million. Sometime prior to June 30, 2021, with the exception of plaintiff, Westmed's shareholders approved Westmed's sale to Summit Health for more than $600 million. The foregoing sale closed in late 2021 or early 2022. On August 26, 2021, plaintiff received a letter from Westmed informing him that as of that date, he was no longer a shareholder and paid him $46,420.05 for his stocks. In September 2021, plaintiff was sent a Withdrawal Agreement and General Release, which he refused to execute. As a result of plaintiff's refusal to execute the foregoing document, Westmed withheld $80,000 ^[2] in compensation due to him. Plaintiff alleges that Westmed and Doe engaged in a scheme whereby the sale of Westmed to Summit Health was withheld from him in order to deprive plaintiff of the augmented value of his stock, which would therefore benefit Westmed and Doe. Based on the foregoing, plaintiff contends that he is entitled to damages in excess of $2 million for defendants' breach of contract, fraudulent misrepresentation and intentional withhold[ing] of material information as part of a fraudulent scheme to deprive Dr. Kanner of sharing in the monetary benefits of the sale to Summit, breach of the implied covenant of good faith and fair dealing implicit in every contract.

On June 23, 2023, this Court denied Westmed's application, served upon plaintiff on January 20, 2023, which sought identical relief. The denial was premised on the failure to provide the Court with working copies of the motion and was without prejudice.

PLAINTIFF'S MOTION FOR THE ENTRY OF A DEFAULT JUDGMENT

Plaintiff's motion for the entry of a default judgment is denied. Significantly, although Westmed, in failing to establish that it has a meritorious defense in a legally cognizable way, fails to preclude the entry of a default judgment, because it is clear that this action must be resolved by arbitration, the instant motion is nevertheless denied.

Pursuant to CPLR § 3215[f], "[o]n any application for judgment by default, the applicant shall file proof of service of the summons and the complaint... and proof of the facts constituting the claim" (Pampalone v Giant Building Maintenance, Inc., 17 A.D.3d 556, 557 [2d Dept 2005] [Default judgment granted once plaintiff submitted proof that defendant was served with the summons and complaint and an affidavit of the facts constituting the claim.]; Andrade v Ranginwala, 297 A.D.2d 691, 691-692 [2d Dept 2002]). Once the requisite showing has been made, a motion for a default judgment must be granted unless the defendant can establish a meritorious defense to the claims made, a reasonable excuse for the delay in interposing an answer, and that the delay in interposing an answer has in no way prejudiced the plaintiff in the prosecution of the case (Buywise Holding, LLC v Harris, 31 A.D.3d 681, 683 [2d Dept 2006]; Giovanelli v Rivera, 23 A.D.3d 616, 616 [2d Dept 2005]).

Pursuant to CPLR §3215(a), "[i]f the plaintiff's claim is for a sum certain or for a sum which can by computation be made certain, application may be made to the clerk within one year after the default." Accordingly, if the damages sought are not for a sum certain or for an amount which can be made certain, a default judgment is only as to liability, where the defendant admits all traversable allegations in the complaint as to liability only (Rokina Optical Co., Inc. v Camera King, Inc., 63 N.Y.2d 728, 730 [1984]; Arent Fox Kinter Plotkin & Kahn, PLLC v Gmbh, 297 A.D.2d 590, 590 [2d Dept. 2002]). A trial on inquest must be held wherein the defendant is afforded an opportunity to present and try a case in mitigation of damages (Rokina Optical Co., Inc. at 730; Arent Fox Kinter Plotkin & Kahn, PLLC at 590]). The term "sum certain" contemplates a situation where once liability has been established, "there can be no dispute as to the amount due, as in actions on money judgments and negotiable instruments" (Reynolds Securities, Inc. v Underwriters Bank and Trust Company, 44 N.Y.2d 568, 572 [1978]).

With regard to establishing the merits of the claim, plaintiff may use an affidavit or a complaint verified by the plaintiff (Mullins v DiLorenzo, 199 A.D.2d 218, 220 [1st Dept 1993]; Gerhardt v J & R Salacqua Contr. Co., Inc., 181 A.D.2d 719, 720 [2d Dept 1992]). Additionally, plaintiff can also use deposition testimony (Empire Chevrolet Sales Corporation v Spallone, 304 A.D.2d 708, 709 [2d Dept 2003]); Ramputi v Timko Contracting Corp., 262 A.D.2d 26, 27 [1st Dept 1999]). While generally, a plaintiff cannot establish the merits of his or her claims using a complaint verified by an attorney (Deleon v Sonin & Genis, 303 A.D.2d 291, 292 [1st Dept 2003]); Juseinoski v Board of Education of the City of New York, 15 A.D.3d 353, 356 [2d Dept 2004]), a complaint verified by an attorney, where the attorney has personal knowledge of facts constituting the claim, is sufficient to establish the merits of a plaintiff's claim (State Farm Mutual Automobile Insurance Company v Rodriguez, 12 A.D.3d 662, 663 [2d...