Nyahsa Servs., Inc. v. People Care Inc.

• Decision Date: 07 July 2016
• Citation: 36 N.Y.S.3d 252,2016 N.Y. Slip Op. 05418,141 A.D.3d 785
• Parties: NYAHSA SERVICES, INC., Self–Insurance Trust, Respondent, v. PEOPLE CARE INCORPORATED, Defendant and Third–Party Plaintiff–Appellant; Cool Insuring Agency, Inc., et al., Third–Party Defendants–Respondents.
• Court: New York Supreme Court — Appellate Division

141 A.D.3d 785

36 N.Y.S.3d 252

2016 N.Y. Slip Op. 05418

NYAHSA SERVICES, INC., Self–Insurance Trust, Respondent,

v. PEOPLE CARE INCORPORATED, Defendant and Third–Party Plaintiff–Appellant;Cool Insuring Agency, Inc., et al., Third–Party Defendants–Respondents.

Supreme Court, Appellate Division, Third Department, New York.

July 7, 2016.

Barclay Damon, LLP, Albany (David M. Cost of counsel), for defendant and third-party plaintiff-appellant.

Bond, Schoeneck & King, PLLC, Albany (Stuart F. Klein of counsel), for respondent.

Keidel, Weldon & Cunningham, LLP, White Plains (Robert J. Grande of counsel), for Cool Insuring Agency, Inc. and another, third-party defendants-respondents.

Peckar & Abramson, PC, River Edge, New Jersey (Kevin J. O'Connor of counsel), for LeadingAge New York Services, Inc. and another, third-party defendants-respondents.

Before: McCARTHY, J.P., EGAN JR., ROSE, LYNCH and AARONS, JJ.

EGAN JR., J.

Appeal from an order of the Supreme Court (Platkin, J.), entered December 31, 2014 in Albany County, which, among other things, partially granted third-party defendants' motions to dismiss the third-party complaint.

Defendant, a home health care provider, was a member of plaintiff, a group self-insured trust, that was formed in July 1995 to provide mandated workers' compensation coverage to defendant's employees (see Workers' Compensation Law § 50[3–a] ; 12 NYCRR 317.2 [i]; 317.3). Defendant was a member of the trust for policy periods of June 15, 2000 through June 15, 2008. In July 2010, plaintiff commenced the instant action against defendant for breach of contract and unjust enrichment, alleging that defendant failed to pay $3,332,427 in adjustment bills that purported to reconcile its estimated annual contributions with its actual incurred expenses.¹ In September 2010, defendant joined issue and counterclaimed for injunctive relief/accounting, unjust enrichment, fraud/fraud in the inducement, breach of fiduciary duty, breach of the duty of good faith and fair dealing, breach of contract, negligence, conversion and violations of General Business Law §§ 349 and 350. Plaintiff then moved to dismiss the counterclaims asserted against it pursuant to CPLR 3211(a)(1), (3), (6) and (7).

On July 26, 2013, defendant commenced a third-party action alleging 13 causes of action sounding in breach of contract, breach of good faith and fair dealing, breach of fiduciary duty, fraud and negligence against third-party defendants Cool Insuring Agency, Inc. and Cool Risk Management, Inc. (hereinafter collectively referred to as Cool), as well as indemnification and contribution, conversion, unjust enrichment, negligent misrepresentation, fraud in the inducement, alter ego liability and violations of General Business Law §§ 349 and 350 against third-party defendant LeadingAge New York Services, Inc., third-party defendant LeadingAge New York, Inc. (hereinafter collectively referred to as LeadingAge) and Cool.² Cool and LeadingAge then moved to dismiss the third-party complaint pursuant to CPLR 3211(a)(1), (3), (6) and (7).

Supreme Court granted plaintiff's motion dismissing defendant's counterclaims for injunctive relief/accounting, unjust enrichment, breach of good faith and fair dealing, negligence, conversion and violations of General Business Law §§ 349 and 350. Supreme Court, among other things, also limited the temporal scope of defendant's counterclaims for breach of contract, breach of fiduciary duty, fraud and fraud in the inducement.³ As to defendant's third party-claims, Supreme Court granted the motions as to the causes of action for breach of contract, breach of good faith and fair dealing, breach of fiduciary duty, fraud, conversion, unjust enrichment, negligence, negligent misrepresentation, fraudulent inducement, violations of General Business Law §§ 349 and 350 and alter ego liability, and denied, in part, the motion as to the cause of action for indemnification against Cool. Defendant now appeals.⁴

On a motion to dismiss pursuant to CPLR 3211(a)(7) for failure to state a claim, “we must afford the complaint a liberal construction, accept the facts as alleged in the pleading as true, confer on the [nonmoving party] the benefit of every possible inference and determine whether the facts as alleged fit within any cognizable legal theory” (Torok v. Moore's Flatwork & Founds., LLC, 106 A.D.3d 1421, 1421, 966 N.Y.S.2d 572 [2013] [internal quotation marks and citation omitted]; see Tenney v. Hodgson Russ, LLP, 97 A.D.3d 1089, 1090, 949 N.Y.S.2d 535 [2012] ). Beginning with defendant's counterclaims, Supreme Court properly dismissed defendant's second counterclaim for unjust enrichment as the rights of defendant are governed and defined by the contribution agreements and, therefore, “a quasi contract cause of action does not lie” (Daley v. County of Erie, 71 A.D.3d 1398, 1400, 897 N.Y.S.2d 813 [2010] ; see Clark–Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 389, 521 N.Y.S.2d 653, 516 N.E.2d 190[1987] ; compare Segal v. Cooper, 95 A.D.3d 545, 546, 944 N.Y.S.2d 65 [2012] ). We reach a similar conclusion with respect to Supreme Court's dismissal of defendant's fifth counterclaim for breach of the duty of good faith and fair dealing as this claim is duplicative of the breach of contract counterclaim (see Fahs Constr. Group, Inc. v. State of New York, 123 A.D.3d 1311, 1312–1313, 999 N.Y.S.2d 244 [2014], lv. denied 25 N.Y.3d 902, 2015 WL 1471636 [2015] ; Mill Fin., LLC v. Gillett, 122 A.D.3d 98, 104, 992 N.Y.S.2d 20 [2014] ; Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce, 70 A.D.3d 423, 426, 894 N.Y.S.2d 47 [2010], lv. denied 15 N.Y.3d 704, 2010 WL 3397330 [2010] ). Finally, defendant's seventh counterclaim for negligence also was properly dismissed as defendant failed to allege a legal duty independent of the underlying contracts and demanded damages identical to those set forth in its breach of contract claim (see Sutton v. Hafner Valuation Group, Inc., 115 A.D.3d 1039, 1042, 982 N.Y.S.2d 185 [2014] ; Torok v. Moore's Flatwork & Founds., LLC, 106 A.D.3d at 1422, 966 N.Y.S.2d 572 ).

Upon further review of the pleadings, however, we find that defendant's fourth counterclaim for breach of fiduciary duty should have been dismissed in its entirety. Supreme Court viewed this particular counterclaim as having both fraud and “non-fraud” components; the court dismissed the non-fraud aspect thereof as redundant, i.e., duplicative, of the breach of contract counterclaim, but allowed the fraud-based portion thereof to stand and analyzed such claims upon statute of limitations grounds. Examination of the pleadings reveals, however, that defendant's counterclaim for breach of fiduciary duty alleges virtually identical facts and theories and requests the same damages as set forth in defendant's counterclaim for breach of contract. Accordingly, the entirety of defendant's counterclaim for breach of fiduciary duty—including the fraud-based aspects thereof—is duplicative and, as such, must be dismissed (see Canzona v. Atanasio, 118 A.D.3d 841, 843, 988 N.Y.S.2d 637 [2014] ; Hylan Elec. Contr., Inc. v. MasTec N. Am., Inc., 74 A.D.3d 1148, 1150, 903 N.Y.S.2d 528 [2010] ; William Kaufman Org. v. Graham & James, 269 A.D.2d 171, 173, 703 N.Y.S.2d 439 [2000] ).⁵

Turning to defendant's third-party complaint, we note that both the underlying facts and the causes of action set forth therein mirror those raised by Recco Home Care Services, Inc. in NYAHSA Servs., Inc., Self–Insurance Trust v. Recco Home Care Services, Inc., 141 A.D.3d 792, 36 N.Y.S.3d 270, –––N.E.3d ––– – [decided herewith] [hereinafter Recco ]. Accordingly, as defendant's arguments and allegations here relative to certain of its third-party claims are indistinguishable from those raised by Recco Home Care Services in the related action, we affirm Supreme Court's dismissal of defendant's third cause of action for breach of good faith and fair dealing (see Fahs Constr. Group, Inc. v. State of New York, 123 A.D.3d at 1312–1313, 999 N.Y.S.2d 244 ; Mill Fin., LLC v. Gillett, 122 A.D.3d at 104, 992 N.Y.S.2d 20 ; Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce, 70 A.D.3d at 426, 894 N.Y.S.2d 47 ), fourth cause of action for breach of fiduciary duty (see EBC I, Inc. v. Goldman, Sachs & Co., 5 N.Y.3d 11, 19, 799 N.Y.S.2d 170, 832 N.E.2d 26 [2005] ; Mawere v. Landau, 130 A.D.3d 986, 990, 15 N.Y.S.3d 120 [2015] ; Brooks v. Key Trust Co. N.A., 26 A.D.3d 628, 630, 809 N.Y.S.2d 270 [2006], lv. dismissed 6 N.Y.3d 891, 817 N.Y.S.2d 625, 850 N.E.2d 672 [2006] ) and seventh cause of action for unjust enrichment (see Corsello v. Verizon N.Y., Inc., 18 N.Y.3d 777, 790–791, 944 N.Y.S.2d 732, 967 N.E.2d 1177 [2012] ; Hyman v. Burgess, 125 A.D.3d 1213, 1214, 4 N.Y.S.3d 645 [2015] ; DiPizio Constr. Co., Inc. v. Niagara Frontier Transp. Auth., 107 A.D.3d 1565, 1567, 968 N.Y.S.2d 288 [2013] ) as duplicative of its breach of contract claim for the reasons set forth in our decision in Recco.⁶

Supreme Court also properly dismissed defendant's eighth cause of action for negligence. The statute of limitations for negligence that results in a loss of funds is three years (see CPLR 214[4] ; Roslyn Union Free Sch. Dist. v. Barkan, 16 N.Y.3d 643, 648 n. 5, 926 N.Y.S.2d 349, 950 N.E.2d 85 [2011] ). Here, defendant's alleged damages arose from, among other things, “amounts already paid” for policy periods of 2000 until 2006 and “ demanded payments for adjustments” for which it received notice of in 2008. As such damages were incurred more than three years prior to the filing of defendant's third-party complaint in 2013, defendant's negligence claim was untimely (see IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132, 139–140, 879 N.Y.S.2d 355, 907 N.E.2d 268 [2009] ; McCormick v. Favreau, 82 A.D.3d 1537, 1539, 919 N.Y.S.2d 572 [2011], lv. denied 17 N.Y.3d 712, 2011 WL 4916454 [2011] ; Kazakhstan Inv. Fund v. Manolovici, 306 A.D.2d 36, 36, 759 N.Y.S.2d 671 [20...