Opinion
64925/2017
08-12-2019
Liliah CANTOR, M.D., Plaintiff, v. BOSTON CHILDREN'S HEALTH PHYSICIANS, LLP., Defendant.
Liliah Cantor, M.D., Plaintiff Pro Se Bleakley Platt & Schmidt, LLP, Attorneys for Defendant, One North Lexington Avenue, White Plains, NY 10601
Liliah Cantor, M.D., Plaintiff Pro Se
Bleakley Platt & Schmidt, LLP, Attorneys for Defendant, One North Lexington Avenue, White Plains, NY 10601
John P. Colangelo, J.
In this action for breach of an employment contract, plaintiff Liliah Cantor, M.D. ("Plaintiff" or "Dr. Cantor") seeks to recover from defendant former employer Boston Children's Health Physicians, LLP ("Defendant" or "Boston Children's") for compensation which she claims was wrongfully withheld from her during the period from December 1, 2016 up to the date of her termination by Defendant in February 2019.
Procedural Background
This case was commenced by Plaintiff in September 2017 while she was still employed by Defendant and revolves around a series of three employment contracts entered into between Plaintiff and Defendant's predecessor in interest, Children's & Women's Physicians of Westchester, LLP ("Children's & Women's"). Her Complaint sets forth a single cause of action for breach of the last employment contract, signed in 2011 (the "2011 Agreement" or "2011 Contract"), alleging that the Defendant wrongfully reduced her annual compensation from $180,000 to $150,000 beginning in December 2016. Although the 2011 Contract by its terms called for an annual salary of $150,000, Plaintiff maintained that the parties had actually agreed to a $180,000 figure, the annual rate at which she was actually compensated from January 1, 2012 until December 1, 2016. Beginning in December 2016, Plaintiff accepted, under protest, the $150,000 compensation amount and remained employed by Defendant after she brought suit and until she was terminated by Defendant as of February 15, 2019. Defendant denied the material allegations of the Complaint and interposed several affirmative defenses, including, most notably, the alleged lack of a written contract modification altering the 2011 Contract's compensation term.
Discovery proceeded apace and after the Note of Issue was filed in October 2018, both sides moved for summary judgment. In the context of her motion, Plaintiff raised the issue of the reasonableness or unreasonableness of the restrictive covenant contained in the employment agreement. By Decision and Order dated January 28, 2019, Hon. Joan Lefkowitz denied both parties' motions, holding that a factual issue was extant as to whether there had been a modification of the salary amount. With respect to the restrictive covenant, the Court ruled that it could not, at that time, make a determination as to the reasonableness or unreasonableness of it since Plaintiff remained employed by Defendant. For this reason and because no discovery has been conducted on the restrictive covenant issue, its alleged unreasonable time period and scope was not addressed at trial, and its relevance limited to any impact it may have had upon the issue of compensation under the Contract at issue.
When settlement discussions between the parties did not bear fruit, this action was set down for trial by the Court alone, and tried on June 3 and 5, 2019. Plaintiff elected to proceed pro se and Defendant was represented by counsel. Plaintiff testified on her own behalf and called three additional witnesses: Leonard Newman, M.D., who signed the 2011 Agreement as President of Defendant's predecessor, Children's & Woman's but who recalled virtually nothing of the meeting at which the 2011 Agreement was executed (Pl. Exh. 3; June 5 Trial Transcript ("Tr.") at 7-10); Ronald Jacobson, M.D., who was also present at the meeting when the Agreement was signed and who signed the 2011 Agreement as "Supervisor", whose recollection of such meeting was also somewhat vague; and Gerald Villucci, Defendant's Chief Executive Officer. Defendant called no witnesses, relying instead upon its counsel's cross examination of the witnesses called by Plaintiff.
Factual Background
As mentioned above, the fulcrum of this action is a series of employment contracts entered into by Plaintiff and Defendant's predessor in interest, Children's & Women's beginning in January 2006 and culminating in the last contract in 2011, the contract Defendant is alleged to have breached. Each of the contracts contained, inter alia , a compensation term, a covenant not compete, and a provision requiring that any modification of its terms be in writing, signed by the parties. (See Ct. Exh. 1, Parties' Joint Stipulation of Undisputed Facts pp 1-21)). The 2006 contract, styled as an "Employee's Employment Agreement," (the "2006 Contract") provided for an annual salary to Plaintiff of $150,000, and contained a covenant not to compete limited to one hospital, the Westchester Medical Center, for a two year period, as well as a non-solicitation of patients undertaking by Plaintiff (Ct. Exh. 1, pp 4-6). In January 2007, Plaintiff and Children's & Women's entered into an agreement styled as a "Partnership Track Employment Agreement" (the "2007 Contract"), with the same compensation and patient non-solicitation term, but with an expanded scope of the covenant not to compete to a five mile radius of the Westchester Medical Center for two years after termination of the Contract. (Ct. Exh. 1 pp 11-13). Finally, on October 1, 2011 Plaintiff and Children's & Women's entered into the contract at issue, a "Partner's Employment Agreement." (The "2011 Agreement" or "2011 Contract"). By its written terms, the 2011 Agreement set forth a base annual salary of $150,000, and the same non-solicitation of patients provision contained in the 2006 and 2007 Contracts. However, the covenant not to compete, while maintaining the same two year temporal scope, greatly expanded in geographic scope to include all of not only Westchester County, but the counties of Orange, Dutchess, Rockland, Putnam, Sullivan and Ulster as well.
The 2011 Agreement also contained, as did the 2006 and 2007 Contracts, a merger clause stating that the Agreement represented the "entire understanding of the parties" and a no oral modification clause to the effect that "no amendment, modification or alteration of this Agreement shall be binding on any party unless executed in writing by all parties hereto." (2011 Agreement, Pl. Exh. 3 p 19.3). Notwithstanding this provision, Plaintiff testified that at the time she and Dr. Newman, as president of Children's & Women's, signed the 2011 Agreement, Plaintiff insisted that in light of the more onerous restrictive covenant term, instead of an annual compensation of $150,000, Plaintiff should be paid at an annual rate of $180,000. According to Plaintiff, Dr. Newman orally agreed to do so, provided that such an increase take effect as of January 1, 2012, a condition acceptable to Plaintiff (June 3 Tr. at 25-28). This alleged oral agreement was never reduced to writing, and while Dr. Newman did not recall such an agreement (June 5 Tr. at 7-10), Dr. Jacobson, who Plaintiff testified was also present when this conversation took place, did recall that compensation was discussed and that "Dr. Newman and I and Dr. Cantor ... agreed upon a salary of $180,000." (June 5 Tr. at 44).Despite Dr. Newman's lack of recollection, the lack of a written and signed modification, and the presence of a no oral modification clause in the 2011 Agreement, Dr. Cantor began receiving compensation at the annual rate of $180,000 as of January 1, 2012 (June 5 Tr. at 46) and was paid at that annual rate for nearly five years, until December 1, 2016. (Ct. Exh. 1 at p 23).
In July 2015, Defendant Boston Children's Health Physicians, LLP acquired Children's & Woman's; Gerald Villucci, a non-physician, became CEO, and changes in Dr. Cantor's status followed hard upon. Plaintiff soon became an employee of Boston Children's rather than a partner, and cost-cutting moves which often follow a change in ownership reared their hydra heads. As the documentary record reflects and as Mr. Villucci testified, Plaintiff was first encouraged to accept a modification of her compensation package; he proposed that Plaintiff's base salary be reduced to $120,000, with the possibility of obtaining increased compensation based on performance incentives. (Pl. Exh. 6; June 5 Tr. at 16-17; Ct. Exh. 1 at p 29-30). Plaintiff rejected this proposed change by e-mail dated September 30, 2016. (Ct. Exh. 1, pp 31-32; Deft. Exh. A-5).
Undaunted, Boston Children's by letter from Mr. Villucci to Dr. Cantor dated November 3, 2016, advised Dr. Cantor that effective December 1, 2016, Boston Children's "will reduce your annual salary to $150,000, the amount set forth in your employment agreement, without a performance incentive component." (The "November 3 Letter", Pl. Exh. 7). It is undisputed that Defendant acted unilaterally, did not enter into a written agreement with Plaintiff to change her compensation, and did so despite the fact that Defendant and its predecessor Children's & Woman's had consistently paid Plaintiff at the rate of $180,000 since January 2012. As Mr. Villucci testified and as the November 3 Letter reflects, Defendant based the reduction on the fact that the 2011 Agreement contained a $150,000 compensation rate - - a provision that Defendant had not followed for nearly five years. (See also 11/22/16 and 11/23/16 communications of Mr. Villucci to Dr. Cantor, Pl. Exh. 9). On November 16, 2016. Plaintiff was offered but refused a severance package (Pl. Exh. 8; Ct. Exh. 1, p 35). Starting in December 2016, Plaintiff received and accepted, under protest (June 3 Tr. at 30-33; Pl. Exh. 9), compensation at the $150,000 annual rate, and did so up to her termination by Defendant on February 15, 2019. (Ct. Exh. 1 at p 39).
In September 2017, while still working with Boston Children's, Plaintiff initiated this suit, alleging that Defendant had breached of the 2011 Agreement by reducing her compensation to $150,000, and claiming that she "was damaged in the sum [of] $2,500 every month starting December 1, 2016" (Compl. p 16) and that "[t]he breach of contract is ongoing." (Id ., p 17).
Discussion and Conclusions
The determination of the central issue - - whether Defendant breached the 2011 Agreement by paying Plaintiff, from December 1, 2016 onward, at the annual compensation rate of $150,000 set forth in the written 2011 Contract as opposed to the allegedly modified annual amount of $180,000 - - is guided by what are, in the main, undisputed facts. Plaintiff alleged in her Complaint and testified that at the time the 2011 Agreement was executed, she insisted upon the $180,000 figure and Dr. Newman, President of Children's & Women's and the Officer who signed the 2011 Contract on its behalf, agreed to it. Plaintiff's insistence was, as she testified, driven by the undisputed fact that by the 2011 Agreement, Defendant was asking Plaintiff to give something - - the greatly expanded geographic scope of the covenant not to compete as compared to the scope set forth in the prior Agreements - - while seeking to keep her compensation flat, which lends credence to Plaintiff's version of events. While Dr. Newman has no recollection of this specific conversation with Plaintiff, Dr. Jacobson, who was also present at the meeting, recalled that there was an oral agreement to pay Dr. Carton at the $180,000 rate (June 5 Tr. at 44). Moreover, the fact remains, as Defendant acknowledges (Ct. Exh. 1 p 23), that as of January 1, 2012 and for nearly five years thereafter, Plaintiff was paid compensation at the annual rate of $180,000 rather then the $150,000 written Contract rate.
The Court thus credits Plaintiff's testimony that Defendant did agree to pay her at the annual rate of $180,000, as it proceeded to do in spite of the no oral modification clause of the Contract. The written terms of the 2011 Contract were thus changed by the agreement and conduct of Defendant which essentially ratified, on a regular and continuous basis for nearly five years, that modified contract term. Under similar circumstances, courts have not hesitated to uphold an orally modified agreement even in the face of a no oral modification clause when subsequent conduct essentially changed the written terms of the contract.
For example, in Aiello v. Burns International Security Services Corp. , 110 AD3d 234 (1st Dept. 2013), the Court held that even though the contact at issue contained a non-waiver clause and a provision stating that it could only be modified in writing, the Court held that it nonetheless could be and was modified by the parties' actual performance. As the Court stated,
"[T]he law is abundantly clear in New York that where a contract specifically contains a nonwaiver clause and a provision stating that it cannot be modified except by a writing, it can, nevertheless, be effectively modified by actual performance and the parties' course for conduct."
Similarly, in the Court of Appeals case of Rose v. Spa Realty Associates , 42 NY2d 338, 343-344 (1977) (Breitel, Ch. J), the Court upheld an oral agreement to modify a real estate contract despite the presence of a no oral modification clause, recognizing that "a contract once made can be unmade, and a contractual prohibition against oral modification may itself be waived ... [w]here there is partial performance of the oral modification sought to be enforced ... if the partial performance be unequivocally referable to the oral modification." And in Moody v. AXA Advisors, LLC , 19 F. Supp. 3d 486, 504 (S.D.NY 2014), the federal District Court, applying New York Law, denied a motion to dismiss a breach of contract claim based on an oral modification to a written contract, holding that a party's performance that is "unequivocally referable" to such oral agreement may override the written agreement's terms "even where the written agreement contains a prohibition against oral modification" since, citing Rose , "a contract once made can be unmade, and a contractual prohibition against oral modification may itself be waived." See also , Estate of Kingston Farms Partnership v. Kingston Farms Partnership , 130 AD3d 1464 (4th Dept. 2015) ; In re Latin Events v. Doley , 120 AD3d 501 (2d Dept. 2014) ("[A]n oral modification is enforceable if the party seeking enforcement can demonstrate partial performance of the oral modification, which performance must be unequivocally referable to the modification.").
Here, as in Aiello and Rose , not only was the conduct of the parties - - Defendant's payment and Plaintiff's acceptance of compensation at the $180,000 annual rate - - "unequivocally referable" to an oral contract modification, it was the quintessence of the modification itself. Moreover, performance in accordance with that modification was repeated not once, but numerous times, and with regularity - - every time Plaintiff was paid by Defendant - - over the course of nearly five years. Accordingly, as in Aiello and Rose , despite the presence of a no oral modification clause in the 2011 Agreement, the compensation term of it was effectively modified to the rate of $180,000 per year by virtue of the consistent and continuous conduct of Defendant in paying compensation in that amount to Plaintiff.
Defendant's suggestion, through the testimony by and documents adduced through Mr. Villucci, that the monthly payments to Plaintiff of compensation at the $180,000 rate was nothing more than a "discretionary" increase based on performance that Defendant was free to revoke at any time and return to the $150,000 written contract amount (Tr. at 30-33; Pl. Exh. 9) is belied by the longstanding consistency by which it was paid - - each month, relentlessly for over 50 months. Defendant also argues that ratification should be a two way street: if Defendant is deemed to have ratified the modification of the annual compensation term by paying Plaintiff at the $180,000 rate, Plaintiff effectively ratified the reduction in compensation imposed by the November 3, 2016 Letter of Mr. Villucci (Pl. Exh. 7) by accepting compensation in that reduced amount. Defendant's contention misses an essential point: as the Court finds, the parties agreed to the $180,000 compensation term, the agreement to which Defendant acknowledged and ratified by a series of payments to Defendant at that rate. No such agreement, oral or written, preceded Plaintiff's acceptance of a reduced salary on and after December 1, 2016. To the contrary, as Plaintiff testified and as the documentary record reflects, Plaintiff protested such a reduction and demanded that her compensation remain at the $180,000 level. (See Pl. Exh. 9). Such protests, however fell upon deaf ears.
Parenthetically, the Court notes that Plaintiff may also be arguing that the $180,000 annual compensation term was not a modification of the 2011 Agreement - - despite the plain language of the Agreement to the contrary - - but part and parcel of the original, negotiated understanding between the parties which, for some reason, did not find its way into the written Agreement. However, in light of the Court's decision, Plaintiff's additional contention is of no moment; whether deemed an original contract term or a modification, the fact remains that Defendant effectively ratified the $180,000 compensation provision, thereby incorporating it into the contractual relationship between the parties.
Accordingly, since the 2011 Agreement was essentially modified to require Defendant to compensate Plaintiff at the rate of $180,000 per year, Defendant's unilateral reduction of Plaintiff's compensation to the $150,000 annual rate constituted a breach for which Plaintiff is entitled to damages in an amount equal to the difference between such compensation rates ($2,500 per month) from December 1, 2016 through the date of termination, February 15, 2019, together with interest thereon. This decision is without prejudice to any remedy Plaintiff may seek in the future with respect to the covenant not to compete contained in the 2011 Agreement.
The Court has considered the additional contentions of the parties and finds them to be without merit and not worthy of further comment. Plaintiff is directed to settle the Judgment in accordance with this Decision and Order within 30 days of this Decision with notice of entry.
The foregoing constitutes the Decision and Order of this Court.