Lisa M. Oakes, Individually and as Executrix of the Estate of Daniel C. Oakes, Deceased, Respondent,v.Rajnikant Patel, M.D., et al., Appellants.BriefN.Y.February 14, 20130 To be Argued by: AMY ARCHER FLAHERTY Estimated Time for Argument: (30 Minutes) STATE OF NEW YORK Court of Appeals LISA M. OAKES, Individually and as Executrix of the Estate of DANIEL C. OAKES, Deceased Plaintiffs-Respondents, vs. RAJNIKANT PATEL, M.D., SATISH K. MONGIA, M.D., and KALEIDA HEALTH as Successor In Interest to MILLARD FILLMORE HOSPITALS d/b/a MILLARD FILLMORE SUBURBAN HOSPITAL, Defendants-Appellants. Appellate Division Docket Number: CA 10-00367. Erie County Index No.: I-2000/9788. REPLY BRIEF FOR DEFENDANT-APPELLANT KALEIDA HEALTH as Successor In Interest to MILLARD FILLMORE HOSPITALS d/b/a MILLARD FILLMORE SUBURBAN HOSPITAL DAMON MOREY LLP Attorneys for Defendant-Appellant Kaleida Health as Successor in Interest to Millard Fillmore Hospitals d/b/a Millard Fillmore Suburban Hospital Avant Building, Suite 1200 200 Delaware Avenue Buffalo, New York 14202-2150 Telephone: (716) 856-5500 Facsimile: (716) 856-5510 MICHAEL J. WILLETT AMY ARCHER FLAHERTY Of Counsel Date of Completion: August 21, 2012 BATAVIA LEGAL PRINTING, INC.— Telephone (866) 768-2100 1 Disclosure Statement Pursuant to Section 500.1(f) of the Rules of the Court of Appeals Kaleida Health is a not-for-profit corporation providing health care services in western New York. It does not have a parent corporation. The following is a listing of Kaleida Health’s subsidiaries and affiliates: Millard Fillmore Gates Hospital Millard Fillmore Suburban Hospital Buffalo General Hospital DeGraff Memorial Hospital The Women and Children’s Hospital of Buffalo Millard Fillmore Ambulatory Surgery Center, Inc. Waterfront Health Care Center, Inc. Deaconess Skilled Nursing Facility VNA Home Care Services [LHCSA] Visiting Nursing Association of Western New York, Inc. [CHHA] Kaleida Health Foundation The Women & Children's Hospital of Buffalo Foundation Kaleida Properties, Inc. Southtowns Venture LLC Kaleida WNYI, LLC Children’s Hospital Homecare LTHHCP High Street Professional Building, Inc. Family Pharmaceutical Services, L.L.C. Northtowns Venture LLC Millard Fillmore Surgery Center, LLC MFHS Managed Care, Inc. Gethsemane Manor Housing Development Fund Company, Inc. Westlink Corporation PrimeLink, L.L.C. HealthLink, L.L.C. WestLink IPA, L.L.C. Kaleida MCO, L.L.C. General Physician, P.C. General Physician Sub I PLLC 2 Community Medical, P.C. Kaleida IPA, LLC. 3 Status of Related Litigation (1) There is a related action that was filed by the County of Cattaraugus against the defendants. The action is pending in New York State Supreme Court, Erie County (Index No.: 9788/2000) assigned to the Hon. Timothy J. Drury. The action seeks recoupment of monies paid by the County, through its Department of Social Services, for care and treatment provided to Mr. Oakes for injuries related to his aneurysm. The amount sought by the County is approximately $850,000. The action is ongoing as to Kaleida Health and Rajnikant Patel, MD. It is in the discovery phase with no trial date set. Satish Mongia, MD has reached an agreement with Cattaraugus County settling its action against him. (2) There is an ongoing proceeding in the Commonwealth Court of Pennsylvania pertaining to the liquidation of the PHICO estate. Kaleida Health, by virtue of a proof of claim filed December 5, 2007, filed a claim with the Liquidator. The Liquidator is in the process of attempting to resolve unresolved claims in order to effectuate the closure of the PHICO estate. Kaleida Health is a claimant with an unresolved claim. Kaleida Health has objected to the notice of determination issued by the Liquidator relative to the value of its claim upon the PHICO estate. The Liquidator appointed a referee for the purpose of recommending to the Commonwealth Court the appropriate disposition of Kaleida 4 Health’s objections to the notice of determination. Discovery is ongoing. It is anticipated that the referee will issue a recommendation to the Commonwealth Court following the completion of discovery and briefing by the parties. Plaintiffs, by virtue of proofs of claim filed March 13, 2003, filed a claim with the Liquidator. Plaintiffs are in possession of information relative to the status of this claim. (3) In November 2009, Kaleida Health filed in the Commonwealth Court of Pennsylvania an expedited petition to enforce the Oakeses’ proofs of claim. The plaintiffs filed an answer and new matter in response. Counsel for the parties have continually stipulated to an extension of time for Kaleida Health to respond to the new matter. The stipulation stems from the order of Supreme Court, Erie County (Drury, J.), filed February 12, 2010, and subsequently upheld by the order of the Appellate Division, entered March 9, 2010, which stayed the enforcement proceeding while this appeal is pending. 5 Table of Contents Page Disclosure Statement Pursuant to Section 500.1(f) of the Rules of the Court of Appeals ...................................................................... 1 Status of Related Litigation ................................................................................. 3 Table of Contents ................................................................................. 5 Table of Cases and Authorities ............................................................................... 6 Preliminary Statement .................................................................................. 9 Questions Presented ................................................................................. 12 Statement of Facts ................................................................................ 14 Argument Point I Kaleida Health’s Motion for Leave to Amend Its Answer to Include the Defenses of Release and General Obligations Law § 15-108 Should Have Been Granted. ................................................................................ 15 Point II The Appellate Division Erred in Refusing to Review the Appropriateness of the Trial’s Court’s Additur on the Ground – Raised Sua Sponte by the Appellate Division – that the Defendants had Failed to Preserve the Issue. .... 34 Point III The Trial Judge Erred in Precluding the Proposed Expert Testimony on the Measure of Damages. ............................................................................. 47 Point IV There was Insufficient Evidence to Support the Verdict as to Dent Neurologic Institute and Kaleida Health’s Vicarious Liability for Dent Neurologic Institute. .................................................................. 52 Conclusion ................................................................................ 57 6 Table of Cases and Authorities Cases Page Arias-Paulino v Academy Bus Tours, Inc. 48 AD3d 350 (1st Dept. 2008) ........................................................................ 31 Burns v Fernandez 401 So2d 1033 (La App 1981) ....................................................................... 20 Cameron v 1199 Housing Corp. 208 AD2d 454 (1st Dept. 1994) ...................................................................... 29 Cassano v. Hagstrom 5 NY2d 643 (1959) ................................................................................... 55 Cochetti v. Gralow 192 AD2d 974 (3d Dept. 1993) ....................................................................... 43 Colnes v. Colligan 183 AD2d 693 (2d Dept. 1992) ....................................................................... 36 Deitsch Textiles, Inc. v. New York Prop. Ins. 93 AD2d 853 (2d Dept. 1983) ........................................................................ 40 DiIorio v. Gibson & Cushman of New York, Inc. 166 AD2d 334 (1st Dept. 1990) ...................................................................... 32 Environmental Concern, Inc. v. Larchwood Constr. Corp. 101 AD2d 591 (2d Dept. 1984) ...................................................................... 52 G. C. Murphy Co. v Reserve Ins. Co. 54 NY2d 69 (1981) ................................................................................... 22 Infante v. City of New York 258 AD2d 333 (1st Dept. 1999) ...................................................................... 40 Kasmarski v. Terranova 115 AD2d 640 (2d Dept. 1985) ................................................................................ 52 Keyser v. KB Toys, Inc. 82 AD3d 713 (2d Dept. 2011) ......................................................................... 37 Koken v Reliance Ins. Co. 586 Pa 269, 893 A2d 70 (2006) ........................................................ 21, 22, 25 Ladd v. Parkhurst 87 AD2d 971 (4th Dept. 1982) ....................................................................... 43 7 Matter of Aho 39 NY2d 241 (1976) ................................................................................... 36 Matter of Allcity Ins. Co. 66 AD2d 531 (1st Dept.) lv denied in part and dismissed in part 48 NY2d 629 (1979) ....................... 21 Matter of Freudenthal v County of Nassau 99 NY2d 285 (2003) ................................................................................... 23 Matter of Jamie R. v. Consilvio 6 NY3d 138 (2006) ................................................................................... 23 McCahill v New York Transp. Co. 201 NY 221 (1911) ................................................................................... 49 McDonald v. 450 W. Side Partners, LLC 70 AD3d 490 (1st Dept. 2010) ........................................................................ 37 Moller v. City of New York 22 Misc3d 1103A (Sup. Ct., NY Co. 2009) .................................................... 43 Monahan v Weichert 82 AD2d 102 (4th Dept. 1981) ........................................................................ 50 Nichman v DeMarco 62 NY2d 926 (1984) ................................................................................... 27 O’Brien v. Covert 187 AD2d 419 (2d Dept. 1987) ....................................................................... 40 O’Connor v. Papertsian 309 NY 465 (1955) ............................................................................ 42, 43 Perlin v. King 36 AD3d 495 (1st Dept. 2007) ........................................................................ 45 Po Yee So v. Wing Tat Realty, Inc. 259 AD2d 373 (1st Dept. 1999) ..................................................................... 41 Prunty v. YMCA of Lockport 206 AD2d 911 (4th Dept. 1994) ...................................................................... 41 Reddington v Staten Island Univ. Hosp. 11 NY3d 80 (2008) ................................................................................... 22 8 Rivera v. Lincoln Ctr. for Performing Arts, Inc. 16 AD3d 274 (1st Dept. 2005) ........................................................................ 45 Robillard v. Robbins 78 NY2d 1105 (1991) ................................................................................... 44 Rose v Fidelity Mut. Life Ins. Co. 207 FS2d 50 (EDNY 2002) ............................................................................. 21 Shine v Duncan Petroleum Transport, Inc. 60 NY2d 22 (1983) ................................................................................... 29 Slivinsky v. Bloomerside Cooperative, Inc. 202 AD2d 491 (2d Dept. 1994) ...................................................................... 30 Tag Mechanical Systems, Inc. v V.I.P. Structures, Inc. 63 AD3d 1504 (4th Dept. 2009) ...................................................................... 31 Werner v State of New York 53 NY2d 346 (1981) ................................................................................... 23 Statutes and Other Authorities CPLR 5501(b) ................................................................................... 44 CPLR 5501(c) ................................................................................... 43 General Obligations Law § 15-108 ........................................................... 9, 11, 15, 33 General Obligations Law § 15-303 ............................................................................ 21 Pennsylvania Insurance Department Act 40 P.S. § 221.40 ................................................................................... 16 9 Preliminary Statement This brief is submitted on behalf of defendant, Kaleida Health, as successor in interest to Millard Fillmore Hospitals d/b/a Millard Fillmore Suburban Hospital (hereinafter, “Kaleida Health”), in further support of its appeal from the order of the Appellate Division, Fourth Judicial Department, entered August 19, 2011, and in response to the arguments made by the plaintiffs in the brief submitted by them to this Court. In arguing that the releases executed by them were null and void, the plaintiffs attempt to attribute the conduct of the New York Liquidation Bureau to a wholly separate entity, the Pennsylvania Statutory Liquidator. In fact, as will be discussed below, the acceptance of coverage by the Pennsylvania Liquidator made the releases effective with respect to all claims within the coverage of Kaleida Health’s insolvent liability insurer, PHICO Insurance Company, regardless of any steps taken by the New York Liquidation Bureau. Accordingly, Kaleida Health’s motion for leave to amend its answer to add the defenses of release and General Obligations Law § 15-108 should have been granted. On the issue of the trial court’s additur, the plaintiffs seek to go beyond the Appellate Division ruling by arguing that a defendant, such as Kaleida Health here, is completely barred from obtaining appellate review of the appropriateness of the additur when such defendant is unable to perfect its appeal before the 10 court-ordered retrial on damages is held. As will be discussed below, adoption of the plaintiffs’ position would not only unfairly deprive Kaleida Health of the benefit of the first jury determination with respect to damages, but would also be contrary to the strong policy of the State of New York that all court determinations be subject to at least one level of appellate review. The plaintiffs’ argument with respect to the improper preclusion of the defense expert testimony at the 2009 damages trial relies upon their insistence that findings as to the scope of damages were somehow blended into the proximate cause determination. The argument is not only inconsistent with the law, but also contrary to the particular language of the jury charge given at trial and the wording of the verdict sheet. There was no basis for the preclusion of the defense witness and the error entitles the defendants to a new trial. Finally, as will be explained below, the issue of the alleged negligence of Dent Neurologic Institute (“Dent”) should not have been submitted to the jury. There was no evidence at trial sufficient to establish a claim against Dent as an entity, separate and apart from any claim that it was vicariously responsible for the conduct of its affiliated physicians. As a result of the various errors in the rulings of the trial court and in the Appellate Division decision, several actions by this Court are necessary. Kaleida Health should be permitted to amend its answer to assert the defenses of 11 release and General Obligations Law § 15-108 and the releases should be enforced as written. There must be a new trial on apportionment of fault among the defendants. Kaleida Health must be given the opportunity to stipulate to an appropriate additur relative to the damages proved at the 2008 trial. At any trial in which damages are determined, the defendants should be permitted to present expert proof relative to the scope of damages. 12 Questions Presented 1. Are the releases voluntarily executed by the plaintiffs in connection with the liquidation of the PHICO estate null and void in circumstances where the Liquidator of PHICO issued a reservation of rights with regard to a portion of the claim against Kaleida Health, the insured, but did not disclaim coverage with regard to any portion of the claim? The Appellate Division answered this question “yes.” It is respectfully submitted that this question should be answered in the negative. 2. Assuming that the releases voluntarily executed by the plaintiffs were not null and void, does any claim of prejudice fail as a matter of law, thereby entitling Kaleida Health to amend its answer and to enforce the releases? The Appellate Division did not reach this question. It is respectfully submitted that this question should be answered in the affirmative. 3. Did the defendants preserve for appellate review the issue of the appropriateness of the amount of the trial court’s additur? The Appellate Division answered this question “no.” It is respectfully submitted that this question should be answered in the affirmative. 4. Were the defendants entitled to present evidence at the second trial on damages concerning the effects of the underlying medical condition of plaintiff Daniel Oakes? 13 The Appellate Division answered this question “no.” It is respectfully submitted that this question should be answered in the affirmative. 5. Was the evidence of negligence against the non-party, Dent Neurologic Institute, for which defendant Kaleida Health was vicariously responsible, sufficient to create a jury question? The Appellate Division answered this question “yes.” It is respectfully submitted that this question should be answered in the negative. 14 Statement of Facts The facts applicable to this appeal were fully set forth in Kaleida Health’s original brief to this Court and need not be re-stated. Where necessary, references to the factual record are made in the “Argument” section of this brief. 15 Argument Point I Kaleida Health’s Motion for Leave to Amend Its Answer to Include the Defenses of Release and General Obligations Law § 15-108 Should Have Been Granted. The plaintiffs’ argument that Kaleida Health’s motion for leave to amend its answer to assert the defenses of release and General Obligations Law § 15-108 was correctly denied has three principal components: (1) The Appellate Division was correct in determining that the releases executed by Mr. and Mrs. Oakes were null and void because the Statutory Liquidator of PHICO Insurance Company (the “Liquidator”) sought to avoid coverage for the Oakeses’ claims; (2) Even if the Liquidator did not seek to avoid coverage for the Oakeses’ claims, this Court should not enforce the releases because the election of remedies provision of the governing Pennsylvania statute is inconsistent with New York law; and (3) Kaleida Health’s motion was properly denied as an exercise of the trial court’s discretion, because of the lateness of the motion for leave to amend and the resulting prejudice to the Oakeses. None of these arguments has merit. Each will be addressed in turn. 16 1. The “Avoidance of Coverage” Argument The plaintiffs rely upon Section 221.40 of the Pennsylvania Insurance Department Act (40 P.S. § 221.40) in arguing that the releases executed by them were null and void. That statute provides as follows: (a) Whenever any third party asserts a cause of action against an insured of an insurer in liquidation the third party may file a claim with the liquidator. The filing of the claim shall operate as a release of the insured’s liability to the third party on that cause of action in the amount of the applicable policy limit, but the liquidator shall also insert in any form used for the filing of the third party claims appropriate language to constitute such a release. The release shall be null and void if the insurance coverage is avoided by the liquidator. 40 P.S. § 221.40(a)(emphasis added). According to the plaintiffs’ argument, the releases were null and void because either the Liquidator or the New York State Liquidation Bureau, or both, avoided coverage for Kaleida Health’s vicarious liability for Dent Neurological Institute (“Dent”). The fallacy in the plaintiffs’ argument is that there was, in fact, no avoidance of coverage by the Liquidator at all with respect to any of the claims against Kaleida Health. Instead, the record clearly establishes that the Liquidator accepted coverage for the claim of the Oakeses, subject only to a reservation of rights with respect to that portion of the judgment attributable to Kaleida Health’s vicarious responsibility for the actions of Dent (11989). As discussed in Kaleida Health’s 17 original brief to this Court, a reservation of rights is not a disclaimer or avoidance of coverage. With respect to that portion of the judgment based on Kaleida Health’s direct liability for its own acts, coverage was accepted without any reservation of rights (11389). It is therefore evident that there was no avoidance of coverage. Accordingly, the releases were not rendered null and void. In fact, the acceptance of coverage meant that the releases were valid and in effect, pursuant to the specific language of the releases (11743-11744). The clear lack of merit of the plaintiffs’ arguments with regard to the effectiveness of the releases required that they develop an alternative argument, and they have. The plaintiffs contend that the partial disclaimer by the New York Liquidation Bureau (relative to Kaleida Health’s vicarious liability for the acts of Dent) should be attributable to the Liquidator. According to the plaintiffs, “The Liquidation Bureau represents the first layer of coverage for the PHICO liquidation” and the Liquidator “received the full benefit of the disclaimer made by the Liquidation Bureau” because the Liquidator “would not even become involved until the New York Liquidation Bureau funds were exhausted” (Brief for Plaintiffs, pp. 68-69). It is apparent from this baseless argument that the plaintiffs have either misunderstood, or misrepresented, the statutory scheme governing claims against insolvent insurers. 18 It is important to emphasize that funds available from the Liquidation Bureau did not represent the “first layer of coverage for the PHICO liquidation”. The Liquidation Bureau is a New York State agency that functions as a guaranty association for the protection of insureds and claimants residing within the State of New York. It had no direct connection to the Liquidator, who is the Insurance Commissioner of the Commonwealth of Pennsylvania. The Liquidator’s involvement in the insolvency of PHICO came about because PHICO was a Pennsylvania insurer. The respective roles of state guaranty associations, such as the New York Liquidation Bureau, and the Liquidator were explained in the notice sent to all claimants against the estate of PHICO, including the Oakeses. The notice clearly explained that various state laws created guaranty associations and funds that might provide protection to insureds in those states in the event of an insurer liquidation (11993-11997). Any such payments were subject to the various state laws that created the guaranty associations (11986). The notice flatly contradicted the assertion by the plaintiffs that the Liquidator somehow benefitted from a disclaimer by the New York Liquidation Bureau. Instead, according to the notice, Claims which are not covered by a guaranty association or portions of claims which exceed the statutory obligations of the guaranty association become claims against the estate of the company and will be paid at some time in the future to the extent funds are available. 19 (11996). Thus, any limit placed on the amount recoverable from the New York Liquidation Bureau, whether due to a statutory limit on recovery or a partial disclaimer, would not “benefit” the Liquidator. Instead, such a limitation would have the opposite effect. That portion of the claim not covered by the New York Liquidation Bureau would become part of the claim filed with the Liquidator in the liquidation proceeding in Pennsylvania. The plaintiffs’ apparent assumption that the New York Liquidation Bureau and the PHICO Liquidator are somehow two branches of the same entity is clearly erroneous. While the Liquidation Bureau and Liquidator are concerned with a common issue, the insolvency of an insurer, they are separate entities created under the laws of different states. The decisions of one cannot be imputed to the other. In fact, as pointed out by the plaintiffs, the two entities made conflicting determinations on the coverage issue, with the New York Liquidation Bureau disclaiming for the portion of the claim attributable to the liability of Dent. There was no disclaimer by the Liquidator. It is therefore evident that the partial disclaimer by the New York Liquidation Bureau did not constitute an avoidance of coverage by the Liquidator. The releases are valid and fully enforceable. The plaintiffs also argue “that their claim has been evaluated at zero by the Pennsylvania liquidator”, which they interpret as “a complete avoidance of the claim” (Brief for Plaintiffs, pp. 71-72). No citation to the record is given for this 20 claim, made in an apparent attempt to mislead the Court into assuming that no recovery by the plaintiffs is available in the liquidation proceeding. Indeed, there is nothing in the record to support this contention, which should be disregarded by the Court. Even if the allegation was true, it would have no effect on the enforceability of the releases. The releases clearly outlined that their effectiveness was not dependent upon a recovery by the plaintiffs in the liquidation proceeding. The proofs of claim signed by Mr. and Mrs. Oakes stated that, once coverage was accepted by the Liquidator, the proofs operated as releases, “regardless of whether any compensation is actually paid to the undersigned”. Thus, the releases were effective, as it is undisputed that coverage was accepted by the Liquidator. 2. The Election of Remedies Issue The plaintiffs also argue that, even if the releases were not null and void, the Court should not enforce them because they required that the plaintiffs make an election among remedies, which, according to the plaintiffs’ argument, is somehow inconsistent with New York law. In making this argument, the plaintiffs point out that the New York insurer liquidation statute does not require execution of a release in order to submit a claim. The plaintiffs also rely upon a Louisiana case, Burns v Fernandez, 401 So2d 1033 (La App 1981), where the court declined to enforce a similar release. 21 Burns clearly has no application to the matter at bar. In Burns, the release was voided because no consideration was given for it and because coverage had been avoided by the liquidator. As discussed above, the PHICO Liquidator did not avoid coverage. Furthermore, in New York, a written release is not rendered invalid by the absence of consideration. General Obligations Law § 15-303. It is therefore clear that Burns is irrelevant to the issues presented in this appeal. Contrary to the argument of the plaintiffs, there is nothing about the Pennsylvania statutory scheme that is contrary to any principle of New York law. Each of the states has enacted a comprehensive statutory program intended to protect creditors, policyholders and the general public by providing an efficient means for collecting the insolvent insurer’s assets and equitably paying the claims of creditors. Matter of Transit Casualty Co., 79 NY2d 13, 19 (1992); Koken v Reliance Ins. Co., 586 Pa 269, 290-291, 893 A2d 70 (2006). Decisions of courts in both states recognize that such statutes are exclusive in their operation, furnish a complete procedure for the protection of the rights of all interested parties, and may displace other remedies, including common law actions. See, Matter of Allcity Ins. Co., 66 AD2d 531 (1st Dept.), lv denied in part and dismissed in part 48 NY2d 629 (1979). One such example of the application of these principles was Rose v Fidelity Mut. Life Ins. Co., 207 FS2d 50 (EDNY 2002). In Rose, the plaintiffs sought to prosecute a claim against an insolvent insurer in the federal 22 courts in New York. At the time, there was an ongoing rehabilitation proceeding in Pennsylvania, overseen by the Pennsylvania Insurance Commissioner. The district court dismissed the plaintiffs’ complaint against the insurer, ruling that any claim against it was required to be adjudicated in the Pennsylvania rehabilitation proceeding. The court found that Pennsylvania was a reciprocal state for purposes of the Uniform Insurance Liquidation Act, which, as this Court has noted, created a uniform system for the orderly and equitable administration of the assets and liabilities of defunct multistate insurers. See, G. C. Murphy Co. v Reserve Ins. Co., 54 NY2d 69, 77 (1981). In making this finding, the court ruled that Pennsylvania’s procedures for protecting the interests of claimants, insureds and insurers were fully in harmony with those protections existing under New York law. As discussed in Kaleida Health’s original brief to this Court, the Pennsylvania statute contains an election of remedies provision, requiring that a plaintiff make a choice between pursuing his or her claim against the insured in a court proceeding and presenting the claim in the liquidation proceeding. See, Koken v Reliance Ins. Co., supra, at 293-295, 893 A2d at 84-86. While the New York liquidation statute does not include a provision automatically releasing an insured upon the execution of a proof of claim by a claimant, election of remedies provisions are found in New York law in various contexts, and such requirements are routinely upheld and enforced by this Court. See, e.g., Reddington v Staten 23 Island Univ. Hosp., 11 NY3d 80 (2008) (Claim based on violation of Whistleblower Law precludes remedies available under any other contract, law or rule, or under the common law); Matter of Jamie R. v. Consilvio, 6 NY3d 138 (2006) (Criminal defendants found not responsible by reason of mental disease or defect required to choose between two methods of obtaining review of judicial determination authorizing confinement); Matter of Freudenthal v County of Nassau, 99 NY2d 285 (2003) (Party who files claim before Division of Human Rights foreclosed from seeking redress elsewhere while claim is pending); Werner v State of New York, 53 NY2d 346 (1981) (Claimant who applies for and accepts workers’ compensation death benefit barred from maintaining wrongful death action against deceased worker’s former employer for intentional assault). As was also discussed in the original brief, liquidation statutes around the country commonly require that a claimant making a claim in a liquidation proceeding execute a release in favor of the insured as a condition of the claim, and such requirements are uniformly upheld in the courts. Indeed, requiring a release advances the goal of liquidation statutes of providing for the orderly distribution of the assets of the insolvent insurer in a manner that provides claimants, insureds and insurers with security and certainty. In evaluating the arguments of the plaintiffs’ counsel, the Court should be mindful of the fact that Mr. and Mrs. Oakes chose, with the assistance of counsel, 24 to subject themselves to the Pennsylvania liquidation proceeding, thereby forfeiting their opportunity to proceed against Kaleida Health in court for the amounts within the PHICO coverage. Because of the existence of Kaleida Health’s $2,000,000 self-insured retention, and because the plaintiffs had claims against defendants other than Kaleida Health, the plaintiffs could, and did, proceed to litigation in the New York courts. But, subject to acceptance of coverage by the Liquidator, that litigation would not encompass the claims against Kaleida Health that were over and above the amounts that were within the self-insured retention and $1,000,000 in coverage available from the New York Liquidation Bureau. Certainly, the Oakeses and their attorneys read the proofs of claim and understood that filing these proofs meant that they could not litigate the claims that fell within the PHICO coverage in any forum other than the liquidation proceeding. All that Kaleida Health requested in its motion to amend was that the trial court enforce a choice that the Oakeses had already made. The election made by the Oakeses was justified. As discussed in the plaintiffs’ brief, the insolvency of PHICO raised doubts as to whether there would be insurance coverage for the amounts sought in the Oakeses’ lawsuit. Moreover, as acknowledged by plaintiffs’ counsel in an affidavit submitted to the trial court, at the time that the proofs of claim were filed, Kaleida Health was in the midst of a financial crisis and there were justifiable fears on the part of the Oakeses and their counsel that Kaleida 25 Health might not have the financial means to pay a judgment or settlement (11881, 11940-11947). Given the uncertainties, the Oakeses elected to make a claim in the liquidation proceeding (11881). Once that election was made, it could not be revoked or withdrawn. At some point, the Oakeses apparently decided that they did not wish to be bound by their election. They did not disclose to Kaleida Health that the proofs of claim had been filed and they proceeded on multiple paths. While the Liquidator processed their claim, eventually making a decision to accept coverage for it, the Oakeses pursued Kaleida Health and the other defendants in court, seeking recovery of all of their damages, including those for which they had made a claim in the liquidation proceeding. Their goal was clear – to maximize their possible recovery by keeping all of their options open. In other words, they tried to have it both ways. The law does not permit a party to pick and choose among remedies, as the plaintiffs seek to do here. As discussed in Koken, the requirement of an election creates an expectation of security on the part of the plaintiff and policyholder alike, and minimizes legal uncertainty and litigation. 586 Pa at 293-295, 893 A2d at 85. The important policies that form the foundation for comprehensive liquidation statutes would be undermined by a ruling in the plaintiffs’ favor here. 26 The Oakeses voluntarily chose to pursue their remedies in the liquidation proceeding and that election should be enforced by this Court. 3. The Issue of Prejudice The plaintiffs repeatedly argue that the question of whether to grant leave to amend the answer was a matter of discretion and that denial of Kaleida Health’s application was proper due to the lateness of the application and the prejudice that would result from the granting of the requested relief. These arguments are meritless and should be rejected by this Court. It is important to emphasize that, on this issue, this Court is not reviewing a discretionary determination. Neither the trial court ruling nor the Appellate Division decision rested on an exercise of discretion. Justice Drury concluded that there was “no possible legal vehicle” that would allow the answer to be amended after the 2008 trial (12049). The Appellate Division concluded that the proposed defenses lacked merit as a matter of law. Because the courts below decided the issue on legal grounds, the issue presented to this Court is one of law. The plaintiffs’ argument that the motion was untimely cannot be accepted because all parties agree that the releases did not become effective until coverage was accepted by the Liquidator and that such acceptance did not occur until after the 2008 trial. The plaintiffs’ own attorney argued at the trial court that the five- year delay in acceptance of the claim by the Liquidator caused the Oakeses to 27 believe that their claim had not been accepted (11887). In his decision denying Kaleida Health’s motion, Justice Drury noted that raising the issue of the releases prior to the 2008 trial would not have altered the verdict because the releases by their terms were “subject to coverage being accepted by the Liquidator”, and that acceptance did not occur until after the trial (12048). In these circumstances, it is apparent that the application was not untimely – the motion was made at the earliest point in time that the issue of the releases’ validity could be litigated. Kaleida Health was not the party responsible for the delay. It was the Oakeses and their attorneys who filed the proofs of claim and then decided to conceal this fact from the defendants. It was the Liquidator that delayed its decision to accept coverage of the Oakeses’ claims until after the 2008 trial had been conducted. Kaleida Health made its motion shortly after its attorneys were provided with the proofs of claim by the Liquidator, at the same time that coverage was accepted. The plaintiffs should not be heard to complain about the slow pace of the liquidation process, because it was the plaintiffs themselves who chose to pursue that remedy. The statement by this Court in Nichman v DeMarco, 62 NY2d 926 (1984), is equally applicable here: The plaintiffs are parties who charted their own course, and they have offered no sufficient reason to be permitted to radically change that course. 62 NY2d at 929 (citation omitted). 28 These circumstances make it obvious that there is no validity to the plaintiffs’ claims that they would be prejudiced by the granting of Kaleida Health’s motion. The prejudice alleged by the plaintiffs included a supposed inability to conduct discovery on the issue of the validity of the releases, and the “enormous expense, effort and time” involved in preparing the case for trial (Brief for Plaintiffs, p. 87). Justice Drury cited the same factors in his decision denying the motion (12048-12049). As discussed in Kaleida Health’s original brief to this Court, the alleged need for discovery did not actually exist. The Oakeses and their counsel are the parties in the best position to explain how the releases came to be executed. Indeed, they have already done so in their attorney’s affidavit – they were concerned that Kaleida Health might not have insurance coverage and that its financial problems would render it unable to pay a judgment or settlement, so they opted to pursue a recovery in the liquidation proceeding. The plaintiffs have utterly failed to identify any other information that they would have expected to obtain in discovery. As for the time and expense of trial, such investments would have been necessary even if the defense of release had been asserted at an earlier time. As Justice Drury pointed out in his decision, coverage had not been accepted by the Liquidator at the time of the 2008 trial, so assertion of the defense at an earlier 29 point in time would not have affected that trial at all. In addition, as noted above, the releases applied only to the PHICO coverage, Kaleida Health had a $2,000,000 self-insured retention, and there were other defendants named in the action. The 2008 trial would therefore still have been necessary, even if the answer of Kaleida Health had been amended prior to that time. These factors distinguish the present case from the cases cited by the plaintiffs in their brief. For example, the plaintiffs rely on Shine v Duncan Petroleum Transport, Inc., 60 NY2d 22 (1983). Shine involved the defense of workers’ compensation, however. If that defense had been asserted earlier, the trial would have been completely unnecessary. It is also important to note that Shine did not involve a motion for leave to amend a pleading, but was a motion to stay a trial, made during the trial. A significant point emphasized by this Court in Shine was that leave to amend pleadings to add an affirmative defense should be freely granted, even in midtrial, in the absence of operative prejudice. 60 NY2d at 27. The other cases cited by the plaintiffs also involved circumstances where successful assertion of a defense at an earlier time would have actually eliminated the need to spend considerable time preparing for trial. See, Cameron v 1199 Housing Corp., 208 AD2d 454 (1st Dept. 1994) (Court properly denied motion for leave to amend answer to add defense of statute of limitations where motion made six years after service of answer, after case had been placed on trial calendar); 30 Slivinsky v. Bloomerside Cooperative, Inc., 202 AD2d 491 (2d Dept. 1994) (Motion for leave to amend answer properly denied where amendment sought to add defense of Statute of Limitations made on eve of trial after two years of trial preparation and discovery). The plaintiffs also argue that they might have altered their trial strategy, such as pursuing appeals against the three defendants who were found not responsible at the liability trial, and who all had substantial insurance coverage. This argument is speculative and specious. The plaintiffs fail to identify even a single appealable issue with respect to any of those defendants. This argument also ignores the assertion of plaintiffs’ own counsel, who stated to the trial court that, at the time of the 2008 trial, the plaintiffs feared that Kaleida Health had no insurance coverage and was in the midst of a financial crisis. The plaintiffs obviously had an incentive to direct their attacks elsewhere, but chose not to do so. It is not credible that they would have altered their strategy if the issue of the releases had been raised earlier. After all, the plaintiffs knew about the proofs of claim, having executed them, and their attorney certainly knew that leave to amend the answer to assert the defense of the releases could be sought at any time. Thus, at the time of the 2008 trial, the plaintiffs and their counsel already knew that the proofs of claim had been executed, that the proofs of claims included releases, that New York law permitted Kaleida Health to amend its answer to assert the defense of the releases at any 31 time, that Kaleida Health might not have insurance coverage, and that Kaleida Health had serious financial difficulties. In spite of all of these factors, the plaintiffs pursued a trial strategy that heavily targeted Kaleida Health. It is simply not credible that Kaleida Health’s actual assertion of a defense that the plaintiffs already knew to be in existence would have somehow caused the plaintiffs to overhaul their trial strategy. There is no evidence of prejudice here. Any obstacles to the Oakeses’ recovery were erected by the Oakeses and their counsel. There is nothing about Kaleida Health’s motion that created any prejudice. The claim of prejudice fails as a matter of law. The other cases cited by the plaintiffs simply have nothing to do with the factual circumstances at bar. In Tag Mechanical Systems, Inc. v V.I.P. Structures, Inc., 63 AD3d 1504 (4th Dept. 2009), the proposed amendment of the answer sought to add a counterclaim that sought affirmative relief based on a contract that was not at issue in the complaint. The counterclaim also was unrelated to any matters addressed in discovery, which had been completed. The Fourth Department found that the plaintiff would be prejudiced if the amendment were permitted. In Arias-Paulino v Academy Bus Tours, Inc., 48 AD3d 350 (1st Dept. 2008), the defendant sought leave to amend its answer to add affirmative defenses of release and accord and satisfaction. The motion was denied on the ground of 32 laches because the defendant waited 2½ years after receiving the release to make the motion, during which time the plaintiffs extensively litigated the matter and prepared for and participated in a mediation proceeding. This case is obviously distinguishable from the matter at bar, as there was no delay by Kaleida Health once it received copies of the proofs of claim. DiIorio v. Gibson & Cushman of New York, Inc., 166 AD2d 334 (1st Dept. 1990), also relied upon by the plaintiffs, did not involve a motion for leave to amend a pleading. In that case, the defendant was seeking to vacate a judgment on the grounds of newly discovered evidence and fraud. DiIorio thus has nothing to do with the issues raised at bar. In their brief, the plaintiffs argue that “knowledge of the effect of the releases would have placed all parties on equal footing during the trial” (Brief for Plaintiffs, p. 85). This is one of the few statements made in the plaintiffs’ brief with which Kaleida Health can agree. The parties were not on equal footing during the liability trial because it was the Oakeses and their counsel who knew that the proofs of claim had been executed and that they contained releases. It was the Oakeses and their counsel who pursued a large recovery from Kaleida Health in the New York State Supreme Court even though they had elected to pursue their recovery in the liquidation proceeding in Pennsylvania. It is Kaleida Health that now seeks to be placed on equal footing with the plaintiffs. That can be 33 accomplished only by permitting Kaleida Health to assert its affirmative defenses of release and General Obligations Law § 15-108. The defenses are meritorious and the plaintiffs’ claims of prejudice fail as a matter of law. This Court should therefore direct the entry of an order granting the motion to amend the answer and limiting the liability of Kaleida Health to no more than $3,000,000, representing its self-insured retention of $2,000,000 and the $1,000,000 for which the New York State Liquidation Bureau is responsible. 34 Point II The Appellate Division Erred in Refusing to Review the Appropriateness of the Trial’s Court’s Additur on the Ground – Raised Sua Sponte by the Appellate Division – that the Defendants had Failed to Preserve the Issue. 1. The Appellate Division is vested with the authority and responsibility to review discretionary determinations of Supreme Court. Plaintiffs argue that the Appellate Division did not have the ability to review the trial court’s decision to grant additur. This is simply not correct. Pursuant to the New York State Constitution, the Appellate Division is charged with reviewing questions of law and questions of fact. The Appellate Division is also charged with reviewing any exercise of discretion by the court or the judge below. CPLR 5501. In the case at bar, plaintiffs could simply have asked the trial court to set aside the jury’s award on damages following the 2008 trial as against the weight of the evidence. Had this motion been made to the trial court and granted by the trial court, plaintiffs would have been awarded a new trial on those items of damages set aside. Instead, plaintiffs made a two-pronged application to the trial court following the 2008 trial and received a two-pronged decision. In the first instance, plaintiffs moved to set aside the verdict as against the weight of the evidence. In the second instance, plaintiffs moved to increase the verdict on the ground that the award deviated from reasonable compensation in that it was inadequate (10711- 35 10732). The trial court granted the first prong of plaintiffs’ motion and set aside the jury’s verdict. The trial court also granted the second prong of plaintiffs’ motion, granted additur and increased the award. Both decisions were discretionary and, as such, both were subject to review by the Appellate Division. Plaintiffs argue that the grant of additur is not reviewable by the Appellate Division because the trial court was not required to grant additur. The argument is nonsensical. The fact is that the trial court granted additur. It is therefore within the scope of review of the Appellate Division to review that award. Contrary to plaintiffs’ assertions, Kaleida Health had no obligation to move for reargument or reconsideration of the trial court’s decision. Such motion was not required and would serve no purpose. The trial court which granted plaintiffs’ motion and increased the award in a 28-page decision would not have granted reargument and would not have reduced the amount of the additur. The motion for reconsideration of recusal referenced in plaintiffs’ brief was made in advance of oral argument of Kaleida Health’s motion for leave to amend its answer in order to preserve that issue. The reason for that application had no relation to plaintiffs’ motion to set aside the verdict and to increase the award which had already been decided by the trial court (11683, 12029-12034). Additionally, Kaleida Health had already taken the only avenue open to it at that time to challenge the trial court’s decision to set aside the jury’s award on damages as inadequate and the trial 36 court’s decision to grant additur: Kaleida Health had filed a notice of appeal from the order (SR753-SR755). Kaleida Health did not, however, have sufficient time to perfect that appeal, have that appeal heard, and have that appeal decided before the second trial on damages would have been held and judgment would have been entered. The trial court scheduled the retrial to take place in March 2009. Judgment was to be entered immediately after the retrial.1 Accordingly, at the time the additur was rejected and the notice of appeal filed, Kaleida Health knew that even if the appeal was perfected, it would not be heard and decided at the time the judgment was entered. The appeal would, therefore, have been subsumed into the final judgment and subject to dismissal upon plaintiffs’ application as soon as judgment was entered. Matter of Aho, 39 NY2d 241 (1976); Colnes v. Colligan, 183 AD2d 693 (2d Dept. 1992). Kaleida Health also anticipated challenging the trial court’s decision to set aside the verdict and to award additur upon an appeal from the judgment. It is also worth noting that Kaleida Health sought an interlocutory judgment on liability and a stay of the retrial following the 2008 trial. Kaleida Health intended to proceed with an appeal on issues related to liability from the interlocutory judgment after obtaining a stay of the retrial. A successful appeal on the issues related to liability would have obviated the need for the retrial. Plaintiffs 1 Unbeknownst to Kaleida Health, judgment would not be entered until December 23, 2009 due to various motions relative to the calculation of the judgment and plaintiffs’ counsel’s motion for increased attorney’s fees which were made and decided prior to entry of judgment. 37 opposed Kaleida Health’s request for an interlocutory judgment and a stay of the retrial to allow such appeal. Kaleida Health sought an adjournment of the 2009 retrial to pursue an appeal to the Appellate Division of the denial of its motion to amend the answer. The stay was sought first from the trial court and then from the Appellate Division. A successful appeal would have obviated the need for a retrial on damages. Plaintiffs also opposed both motions, arguing that Kaleida Health’s applications were part of a continuing pattern of delay. Both motions for a stay were denied.2 It is disingenuous for plaintiffs to argue that Appellate Division review of the order which granted additur was only available to Kaleida Health on an appeal from the order which granted it given the fact that plaintiffs knew there was insufficient time to perfect the appeal, and have the appeal heard and decided prior to the retrial and opposed Kaleida Health’s requests for a stay. The trial court’s excessive additur and the Appellate Division’s refusal to review that additur resulted in the denial of a benefit to which Kaleida Health was entitled. That benefit was the favorable jury verdict. Keyser v. KB Toys, Inc., 82 AD3d 713 (2d Dept. 2011); McDonald v. 450 W. Side Partners, LLC, 70 AD3d 490 (1st Dept. 2010). When the trial court set aside the 2008 jury’s verdict and granted additur but failed to adhere to the appropriate standard to do so, 2 Along with this reply brief, Kaleida Health has submitted to this Court a separate volume of documents which contain an excerpt from the October 15, 2008 proceeding before the trial court wherein counsel for Kaleida Health requested an interlocutory judgment, plaintiffs’ response, and the trial court’s decision to deny the request, as well as Kaleida Health’s motions for a stay of the March 2009 retrial. Kaleida Health respectfully requests that this Court take judicial notice of the proceeding and the motions. 38 Kaleida Health was deprived of the opportunity to stipulate to an appropriate additur with respect to the items of damages set aside. The appropriate additur would have been one which increased the jury’s award to the minimum amount which could have been awarded based upon the evidence presented at the 2008 trial. That was an error by the trial court and the error was not cured by the second trial on damages. Kaleida Health did not make a strategic decision not to accept an appropriate additur and to proceed at its peril to the second trial. Instead, because of the vast increase in the amount of the award, Kaleida Health had to reject the inordinate additur and had to proceed to the retrial on damages. After that retrial occurred, Kaleida Health’s only recourse was an appeal from the judgment. Because the Appellate Division majority found the additur issue to be unpreserved, it undertook to review the jury’s award following the 2009 trial to determine whether it exceeded the maximum amount the jury could have awarded. In the process, Kaleida Health was deprived of a jury verdict which was favorable to it in the amount of the award, was deprived of the opportunity to stipulate to an additur which was limited to an increase to the minimum amount the jury could have awarded, and was ultimately found responsible for an award consistent with the maximum amount the jury could have awarded. In the event that plaintiffs’ arguments are accepted and no review is undertaken of the trial court’s additur, the decision will have far-reaching effects. 39 The oversight of trial courts relative to hearing and deciding post-trial motions to set aside jury verdicts and to award additur will be severely limited. If plaintiffs’ arguments are accepted, it will be only the rare case when a litigant will be fortunate enough to have sufficient time to perfect an appeal on the issue of the appropriateness of the amount of additur and have that appeal heard and decided before being required to go forward with a retrial. This is especially so as trial courts – once having made the decision to grant a motion to set aside a verdict and to award additur – will be highly unlikely to stay the retrial so that the litigant who opposed the application and lost can appeal it. The practical impact will be that litigants will be deprived of appellate review of decisions granting motions to set aside verdicts and to award additur. Additionally, some litigants will have fewer appellate rights than others, simply by virtue of the date selected by the trial court for retrial. If plaintiffs’ arguments are rejected and a review is undertaken, that review will not create an unmanageable number of cases where additur is found to be excessive and defendants permitted the opportunity to stipulate to an appropriate additur. There simply will not be many cases where the Appellate Division will find that the trial court failed to award additur in an appropriate amount. In most instances, the trial court will follow the appropriate standard and the Appellate Division, in turn, will find that the amount of the trial court’s additur was 40 acceptable, thus appellants would not be entitled to an opportunity to stipulate to an appropriate additur. Instead, it will be the rare case where a appellant will prevail on appeal and have the opportunity to stipulate to a more reasonable amount. No doubt this is the reason the parties are unable to cite cases to this Court where additur was reviewed following a retrial. The cases relied upon by plaintiffs for the proposition that no appellate review is permitted when additur is refused (O’Brien v. Covert, 187 AD2d 419 (2d Dept. 1987), Infante v. City of New York, 258 AD2d 333 (1st Dept. 1999), and Deitsch Textiles, Inc. v. New York Prop. Ins., 93 AD2d 853 (2d Dept. 1983), are not on point, as they do not address whether additur may be reviewed. To agree that there is no right to review an award of additur from a final judgment would mean that appellate oversight of such decisions and awards would be lost. There would be no check on such decisions and, over time, a reduced ability of the courts to attempt to reach a fair outcome for litigants and avoid the need for retrials. Plaintiffs argue that the fact that the retrial went forward in this case means that the amount of the additur is irrelevant and not subject to review. Many more retrials could be avoided, however, if trial courts know that their decisions on a motion to set aside and to award additur will be reviewed and will be adjusted to comport with the applicable standard. The trial courts will be guided to comply with the appropriate standard and to award additur in the minimum amount a jury could have awarded based 41 upon the proof. If the Appellate Division is not able to review awards of additur, litigants will be denied their right to an award that was favorable to them in amount, denied their right to an increase in the award to the minimum a jury could have awarded and denied their right to a just determination of the award without the time and expense of another trial. Also lost will be the deference which is to be awarded to jury verdicts which are to be set aside sparingly. Po Yee So v. Wing Tat Realty, Inc., 259 AD2d 373 (1st Dept. 1999); Prunty v. YMCA of Lockport, 206 AD2d 911 (4th Dept. 1994). All this would work to defeat the purpose for judicial mechanism of additur. The trial court was charged with granting additur and was charged with doing so in an appropriate manner, following the applicable statutes and case law. Those statutes and case law require the trial court to award additur in the minimum amount the jury could have awarded under the proof presented at the 2008 trial. The trial court failed to follow the appropriate standard. The trial court set aside the verdict and granted plaintiffs’ motion for additur in an amount that exceeded reasonable compensation in light of the damages which had been proven at the 2008 trial. That the trial court did so is clear from the dissents of Justices Peradotto and Smith. Justice Peradotto found that the $5,000,000 each for past and future pain and suffering and the $3,500,000 for past and future loss of services was simply not the minimum amounts the jury could have awarded as a 42 matter of law based on the evidence at trial (11a). Justice Smith reviewed the jury’s award following the 2009 trial and found that the maximum amount that the jury could have awarded to plaintiffs following that trial was $2,000,000 for past pain and suffering, $3,500,000 for future pain and suffering, $200,000 for past loss of services, $300,000 for future loss of services, and $3,000,000 for future custodial care. A total of $9,000,000 (9a). If Justice Smith found $9,000,000 to be the maximum amount the jury could have awarded following the 2009 damages-only trial, where plaintiffs’ proof was solely geared to damages and was much improved and augmented from the first trial, then certainly the trial court’s additur to $17,400,000 was not, in her view, the minimum amount the 2008 jury could have awarded. The sua sponte finding of the Appellate Division majority that the amount of the additur was unpreserved meant that the majority did not have to reach the question of whether the amount of the additur chosen by the trial court comported with the standard that the amount should be increased to the minimum amount that could have found based upon the evidence presented at the 2008 trial. Plaintiffs argue that the trial court was not required to grant any additur up to the minimum the jury could have awarded based upon the evidence presented at the 2008 trial and further argue that the trial court was free to grant additur to the maximum amount. Plaintiffs rely upon this Court’s decision in O’Connor v. 43 Papertsian, 309 NY 465 (1955) and the Fourth Department’s decision in Ladd v. Parkhurst, 87 AD2d 971 (4th Dept. 1982). Both O’Connor and Olsen were decided before the 1986 amendment to CPLR 5501(c) which changed the appellate standard of review and required the Appellate Division to review a jury award to determine if the award deviated from reasonable compensation. The two cases were decided before the trial courts also adopted this standard for reviewing jury awards as the applicable standard for setting aside an award. See, Cochetti v. Gralow, 192 AD2d 974 (3d Dept. 1993); Moller v. City of New York, 22 Misc3d 1103A (Sup. Ct., NY Co. 2009). Since the cases relied upon by plaintiffs were decided before the applicable statute became effective, they do not stand for the proposition that the trial court or the Appellate Division was not required to increase the jury award to the minimum amount the jury could have awarded based upon the proof presented at the 2008 trial and was instead free to increase the award to the maximum amount. To agree with plaintiff that the additur cannot be reviewed on an appeal from a final judgment would also go against a tenet of the New York Constitution and the court system. The New York Constitution and the Civil Practice Law and Rules are carefully structured to allow a litigant at least one review of a decision which grants relief, in whole or in part, against him or her which he or she opposed. As an illustration, this Court is empowered to review questions of fact 44 where the Appellate Division has expressly or impliedly found new facts and a final judgment pursuant thereto is entered as, again, a litigant is entitled to, at a minimum, one appellate review. See, CPLR 5501(b). Here, the sum of plaintiffs’ argument is to deny this most basic tenet of appellate review. Public policy demands that plaintiffs’ argument and plaintiffs’ reasoning fail. 2. The Issue of Additur was Preserved. Contrary to plaintiffs’ assertion and the finding of the Appellate Division majority, the issue of the amount of the trial court’s additur was preserved for review. The issue was before the Appellate Division. Again, the Appellate Division was alerted to the relevant question which preserved the issue for review.3 Kaleida Health submits that the very act of the trial court in setting aside $4,000,000 in various damages and more than quadrupling those same damages to $17,400,000 was, in and of itself, sufficient to raise the issue on Kaleida Health’s appeal from the judgment. Such a vast increase was aberrant and, in itself, alerted to the Appellate Division to the excessive nature of the additur. That was, however, not all which occurred or which Kaleida Health did following the inordinate additur. 3 Plaintiffs cite this Court’s decision in Robillard v. Robbins, 78 NY2d 1105 (1991) to argue that a specific objection, rather than a general objection, to the amount of the additur was required. The Robillard case cites the relevant standard for preservation for an objection to the admission of evidence at trial and has no application here. 45 Kaleida Health appealed from the order granting additur. Kaleida Health did not perfect its appeal as there was simply insufficient time to have the appeal heard and decided prior to the retrial. The relevant question was contained within the brief submitted by Kaleida Health to the Appellate Division. Numerous references were made to the inordinate and excessive nature of the additur in Kaleida Health’s brief (SR 8, 28, 58, 65-70, 450, 468-471). Certainly plaintiffs understood the amount of the additur was at issue as plaintiffs included arguments and citations to cases within their responding brief to the Appellate Division wherein they argued that the amount of the additur was appropriate and constituted reasonable compensation (SR 291, 295, 337, 342-343). Justice Peradotto found that the issue had been preserved, noting that Kaleida Health had opposed plaintiffs’ motion to set aside the verdict by contending that the award did not deviate from reasonable compensation, rejected the proposed additur, and proceeded to a second trial and argued in their brief that the trial court erred in setting aside the verdict and that the verdict was excessive (11a-12a). Such argument had preserved the issue in similar cases and served as a basis to reduce an excessive additur. See, Perlin v. King, 36 AD3d 495 (1st Dept. 2007); Rivera v. Lincoln Ctr. for Performing Arts, Inc., 16 AD3d 274 (1st Dept. 2005). Kaleida Health also pursued other avenues which would have obviated the need for the retrial. Plaintiffs opposed any avenue which had the potential to obviate the need for the 2009 retrial as well as any request for a 46 stay of the retrial. Plaintiffs now argue that such appeal should have been perfected and was defendants’ only opportunity to have the amount of the additur reviewed. Plaintiffs cannot now fairly claim economic disadvantage for having had the retrial. In fairness to the defendants, plaintiffs cannot be permitted to have it both ways. For all of the foregoing reasons and the reasons set forth in Kaleida Health’s main brief, the Appellate Division erred in refusing to review the appropriateness of the trial court’s additur. The amount of the additur should be reviewed to determine whether the amount comports with the minimum amount which could have been awarded to plaintiffs for the injuries established at the 2008 trial. Kaleida Health was denied the opportunity to stipulate to an appropriate additur. Kaleida Health should be given this opportunity. 47 Point III The Trial Judge Erred in Precluding the Proposed Expert Testimony on the Measure of Damages. The plaintiffs’ basic position in response to Kaleida Health’s argument that the defendants were improperly precluded from presenting expert testimony at the second, damages-only trial is to assert that the defendants failed to present any such evidence at the first trial. In the view of the plaintiffs, “Having failed to offer any such evidence, the trial court properly precluded them from trying to do so at the second trial.” No authority is cited for the plaintiffs’ novel contention that a defendant, upon a re-trial limited to damages only, is limited to the proof presented at the earlier trial. The new rule advocated by the plaintiffs apparently is intended to apply only to defendants, as the plaintiffs called witnesses at the 2009 trial on damages who did not appear at the 2008 trial. The plaintiffs repeatedly assert that the proposed expert testimony related to the issue of proximate cause, which was decided at the 2008 trial and was not a question to be litigated in the 2009 damages trial. The plaintiffs’ argument would make sense only if the jury at the 2008 trial had specifically considered each and every injury and item of damage claimed by the Oakeses and made a finding of causation for each such claim. Such was not the case, however. The charge given to the jury on proximate cause instructed the jury that the causation requirement 48 would be satisfied if the act or omission of a defendant “was a substantial factor in bringing about the injury” (10578). In other words, so long as there was some injury causally related to a defendant’s negligence, a finding in the Oakeses’ favor on the “substantial factor” test would mean that the requirement of proximate cause was met. The measure of damages was covered in the Court’s charge on damages. That charge began as follows: If you find that the plaintiffs are entitled to recover from any or all of the defendants, you must render a verdict in a sum of money that will justly and fairly compensate the plaintiffs for all losses resulting from the injuries sustained by them. If you decide that any of the defendants are liable, the plaintiff is entitled to recover a sum of money which will justly and fairly compensate him for any injury and conscious pain and suffering to date caused by that defendant or defendants. (10588-10589)(emphasis added). In other words, in evaluating the measure of damages, the jury was required to make a determination as to whether a particular claimed injury was attributable to, or the result of, or caused by, the conduct of a defendant. Contrary to the plaintiffs’ argument here, this is not a “proximate cause” determination. It is the recognition of the fact that an integral part of determining the measure of damages is finding that the injuries complained of actually resulted from the conduct of the defendant. 49 The verdict sheet also addressed injuries generally in the proximate cause questions, rather than asking that the jury make a separate determination as to each and every claim of injury made by the Oakeses (28734-28737). The causal relationship between the conduct of a defendant and a particular injury or loss claimed by the Oakeses was part of the determination of the measure of damages. It was an issue at the 2009 trial and the defendants should have been allowed to present evidence on the question. When the trial court set aside parts of the damages verdict and ordered that those items be re-tried, it did not relieve the Oakeses of their burden of establishing that the injuries for which they sought compensation were the result of the conduct of the defendants. At the same time, the trial court’s determination did not foreclose the defendants from arguing that some of the injuries for which the Oakeses sought an award of damages were the result of other causes or would have been sustained in any event, without any negligence. This was why the defense sought to call Dr. Grand as a witness – to address the issue of the measure of damages. The proposed testimony had nothing to do with the liability factor of proximate cause. Determining the measure of damages was the issue discussed by this Court in McCahill v New York Transp. Co., 201 NY 221 (1911), and the rule has not changed in the century since McCahill was decided. Even when there is no issue as to proximate cause for liability purposes, evidence as to the cause of a 50 condition is still admissible because it is “an important element in fixing damages”. Id. at 224. The plaintiffs’ reliance upon Monahan v Weichert, 82 AD2d 102 (4th Dept. 1981), is misplaced, as Monahan supports the position of the defendants. While Monahan did discuss, among other issues, the proper standard for proximate cause in medical malpractice litigation, it also discussed measure of damages. The Monahan court found that a plaintiff could not recover for injuries caused by the underlying affliction, rather than the negligence. Thus, whether a particular injury is a result of the defendant’s conduct is always an issue when a jury is to determine the amount of damages to be awarded. It is therefore clear that the trial court committed a serious error when it precluded the defendants from presenting evidence as to the injuries that Mr. Oakes likely would have sustained due to the aneurysm in the absence of any negligence. The plaintiffs’ argument is not rendered more convincing by the long recitation in their brief of Mr. Oakes’ various injuries and medical procedures. Instead, the description illustrates the manifest unfairness of the damages trial, where the plaintiffs were permitted to present evidence from two experts who did not testify at the 2008 trial (Janet Kent, M.D. and Mark Schachter, Ph.D.), while the defense was barred from presenting expert proof on the measure of damages. 51 The plaintiffs’ contention that the defendants (and only the defendants) should be bound by their evidence and strategies from the first trial upon retrial is illogical and without basis in law or fact. At bar, the 2008 trial dealt with both liability and damages. As is often the case in medical malpractice litigation, the defendants, for strategic reasons, elected to concentrate their evidence and cross- examinations on the liability issue. When the trial court ordered that there be a new trial on certain damages issues, it became a new trial for the defendants as well as the plaintiffs. Each side was free to present witnesses and evidence relevant to the issues, consistent with the rules of evidence and the parties’ expert witness disclosures. Contrary to the claim of the plaintiffs, the defendants were not required to sit mutely during a damages presentation restricted to plaintiffs’ witnesses only. It is apparent from the foregoing that this error entitles the defendants to a new trial on the issue of damages. 52 Point IV There was Insufficient Evidence to Support the Verdict as to Dent Neurologic Institute and Kaleida Health’s Vicarious Liability for Dent Neurologic Institute. Plaintiffs, Dr. Patel, and Dr. Mongia argue that there was sufficient evidence to support the finding of the 2008 jury that there was direct negligence on the part of Dent as an entity. Plaintiffs’ arguments are barred by the doctrine of judicial estoppel and, in any event, neither the plaintiffs nor the doctors established negligence on the part of Dent. The doctrine of judicial estoppel provides that where a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position. Kasmarski v. Terranova, 115 AD2d 640 (2d Dept. 1985); Environmental Concern, Inc. v. Larchwood Constr. Corp., 101 AD2d 591 (2d Dept. 1984). In the case at bar, plaintiffs’ counsel argued before the trial judge that the Oakeses did not establish a claim as to Dent, that Dent should not be on the verdict sheet, and that if the trial judge determined otherwise, the jury should not be told that the claim against Dent was being asserted by the Oakeses, as it was not (10109-10112). The trial judge agreed and included Dent on the verdict sheet, but instructed the jury that the defendants were making the claim as to Dent (10586-10587). The doctrine 53 of judicial estoppel precludes the Oakeses from now arguing that the evidence at trial supports the jury’s finding of negligence as to Dent4. With respect to the doctors’ arguments that there was sufficient evidence to support a finding of negligence with respect to Dent as an entity, the arguments fail as a matter of law as the evidence was simply insufficient to form a valid line of reasoning or permissible inferences to support a verdict as to Dent. During the 2008 trial, the plaintiffs admitted into evidence the Millard Fillmore Suburban Hospital “C.T. Department Policy” (21677). The policy provided as follows: CT Scans of the head are the Dent Neurologic cases, NOT Radiology. CT technicians will call a Dent physician to read the CT scan. After the CT technician calls the Dent physician, it is the responsibility of the Dent Physician to respond in a timely manner to give an official report, call the report and give consultation. At the 2008 trial, various witnesses5 confirmed the process for the interpretation of a head CT ordered on a stat basis which was taken after hours at Millard Fillmore Suburban Hospital. After the registration and requisition process, a hospital CT technician would take the images for the head CT. The technician 4 Plaintiffs argue that they would not have taken this position as to the Dent if release was an affirmative defense in the action. Plaintiffs suggest they would have advocated for Dent to be included on the verdict sheet. Strategically, this, however, does not make sense as plaintiffs would not have been able to recover from Dent as Dent had won summary judgment as to plaintiffs’ claims against them on the ground that plaintiffs’ claims were barred by the statute of limitations. 5 These witnesses, among others, were Ellen Levea, Sandra Mohr, Karen Irving, Laszlo Mechtler, MD, and Vernice Bates, MD. 54 would ascertain if a Dent neuroimager was in the radiology department at Millard Fillmore Suburban Hospital. If one was not, the technician would call the Dent neuroimager working at Millard Fillmore Gates Hospital and tell the neuroimager that she would be electronically transmitting images for interpretation (2531, 2534, 2894, 3003-3004). The neuroimager would let the technician know by return call if the images did not arrive for interpretation (2532-2533, 3005). Once the images were received, the neuroimager would interpret them and call the ordering physician with the interpretation (8266, 8274, 8654-8655, 8658). A formal read and report of the head CT would be done by a neuroimager the next time a neuroimager came to Millard Fillmore Suburban Hospital (8276-8277). The admission of the Millard Fillmore Suburban Hospital policy and the testimony of the various witnesses were not legally sufficient to implicate Dent as an entity. The policy and the testimony of the witnesses recounted that the responsibility for the interpretation of the head CT scan and the reporting of the scan rested with the neuroimagers. This was not, however, enough to establish negligence on the part of Dent itself. According to the evidence presented, Dent could only be vicariously responsible for the actions or omissions of its neuroimagers. Contrary to the doctors’ contentions, the testimony of Dr. Lutnick does not establish negligence or malpractice on the part of Dent. Dr. Lutnick’s testimony confirmed the neuroimagers’ responsibilities for the interpretation and 55 reporting of the head CT scan. Dr. Lutnick confirmed that the neuroimagers had the responsibility to receive the images, to interpret them and to report their interpretation to the ordering physician (9237, 9329). The experts cited by the doctors, namely, Dr. Lutnick and Dr. Abrahams, did not offer testimony that the process, which relied upon the actions of the neuroimagers, was deficient relative to Dent as an entity. To interpret their testimony otherwise is simply to encourage speculation. A verdict, however, must be based upon the evidence actually presented at trial. Similarly, expert opinion, like that of Drs. Lutnick and Abrahams, must be based upon facts in the record. Cassano v. Hagstrom, 5 NY2d 643 (1959). It is also worth noting that the jury found the neuroimagers involved in the care and treatment of Mr. Oakes not negligent. Given the established nature of the process by neuroimagers for head CT scans, had the jury reached the conclusion that that part of the process was flawed, it would also have found the neuroimagers negligent. It did not. Inasmuch as no proof was presented at trial to establish that Dent, as an entity, was negligent or that Dent, as an entity, deviated from accepted standards of care, there is simply no valid line of reasoning to support the jury’s verdict as it pertains to Dent. The evidence presented would only support a finding that Dent was vicariously responsible for the actions or omissions of its neuroimagers, had they been found negligent. Dent should not, however, have been included on the 56 verdict sheet and the jury should not have been allowed to apportion liability to Dent. Finally, as Dent was improperly included on the verdict sheet, there was no basis for a finding that Kaleida Health was vicariously liable for Dent. Accordingly, there should be a new trial on the issue of the apportionment of fault. 57 Conclusion Plaintiffs released Kaleida Health from claims against it which fell within the scope of its insurance coverage through PHICO. This Court must therefore reverse the order of the Appellate Division which denied Kaleida Health’s motion to amend its answer. Depending upon the resolution of the remaining issues, this Court should direct entry of an order granting Kaleida Health’s motion to amend the answer and modifying the judgment to limit the liability of Kaleida Health to no more than $3,000,000.00, representing Kaleida Health’s self-insured retention of $2,000,000 and the $1,000,000.00 in coverage provided by the New York Liquidation Bureau. With respect to the remaining issues, the incorrect submission to the jury of the issue of the liability of Dent and Kaleida Health’s vicarious liability for the liability of Dent mandates that there be a new trial on the issue of apportionment of fault. Should this Court determine that the liability findings should stand, the amount of the trial court’s additur must be reviewed and Kaleida Health given an opportunity to stipulate to an appropriate additur, one that increases the damages award to the minimum amount the jury could have awarded to the plaintiffs, based on the evidence presented at the 2008 trial. Finally, this Court should find that the Appellate Division incorrectly concluded that the preclusion of defendants’ expert from the testifying at the 2009 re-trial on damages relative to Mr. Oakes’s 58 underlying condition was proper and direct that such proof be admissible at any re- trial relative to damages. Dated: Buffalo, New York August 21, 2012 Respectfully submitted, DAMON MOREY LLP By ____________________________________ Amy Archer Flaherty Attorneys for Defendant-Appellant Kaleida Health d/b/a Millard Fillmore Suburban Hospital The Avant Building – Suite 1200 200 Delaware Avenue Buffalo, New York 14202-2150 Telephone: (716) 856-5500 Michael J. Willett, Esq. Amy Archer Flaherty, Esq. Of Counsel 1726942