        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

1192
CA 12-00521
PRESENT: SCUDDER, P.J., SCONIERS, VALENTINO, AND WHALEN, JJ.


JANERIO ALDRIDGE, M.D., HASHMAT ASHRAF,
M.B.B.S., F.R.C.S., LUJEAN JENNINGS, PH.D.,
M.D., AND BUFFALO THORACIC SURGICAL
ASSOCIATES, P.C.,
PLAINTIFFS-APPELLANTS-RESPONDENTS,

                    V                               MEMORANDUM AND ORDER

RICHARD F. BRODMAN, M.D. AND BUFFALO
CARDIOTHORACIC SURGICAL, PLLC,
DEFENDANTS-RESPONDENTS-APPELLANTS.
-------------------------------------------------
RICHARD F. BRODMAN, M.D. AND BUFFALO
CARDIOTHORACIC SURGICAL, PLLC, THIRD-PARTY
PLAINTIFFS-APPELLANTS,

                    V

KALEIDA HEALTH, THIRD-PARTY DEFENDANT-RESPONDENT.


PHILLIPS LYTLE LLP, BUFFALO (LISA MCDOUGALL OF COUNSEL), FOR
PLAINTIFFS-APPELLANTS-RESPONDENTS.

JAECKLE, FLEISCHMANN & MUGEL, LLP, BUFFALO (CHARLES C. SWANEKAMP OF
COUNSEL), FOR DEFENDANTS-RESPONDENTS-APPELLANTS AND THIRD-PARTY
PLAINTIFFS-APPELLANTS.

HODGSON RUSS LLP, BUFFALO (ROBERT J. LANE, JR., OF COUNSEL), FOR
THIRD-PARTY DEFENDANT-RESPONDENT.


     Appeal and cross appeal from an order of the Supreme Court, Erie
County (John A. Michalek, J.), entered July 5, 2011. The order, among
other things, granted third-party defendant’s motion for summary
judgment dismissing the third-party complaint.

     It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by denying in part the motion of
third-party defendant for summary judgment dismissing the third-party
complaint and reinstating the first cause of action in the third-party
complaint and as modified the order is affirmed without costs.

     Memorandum: Plaintiffs appeal and defendants-third-party
plaintiffs (defendants) cross-appeal from an order that, inter alia,
granted that part of plaintiffs’ motion seeking summary judgment
                                 -2-                          1192
                                                         CA 12-00521

dismissing defendants’ counterclaims, granted the motion of defendants
for summary judgment dismissing plaintiffs’ “third converted and
amended complaint” (complaint), and granted the motions of third-party
defendant, Kaleida Health (Kaleida), for summary judgment dismissing
the complaint and the third-party complaint.

     The individual plaintiffs are cardiothoracic surgeons and the
sole shareholders of plaintiff Buffalo Thoracic Surgical Associates,
P.C. Prior to the events giving rise to the instant appeal and cross
appeal, plaintiffs had privileges to perform surgery at hospitals
operated by Kaleida. Defendant-third-party plaintiff Richard F.
Brodman, M.D. is also a cardiothoracic surgeon, and he formed
defendant-third-party plaintiff Buffalo Cardiothoracic Surgical, PLLC
(BCS) for the purpose of providing cardiothoracic surgery services at
Kaleida’s hospitals. In 2003, Kaleida entered into separate contracts
with Brodman and BCS, whereby Brodman became the Chief of Service of
cardiothoracic surgery, and physicians associated with BCS became the
exclusive providers of cardiothoracic surgery services at Kaleida’s
hospitals. Subsequently, plaintiffs rejected defendants’ offer to
join BCS, and Kaleida terminated plaintiffs’ privileges to perform
surgeries at its hospitals. In January 2005, Brodman resigned from
his position with Kaleida, Kaleida terminated its contracts with
defendants for cause, and plaintiffs regained their privileges to
perform surgery at Kaleida’s hospitals.

     In their complaint, plaintiffs asserted three causes of action
against defendants, one of which has since been dismissed. In the
remaining two causes of action, plaintiffs asserted that defendants
committed unfair trade practices, and that they engaged in tortious
interference with plaintiffs’ business relationships. In their
counterclaims, defendants asserted that plaintiffs engaged in tortious
interference with contractual relations between defendants and Kaleida
and between defendants and other members and employees of BCS. In
their third-party action, defendants sought contractual
indemnification from Kaleida.

     Contrary to plaintiffs’ contentions, the court properly granted
the motions of defendants and Kaleida for summary judgment dismissing
plaintiffs’ remaining two causes of action because defendants and
Kaleida established that plaintiffs did not sustain any damages as a
result of defendants’ conduct, and plaintiffs failed to raise a
triable issue of fact (see generally Zuckerman v City of New York, 49
NY2d 557, 562). Defendants and Kaleida met their initial burdens by
submitting deposition testimony and answers to interrogatories in
which plaintiffs admitted that they could not identify the loss of any
patients or referrals because of defendants’ alleged unfair trade
practices and/or tortious interference with plaintiffs’ business
relationships. In their responding papers, plaintiffs submitted tax
returns establishing that they experienced lower revenues during the
period in which defendants allegedly committed the conduct underlying
plaintiffs’ second and third causes of action, but plaintiffs failed
to offer any evidence connecting the decline in revenues to
defendants’ conduct. Contrary to plaintiffs’ contention,
“plaintiff[s] failed to raise a triable issue of fact as to whether
                                 -3-                          1192
                                                         CA 12-00521

defendant[s’] alleged [conduct] was a proximate cause of plaintiff[s’]
losses” (Gerber Trade Fin., Inc. v Skwiersky, Alpert & Bressler, LLP,
12 AD3d 286, 286, lv denied 4 NY3d 705). “Where a party has failed to
come forward with evidence sufficient to demonstrate damages flowing
from the [defendants’ conduct] and relies, instead, on wholly
speculative theories of damages, dismissal of the . . . [causes of
action at issue] is in order” (Lexington 360 Assoc. v First Union
Natl. Bank of N. Carolina, 234 AD2d 187, 190).

     We further conclude that the court properly granted that part of
plaintiffs’ motion for summary judgment dismissing defendants’
counterclaims for tortious interference with contractual relations.
Contrary to defendants’ contention, plaintiffs established that they
did not intentionally induce a third party “to breach [a contract with
defendants] or otherwise render performance impossible” (Kronos, Inc.
v AVX Corp., 81 NY2d 90, 94), and defendants failed to raise a triable
issue of fact (see generally Zuckerman, 49 NY2d at 562).

     Contrary to the contention of defendants, the court properly
granted those parts of Kaleida’s motion for summary judgment
dismissing the third-party complaint to the extent that it seeks
contractual indemnification with respect to plaintiffs’ second and
third causes of action. Although we have concluded herein that the
second and third causes of action were properly dismissed, defendants
would nevertheless be entitled to recover attorneys fees incurred in
defending against them. However, attorneys fees are not recoverable
inasmuch as those causes of action allege that defendants committed
intentional torts. “Indemnification agreements are unenforceable as
violative of public policy . . . to the extent that they purport to
indemnify [parties] for damages flowing from the intentional causation
of injury” (Austro v Niagara Mohawk Power Corp., 66 NY2d 674, 676).

     We further conclude that the court properly granted that part of
Kaleida’s motion for summary judgment dismissing the third-party
complaint to the extent that it seeks contractual indemnification of
BCS with respect to plaintiffs’ first cause of action. Again,
defendants seek attorneys fees incurred in defending BCS against that
cause of action, before that cause of action was dismissed.
Nevertheless, defendants are not entitled to recover those fees
because plaintiffs’ first cause of action alleges that defendants
committed culpable conduct, and the independent contractor agreement
between Kaleida and BCS does not provide that Kaleida must indemnify
BCS for BCS’s own conduct. Kaleida thus met its initial burden, and
defendants failed to raise a triable issue of fact (see generally
Zuckerman, 49 NY2d at 562).

     We agree with defendants, however, that the court erred in
granting that part of Kaleida’s motion for summary judgment dismissing
the third-party complaint to the extent that it seeks contractual
indemnification of Brodman with respect to plaintiffs’ first cause of
action. We therefore modify the order accordingly. In support of the
motion, Kaleida submitted its employment agreement with Brodman, which
included the provision that Kaleida “shall be obligated to indemnify
and hold harmless [Brodman] from and against any and all third party
                                 -4-                          1192
                                                         CA 12-00521

claims, damages, judgments, costs, expenses, interest and penalties
(including, without limitation, attorneys’ fees) unless it is
determined that [Brodman] did not act reasonably within the scope of
his employment.” Kaleida did not establish as a matter of law that
Brodman’s conduct with respect to plaintiff’s first cause of action
was not reasonably within the scope of his employment (see generally
Zuckerman, 49 NY2d at 562).

     We have reviewed the parties’ remaining contentions and conclude
that they are without merit.




Entered:   November 16, 2012                    Frances E. Cafarell
                                                Clerk of the Court
