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July 30, 2004.

MARY FACELLA, Plaintiff,

The opinion of the court was delivered by: DEBORAH BATTS, District Judge


Plaintiff Mary Facella brought this action against Defendants Federation of Jewish Philanthropies of New York, Inc. ("FOJP"), Montefiore Medical Center ("Montefiore"), and First Colony Life Insurance Company ("First Colony") for claims arising from alleged violations of a state court settlement, which resolved a medical malpractice case between Plaintiff and Defendants FOJP and Montefiore (collectively "FOJP Defendants"). Plaintiff, FOJP Defendants, and Third-Party Defendant Lewis E. Alperin ("Alperin") have moved for summary judgment. Defendant First Colony Life Insurance Company ("First Colony") has also moved to have the FOJP Defendants' cross-claims dismissed.


  In 1978, Meredith Facella was born to Mary Facella and her then-husband Stephen Facella. (Joint Rule 56.1 Statement ("56.1 Stmt.") ¶ 1.)*fn1 Meredith Facella lived her entire life in a vegetative state, and her parents, alleging medical malpractice, filed suit against Defendant Montefiore (and other individual defendants not named in the instant case) in Supreme Court, Bronx County in 1980. (Id. ¶¶ 1, 2; Compl. ¶¶ 8, 9.)

  The parties to the state court case settled the matter in a Stipulation of Settlement ("Stipulation"), executed on September 17, 1982 by Stephen Facella. (56.1 Stmt. ¶ 3; Compl. ¶ 11.)*fn2 This Stipulation was later incorporated into an Infant's Compromise Order, dated October 8, 1982 ("Compromise Order") and approved by Justice Louis Fusco, Jr. of the Supreme Court, Bronx County as required by New York state law. (56.1 Stmt. ¶ 4; Compl. ¶ 12; Compromise Order at 1 ("Comp. Order").) The parties subsequently appeared before Justice Fusco at a November 17, 1982 Hearing ("Hearing") in which both attorneys indicated on the record that they were effectuating a settlement agreement, (11/17/82 Trans at 1-3), and in which a Release ("Release"), signed by both Mary and Stephen Facella on November 15, 1982, was given to opposing counsel. This Release specifically stated that:
STEPHEN FACELLA and MARY FACELLA, as parents and natural guardians of MEREDITH FACELLA, . . . as RELEASOR, in consideration of the amounts of money to be paid pursuant to the Order of Judge Louis Fusco entered on the 8th day of October, 1982. . . . releases and discharges Montefiore Hospital . . . from all actions, causes of action . . . claims, and demands whatsoever, in law, admiralty or equity which the . . . RELEASOR . . . ever had, now have, or hereafter can, shall or may, have for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of this RELEASE. . . .
/s/ Stephen Facella, /s/ Mary Facella.
(Release, Nov. 15, 1982.)
  The Compromise Order established and detailed a payment scheme whereby Montefiore would purchase an annuity contract (the "Annuity") to make monthly payments of approximately $4,166, totaling $50,000 per annum, to Stephen Facella within 30 days of the date of the Compromise Order. (56.1 Stmt. ¶ 8; Comp. Order at 3.) This payment was to last the longer of ten years or Meredith's life. (56.1 Stmt. ¶ 8; Comp. Order at 4.)
  The Annuity was also to provide for five lump-sum payments of $150,000, paid to Stephen Facella and beginning five years after the first monthly payment to Stephen Facella and then every five years after that until 2007. (56.1 Stmt. ¶¶ 4-8; Comp. Order at 5-7.) These payments were guaranteed even if Meredith Facella died before the payout dates. (56.1 Stmt. ¶ 6; Comp. Order at 6.) According to the Compromise Order, each lump-sum payment:
shall be paid to STEPHEN FACELLA as parent and natural guardian of MEREDITH FACELLA, jointly with an officer of the [eight] respectively designated bank as herein specified with payment to be distributed in the following amounts:
$18,750.00 to be deposited in Dollar Savings Bank located at 2530 Grand Concourse, Bronx, NY.
$18,750.00 to be deposited in Eastern Savings Bank located at 888 Grand Concourse, Bronx, NY.
. . . [listing four other banks]
$18,750.00 to be deposited in Greenwich Savings Bank located at 950 Third Avenue NY, NY.
(Comp. Order at 8.)
Justice Fusco further stipulated that "[a]ll payments are to be deposited in the highest interest-bearing account to the credit of the infant plaintiff, subject to the further Order of the Court." (Id.) The Compromise Order stipulated that Meredith Facella was to be named the beneficiary of the Annuity. In the case of her death, the named beneficiaries would be both her parents. (Comp. Order at 4-5, 7.) The Order also required Montefiore to guarantee all the payments under the Annuity in the event of default by the insurance company. (56.1 Stmt. ¶ 10; Comp. Order at 8.) Finally, Stephen Facella was to apply to be appointed Conservator of Meredith Facella's estate pursuant to Article 77 of the Mental Hygiene Law. (56.1 Stmt. ¶ 11; Comp. Order at 9.)

  In accordance with the Compromise Order, FOJP, Montefiore's fiduciary, purchased an annuity from First Colony to make the monthly and lump-sum payments as mandated by Judge Fusco. (56.1 Stmt. ¶ 9.) It appears that the monthly payments were disbursed in a timely manner. (Kearney Decl., Exh. B. (indicating that monthly "payments . . . commenced on December 20, 1982, which was 30 days after the receipt of the [C]ompromise [O]rder").) By the time of the first lump-sum payment in 1987, all the banks listed in the Compromise Order no longer existed. (Saretsky Aff., Exh. G, Exh. 2 at 2.) FOJP made the payments solely to Stephen and by 1993, the first two lump-sum payments were made. (56.1 Stmt. ¶¶ 13, 14, 17.)

  Plaintiff, Stephen Facella, and their three other minor children moved to Florida sometime in 1986 or 1987 (Pl. Depos. at 19.); however, Meredith Facella stayed in New York in the care of St. Margaret's Children's Hospital in Albany New York. (56.1 Stmt. ¶ 16.) Her care was apparently paid for first by the family's medical insurance and then by the state.*fn3

  Lewis Alperin ("Alperin") was appointed as a referee pursuant to the state's Mental Hygiene Law by court order. (56.1 Stmt. ¶ 30.) Meredith Facella died on March 24, 1993 in New York. (56.1 Stmt. ¶ 15.) Several days after her death, Stephen Facella brought Alperin the death certificate. (56.1 Stmt. ¶ 34.) From 1993 to 1996, Stephen Facella continued to receive the monthly payments, which totaled $183,348 over the period. (56.1 Stmt. ¶ 23.) At no time before 1996 did Stephen or Mary Facella, or Alperin inform FOJP Defendants of Meredith Facella's death. (56.1 Stmt. ¶ 22.)

  Stephen and Mary Facella entered into divorce proceedings in Florida sometime in 1996. (56.1 Stmt. ¶¶ 19, 22.) At this time, FOJP Defendants became aware for the first time that the monthly payments should not have been made. They accordingly offset the total amount of those monthly payments ("post-death monthly payments") from the lump-sum payment due in 1997; the entire payment was offset. (FOJP Def. Memo. of Law at 8; Ellmer Depos. at 52-56.)

  In 1998, Plaintiff's divorce from her husband became final. (56.1 Stmt. ¶ 19.) In their divorce settlement, Stephen Facella gave Plaintiff his share of the remaining two payments in 2002 and 2007. (Id. ¶ 20.) Neither of those payments, to the Court's knowledge, have been made.

  Plaintiff then brought this diversity action pursuant to 28 U.S.C. § 1332, alleging four causes of action against the FOJP Defendants. Specifically, she seeks monetary damages from Defendants based on: 1) purported violations of the Compromise Order, 2) breach of fiduciary duty, 3) breach of contract, and 4) negligence. (Compl. ¶¶ 30-48.) On December 16, 1999, Plaintiff dismissed her claims against First Colony with prejudice; however, First Colony remains a defendant in the case because the FOJP Defendants brought counterclaims against it. (Stip. of Withdrawal, Dec. 16, 1999; FOJP Def. Ans. ¶¶ 78-81.) They also served a Third-Party Complaint against Stephen and Alperin, alleging a violation of the Appointment Order and a claim of contribution or indemnity. (3d Party Compl. ¶¶ 48-58.) Finally, the FOJP Defendants obtained a default judgment against Stephen Facella on April 30, 1999.

  Pursuant to the Court's Scheduling Order, Plaintiff and FOJP Defendants cross moved for Summary Judgment on all four claims contained in the Complaint; Third Party Defendant Alperin moved for Summary Judgment on Third Party Plaintiffs FOJP and Montefiore's claims. (Sch. Order, Mar. 28, 2002.). Defendant First Colony also moved for summary judgment on FOJP Defendants' counterclaims. For the reasons that follow, Plaintiff's Motion is DENIED; FOJP's Motion is GRANTED. ...

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