To be Argued by:
TIMOTHY J. O’SHAUGHNESSY
New York County Clerk’s Index No. 113895/01
New York Supreme Court
Appellate Division-First Department
RALPH H. SPEKEN and STEPHANIE Z. SPEKEN, as Co-Administrators of the
Estate of SETH B. SPEKEN, deceased and RALPH H. SPEKEN and
STEPHANIE Z. SPEKEN, Individually,
— against —
COLUMBIA PRESBYTERIAN MEDICAL CENTER,
BRIEF FOR DEFENDANT-RESPONDENT
McAL00N & FRIEDMAN, P.C.
Attorneys for Defendant-Respondent
116 John Street
New York, New York 10038
NEW YORK SUPREME COURT
APPELLATE DIVISION: FIRST DEPARTMENT
RALPH H. SPEKEN and STEPHANIE Z. SPEKEN, as
Co-Administrators of the Estate of SETH B.
SPEKEN, deceased, and RALPH H. SPEKEN and
STEPHANIE Z. SPEKEN, individually,
COLUMBIA PRESBYTERIAN MEDICAL CENTER,
Plaintiffs appeal from the order of the Supreme Court, New York County (Bransten, J.) entered March 18, 2002 that granted the motion of Defendant-Appellant New York-Presbyterian Hospital s/h/a Columbia Presbyterian Medical Center for dismissal of this action on res judicata grounds (3-9).1
Did the Supreme Court err in dismissing this action on res iudicata grounds where plaintiffs settled a prior medical malpractice action against defendant, their motion to set aside the settlement was denied by the Supreme Court, this Court affirmed the Supreme Court, and plaintiffs now have brought a new action seeking to declare void one of the key provisions of the settlement agreement?
1 Numbers in parentheses refer to pages in the Record on Appeal.
Plaintiffs, husband (a psychiatrist) and wife, brought an action in medical malpractice for the alleged pain and suffering and wrongful death of their son while an inpatient at defendant’s hospital. Their son had been living at home, was unmarried and unemployed. He died of a pulmonary embolism in his sixth day of hospitalization.
Plaintiffs sued as administrators of their son’s estate and in their individual capacities. On July 8, 1999, after numerous settlement conferences attended by both plaintiffs before Justice Heitler, and on the eve of trial, plaintiffs and defendant agreed to resolve the case. The settlement agreement was reduced to writing in a general release that laid out the terms, which were: the case would be discontinued; all parties waived all claims they might have against each other; plaintiffs would receive $500,000; the settlement would be confidential; and there would be no publicity about the case itself. The last of these terms specifically provided that plaintiffs would shut down a website they had created in which they not only set forth their own vitriolic views of defendant’s medical treatment, the doctors, nurses and hospital, defendant’s lawyers and the judiciary. That the website would be shut down was specifically and clearly made a part of the settlement agreement (set forth below)
Plaintiffs signed the settlement agreement and testified under oath as follows (37-41)
THE COURT: It is the Court’s
understanding that this matter has been resolved.
Mr. Moore, do you want to spell out the
terms of the settlement before you have your clients under oath?
MR. MOORE [plaintiffs’ attorney] : The settlement
agreement which you signed provides for payment to the two of you of
$500,000. You realize that’s reduced by disbursements and
contingencies, fees, which your counsel has explained to you.
Secondly, the agreement provides that both parties release
their rights against each other in consideration of the amount
paid, and [it] also provides for confidentialities, as set out in the a
agreement [sic] itself, and, as I understand it, you have both
agreed of your own free will, having read and understood the
document, that this is a general release and settlement that you
wish to enter into.
THE COURT: I’m going to put the parties under oath at this point.
BY THE COURT:
Q Dr. Speken, do you understand the terms of the settlement?
Q And do you agree to these terms, sir?
Q And do you understand, as your attorney just indicated, that the full sum of
the settlement is $500,000 from which there will be a reduction first of any
disbursements which were laid out on your behalf by your counsel, and then
the sum will be reduced by your agreement that you have with Mr. Moore in
terms of his retainer, and the balance will go to you.
Q Do you have any questions about that financial arrangement at this point?
Q And, sir, are you doing this of your own free will?
Q Has anybody forced you into this?
Q And have you taken any type of medication or alcohol today that would have
in any way affected your judgment in making this decision?
Q Have you read what is referred to as the General Release, sir, and is that
your signature on page 3?
A Yes, it is.
Q And do you have any questions with regard to this release, sir?
BY THE COURT:
Q Mrs. Speken, do you understand the financial agreement as your attorney
has put it on the record?
Q And you understand that from the sum of $500,000 there will be a reduction
of disbursements and then attorney’s fees?
Q And have you entered into this agreement of your own free will?
Q And have you taken any type of medication or alcohol which would in any
way affect your judgment today?
Q Do you have any questions whatsoever with regard to this settlement?
Q And did you read this General Release, ma ‘ am?
Q And is this your signature on page 3 of the General Release?
A It is.
Q And do you have any questions at all with regard to this document?
Q And I ask each of you again if there are any questions with regard to either
the General Release which you have signed or the settlement itself?
DR. SPEKEN: No.
MRS. SPEKEN: No.
THE COURT: And you understand there is a
confidentiality agreement here with regard to
this incident in this hospital?
MRS. SPEKEN: Yes.
THE COURT: Do you understand that, sir?
DR. SPEKEN: Yes.
The settlement agreement, which was signed by both plaintiffs, notarized and given to defense counsel, was unambiguous and, as demonstrated above, had been read and understood by both plaintiffs. It stated, in relevant part, that defendant will pay plaintiffs $500,000 and that the parties release each other from all claims they may have (33, 35) . It contains the following Confidentiality Provision (34-35)
This Release and settlement is confidential. Neither plaintiffs, nor any
attorney, agent or individual acting on their behalf shall publicize or
disclose the existence, circumstance or terms of this Release or
settlement except as required by law or regulation.
The Releasors [plaintiffs] further agree that neither they nor
any attorney, agent or individual acting on their behalf shall
be interviewed, discuss or otherwise disseminate or
publicize information about the allegations made in the
above lawsuit, decedent’s care and treatment at defendant
hospital, the names or description of any individual involved
in the decedent’s hospitalization or the hospital itself.
The Releasors agree that they shall immediately and
permanently expunge their website located at
www.med-malpractice.com and shall not reissue, open or
create another Internet accessible site or website
concerning the allegations in this lawsuit, the personnel,
physicians, nurses and hospital involved and/or the medical
care and treatment rendered to the decedent by the
defendant and its medical staff.
* * *
The Releasors agree that if they or their agents violate the
confidentiality and nondisclosure provisions of this Release
and settlement, plaintiffs shall be liable to the defendant,
hospital, for the full amount of the consideration recited
herein and defendant, hospital, will have the right to enter
judgment against plaintiffs for said amount. Should plaintiffs
contest defendant’s allegation that they breeched [sic] these
provisions, such allegations and issues shall be submitted for
arbitration to an individual arbitrator mutually agreed upon
by both sides, or, alternatively, to the American Arbitration
The settlement agreement was signed by plaintiffs the same day as the allocution and open court settlement (35). The website was shut down for several months shortly afterward but then wasresurrected and is in operation to the present day ( see 5; www.med-ma1practice . com)
Plaintiffs’ efforts to undo the terms of the settlement began only after a fee dispute arose about one month after the settlement between their attorney of record and the attorney hired to try the case (124). As they did unsuccessfully in the prior action, here plaintiffs once again attempt to re-write the terms of the settlement so that they can keep the $500,000 but not have to abide by the Confidentiality Provision and in particular their promise to shut down the website, a Provision and promise most clearly bargained for by defendant. This lawsuit is just a second attempt to get what this Court already has told them they may not have: both the $500,000 and relief from the promise that the website will be shut down.
In his supporting affirmation trial counsel Richard Frank raised several charges of misfeasance on the part of attorney of record Thomas R. Moore (202). Mr. Moore responded with an affirmation denying Mr. Frank’s charges of misfeasance and raising charges of misfeasance against Mr. Frank (202). Over three months after the settlement and over two months after Mr. Frank’s motion, plaintiffs moved to vacate the settlement and, specifically, the Confidentiality Provision (44-65, 202) . The reason for the relief sought was “fraud,” although all the allegations in plaintiffs’papers that could be understood as allegations of fraud were of fraud on the part of their own attorneys (44, 44-69)
The Supreme Court (Heitler, J.), after carefully reviewing the facts, set forth the case law establishing that there is a strong public policy in favor of enforcement of settlement agreements and that an open court settlement backed by an allocution such as here will not be vacated without concrete evidence that the settlement was procured by fraud or coercion (134-35) The Court then held that the record revealed no competent evidence of fraud, duress or other cause sufficient to invalidate the settlement (136) The Court quoted from the transcript of July 8, 1999 the statements by plaintiffs that they were entering into the settlement of their free will (137-38) The Court also noted that plaintiffs admitted on the motion that they had no direct proof of coercion (other than their own testimony) and that plaintiffs were intimately involved in the settlement process (138)
Finally, the Court found that throughout the lawsuit plaintiffs were represented by a lawyer of their choosing and that their present accusations appeared to be nothing more than postsettlement expressions of dissatisfaction (142) However, the Court stated, a settlement will not be vacated because a party has reconsidered whether the terms previously accepted are advantageous or not (142)
Plaintiffs appealed and this Court unanimously affirmed, stating simply, “There is no basis shown to set aside the stipulation of settlement entered into in open court after full allocution by the court” (230) (citations omitted)
Plaintiffs, having lost their effort to re-write the settlement agreement, then simply commenced a new action seeking the same relief. The complaint contains two causes of action, each of which, contend plaintiffs, warrants voiding and nullifying the Confidentiality Provision. The first alleges that defendant’s medical treatment was criminal in nature and that they cannot be silenced about a crime (239-41). In the second cause of action plaintiffs allege that as a matter of public policy the right of the public to know about medical malpractice supersedes defendant’s right to enforcement of the Confidentiality Provision (241). Plaintiff seek a declaration that the Confidential Provision is void as against public policy “and restoring plaintiffs’ First Amendment Rights” (241)
Defendant moved to dismiss this action on res iudicata grounds.
The Supreme Court granted defendant’s motion and dismissed the action (3-9) . The Court noted that plaintiffs take the position that this action is not barred by res iudicata because in this action they seek to litigate issues that were raised by them in the prior action, viz., the alleged criminality of defendant’s conduct and the legality of the Confidentiality Provision, but were never explicitly decided by the Supreme Court or this Court (7) . The Court stated, however, that res iudicata applies to all claims that actually were or could have been litigated in the prior action (7). The Court noted also that all claims that could have been litigated are barred regardless of whether the Court actually addressed them in the prior action (8).
Accordingly, the Court held that this action is barred by res iudicata (8). The Court stated (8)
The Spekens had an opportunity to fully litigate,
and indeed did fully litigate, the validity of the
settlement agreement. In fact, the Spekens
concede that they raised the very issues that are
the subject of this action in their earlier action
before Justice Heitler. If the Spekens believed
that in its March 2000 decision the court
overlooked the issue of whether the settlement
agreement violated public policy, their remedy
was to seek reargument or raise the issue on
appeal in a timely manner.
The Court thus granted defendant’s motion to dismiss (9)
Plaintiffs subsequently commenced an action against Mr. Moore (Sup Ct, NY Co No 114722/02)
THE SUPREME COURT WAS CORRECT IN DISMISSING THIS ACTION ON THE GROUND OF RES JUDICATA.
Res judicata bars the litigation not only of claims and issues that were litigated in a previous action, but also of claims and issues that could have been litigated in the previous action. O’Brien v. City of Syracuse, 54 NY2d 353, 357, 445 NYS2d 687 (1981); Smith v. Russell Sage College, 54 NY2d 185, 192-94, 445 NYS2d 68 (1981); Reilly v. Reid, 45 NY2d 24, 30, 407 NYS2d 645 (1978); Troy v. Goord,___AD2d ___, 752 NYS2d 460 (4th Dept, 2002); Sandcham Realty Corn. v. Taub, 299 AD2d 220, 752 NYS2d 15 (1st Dept, 2002); Ellis v. Abbey & Ellis, 294 AD2d 168, 742 NYS2d 225 (1st Dept), leave to appeal denied, 98 NY2d 612, 749 NYS2d 3 (2002); In re Estate of Hofmann, 287 AD2d 119, 733 NYS2d 168 (1st Dept, 2001); Carella v. Collins, 272 AD2d 645, 707 NYS2d 526 (3d Dept, 2000); Newton Garment Carriers, Inc. v. Consolidated Carriers Corp., 250 AD2d 482, 673 NYS2d 631 (1st Dept, 1998); Coleman v. Chaibane Properties, Inc., 188 AD2d 413, 592 NYS2d 245 (1st Dept, 1992), motion for leave to appeal dismissed, 81 NY2d 1007, 599 NYS2d 806 (1993), leave to appeal denied, 84 NY2d 803, 617 NYS2d 137 (1994); Nottenberg v. Walber 985 Co., 160 AD2d 574, 554 NYS2d 217 (1st Dept, 1990); Boorman v. Deutsch, 152 AD2d 48, 547 NYS2d 18 (1st Dept, 1989), appeal dismissed, 76 NY2d 889, 561 NYS2d 550 (1990). The second action or motion is barred even if the plaintiff relies on different theories or seeks a different remedy. O’Brien, 54 NY2d at 357, 445 NYS2d 687; Smith, 54 NY2d at 192-94, 445 NYS2d 68; Reilly, 45 NY2d at 30, 407 NYS2d 645; Kleibert v. General Electric Co., 254 AD2d 197, 679 NYS2d 566 (1st Dept, 1998) motion for leave to appeal dismissed, 93 NY2d 957, 694 NYS2d 634 (1999); Castellano v. City of New York, 251 AD2d 194, 674 NYS2d 364 (1st Dept), appeal dismissed, 92 NY2d 919, 680 NYS2d 458, leave to appeal denied, 92 AD2d 817, 684 NYS2d 489 (1st Dept, 1998), cert. denied, 526 US 1131, 119 S Ct 1804 (1999) ; Brooklyn Welding Corp. v. City of New York, 198 AD2d 189, 604 NYS2d 87 (1st Dept, 1993) motion for leave to appeal dismissed, 83 NY2d 795, 611 NYS2d 128 (1994) ; Coleman, 188 AD2d 413, 592 NYS2d 245; Nottenberg, 160 AD2d 574, 554 NYS2d 217.
The second attempt to litigate is barred if the claims or theories in the second attempt arise from the same facts as the first. Sud v. Sud, 227 AD2d 319, 642 NYS2d 893 (1st Dept, 1996)
In short, parties are not permitted a second bite at the apple if the theory in the second litigation was as available at the time of the first as it is at the time of the second. Smith, 54 NY2d at 194, 445 NYS2d 68.
Here, plaintiffs challenge the Confidentiality Provision on a basis that is solely legal, viz., that it is against public policy because it allegedly requires plaintiffs to keep silent about a crime and because, allegedly, the right of the public to know about medical malpractice supersedes defendant’s rights under the settlement agreement. Both of these arguments are simple, straightforward legal arguments that could have been raised in the prior action when plaintiffs moved for relief from the settlement agreement. As in Smith, these arguments were as available then as they are now.
The present case thus is controlled by the principles stated above and is similar to cases in which a plaintiff sought to challenge a contract but had previously been held in default under that contract, Newton, 250 AD2d 482, 673 NYS2d 631; Brooklyn Welding, 198 AD2d 189, 604 NYS2d 87, and in which a party sought, on a new theory, to overturn an order he previously had appealed from, Carella, 272 AD2d 645, 707 NYS2d 526. Plaintiffs previously brought a challenge to the settlement agreement and cannot now avoid the principle of res iudicataby challenging only a part of it on a theory they thought up only after their previous challenge failed.
Plaintiffs argue that res iudicata allegedly does not apply because their arguments herein were raised in the prior action but not addressed in the decisions of the Supreme Court and this Court. We note first that this is a concession that their arguments herein could have been raised in the prior action and thus that analysis can end right there. In addition, however,plaintiffs cite no case, and we are aware of none, that remotely supports the proposition that res iudicata does not apply if the decision in the prior action does not address the arguments raised in the second action. As the Supreme Court correctly noted, if plaintiffs believed that the Supreme Court or this Court overlooked an argument they made, their remedy was to move for reargument (8)
At the risk of overkill we note that it is well-settled that the public policy of the State of New York strongly favors the enforcement of settlements. Denberg v. Parker Chapin Flattau & Klimpl, 82 NY2d 375, 383, 604 NYS2d 900 (1993); Hallock v. State of New York, 64 NY2d 224, 230, 485 NYS2d 910 (1984); Calavano v. New York City Health & Hospitals Corp., 246 AD2d 317, 667 NYS2d 351 (1st Dept, 1998). It also is recognized that settlement agreements may include confidentiality provisions. Anonymous v. Anonymous, 233 AD2d 162, 649 NYS2d 665 (1st Dept, 1996); Trump v. Trump, 179 AD2d 201, 582 NYS2d 1008 (1st Dept) , appeal dismissed, 80 NY2d 892, 587 NYS2d 907, leave to appea1 denied, 80 NY2d 760, 591 NYS2d 138 (1992); see generally Abramovich v. Board of Education, 46 NY2d 450, 456, 414 NYS2d 109, cert. denied, 444 US 845, 100 5 Ct 89 (1979) (parties may waive constitutional rights in settlement agreement) ; Romero V. Martinez, 280 AD2d 58, 721 NYS2d 17 (1st Dept, 2001) (parties may waive fundamental rights in settlement agreement); Forty-Seventh-Fifth Co. v. Nektalov, 225 AD2d 343, 638 NYS2d 625 (1st Dept, 1996) (granting preliminary injunctionlimiting speech based on term in lease) . If plaintiffs were to prevail on their argument that confidentiality provisions in settlement agreements in medical malpractice actions should never be enforced, many fewer medical malpractice cases will be settled.
And if plaintiffs were correct, there would be no logical basis on which to limit this ruling to medical malpractice cases, because any subject on which the Courts may grant relief is deserving of public scrutiny, plaintiffs contend that “the public … can only benefit from a complete and public airing of the details of what really happened” (Pltf. Br. at 11). But “a complete and public airing” would happen only at a trial. This reasoning would bar all settlements.
The very first point made in plaintiffs’ brief is that this action allegedly is not barred by res iudicata because the settlement agreement allegedly could be set aside only by a plenary action such as this (Pltf. Br. at 6). This argument was not raised below and thus is not properly before this Court. E.g., Rivera v. Pocono Whitewaters Adventures, 241 AD2d 381, 660 NYS2d 723 (1st Dept, 1997); Sosa v. Cumberland Swan. Inc., 210 AD2d 156, 621 NYS2d 7 (1st Dept, 1994). It also is incorrect. Some cases express the idea that a party may not move to set aside a settlement agreement in a case once a judgment has been entered on the settlement, on the theory that there is no longer an action in which to make a motion, but this idea seems out-of-date at this point. We notealso that plaintiffs certainly did not believe this earlier, when they moved in the prior action to set aside the settlement agreement.
Finally, this second lawsuit only pretends to be about regaining the ability to speak (after plaintiffs previously agreed to forfeit it) . Although they initially shut down the website after agreeing to do so, they subsequently resurrected it. Plaintiffs constantly add to and update the website including comments about their new legal maneuvers and indeed the papers on the present motion! Thus, it is clear, despite what they say, that plaintiffs are not suing in order to regain the ability to speak, because they have been doing that ever since they reestablished their website. The hospital cannot physically prevent plaintiffs from speaking nor has it in any way tried to do so. After agreeing to the settlement, plaintiffs faced the choice between restoring the website and forfeiting the settlement proceeds, on the one hand, and maintaining confidentiality and receiving the proceeds, on the other. They freely chose to restore the website. Now, by this lawsuit, plaintiffs are trying to both violate the confidentiality Provision they agreed to under oath and get the money, money that defendant agreed to pay only if plaintiffs would abide by the confidentiality Provision.
The order appealed from should be affirmed.
McALOON & FRIEDMAN
by: TIMOTHY J. O’SHAUGHNESSY
Attorneys for Defendants.
LAURA R. SHAPIRO,
TIMOTHY J. O’SHAUGHNESSY,
March 3, 2003