Plaintiff commenced this medical malpractice action against, among others, Doctor Maria Fort (hereinafter "Dr. Fort"). He claims that she failed to diagnose and treat the hydrocephalus he suffered when he was approximately one year old, between April 2002 and June 2003. He seeks to recover his damages, in pertinent part, from Dr. Fort for the injuries he sustained, to impose vicarious liability on Bellevue ^[FN1] for Dr. Fort's alleged malpractice, and to impose liability on Ellis ^[FN2] as Bellevue's successor. Issue was joined, discovery is complete and a trial date certain is set (October 6, 2014).

Ellis now moves for summary judgment, claiming that successor liability does not attach to it. Plaintiff opposes the motion and cross moves for summary judgment finding that Ellis is Bellevue's successor as a matter of law. Ellis opposes the cross-motion. Plaintiff also moves for partial summary judgment on its vicarious liability claim against Bellevue. Bellevue opposed the motion. Because Ellis established its entitlement to summary judgment on the successor liability issue, and no issue of fact was raised, its motion is granted. This portion of Plaintiff's motion is, in turn, denied. Plaintiff did demonstrate, however, his entitlement to judgment as a matter of law on his partial summary judgment motion against Bellevue.

It is well established that "[w]hen pursuing summary judgment, the movant bears the threshold burden of tendering evidentiary proof in admissible form establishing entitlement to judgment as a matter of law." (Chiarini ex rel. Chiarini v County of Ulster, 9 AD3d 769 [3d Dept 2004]; Alvarez v Prospect Hospital, 68 NY2d 320 [1986]; CPLR �3212). This "burden may not be met by pointing to gaps in plaintiff's proof." (DiBartolomeo v St. Peter's Hosp. of City of Albany, 73 AD3d 1326 [3d Dept 2010]; Dow v Schenectady County Dept. of Social Services, 46 AD3d 1084 [3d Dept 2007]; Antonucci v Emeco Industries, Inc., 223 AD2d 913 [3d Dept 1996]; Alvarez v Prospect Hospital, 68 NY2d 320 [1986]). Moreover, the "facts must be viewed in the light most favorable to the non-moving party." (Vega v Restani Const. Corp., 18 NY3d 499, 503 [2012], quoting Ortiz v Varsity Holdings, LLC, 18 NY3d 335 [2011]). "If the movant meets this initial burden, the opposing party is required to submit evidence which raises a material issue of fact to preclude an award of summary judgment." (Ware v Baxter Health Care Corp., 25 AD3d 863, 864 [3d Dept 2006]). [*2]

Considering the successor liability motions first, "[a] corporation that purchases another corporation's assets is not liable for the seller's torts, subject to [the] exceptions outlined in Schumacher v Richards Shear Co. (59 NY2d 239 [1983])." (Semenetz v Sherling & Walden, Inc., 7 NY3d 194, 196 [2006]). Applicable here, an exception applies and "[a] corporation may be held liable for the torts of its predecessor if... there was a consolidation or merger ^[FN3] of seller and purchaser [or]... the purchasing corporation was a mere continuation of the selling corporation." (Schumacher v Richards Shear Co., Inc., 59 NY2d 239, 245 [1983][emphasis added]).^[FN4] Contrary to Plaintiff's claim, the Court of Appeals specifically considered and declined to adopt the "continuity of enterprise" exception. (Id. at 245). As such, "continuity of enterprise" will not be further addressed.

Here, Ellis first established its entitlement to judgment as a matter of law on the "de facto merger" exception.

"Under the concept of de facto merger, a successor that effectively takes over a company in its entirety should carry the predecessor's liabilities as a concomitant to the benefits it derives from the good will purchased." (State Farm Fire & Cas. Co. v Main Bros. Oil Co., 101 AD3d 1575, 1578 [3d Dept 2012], quoting Winch v Yates Am. Mach. Co., 205 AD2d 1001 [3d Dept 1994][internal quotation marks omitted]). A "de facto merger" inquiry focuses upon the following factors: "(1) continuity of ownership; (2) cessation of ordinary business operations and the dissolution of the selling corporation as soon as possible after the transaction; (3) the buyer's assumption of the liabilities ordinarily necessary for the uninterrupted continuation of the seller's business; and (4) continuity of management, personnel, physical location, assets and general business operation." (In re New York City Asbestos Litig., 15 AD3d 254, 256 [1st Dept 2005]). "These factors are analyzed in a flexible manner." (AT & S Transp., LLC v Odyssey Logistics & Tech. Corp., 22 AD3d 750, 752 [2d Dept 2005]; Tap Holdings, LLC v Orix Fin. Corp., 109 AD3d 167 [1st Dept 2013]).

In support of its motion Ellis demonstrated, as is largely uncontested, its acquisition of Bellevue. By Asset Transfer Agreement, dated as of October 31, 2007 (hereinafter "Agreement"), Bellevue and Ellis recognized that:

The Commission on Health Care Facilities in the 21st Century (the "Berger Commission") in its November 28, 2006 Final Report mandated ^[FN5] (i) that Bellevue close no later than June 30, 2008 and (ii) that Bellevue's maternity, neonatal, eating disorders, and mobile outpatient education and screening services be added to another hospital in Schenectady County.'

To ensure the continued and uninterrupted provision of Women's Health Services between the Relinquishment Date and the Closing Date, Bellevue and Ellis entered an Asset Lease Agreement dated as of November 1, 2007 (hereinafter "Lease"). Both the Lease and the Agreement referred to Agreement Schedule 2 to identify the items leased/transferred to Ellis. Similarly, Agreement Schedule 3 listed the assets Bellevue retained under both the Lease and Agreement. Although the Lease was not submitted, Bellevue's former Executive Vice President, Patti Hammond ^[FN7], described it as requiring Ellis to make only a nominal payment.

With this proof Ellis sufficiently demonstrated the inapplicability of factor two: when Bellevue's ordinary business operations ceased it was not dissolved as soon as possible after the transaction. It is uncontested that Bellevue's pre-Agreement ordinary business operation was the running of its hospital, which ended when Bellevue relinquished its Operating Certificate on November 1, 2007. Bellevue remained in existence, however, for another three years and three months. Then, according to the New York State Department of State Corporate Data Sheet Ellis submitted Bellevue was dissolved on February 4, 2011. Moreover, the Agreement itself prohibited dissolution "as soon as possible." It obligated Bellevue, "for eight (8) months after the Closing Date[, to]... maintain its corporate existence and remain a not-for-profit corporation in good standing in the State of New York." While the transaction did not actually close on the Agreement's January 31, 2008 Closing Date, according to Ms. Hammond and the documentary evidence Ellis submitted, the closing did occur before October 2008. With such delay of more than two years between closing and dissolution, Ellis again demonstrated that Bellevue was not dissolved "as soon as possible after the transaction."

Ellis similarly demonstrated that the above "dissolution" factor cannot be established with proof that Bellevue was "shorn of its assets and ha[d] become, in essence, a shell." (Fitzgerald v Fahnestock & Co., Inc., 286 AD2d 573, 575 [1st Dept 2001]). As set forth above, Agreement Schedule 3 specifically listed the assets Bellevue retained. It neither leased nor transferred:

"(a) all cash, cash equivalents and all Accounts Receivable; (b) all minute books, stock Records and Corporate seals; (c) the Cottage Lease together with the right of ingress and egress to such premises and right to use adjacent parking lots in common with other Tenant; (d) those rights of Bellevue related to prepaid charges or expenses, deposits, claims for refunds and rights to offset in respect to any contract, lease, or other agreement, including without limitation the Pre-Existing Leases and Ellis Contracts; (e) all Bellevue insurance policies and rights thereunder except as limited in the Agreement's [*4]Section 8.1; (f) all personnel Records and all other Records that Bellevue is required by law to retain in its possession; (g) all claims for refund of Taxes and other governmental charges of whatever nature; (h) all Bellevue's rights in connectin with and assets of the Employee Plans; (i) all Bellevue's rights under this agreement; and (j) certain Bellevue intangible rights to its corporation's name and to all program materials relative to the "Before Your Baby Basics" course. (emphasis in original)

Because Ellis established that Bellevue was neither dissolved as soon as possible after the transaction nor shorn of its assets to be rendered a shell, Ellis sufficiently demonstrated that Plaintiff cannot prove the second de facto merger factor.

Ellis also established that it did not assume Bellevue's liabilities, the third de facto merger factor. The Agreement made abundantly clear that Ellis was not assuming any of Bellevue's medical malpractice liability. It contained numerous clauses reiterating such non-assumption and included a schedule itemizing the liabilities Bellevue retained. The schedule specifically stated that Bellevue retained all "[l]iability arising out of or relating to products of, or services performed by, Bellevue to the extent provided, sold or performed prior to [November 1, 2007]." The Agreement further required Bellevue to acquire "tail insurance" to cover its professional liabilities after it ceased operations. Moreover, the attorney who represented Ellis in negotiating the Agreement, Jeffrey Alexander, stated that Ellis' "one absolute condition [was]... to ensure that under no circumstances would Ellis assume, or be determined by any party to have assumed... any Bellevue liabilities... including... as Bellevue's successor... [N]either the DOH nor Bellevue ever objected to that request." On this proof Ellis demonstrated that Plaintiff cannot establish the third de facto merger, "assumption of the liabilities," factor.

Ellis similarly demonstrated its entitlement to judgment on the first de facto merger factor, "continuity of ownership." The Agreement explicitly recognized that both Ellis and Bellevue were not-for-profit corporations. Due to such status, the parties agree that Bellevue had no owners or shareholders. In addition, as conceded by Plaintiff, Bellevue had no members either. Instead, according to Ms. Hammond, Bellevue was operated by a Board of approximately ten Trustees. She specifically identified six pre-Agreement Trustees. She also noted that two of the six later served on Ellis' Board of Trustees, and one served on Ellis' foundation board. Despite this later overlap, Ms. Hammond was clear that "as of November 1, 2007, [no] people who had been on the Bellevue... Board [were] on the board of Ellis." Rather, the overlap occurred "some months or years after the transfer agreement was signed." Again, Ellis demonstrated no continuity.

Because continuity of ownership is "the essence of a merger" (In re New York City Asbestos Litig., supra at 256, quoting Cargo Partner AG v Albatrans, Inc., 352 F3d 41 [2nd Cir 2003]) and it is undisputed that no such continuity exists, Ellis demonstrated that this factor weighs heavily in its favor to establish that no de facto merger occurred.

While Ellis offered no proof to establish the inapplicability of the fourth de facto merger factor, "continuity of management, personnel, physical location, assets and general business operation," the absence of such proof is not dispositive. "Given the clear absence of the first [three] de facto merger factors, it does not avail plaintiff that the... fourth factor" is present. (In [*5]re New York City Asbestos Litig., supra at 259 [only the first two factors were absent, and still summary judgment dismissing the successor liability claim was granted]).

Turning to the "mere continuation" exception, Ellis demonstrated its inapplicability as a matter of law. As set forth above, Bellevue continued in existence after it leased and sold its Schedule 2 assets to Ellis. It specifically retained the substantial assets listed in Schedule 3 and employed its "wind down" team. Moreover, the Agreement required Bellevue to continue in existence and Ms. Hammond testified that it did so. Because Bellevue "survived the instant purchase agreement as a distinct, albeit meager, entity... [Ellis] cannot be considered a mere continuation of [Bellevue]." (Schumacher v Richards Shear Co., Inc., 59 NY2d 239 [1983]; Sweatland v Park Corp., 181 AD2d 243 [4th Dept 1992]; Hoover v New Holland N. Am., Inc., 71 AD3d 1593 [4th Dept 2010]; State Farm Fire & Cas. Co. v Main Bros. Oil Co., 101 AD3d 1575 [3d Dept 2012] [" mere continuation,' cannot apply because it requires that the selling/predecessor corporation [Bellevue] be fully extinguished for there to be successor liability, and no dispute exists that [Bellevue] continued in business after the transfer of assets to [Ellis]").

On this record Ellis met its prima facie burden of demonstrating that neither the "de facto merger" nor the "mere continuation" exceptions apply.

In opposition, Plaintiff raised no triable issue of material fact on either the "mere continuation" or the "de facto merger" exceptions. First, his reliance on Ms. Hammond's testimony to establish the "mere continuation" exception's applicability is misplaced. While her testimony demonstrated that Bellevue's post-transfer business changed dramatically, she did not state that it was fully extinguished. Plaintiff's "de facto merger" proof is similarly unavailing. Contrary to Plaintiff's conclusory claim that Bellevue was "shorn of its assets," he offered no proof that the Schedule 3 assets Bellevue retained were worthless. Nor did Plaintiff demonstrate, with evidentiary proof, that Bellevue conducted no business after the transfer. Instead he wrongly relied on the cessation of Bellevue's hospital and related medical operations only, but admitted that Bellevue's wind down operations continued after transfer. Moreover, Plaintiff implicitly conceded that there was no "continuity of ownership" between Bellevue and Ellis. With such proof Plaintiff failed to raise a triable issue of fact, or demonstrate its entitlement to judgment as a matter of law.

Accordingly, Ellis' motion for summary judgment is granted and Plaintiff's motion for summary judgment on the successor liability issue is denied.

Considering next Plaintiff's motion for partial summary judgment on Bellevue's vicarious liability, on this record he offered sufficient proof to meet his prima facie burden.

As is well established, "[u]nder the doctrine of respondeat superior, a hospital may be vicariously liable for the medical malpractice of physicians who act in an employment or agency capacity." (Deltoro v Arya, 44 AD3d 896 [2d Dept 2007]; Bing v Thunig, 2 NY2d 656 [1957]; Hill v St. Clare's Hosp., 67 NY2d 72 [1986]; N.X. v Cabrini Med. Ctr., 97 NY2d 247 [2002]).

Here, Plaintiff demonstrated that Bellevue employed Dr. Fort, whose alleged malpractice caused his injury. With both Bellevue's former CEO's affidavit and Dr. Fort's deposition testimony, Plaintiff demonstrated that Bellevue employed Dr. Fort, as its Director of Neonatology, during the time period of her alleged malpractice herein. In addition, Dr. Fort's testimony established that her treatment of Plaintiff, at all times relevant herein, occurred entirely [*6]within the scope of her employment with Bellevue. On such showing Plaintiff demonstrated, as a matter of law, that Bellevue is vicariously liable for Dr. Fort's malpractice.

With the burden shifted, Bellevue raised no triable issue of material fact. In opposition, Bellevue submits its attorney's affirmation only. However, because it is not based upon "personal knowledge of the operative facts [it is of no]... probative value." (2 North Street Corp. v Getty Saugerties Corp., 68 AD3d 1392 [3d Dept 2009]; Groboski v Godfroy, 74 AD3d 1524 [3d Dept 2010]; Zuckerman v City of New York, 49 NY2d 557 [1980]). Moreover, contrary to Plaintiff's attorney's claims, partial summary judgment is not "premature and inappropriate" but rather is wholly authorized by CPLR §3212(g). Nor is it precluded by issues of fact surrounding: Dr. Fort's alleged negligence, independent negligent acts of Bellevue, each Defendants' relative culpability, or any contribution/apportionment claims raised. Instead, such issues remain wholly unresolved. To clarify, one issue is being resolved: Bellevue is vicariously liable for Dr. Fort's malpractice, in the event Plaintiff duly establishes such malpractice at trial.

Accordingly, Plaintiff's motion for partial summary judgment against Bellevue is granted.

This Decision and Order is being returned to the attorneys for Ellis. A copy of this Decision and Order and all other original papers submitted on this discovery dispute application are being delivered to the Albany County Clerk for filing. The signing of this Decision and Order shall not constitute entry or filing under CPLR §2220. Counsel is not relieved from the applicable provision of that section respecting filing, entry and notice of entry.

So Ordered.

Dated: February 11, 2014

Albany, New York_________________________________

Joseph C. Teresi, J.S.C.