Plaintiff GTD Services, Inc. d/b/a BrightStar of North Shore Nassau County ("BrightStar") commenced this action against Defendants Daniel Lewis, a person in his late 80's ("Lewis") and Elizabeth Gershon, as his agent by power of attorney ("Gershon"), based upon a contract under which Plaintiff provided aides who rendered assistance to Daniel Lewis.

The Verified Complaint, dated February 15, 2013, alleges that BrightStar entered into the subject agreement ("Contract"), dated December 14, 2011, with Gershon and Lewis to provide for home health care services (Defendants' Exhibit 6).

The Contract provides that BrightStar will provide:

Paragraph 5.0 of the Contract provides for Defendants' liability in the event Defendants [*2]discharge the services of Plaintiff but separately hired the same aide referred by Plaintiff:

Hiring Process:If I choose to hire a BrightStar employee (defined as a BrightStar employee or former employee who has rendered services for me in the past 6 months) directly before I have used BrightStar services for a period of 12 months, a fee of 30% of full time (2080) hours at the employee's bill rate will apply. After 12 months, the fee is 15%. After 18 months, 12% and after 24 months, 10%.

Further, the Contract states, in Paragraph 1.0, that Defendants will pay 3% interest on all balances over 30 days including collection costs, attorney fees and court fees.

The first cause of action is for breach of contract. It is alleged that Defendants accepted home health care services from December 14, 2011, through June 15, 2012. Plaintiff seeks to recover the sum of $13,728.00 plus "interest at the near maximum allowed statutory rate of 24% per annum from June 15, 2012 (pursuant to Contract stating interest to be 3% per month), plus attorney fees and collection costs." The second cause of action is based upon quantum meruit. The third cause of action seeks recovery for unjust enrichment.

Initially, summary judgment is proper when the proponent sets forth its entitlement by evidentiary proof in admissible form (Zuckerman v City of New York, 49 NY2d 557 [1980]). Once a party makes a sufficient prima facie case for obtaining summary judgment, it then becomes the opponent's burden to produce proof in admissible form to show that there indeed exists a genuine triable issue of fact (McDermott v South Farmingdale Water District, 167 AD2d 517 [2d Dept 1990]).

Moreover, a party opposing a motion for summary judgment must lay bare his proof to demonstrate the existence of a genuine material issue of fact (Illumalights Manufacturing, Inc. v Neo Ray Products, Inc., 124 AD2d 644 [2d Dept 1986]). Only the existence of a bona fide issue raised by evidentiary facts and not one based on conclusory or irrelevant allegations will suffice to defeat a summary judgment motion (Rotuba Extruders, Inc. v Ceppos, 46 NY2d 223 [1978]).

In support of the motion at bar, Defendant Gershon states in her Affidavit dated April 11, 2014, that her father Defendant Lewis is 88 years old and suffers from artery disease, congestive heart failure, total blindness, hearing impairment and neurogenic bladder. He needs daily assistance with permanent in-dwelling Foley catheter care, food preparation, feeding himself, daily bathing activities, taking medications, bathroom functions, and other activities of daily living.

Gershon states that she decided to hire a nurse or home health aide to assist with her father. She contacted BrightStar to obtain assistance and believed that BrightStar was licensed as a home health care services agency. Gershon and Lewis entered into a Contract with BrightStar to provide for such services.

In January of 2012, BrightStar assigned Heather Parker to provide home health aide services to Lewis at his home in Bayside, New York for 2 hours a day, 5 days a week. BrightStar was paid $22 per hour, of which Ms. Parker received $12 and BrightStar retained $10.

On March 29, 2012, BrightStar called to inform Gershon that Ms. Parker was terminated and that another caregiver would be found for Lewis. Ms. Parker left her employment on April 4, 2012.

Lewis was without an aide because BrightStar failed to replace Ms. Parker. Gershon's sister, Melissa Meyer (a doctor) called Ms. Parker on or about April 14, 2012, to have her come back to work for Lewis. Ms. Parker returned to her duties on or about April 15, 2012. On April 29, 2012, 30 days after stating that it would find a replacement, BrightStar contacted Gershon with another aide, who was not accepted by Defendants.

On June 15, 2012, BrightStar sent a demand letter ("Letter") claiming that Gershon and Lewis breached the Contract and demanding damages therefor. Gershon claims that BrightStar breached the Contract:

Defendants also submit an Affidavit from Ms. Parker, dated April 15, 2014, in support of their motion for summary judgment. Ms. Parker states that she was hired by BrightStar in December of 2011 to provide "home health aide services to various patients and clients to whom I was referred by BrightStar." Ms. Parker worked at Lewis' home as a home health aide. She states that the reference "HHA" in the BrightStar/Lewis Contract is a well-known acronym in the home care industry for "home health aide."

Ms. Parker states that Lewis suffers from physical and mental disabilities, including total blindness. She provided home health aide services to Lewis for 2 hours per day, 5 days a week, which totals 10 hours per week or 520 hours on an annual basis. She was paid $12 per hour and BrightStar billed $22 per hour.

Ms. Parker states that she left her employment due to her plans to have surgery, and based upon her dissatisfaction with BrightStar for not giving her more money after she referred a new client [*3]to BrightStar.

Ms. Parker reports that she left BrightStar's employ on April 4, 2012. Ten (10) days later, she was contacted by Melissa Meyer to return to work for Lewis because BrightStar had failed to send a replacement aide.

Gershon indicates that they received the Letter (Defendants' Exhibit 9) dated June 15, 2012, from Don Nickel, CSA and owner of BrightStar, stating that $13,728.00 was owed because Defendants had hired Ms. Parker directly and discharged BrightStar:

In opposition, Plaintiff submits the Affidavit of Don Nickel ("Nickel"), dated June 24, 2014. Nickel states that he is the CEO of GTD Services, Inc., doing business as BrightStar of North Shore Nassau County. BrightStar is engaged in providing home companion care services which were provided to Lewis from December 14, 2011 to June 15, 2012.

Defendants move for summary judgment, in part, on the grounds that BrightStar was unlicensed at the time that it provided the services of Ms. Parker as a home health aide. BrightStar states that it only provided home companion care services and thus a license was not required. Nickel makes the following distinction between home companion and home health care services:

Nickel claims that the parties agreed that companion care services were to be provided to Lewis. The Contract dated December 14, 2011, was executed between the parties. Nickel points to the form (Plaintiff's Exhibit C) entitled Aide/Homemaker/Companion Plan of Care, dated December 14, 2011, which outlines the services to be performed. On the form, the box "Companion" is checked. Under the Perform box, the following is checked:

and med reminder

The further instructions on the form include:

Gershon supplied a list of services to be provided for Lewis by the aide:

BrightStar claims that it only provided companion care services and not home health services. They did not provide for services which involved total catheter care, daily bathing and assistance with bathroom functions. No license is needed to perform companion care services, whereas a license is required for home health care services.

Ms. Parker is a certified nursing assistant and not a certified home health aide. Ms. Parker signed the Employee Certification dated December 28, 2011, wherein she acknowledged "I understand BrightStar is a Companion Care." She further agreed not to actively seek employment with a BrightStar customer:

BrightStar and Gershon exchanged communications about a replacement. BrightStar identified a new replacement which Gershon agreed to accept, effective April 30, 2012. However, Gershon claims that she called BrightStar and left a message on or about April 22, 2012, indicating that a local person had been retained and the replacement was no longer needed. Apparently, BrightStar didn't get the message. A private investigator hired by Plaintiff determined that Ms. Parker was working for Lewis.

As a result of the breach, BrightStar claims damages of $13,728 for violating Paragraph 5.0 of the Contract. According to Paragraph 26 of Nickel's Affidavit, the [*4]$13,728 is calculated as follows:

The $13,728 is owed based upon a fee of 30% of full time annualized (2080) hours at $22.00 per hour. This amount is sought even though Ms. Parker didn't work full time; Plaintiff has no ability to determine precisely how many hours Ms. Parker worked.

BrightStar's attorney drafted the Verified Complaint (Defendants' Exhibit 1), dated February 15, 2013, wherein Plaintiff admits that it "entered into an agreement with BrightStar for home health services," see Paragraph 5. Paragraph 6 states that "Defendant accepted home health care services from BrightStar from December 14, 2011 through June 15, 2012." The Verified Complaint was verified by BrightStar CEO Nickel, on February 28, 2013. Also attached to the Verified Complaint is the Letter dated June 15, 2012, authored by Nickel, wherein he again refers to BrightStar as providing home care services via its employee Heather Parker. The Letter also states that Heather Parker continued to provide health services after Defendants discharged Plaintiff.

Plaintiff's attorney states that he amended the Verified Complaint by the pleading dated April 12, 2013, wherein he changed the reference from home health care to home companion home services, upon learning of his error. Plaintiff admits that it was unlicensed in 2011 and 2012 to provide home health aide services.

Should summary judgment be granted to Defendants because Plaintiff was not licensed pursuant to Public Health Law Section 3602?

The court finds that Plaintiff was unlicensed at the time it provided the services of Ms. Parker to Defendants from December 14, 2011 through April 4, 2012, and is thus barred from any recovery.

The Contract between Plaintiff and Defendants states that the services to be provided were" "HHA". HHA refers to home health aide. The Letter of Don Nickel (Plaintiff's owner), dated June 15, 2012, twice refers to Plaintiff providing home care services to Defendant. The Verified Complaint, dated February 15, 2013, verified by Don Nickel, CEO, states in Paragraphs 5 and 6 that Plaintiff provided home health care services.

The Amended Verified Complaint, dated April 12, 2013, is a belated attempt to avoid the consequences of Plaintiff's earlier admissions that it was providing home health services. See Rosenblatt v. Venizelos, 49 AD3d 519, 520; 853 NYS2d 578 (2d Dept 2008); Abramov v. Miral Corp., 24 AD3d 397, 398 (2d Dept 2005), Fontana v. Fortunoff, 246 AD2d 626, 627; 668 NYS2d 394 (2d Dept 1998), and New Haven Props v. Grinberg, 293 AD2d 386, 387; 741 NYS2d 206 (1st Dept 2002).

The failure of Plaintiff to be properly licensed causes Plaintiff to forfeit any claim for damages. See Mauceri v. Chassin, 156 Misc 2d 802, 594 NYS2d 605 (Sup Ct, Albany County 1993); Damian Services Corporation v. Freedom Personnel, 188 B.R. 107 (N.D. NY 1995).

Is the liquidated damages clause enforceable?

This court finds that Paragraph 5.0 of the Contract is a penalty and, therefore, not enforceable. The standard for enforcing liquidated damages clauses is:

A liquidated damages clause based upon gross revenue is unenforceable. See McRoberts Protective Agency v. Lansdell Protective, 61 AD2d 655, 403 NYS2d 511 (1st Dept 1978), holding that it is error to base damages upon estimated gross profits rather than estimated net profits.

In the case at bar, Plaintiff seeks to recover 30% of full time (2080) hours at the annualized cost for services or $13,728. The record shows that Ms. Parker worked two hours a day for five days a week. Plaintiff billed Defendants $22 per hour, paid Ms. Parker $12 per hour, and received a net profit of $10 per hour. On an annual basis, Plaintiff's damages would equal $5,200 based upon Ms. Parker working 520 hours a year ($10 net profit per hour which Plaintiff earned times the yearly total of 520 hours). At most, Plaintiff would be entitled to its net profit, if it could provide a basis for recovery. See Weinrauch v. Kashkin, 64 AD2d 897, 407 NYS2d 885 (2d Dept 1978); Scientific Mgt. Inst. v. Mirrer, 29 AD2d 962, 289 NYS2d 338 (2d Dept 1968); and Epstein Engineering P.C. v. Cataldo, 2012 WL 4835533 (Sup Ct, NY County 2012).

The court finds that Paragraph 5.0 of the Contract is unenforceable for two reasons: (1) the damages fixed are disproportionate to Plaintiff's injury, and (2) Plaintiff's actual loss is able to be calculated based upon the hours worked by Ms. Parker.

In Construction by Singletree, Inc. v. Lowe, 55 AD3d 861, 864; 866 NYS2d 702 (2d Dept 2008), the Court voided the liquidated damage clause because:

The above law supports this court's ruling that Paragraph 5.0 is unenforceable.

Is the interest charge of 3% per month found in Paragraph 1.0 valid?

This court holds that the 3% per month on all balances over 30 days violates the public policy evidenced in Penal Law Section 190.40, which makes interest charges of more than 25% per year a criminal offense and unenforceable. See Sandra's Jewel Box v. 401 Hotel, 273 AD2d 1, 708 NYS2d 113 (1st Dept 2000).

1.The Defendants are granted summary judgment because Plaintiff was not licensed as required by Public Health Law Section 3602.

2.The liquidated damages clause is unenforceable because it constitutes a penalty and Plaintiff's damages can be determined.

3.The 3% per month interest charge on all outstanding balances over 30 days violates the spirit of Penal Law Section 190.40 and is, therefore, unenforceable.

4.Given all of the foregoing, Plaintiff's claims in quantum meruit and

So Ordered:

DISTRICT COURT JUDGE

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