Ross v. Louise Wise Services, Inc.

28 A.D.3d 272, 812 N.Y.S.2d 325

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: April 13, 2006
• Status: Published

Opinions

Order, Supreme Court, New York County (Barbara R. Kapnick, J.), entered May 20, 2004, which denied defendant’s motion for summary judgment dismissing the complaint; granted the branch of defendant’s motion to dismiss the second and third causes of action as barred by the applicable statute of limitations; limited plaintiffs’ potential recovery of compensatory damages to the extraordinary out-of-pocket expenses of raising their adopted child to age 21; and denied defendant’s motion to dismiss plaintiffs’ claims for punitive damages, affirmed, without costs.

Nardelli and Sweeny, JJ., concur in a memorandum by Nardelli, J., as follows: In this action, it is alleged that defendant adoption agency concealed and misrepresented the subject infant’s bilateral family history of mental illness/schizophrenia at the time of adoption by plaintiffs, and continued to do so for decades thereafter, thereby hindering plaintiffs’ doctors from making an accurate diagnosis, while plaintiffs’ family unit gradually disintegrated. At issue in this appeal is whether the motion court properly dismissed plaintiffs’ second and third causes of action, sounding in negligence, breach of fiduciary duty and intentional infliction of emotional harm, and allowed plaintiffs’ claim for punitive damages to go forward.

This matter has at its core the adoption of nonparty Anthony Ross, by plaintiffs Arthur and Barbara Ross, through defendant adoption agency, Louise Wise Services, Inc. The complaint, filed in June 1999, seeks compensatory, emotional and punitive damages. The motion court declined to dismiss plaintiffs’ first cause of action for wrongful adoption and fraud, and that branch of the decision is not at issue on this appeal.

Background

Defendant’s adoption file indicates that plaintiffs first contacted the agency in 1960, seeking to adopt an infant, of either sex, “with a background as matchable [sic] as you deem important for the child’s well-being.” An interview was thereafter conducted, during the course of which the interviewer noted that plaintiffs “would be interested in hearing” everything that was known about the parents.

On December 5, 1960, the baby at issue, as yet unborn, was referred for adoption. The referral summary described the child’s biological mother as having had an unhappy childhood, which left many emotional scars, leaving her unable to care for a child. The referral also noted that the mother was unable to complete school because of various psychological factors, and that she affirmatively stated that her home situation was abnormal, and that perhaps she was not normal. The mother further opined that there was “so much sickness in her family,” and that her mother died of leukemia when she was four, and her father was plagued with illness, both physical and mental, including a period of IV2 years during which he was hospitalized for schizophrenia, believing people were trying to poison him. The birth mother herself, according to a contemporaneous report filed by a Louise Wise employee, was under the care of a psychiatrist, who described her as a “girl who was failing in her major adjustments to life . . . failed to maintain matriculation at two colleges; few friends; hostility to most people . . . feelings of hopelessness and isolation,” with a “guarded” prognosis.

The baby’s birth father, as set forth in the referral, had strong feelings regarding “pre-determination” and, prior to the completion of the adoption, was diagnosed as a paranoid schizophrenic, which diagnosis was documented in Louise Wise’s file. The file also included the summary notation that the child’s parents were “disturbed people.”

On March 28, 1961, plaintiffs were informed that a baby was available, that he had been born in a hospital, and that his physical condition was good. The birth mother was described as a bright person, and a high school graduate who later attended a school of design because she had “a talent for this.” The birth father was portrayed as a high school graduate who attended a university for a time and then a school of design, and was currently attending a fine arts school during the day and working at night to finance his courses. Plaintiffs, after seeing the baby and hearing of his background, indicated interest in adopting the child, and after defendant’s representative made several visits to the Ross home between April 1961 and February 1962, an order of adoption was issued in May 1962. Plaintiffs maintain that defendant and its staff made absolutely no suggestion of any mental illness in either of the birth parents, or their families, and that had they known of the infant’s true family history, they would have never agreed to the adoption.

The child, whom plaintiffs named Anthony, began exhibiting signs of abnormal emotional development and by age four, plaintiffs had consulted a social worker regarding Anthony’s abnormally impulsive and hyperactive behavior. The counseling, however, had little effect and by 1970, Anthony had little impulse control, was loud and abusive to guests, would strike Ms. Ross, throw things, use inappropriate language, and walk in his sleep, acting as if someone was trying to hurt him. Plaintiffs, as a result, contacted defendant’s executive director, Florence Kreech, who referred them to Barbara Miller, the head of defendant’s postadoption services.

Plaintiffs maintain that they requested any information available on Anthony’s background, to which Ms. Miller replied that plaintiffs were already in possession of all of Anthony’s medical background information. Ms. Miller testified at a deposition conducted in May 2001 that although it was not yet certain that Anthony was suffering from schizophrenia, “his behavior was aberrant enough to raise questions that that’s where he might be headed.” Ms. Miller, however, did not share this insight with plaintiffs, or information of Anthony’s family history of schizophrenia and mental illness, due to “agency policy.”

Plaintiffs were then referred to Dr. Anne-Marie Weil, a psychiatrist employed by defendant who, although aware of Anthony’s medical history, also neglected to advise plaintiffs of such, despite seeing Anthony on a number of occasions. Anthony’s condition, despite these visits, continued to deteriorate.

Plaintiffs, in 1973, engaged a psychiatrist, Dr. Stella Chess, to assist Anthony and, in conjunction therewith, Ms. Ross wrote to Ms. Miller requesting that all the information the agency had about Anthony’s background be sent to Dr. Chess. Ms. Ross, by this point in time, was in physical fear of Anthony, both for herself and the couple’s other adopted child, Susan, and that as a result, the couple’s marriage was deteriorating because of their inability to agree on how to cope with Anthony’s behavior. Once again, despite being aware of the foregoing familial stress and deteriorating behavior of Anthony, defendant, remarkably, provided no information regarding Anthony’s family history of mental illness and schizophrenia to Dr. Chess.

Ms. Ross, as Anthony’s behavior continued to regress, concluded that it was unsafe for her and Susan to remain in the same house with him and, as a result, they moved out. Plaintiffs were subsequently divorced in 1979 after 26 years of marriage.

Ms. Miller received a call from Ms. Ross in August 1981, at which time she learned that plaintiffs had divorced and that Anthony had remained with his father. Ms. Ross also informed Ms. Miller that Anthony continues to be “disturbed,” has very few friends, is withdrawn, relies on his father for menial jobs, and that Mr. Ross continues to be devoted to him. Armed with this information, Ms. Miller still withheld Anthony’s true medical history.

In June 1982, Anthony appeared at Dr. Weil’s office, without an appointment, asking about a report Dr. Weil had purportedly sent to someone. Ms. Miller noted in her records that “Dr. [Weil] was very concerned and frightened by Tony’s appearance and demeanor. She felt he was a paranoid schizophrenic, capable of violence and wanted me to be aware of this, should Tony ever request an appointment here” (emphasis added). Amazingly, whereas Dr. Weil found it necessary to issue a strong caution to defendant’s staff regarding Anthony, neither Dr. Weil, nor Ms. Miller, saw fit to warn plaintiffs that defendant’s staff psychiatrist had concluded that Anthony was a paranoid schizophrenic capable of violence.

Anthony, over the course of years that he resided with his father, generated numerous stressful incidents including: being arrested for stealing medications from a doctor’s office; harassing neighbors; breaking a surveillance camera specifically placed in the apartment building where he and his father resided to keep watch over him; being the subject of eviction proceedings due to his aberrant behavior; and sabotaging his father’s personal relationships.

In 1983, the New York State Legislature enacted section 373-a of the Social Services Law, which provided: “Notwithstanding any other provision of law to the contrary, to the extent they are available, the medical histories of a child legally freed for adoption and of his or her natural parents, with information identifying such natural parents eliminated, shall be provided by an authorized agency to such child’s prospective adoptive parent; and ... to such child when discharged to his or her own care. The medical histories shall include all available information setting forth conditions or diseases believed to be hereditary, any drugs or medication taken during pregnancy by the child’s natural mother, and any other information which may be a factor influencing the child’s present or future health” (L 1983, ch 326).

In 1985, the Legislature amended the above law to add the requirement that the disclosure be made not only to the child’s prospective parent, but also to the “adoptive parent when such child has been adopted” (L 1985, ch 103), and a second amendment, also enacted in 1985, provided that the disclosed information must incorporate “any psychological information in the case of a child legally freed for adoption or when such child has been adopted” (L 1985, ch 142).

The New York State Legislature, also in 1983, added sections 4138-b,¹ 4138-c and 4138-d to the Public Health Law, which established an “adoption information registry” in the Department of Health, allowing an adult adoptee to register and obtain nonidentifying medical information concerning his/her birth parents. By letter dated December 28, 1983, defendant’s then executive director informed the Department of Health that Louise Wise “has established its own mutual consent adoption registry.” Defendant’s director of training, Roslyn Ganger, testified that it then became the agency’s practice to inform inquirers of their right to register.

In early 1984, Anthony called defendant to schedule an appointment in order to receive background and medical information and Ms. Miller expressly instructed her assistant, who was designated to meet with Anthony,² that nothing was to be said about his family history of schizophrenia. Anthony was also not informed of his right to enroll in the adoption information registry. This information was not disclosed, according to Ms. Miller, “because the agency policy would not permit it.” Ms. Miller, in June 1984, was also informed that Anthony’s birth mother had committed suicide 11 years earlier, another piece of the puzzle that was never revealed to plaintiffs.

In 1994, Ms. Ross called defendant and voiced her belief that Anthony was suffering from attention deficit hyperactivity disorder. Defendant, despite the passage of, and amendments to, section 373-a of the Social Services Law almost 10 years earlier, did nothing to correct Ms. Ross’s misimpression, even though, 12 years earlier, its own psychiatrist diagnosed Anthony as a paranoid schizophrenic capable of violence.

In 1995, Mr. Ross awoke in bed to find Anthony standing on top of him, wielding a large flashlight with the apparent intent to injure him. Not long thereafter, Anthony began throwing stones into the courtyard of their apartment building, at which point Mr. Ross called the Bellevue Hospital Mobile Crisis Unit. Anthony was subsequently diagnosed as suffering from paranoid schizophrenia, and while he was initially placed in a facility for the mentally ill, further erratic behavior toward the facility’s employees resulted in his transfer to the psychiatric ward.

In 1999, due to the constant strain from the continuing difficulties with Anthony, Mr. Ross developed clinical depression so severe, he was hospitalized at Mount Sinai Hospital, where he underwent a series of electroshock treatments, resulting in some permanent memory loss. Ms. Ross also claims to suffer frequent bouts of depression stemming from her divorce and inability to help Anthony.

Defendant, in support of its motion for summary judgment, submitted an affidavit from Anita Longo Sorenson, a social worker, who opined that it was the general opinion and belief of social workers and other professionals in the adoption field in the 1960s and into the early 1980s that nurture played a much greater role than nature in the development of a child.³ Moreover, it was the belief and general opinion of social workers and other professionals in the adoption field at those times that mental illness would not be passed on if a child were placed in a loving environment.

It was also alleged by Ms. Sorenson that the general opinion and belief of social workers and other professionals in the adoption field at those times was that the disclosure of certain information to prospective adoptive parents would interfere with the bonding between adoptive parent and child and prove detrimental to the child, the parents and their relationship. Therefore, it was the practice of social workers and other professionals in the adoption field in the 1960s and into the early 1980s not to disclose information that could be viewed as negative and which was not believed to be hereditary for fear that it would influence the family adversely on how they would nurture the adopted child.

Ms. Kreech testified that defendant’s staff was instructed to never inform parents about schizophrenia in the family of a child offered for adoption, as it was considered “upset[ting].” Ms. Kreech acknowledged that while thought was given to the fact that this was a lifetime responsibility for parents, in those days it was simply not disclosed.

Ms. Miller echoed Ms. Kreech’s testimony regarding defendant’s policy toward disclosing any information about schizophrenia, one concern being that any such disclosure would create anxiety in adoptive parents “so every time the child sneezes, they think something is wrong.” Ms. Miller further testified that when the law changed in 1983, “we told the truth,” but, upon further questioning, backtracked and claimed that defendant did not, in fact, obey the 1983 disclosure laws because the agency’s attorney failed to advise defendant about the new laws until 1990. Ms. Miller’s testimony, however, is problematic at best, as the agenda of a conference held at Louise Wise on November 29, 1983, which was headlined as “The Adoption Registry Law: Implications and Implementation,” lists Ms. Miller as a speaker on the topic “The Impact of the Law on an Adoption Agency’s Practices, Past and Present.” Moreover, defendant’s director of training, Roslyn Ganger, testified that she discussed the Adoption Registry Law with Ms. Miller “[p]robably when it was promulgated.”

Plaintiffs, in sharp contrast, submitted an affidavit from Dr. Dolores Malaspina, an associate professor of psychiatry at Columbia University and research psychiatrist at the New York State Psychiatric Institute, whose work concentrates on schizophrenia. Dr. Malaspina opined, inter alia, that: research, as early as 1911, had established that 90% of schizophrenia cases were inherited; its familial basis has never been seriously contested; early disclosure to Anthony’s family would have led to earlier treatment, minimizing his deterioration and decreasing the enormous stress on his parents, as early diagnosis significantly improves the outcome for those with the disease; and it was difficult to postulate any justification for defendant’s failure to warn plaintiffs that they had assessed Anthony as dangerous. Dr. Malaspina also surmised that the false information given plaintiffs’ family psychiatrist made it 50 times less likely that he would be correctly diagnosed, as many other psychiatric disorders present with similar manifestations.

Dr. Malaspina noted that the type of chronic psychosocial stress experienced by caregivers of a child with schizophrenia is an absolutely accepted pathway to the development of severe major depression. Dr. Malaspina went into the symptoms that would be experienced, in detail, and noted a caregiver’s tendencies toward self-blame, which would have been ameliorated if plaintiffs had been advised of Anthony’s predisposing genetic factors toward schizophrenia.

Plaintiffs, in early 1999, once again contacted defendant to request information regarding Anthony’s medical history, having been prompted to do so by a New York Times article concerning a case with facts similar to those currently presented at bar. On April 6, 1999, defendant provided the psychiatric information it had withheld for almost 40 years and on June 25, 1999, plaintiffs commenced the within action.

Supreme Court Proceedings

Defendant, after the close of discovery, moved for summary judgment dismissing the complaint or, in the alternative, for partial summary judgment: dismissing the second and third causes of action as time-barred; dismissing plaintiffs’ claim for emotional distress, and limiting their damages to extraordinary out-of-pocket expenses in raising their adopted child to 21 years of age; and striking plaintiffs’ demand for punitive damages.

The motion court: denied that branch of defendant’s motion which sought to dismiss the complaint in its entirety; denied defendant’s request to dismiss plaintiffs’ claim for punitive damages; dismissed plaintiffs’ claims for negligence, breach of fiduciary duty and intentional infliction of emotional harm, as time-barred; and limited plaintiffs’ potential recovery of compensatory damages to the extraordinary out-of-pocket expenses of raising Anthony to age 21.

Defendant appeals, plaintiffs cross-appeal, and we now affirm.

Discussion

Punitive Damages

Initially, we note that claims for “wrongful adoption” have only recently been recognized as viable tort actions in New York, this Court having previously reasoned that New York’s vital interest in the welfare of its children, as well as in the adoption process, which advances that vital interest, warranted an extension of well-settled common-law fraud principles to the adoption process {Juman v Louise Wise Seros., 211 AD2d 446, 447 [1995]). Indeed, a growing number of jurisdictions have begun recognizing “wrongful adoption” actions, although such recognition is not uniform {see Milks, Annotation, “Wrongful Adoption” Causes of Action Against Adoption Agencies Where Children Have or Develop Mental or Physical Problems That Are Misrepresented or Not Disclosed to Adoptive Parents, 74 ALR5th 1).

It has long been understood that an award of punitive damages serves a dual purpose, to punish the offending party, and to deter similar conduct on the part of others {Krohn v New York City Police Dept., 2 NY3d 329, 335 [2004]; Honzawa v Honzawa, 309 AD2d 629, 629-631 [2003], lv dismissed in part and denied in part 2 NY3d 753 [2004], cert denied 541 US 1064 [2004]). In a fraud cause of action, punitive damages may only be recovered when the conduct in question is aimed at the public generally, involves a high degree of moral culpability, and rises to a level of “such wanton dishonesty as to imply a criminal indifference to civil obligations” {Walker v Sheldon, 10 NY2d 401, 405-406 [1961]; Kelly v Defoe Corp., 223 AD2d 529 [1996]; see also Rocanova v Equitable Life Assur. Socy. of U.S., 83 NY2d 603, 613 [1994]). “Whether to award punitive damages in a particular case, as well as the amount of such damages, if any, are primarily questions which reside in the sound discretion of the original trier of the facts” {Nardelli v Stamberg, 44 NY2d 500, 503 [1978]; Swersky v Dreyer & Traub, 219 AD2d 321, 328 [1996]).

In the matter before us, defendant deprived plaintiffs of the key to their son’s illness when he was nine years old, lied to Anthony’s private psychiatrist when he was 12, failed, outrageously, to warn plaintiffs that Dr. Weil had diagnosed Anthony as schizophrenic and capable of violence when he was 19, and again lied to Anthony, this time in violation of the law, when he was 23. Defendant’s nearly four decades of duplicity and deceit subsequent to the adoption prevented Anthony from obtaining a correct diagnosis and treatment, deprived plaintiffs of the ability to understand their situation, and, finally, brought about the disintegration of the family unit, the ruin of Mr. Ross’s career,⁴ and his eventual hospitalization and treatment for severe depression.

Moreover, defendant’s justification for its actions is muddled, at best. Ms. Miller claims that she did not learn of the 1983 changes in the law requiring disclosure until 1990, yet evidence was presented that she lectured on the law, and its implications, and spoke to a colleague about it in 1983, shortly after the law was promulgated. Compounding the foregoing is defendant’s assertion, in this action, that it was not thought heredity was a factor in schizophrenia until 1980, yet its admission in a prior action that such evidence, which postulated that there was a genetic component to the etiology of schizophrenia, existed in 1968.

In sum, we find factual issues as to whether defendant’s actions and omissions, summarized above, especially its failure to warn plaintiffs of Anthony’s capability of violence, regardless of “agency policy” requiring the withholding of information from adoptive parents, constitutes a policy aimed toward the general public, sufficient to warrant the submission of plaintiffs’ claims for punitive damages to a jury.

Negligence/Breach of Fiduciary Duty

We agree with the motion court that plaintiffs’ second cause of action, sounding in negligence and breach of fiduciary duty, was properly dismissed as time-barred, as a cause of action asserting breach of fiduciary duty, which seeks monetary relief, is governed by a three-year limitations period (CPLR 214; Papp v Debbane, 16 AD3d 128 [2005]; Deutsch v Polly N. Passonneau, PC., 297 AD2d 571, 572 [2002]). Here, the adoption of Anthony was finalized in 1962, and it was at this juncture that the applicable limitations period began to run. Since plaintiffs do not allege any additional misrepresentations by defendant until 1970, some eight years later, this cause of action became time-barred in 1965.

Intentional Infliction of Emotional Distress

Plaintiffs’ third cause of action, asserting intentional infliction of emotional distress, is subject to a one-year limitations period (CPLR 215 [3]; Brasseur v Speranza, 21 AD3d 297, 298 [2005]; Spinale v Guest, 270 AD2d 39, 40 [2000]), and is therefore time-barred. Moreover, as this Court recently held in Juman v Louise Wise Servs. (3 AD3d 309, 309-310 [2004]), damages in a wrongful adoption case are limited to pecuniary losses which flow directly from the alleged fraud, and damages which purportedly arise as the result of emotional distress do not fall within that description (see also Juman v Louise Wise Servs., 254 AD2d 72, 73-74 [1998]; Becker v Schwartz, 46 NY2d 401, 413-415 [1978]).

Equitable Estoppel

Finally, we agree with the motion court that plaintiffs may not invoke the doctrine of equitable estoppel to preclude defendant from asserting the statute of limitations as a defense.

The doctrine of equitable estoppel, an “extraordinary remedy” (East Midtown Plaza Hous. Co. v City of New York, 218 AD2d 628, 628 [1995]), provides that a defendant may be estopped from pleading the statute of limitations where the plaintiff “was induced by fraud, misrepresentations or deception to refrain from filing a timely action” (Simcuski v Saeli, 44 NY2d 442, 448-449 [1978]; Kaufman v Cohen, 307 AD2d 113, 122 [2003]), or, stated another way, that the plaintiff was “lulled” into inaction by defendants so that the statute of limitations would expire (Incorporated Vil. of Rockville Ctr. v Town of Hempstead, 278 AD2d 279, 280 [2000]). The fraud upon which the application of the doctrine is based must be separate and distinct from the acts underlying the action itself (Rizk v Cohen, 73 NY2d 98, 105-106 [1989]; Kaufman v Cohen, 307 AD2d at 122). The doctrine requires proof that the defendant made an actual misrepresentation or, if a fiduciary, concealed facts it was required to disclose and that plaintiffs reliance resulted in an untimely action (Heffernan v Marine Midland Bank, 283 AD2d 337 [2001]; Powers Mercantile Corp. v Feinberg, 109 AD2d 117, 122 [1985], affd 67 NY2d 981 [1986]), and “ ‘mere silence or failure to disclose the wrongdoing is insufficient’ ” (Doe v Holy See [State of Vatican City], 17 AD3d 793, 795 [2005], quoting Zoe G. v Frederick F.G., 208 AD2d 675, 675-676 [1994]). Due diligence on the part of plaintiff in commencing the action is an essential element when plaintiff seeks the shelter of this doctrine (Simcuski v Saeli, 44 NY2d at 450; Fuchs v New York Blood Ctr., 275 AD2d 240, 241 [2000], lv denied 95 NY2d 769 [2000]).

In this matter, plaintiffs contend that the underlying breach of fiduciary duty occurred at the time of the adoption, but allege no additional separate and distinct acts upon which the application of the doctrine can be based. Indeed, the next alleged misrepresentations to plaintiffs were made in 1970, eight years after the cause of action accrued and five years after it was rendered time-barred. These alleged misrepresentations do not serve to resurrect the breach of fiduciary duty claim.

1 . Public Health Law section 4138-b was repealed, effective July 24, 1992.

2 . Perhaps in view of Dr. Weil’s warning.

3 . In Juman v Louise Wise Servs. (174 Misc 2d 49, 53 [1997], mod 254 AD2d 72 [1998]), the defendant advocated a somewhat different scientific time line. The court therein noted that “[t]he Agency claims that at the time of the adoption [1966] members of the scientific community held differing opinions concerning whether schizophrenia was a disease that could be inherited. They present evidence that it was not until 1968 that ‘the literature suggested that there was sufficient evidence to postulate that there was a genetic component to the etiology of schizophrenia’ ” (id. [emphasis added]). In this matter, defendant insists, through various parties, that the belief was schizophrenia was a product of “nurture not nature” until the 1980s.

4 . Arthur Ross, at the time of the adoption, stated that he was a nationally known figure in the advertising profession, had won more than 150 awards for creative film/radio and television productions, including “Best Commercial” in several different industry categories, and was awarded the Grand Prix de la Television at the Venice Film Festival in 1962.