Employers Cannot Bring Unjust Enrichment Claim For Unearned Pay Where Payments Are Governed By An Employment Contract

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On December 14, 2010, Justice James A. Yates of the New York Commercial Division issued a decision on a motion to dismiss in Mount Sinai School of Medicine v. Konstadinos A. Plestis, M.D., Index No. 601314/2010 (Sup. Ct., NY County, December 14, 2010). The decision addresses the issue of whether an employer can bring an unjust enrichment claim for unearned pay against a former employee where the payments at issued were governed by an employment contract.

Factual Background In June 2005, plaintiff Mount Sinai School of Medicine of New York University (“Mount Sinai”) employed defendant Konstadinos A. Plestis, M.D. (“Defendant” or “Dr. Plestis”) pursuant to a three-year employment contract (the “Employment Agreement”) as an Associate Director to one of its surgery programs at Mount Sinai Hospital (the “Hospital”) and as an Assistant Professor of Cardiothoracic Surgery at Mount Sinai. Under the terms of the Employment Agreement, Dr. Plestis received a base salary of $160,00 per year and an annual supplement of $590,000 for the first two years. Dr. Plestis was required to meet a Minimum Productivity Target (“MPT”) in order to receive the annual supplement from the third year of his employment onwards. The MPT required him to perform surgical services that grossed a target amount of $875,000 in receipts to the Hospital.

Mount Sinai alleges that it paid Dr. Plestis his full salary and annual supplement for his third year of employment and the pro-rated salary and annual supplement for his fourth years of employment up until the time of his resignation. Mount Sinai further alleges that Dr. Plestis failed to meet his productivity targets during his third and fourth years and, therefore, was not entitled to the full amount of the annual supplement.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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