Trusts and Estates Archives - New York Appellate Digest

Contract Law, Family Law, Fiduciary Duty, Trusts and Estates

THE CAUSE OF ACTION SEEKING THE IMPOSITION OF A CONSTRUCTIVE TRUST TO PREVENT UNJUST ENRICHMENT SHOULD NOT HAVE BEEN DISMISSED; PLAINTIFF WIFE ENTERED A SETTLEMENT AGREEMENT REQUIRING PAYMENTS BY HER EX-HUSBAND; AFTER HER EX-HUSBAND’S DEATH HIS CHILDREN ALLEGEDLY EMPTIED THE ESTATE OF ASSETS, THEREBY PREVENTING THE FULFILLMENT OF THE TERMS OF THE SETTLEMENT AGREEMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the cause of action alleging the existence of a constructive trust to prevent unjust enrichment should not have been dismissed. Plaintiff and her deceased ex-husband entered a settlement agreement in which plaintiff would be entitled to certain payments until 2020 and 2023. Plaintiff’s ex-husband died in 2017 and the complaint alleged that all of the ex-husband’s assets had been removed from the estate by the husband’s children making it impossible for the terms of the settlement to be fulfilled:

The purpose of a constructive trust is to prevent unjust enrichment … . Accordingly, ” the constructive trust doctrine is given broad scope to respond to all human implications of a transaction in order to give expression to the conscience of equity and to satisfy the demands of justice'” … . ” A constructive trust is an equitable remedy, and may be imposed when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest'” … .

Moreover, an agreement between spouses, such as the agreement and addendum here, involve a fiduciary relationship requiring the utmost good faith … . Since the agreement and addendum provide that, if necessary, the plaintiff could use the assets of Iannazzo’s [the ex-husband’s] estate to satisfy his obligations to her, and, thereafter, all of Iannazzo’s assets were transferred to the Trust before his death, his estate can provide no relief to the plaintiff and the obligations she is owed pursuant to the agreement and addendum will not be met. The plaintiff therefore adequately states a cause of action that the defendants would be unjustly enriched if the Trust is allowed to retain the portion of the assets now owned by the Trust that would satisfy the unmet obligations of Iannazzo and his estate pursuant to the agreement … . Derosa v Estate of Iannazzo, 2020 NY Slip Op 04917, Second Dept 9-16-20

September 16, 2020/0 Comments/by Bruce Freeman

Attorneys, Civil Procedure, Trusts and Estates

MOTIONS TO QUASH SUBPOENAS ISSUED IN SUPPORT OF OBJECTIONS TO AN ACCOUNTING OF A TRUST SHOULD NOT HAVE BEEN GRANTED; COUNSEL’S SUBMISSION OF EMAILS DEMONSTRATING A GOOD FAITH EFFORT TO SETTLE WERE SUFFICIENT (SECOND DEPT).

The Second Department, reversing Surrogate’s Court, determined the motions to quash subpoenas issued by appellants who objected to an accounting of a trust should not have been granted and the appellants’ counsel’s submissions demonstrating a good faith effort to settle the matter (22 NYCRR 202.7) were sufficient:

In a proceeding pursuant to article 22 of the Surrogate’s Court Procedure Act to settle an account of a trust, a party filing objections is “entitled to all rights granted under article thirty-one of the civil practice law and rules with respect to . . . discovery” (SCPA 2211[2]). CPLR 3101(a), which provides for “full disclosure of all matter material and necessary in the prosecution or defense of an action,” is to be liberally construed “to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity” … .

A “party or nonparty moving to vacate the subpoena has the initial burden of establishing either that the requested [information] is utterly irrelevant’ to the action or that the futility of the process to uncover anything legitimate is inevitable or obvious'” … . Matter of Cheryl LaBella Hoppenstein 2005 Trust, 2020 NY Slip Op 04846, Second Dept 9-2-20

September 2, 2020/by Bruce Freeman

Attorneys, Civil Procedure, Corporation Law, Fiduciary Duty, Trusts and Estates

PLEADING REQUIREMENTS FOR A BREACH OF FIDUCIARY DUTY CAUSE OF ACTION WERE NOT MET; ATTORNEY REPRESENTING A CORPORATION DOES NOT OWE A FIDUCIARY DUTY TO SHAREHOLDERS OR EMPLOYEES (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the pleading requirements for a breach of fiduciary duty cause of action were not met and defendant attorneys, who represented the corporation, not the decedent, did not owe a fiduciary duty to decedent:

We disagree with the Supreme Court’s determination denying that branch of the Berger defendants’ [attorneys’] motion which was pursuant to CPLR 3211(a)(7) to dismiss the sixth cause of action, alleging breach of fiduciary duty against them. ” [T]he elements of a cause of action to recover damages for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendants misconduct'” … . A cause of action to recover damages for breach of fiduciary duty must be pleaded with the particularity required under CPLR 3016(b) … . Here, the sixth cause of action, alleging breach of fiduciary duty against the Berger defendants, contained only bare and conclusory allegations related to damages, without any supporting detail, and failed to satisfy the requirements of CPLR 3016(b) … .

Additionally, the complaint alleges that the Berger defendants represented Rockland Inc., and owed a fiduciary duty to the decedent based upon that representation. However, a corporation’s attorney represents the corporate entity, not its shareholders or employees … . Mann v Sasson, 2020 NY Slip Op , 04737, Second Dept 8-26-20

August 26, 2020/by Bruce Freeman

Contract Law, Real Property Law, Trusts and Estates

PLAINTIFF RAISED QUESTIONS OF FACT ABOUT WHETHER A CONSTRUCTIVE TRUST ON REAL PROPERTY HAD BEEN CREATED, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff had raised questions of fact about whether a constructive trust on real property had been created:

The defendant established his prima facie entitlement to judgment as a matter of law dismissing the complaint by submitting his affidavit denying the existence of any agreement with the plaintiff regarding ownership or an interest by the plaintiff in the premises, and denying that the plaintiff performed repairs to the premises. However, in opposition, the plaintiff submitted the affidavits of two nonparties who each attested, inter alia, to admissions made by the defendant that the plaintiff was an equal owner of the premises with the defendant. Thus, the affidavits submitted by the parties raise triable issues of fact as to whether the parties, who are in-laws by virtue of the defendant’s marriage to the plaintiff’s daughter and who lived with each other for several years prior to the defendant moving out, orally agreed to a shared ownership of the subject premises, and as to whether the plaintiff relied on that agreement by paying for repairs and expenses on the home for the benefit of the defendant. Accordingly, the defendant’s motion for summary judgment should have been denied … . Abehsera v Saldin, 2020 NY Slip Op 04723, Second Dept 8-26-20

August 26, 2020/by Bruce Freeman

Mental Hygiene Law, Trusts and Estates

ALTHOUGH AURELIA S WAS PROPERLY FOUND TO BE AN INCAPACITATED PERSON, THE POWERS AWARDED THE GUARDIAN WERE TOO BROAD (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the powers awarded to the guardian of the incapacitated person, Aurelia S, were too broad:

… “[T]he determination of incapacity . . . shall consist of a determination that a person is likely to suffer harm because” (1) “the person is unable to provide for [his or her] personal needs and/or property management” and (2) “the person cannot adequately understand and appreciate the nature and consequences of such inability” (Mental Hygiene Law § 81.02[b] …). In reaching its determination, the court shall give primary consideration to the functional level and functional limitations of the person (see Mental Hygiene Law § 81.02[c]). Significantly, any guardian appointed shall be granted “only those powers which are necessary to provide for personal needs and/or property management of the incapacitated person in such a manner as appropriate to the individual and which shall constitute the least restrictive form of intervention” (Mental Hygiene Law § 81.02[a][2]).

… [T]he broad powers granted to the appointed guardian are inconsistent with the statutory requirement that the guardian be granted “only those powers which are necessary” and “which shall constitute the least restrictive form of intervention” (Mental Hygiene Law § 81.02[a][2] … ). Under the circumstances presented, the Supreme Court should have appointed a guardian only to manage Aurelia S.’s property and financial affairs, which shall have the following limited powers: (1) apply for, establish, and maintain eligibility for the maximum amount of government and private benefits; (2) marshal and manage income and assets; (3) enter into contracts, subject to prior court approval; (4) invest funds with the same authority as a trustee pursuant to EPTL 11-2.2; and (5) investigate any misappropriation of funds of Aurelia S. and take appropriate action. Matter of Aurelia S., 2020 NY Slip Op 04560, Second Dept 8-19-20

August 19, 2020/by Bruce Freeman

Civil Procedure, Medical Malpractice, Negligence, Trusts and Estates

PLAINTIFF’S DECEDENT’S MEDICAL MALPRACTICE AND WRONGFUL DEATH ACTIONS WERE NOT TIME-BARRED, SUPREME COURT REVERSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the medical malpractice and wrongful death causes of action on behalf of decedent should not have been dismissed as time-barred:

The plaintiff’s decedent died due to complications related to cancer on August 29, 2015. On May 26, 2016, the plaintiff commenced this action to recover damages for wrongful death and medical malpractice against, among others, the defendants Forest Hills Hospital (hereinafter FHH) and Sergio Martinez, a physician (hereinafter together the defendants). As is relevant to these appeals, the complaint alleged negligent acts and omissions by the defendants related to the decedent’s hospitalization at FHH from July 30, 2013, to August 1, 2013. After joinder of issue, Martinez and FHH separately moved pursuant to CPLR 3211(a)(5) to dismiss, as time-barred, so much of the complaint as was based upon alleged acts of malpractice committed before November 26, 2013, insofar as asserted against each of them. … Supreme Court granted the defendants’ separate motions. …

We disagree with the Supreme Court’s determination that the statute of limitations barred causes of action to recover damages for medical malpractice that accrued prior to November 26, 2013 (i.e., 2½ years before the date the action was commenced), rather than February 28, 2013 (i.e., 2½ years before the date of the decedent’s death) (see EPTL 5-4.1 …). Since, at the time of his death, the decedent had a valid cause of action to recover damages for medical malpractice based upon acts or omissions occurring on or after February 28, 2013, and since the wrongful death cause of action was commenced within two years of the date of his death, the wrongful death cause of action was timely commenced … . Accordingly, any causes of action to recover damages for medical malpractice that accrued on or after February 28, 2013 (i.e., within 2½ years of the decedent’s death), including the decedent’s July 2013 hospitalization, were timely. Further, the plaintiff then had one year from the decedent’s death to assert a cause of action alleging conscious pain and suffering (see CPLR 210[a]; …). Perez v Baez, 2020 NY Slip Op 04329, Second Dept 7-29-20

July 29, 2020/by Bruce Freeman

Evidence, Trusts and Estates

THE PROOF DID NOT SUPPORT SURROGATE’S COURT’S FINDING THAT THERE WAS A CONFIDENTIAL RELATIONSHIP BETWEEN RESPONDENTS AND THE DECEDENT AND THE PROOF DID NOT SUPPORT THE FINDING THAT RESPONDENTS EXERTED UNDUE INFLUENCE UPON DECEDENT (FOURTH DEPT).

The Fourth Department, reversing Surrogate’s Court, determined the evidence did not support the finding that the respondents, decedent’s daughter Ellen and her son, Alex, exerted undue influence upon the decedent. In addition, the proof did not support the finding of a confidential relationship between respondents and the decedent:

Here, although the record establishes that Ellen and Alexander held a position of trust with decedent, and that Ellen assisted decedent with her finances and was named decedent’s power of attorney, the record also reflects that, despite Ellen’s position of trust, decedent was actively and personally involved in managing her real estate and in drafting her estate plan, and that she directed her personal attorney and the branch manager at her bank to act according to her own desires based on her own personal, stated reasons. …

Here, the record reflects that Ellen and Alexander wanted to benefit from decedent’s estate, and that Ellen assisted decedent in executing the relevant estate plan and making the disputed transactions. The relevant inquiry, however, is not what Ellen and Alexander may have wanted, asked for, or facilitated, but rather whether decedent’s free will, independent action, and self-agency were overcome by their conduct … . In this case, the record establishes that decedent informed her attorney in 2011 that she did not want petitioner to have any further power over her affairs, that decedent thereafter worked with her attorney directly in order to revise her estate plan, and that decedent discussed with her attorney her personal reasons for altering her prior estate plan to the exclusion of petitioner. Indeed, decedent’s attorney testified that he never prepared a document that decedent did not personally authorize, and testimony from numerous non-beneficiaries established decedent’s capacity and active management of her own affairs during the relevant time frame, albeit with the assistance of Ellen. Simply put, the record does not reflect that decedent at any time lost her free will or agency, and instead the record reflects that she took the disputed actions based on her stated personal motives. Matter of Kotsones, 2020 NY Slip Op 04102, Fourth Dept 7-17-20

July 17, 2020/by Bruce Freeman

Civil Procedure, Foreclosure, Trusts and Estates

ATTEMPTS TO DE-ACCELERATE THE DEBT, INCLUDING VOLUNTARY DISCONTINUANCES AFTER THE DEATH OF THE DEFENDANT, WERE INEFFECTUAL, THE FORECLOSURE ACTION IS TIME-BARRED (THIRD DEPT).

The Third Department, over a two-justice concurrence, determined the statute of limitations began to run in 2009 when the mortgage debt was accelerated in this foreclosure action and the attempts to subsequently de-accelerate the debt after the death of the defendant, including voluntary discontinuances, were ineffectual. Therefore the action was time-barred:

With respect to the notices of discontinuance in the 2009 and 2013 actions, we note that we, as well as other Appellate Divisions, have held that the voluntary discontinuance of an action, without more, will not generally constitute an affirmative act that revokes a lender’s election to accelerate a debt … . * * *

In the 2009 action, plaintiff filed its notice of voluntary discontinuance roughly 13 months after decedent had passed away, without having sought substitution of a legal representative to act on behalf of decedent’s estate (see CPLR 1021; see also SCPA 1002, 1401, 1402 [1] [b]). Thus, as the action was stayed and there was no substitution of a proper defendant, the notice of voluntary discontinuance filed in the 2009 action was without effect. … As for the notice of discontinuance filed in the 2013 action, plaintiff commenced that action against decedent, despite the fact that she had died more than two years earlier. As a result, the 2013 action was a nullity from its inception and the subsequent notice of voluntary discontinuance was void … .

We similarly find that, under the circumstances of this case, the July 2015 and September 2015 notices did not constitute affirmative acts that would notify decedent’s legal representative that the prior debt acceleration was revoked, that the debt was de-accelerated and that the loan was reinstated to installment payments. Irrespective of the content and substance of the July 2015 and September 2015 notices, plaintiff addressed the notices to decedent, who had been deceased for more than four years, and mailed them to the mortgaged property. The record reflects that the September 2015 letter, which was sent by both regular mail and certified mail, was returned as undeliverable. Beneficial Homeowner Serv. Corp. v Heirs at Large of Ramona E. Thwaits, 2020 NY Slip Op 03709, Third Dept 7-2-20

July 2, 2020/by Bruce Freeman

Civil Procedure, Foreclosure, Trusts and Estates

UNDER THE TERMS OF THE MORTGAGE, THE DEATH OF THE BORROWER DID NOT ACCELERATE THE DEBT; BECAUSE THE DEBT WAS NOT ACCELERATED THE INSTALLMENT PAYMENTS FOR THE SIX YEARS PRIOR TO THE COMMENCEMENT OF THE FORECLOSURE ACTION WERE STILL OWING AND THE ACTION WAS NOT BARRED BY THE STATUTE OF LIMITATIONS (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the foreclosure action should not have been dismissed as time-barred, noting that the death of the borrower did not accelerate the debt. Therefore the installment payments due during the six year prior to commencing the action were still owing:

An action to foreclose a mortgage is subject to a six-year statute of limitations (see CPLR 213 [4]). Here, the note provided that decedent agreed to repay the loan in monthly installments from September 2007 to August 2032. “[W]ith respect to a mortgage payable in installments, there are separate causes of action for each installment accrued, and the [s]tatute of [l]imitations [begins] to run, on the date each installment [becomes] due” … . Plaintiff commenced this foreclosure action on September 15, 2017. Therefore, recovery for the installments due within the six years prior to that date, i.e., September 15, 2011, is not barred by the statute of limitations. To the extent that plaintiff seeks recovery for installments due before that date, recovery is barred by the statute of limitations … . * * *

We reject defendants’ contention that the debt accelerated automatically upon decedent’s death. The mortgage provides that there is a default upon decedent’s death, but it does not provide that the death of decedent would automatically accelerate the debt. Rather, the mortgage provides that the lender may accelerate the debt upon a default and, here, defendants did not establish that plaintiff chose to accelerate the debt at any time before the complaint was filed … . Wilmington Sav. Fund Socy. FSB v Deliberto, 2020 NY Slip Op 03297, Fourth Dept 6-12-20

June 12, 2020/by Bruce Freeman

Immunity, Municipal Law, Sepulcher, Trusts and Estates

QUESTION OF FACT RAISED ABOUT WHETHER THE HOSPITAL DEFENDANTS MADE A REASONABLE AND SUFFICIENT EFFORT TO LOCATE THE NEXT OF KIN OF THE DECEDENT IN THIS RIGHT-OF-SEPULCHER CASE; THE PUBLIC ADMINISTRATOR, HOWEVER, ENJOYED GOVERNMENTAL FUNCTION IMMUNITY AND NO SPECIAL DUTY WAS OWED PLAINTIFFS (FOURTH DEPT).

The Fourth Department determined plaintiffs had raised a question of fact whether the hospital defendants made reasonable and sufficient efforts to locate the decedent’s next of kin in this right-of-sepulcher case alleging defendants interfered with plaintiffs right to immediate possession of decedent’s body. After the hospital defendants failed to locate the next of kin, the investigation was turned over to the County Public Administrator (PA). After the PA failed to locate the next of kin the decedent was buried. After plaintiffs learned of decedent’s death, the body was exhumed and a memorial service was held at the PA’s expense. The suit against the County PA was properly dismissed because the PA enjoyed governmental function immunity and no special duty was owed plaintiffs:

The common-law right of sepulcher “affords the decedent’s next of kin an absolute right to immediate possession of a decedent’s body for preservation and burial . . . , and damages may be awarded against any person who unlawfully interferes with that right or improperly deals with the decedent’s body” … . “To establish a cause of action for interference with the right of sepulcher, [a] plaintiff must establish that: (1) plaintiff is the decedent’s next of kin; (2) plaintiff had a right to possession of the remains; (3) defendant interfered with plaintiff’s right to immediate possession of the decedent’s body; (4) the interference was unauthorized; (5) plaintiff was aware of the interference; and (6) the interference caused plaintiff mental anguish” … . * * *

… [P]laintiffs identified certain records of the hospital defendants, which indicated that decedent had resided, on some occasions, at a local homeless shelter. Those documents were available to the hospital defendants at the time they conducted their search for decedent’s next of kin, and there is no dispute that the hospital defendants did not attempt to contact that homeless shelter during their search.

Plaintiffs also submitted deposition testimony from a person employed by the homeless shelter, who testified that decedent was a frequent resident there and that she knew members of decedent’s family and could have contacted them if she had been notified of decedent’s death. Green v Iacovangelo, 2020 NY Slip Op 03363, Fourth Dept 6-12-20