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THE DRAM SHOP ACT DOES NOT CREATE A CAUSE OF ACTION IN FAVOR OF THE INTOXICATED PERSON (SECOND DEPT).

The Second Department, in this wrongful death case, determined the Dram Shop Act cause of action was properly dismissed because the act does not create a cause of action in favor of the intoxicated person. Here the complaint alleged defendant Bombace Wine & Spirits, Inc. was liable for selling alcohol to plaintiff’s decedent, who died of alcohol poisoning and was referred to as a habitual drunkard. Although plaintiff’s decedent’s family members could sue under the Dram Shop Act for “means of support” damages, there no were allegations of “means of support” damages in the complaint:

The Dram Shop Act “creates a cause of action in favor of a third party injured or killed by an intoxicated person, but it does not create a cause of action in favor of the intoxicated person” … or his or her estate … . Thus, the first cause of action to recover damages under the Dram Shop Act fails to state a cause of action insofar as it is asserted on behalf of the decedent’s estate, notwithstanding the addition in the amended complaint of the allegation that the decedent’s intoxication at the time of the alleged illegal alcohol sale was “involuntary” … . Further, because the decedent, were she alive, would not possess a viable cause of action against the Bombace defendants to recover damages for injuries sustained as a result of her own intoxication, her estate possesses no viable cause of action to recover damages for wrongful death (see EPTL 5-4.1 …). Estate of Tammy Colleen Feenin v Bombace Wine & Spirits, Inc., 2020 NY Slip Op 06755, Second Dept 11-18-20

 

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THE TRUSTEES DID NOT DEMONSTRATE THE AVAILABILITY OF THE STATUTE OF LIMITATIONS OR LACHES DEFENSES TO THE ACTION SEEKING AN ESTATE ACCOUNTING; THE TRUSTEES DID NOT OPENLY REPUDIATE THEIR FIDUCIARY OBLIGATIONS AND, THEREFORE, THE TIME DID NOT BEGIN TO RUN FOR EITHER DEFENSE (SECOND DEPT).

The Second Department, reversing Surrogate’s Court, determined the action seeking an estate accounting should not have been dismissed as untimely because the statute of limitations had not been triggered by an open repudiation of the trustees’ fiduciary obligations. A similar open repudiation is necessary for a laches defense as well:

A proceeding to compel an accounting by a fiduciary is governed by a six-year statute of limitations (see CPLR 213[1]). “It is well settled that the statutory clock begins to run when the trustee openly repudiates his [or her] fiduciary obligations” or there is a judicial settlement of the fiduciary’s account … . “For a trustee to invoke a Statute of Limitations defense, a mere lapse of time is insufficient without proof of an open repudiation” … . There must be proof of a repudiation by the fiduciary “‘which is clear and made known to the beneficiaries'” … , “viewed in the light of the circumstances of the particular case” … . The party seeking the benefit of the statute of limitations defense bears the burden of proof on the issue of open repudiation  … . “Where there is any doubt on the record as to the conclusive applicability of a Statute of Limitations defense, the motion to dismiss the proceeding should be denied” … . Matter of Eisdorfer, 2020 NY Slip Op 06258, Second Dept 11-4-20

 

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PETITION SEEKING TRANSFER OF REAL PROPERTY FROM DECEDENT TO PETITIONER BY REFORMATION OF THE DEED OR A CONSTRUCTIVE TRUST, AS WELL AS THE DISTRIBUTION OF TRUST ASSETS TO DECEDENT’S GRANDCHILDREN, AS OPPOSED TO DECEDENT’S SURVIVING DESCENDANTS, PROPERLY DENIED (THIRD DEPT).

The Third Department determined Surrogate’s Court properly denied the petition which sought proceeds from the sale of real property in decedent’s name and a distribution from a trust for the educational expenses for decedent’s grandchildren:

According to the petition, petitioner had contributed funds to purchase the lots and paid all expenses associated therewith. Petitioner requested either reformation of the deeds or the imposition of a constructive trust. In the second proceeding, petitioner sought a decree authorizing a distribution from decedent’s testamentary trust to pay for the educational expenses of the grandchildren. …

[Re: reformation of the deed for the real property,] [g]iven that petitioner did not establish, or even allege, that there was fraud involved, she failed to establish unilateral mistake where the showing of fraud is required … . To claim that there was mutual mistake, it must be established that “the parties have reached an oral agreement and, unknown to either, the signed writing does not express that agreement” … . Here, petitioner failed to show that there was an oral agreement that the vacant lots would be owned as tenants by the entirety … . …

[Re: a constructive trust for the real property,] … although there was a confidential relationship between petitioner and decedent due to their marital status, the record does not reveal that there was a promise that the two would jointly own the four vacant lots, that petitioner transferred monies to purchase the properties in reliance of that promise or that decedent’s enrichment was unjust as a result … . …

Petitioner asserts that the word “use” supports her claim that decedent intended to provide the trustees with broad discretion that allows the distribution of the trust to be used for the grandchildren’s educational expenses. However, when gleaning decedent’s intent from the entirety of the will, the word “use” does not give unbridled discretion to the trustees to distribute the income for such purpose. Rather, when considering that the will provides that decedent’s descendants who survive petitioner receive the remainder of the trust at the time of her death, it may be gleaned that it was not decedent’s intent that the trust provide for the grandchildren’s educational expenses during petitioner’s lifetime … . Matter of Husisian, 2020 NY Slip Op 06188, Third Dept 10-29-20

 

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THE 2008 FORECLOSURE COMPLAINT WAS SERVED ON A DECEASED DEFENDANT AND WAS THEREFORE A NULLITY WHICH DID NOT TRIGGER THE SIX-YEAR STATUTE OF LIMITATIONS; THE INSTANT FORECLOSURE ACTION, THEREFORE, IS NOT TIME-BARRED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the foreclosure action was not time-barred. Although a foreclosure complaint was served in 2008, it named a deceased defendant and was therefore a nullity which did not accelerate the debt and start the statute of limitations running:

Plaintiff contends that Supreme Court erred in dismissing the action as untimely because the 2008 action was commenced only against the decedent borrower and was thus a legal nullity. We agree. “The six-year statute of limitations in a mortgage foreclosure action begins to run from the due date for each unpaid installment unless the debt has been accelerated; once the debt has been accelerated by a demand or commencement of an action, the entire sum becomes due and the statute of limitations begins to run on the entire mortgage” … . Accordingly, as a general rule, the commencement of a mortgage foreclosure action triggers the statute of limitations … . As pertinent here, however, “[a] party may not commence a legal action or proceeding against a dead person, but must instead name the personal representative of the decedent’s estate” … . Greenpoint [Mortgage Funding] served but did not substitute the executor of decedent’s estate as a party in the 2008 action (see CPLR 1015 [a]). As such, the court lacked jurisdiction over the 2008 action, and that action was a legal nullity from its inception … . It follows that the 2008 action, a legal nullity, did not trigger the statute of limitations. Since this action was commenced within six years of the 2013 acceleration letter, the action was timely. U.S. Bank Natl. Assn. v Stewart, 2020 NY Slip Op 05982, Third Dept 10-22-20

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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