Trusts and Estates – Page 17 – New York Appellate Digest

COUNTERCLAIMS AGAINST INDIVIDUAL TRUSTEES RELATED BACK TO THE COUNTERCLAIMS AGAINST THE TRUST AND THEREFORE WERE NOT TIME-BARRED, SUPREME COURT REVERSED (THIRD DEPT).

The Third Department, reversing (modifying) Supreme Court, determined the counterclaims against the trustees of the plaintiff workers’ compensation self-insurance trust should not have been dismissed as time-barred because they related back to the counterclaims against the trust:

Supreme Court determined that, because defendant was aware of the identity of the trustees when it interposed its original answer and counterclaims in September 2010, its failure to assert claims against the individual trustees between September 2010 and December 2016 represented “either a strategic litigation decision on its part or a mistake of law,” neither of which it found would entitle defendant to application of the doctrine. We disagree.

There is nothing in the record before us demonstrating that defendant intentionally elected not to assert its counterclaims against the individual trustees and/or that it did so to obtain “a tactical advantage in the litigation” … . A review of defendant’s pleadings demonstrates that it intended to sue the individual trustees … . Although the specific names of the individual trustees could have been ascertained from certain documentation that the trust provided to defendant on an annual basis, “we need no longer consider whether [such a] mistake was excusable” … . Rather, as the Court of Appeals has recognized, the primary question — and “the linchpin of the relation back doctrine” — is whether the newly added party had actual notice of the claim … . As trustees of the trust, we find it implausible that the individual trustees were not aware of the trust’s commencement of this action and the counterclaims that defendant asserted against the trust — such knowledge being imputed to them as trustees … . NYAHSA Servs., Inc., Self-Ins. Trust v People Care Inc., 2018 NY Slip Op 08735 [167 AD3d 1305], Third Dept 12-20-18

December 20, 2018

Fiduciary Duty, Trusts and Estates

ONLY SERIOUS MISCONDUCT, NOT CONFLICTS OF INTEREST, JUSTIFIES REMOVAL OF NAMED EXECUTORS, SURROGATE’S COURT REVERSED, MATTER SENT BACK FOR A HEARING (THIRD DEPT).

The Third Department, reversing Surrogate’s Court, determined that the petition seeking letters of administration on the ground that respondents, who were the named executors, had conflicts of interest and had breached their fiduciary duties, should not have been granted. The court explained that named executors can be removed only for serious misconduct, not conflicts of interest. The matter was sent back for a hearing:

“‘[I]t is actual misconduct, not a conflict of interest, that justifies the removal of a fiduciary'”… . Simply put, “a conflict does not make a fiduciary ineligible under SCPA 707, and public policy zealously protects the decedent’s right to name a fiduciary, even one with a conflict” … . Thus, petitioners’ remedy for the alleged conflict of interest lies not in the ineligibility provisions of SCPA 707, but in the provisions of SCPA 702 authorizing the issuance of limited and restricted letters of administration under certain enumerated circumstances.

To that end, SCPA 702 (9) specifically provides for the issuance of limited letters of administration to a party for the purpose of commencing “any action or proceeding against the fiduciary, in his or her individual capacity, or against anyone else against whom the fiduciary fails or refuses to bring such a proceeding.” Indeed, this subdivision is designed to preserve a decedent’s choice of fiduciary “by permitting the appointment of a second limited administrator instead of requiring the disqualification or removal of original fiduciaries where their conflicts of interests preclude them from pursuing claims against themselves or others to the prejudice of other persons interested in the estate” … . For these reasons, we conclude that the conflict alleged did not render respondents ineligible to serve as fiduciaries of decedent’s estate under SCPA 707. Matter of Bolen, 2018 NY Slip Op 08001, Third Dept 11-21-18

TRUSTS AND ESTATES (EXECUTORS, ONLY SERIOUS MISCONDUCT, NOT CONFLICTS OF INTEREST, JUSTIFIES REMOVAL OF NAMED EXECUTORS, SURROGATE’S COURT REVERSED, MATTER SENT BACK FOR A HEARING (THIRD DEPT))/FIDUCIARY DUTY (TRUSTS AND ESTATES, EXECUTORS, ONLY SERIOUS MISCONDUCT, NOT CONFLICTS OF INTEREST, JUSTIFIES REMOVAL OF NAMED EXECUTORS, SURROGATE’S COURT REVERSED, MATTER SENT BACK FOR A HEARING (THIRD DEPT))/EXECUTORS (TRUSTS AND ESTATES, ONLY SERIOUS MISCONDUCT, NOT CONFLICTS OF INTEREST, JUSTIFIES REMOVAL OF NAMED EXECUTORS, SURROGATE’S COURT REVERSED, MATTER SENT BACK FOR A HEARING (THIRD DEPT))

November 21, 2018

Real Property Law, Trusts and Estates

DECEDENT DIED INTESTATE, COTENANTS’ INTERESTS IN THE REAL PROPERTY VESTED UPON DEATH, COTENANTS COULD THEREFORE CONVEY THEIR INTERESTS IN THE PROPERTY, SURROGATE’S COURT SHOULD NOT HAVE SET ASIDE DEEDS (SECOND DEPT).

The Second Department, reversing Surrogate’s Court, determined deeds executed by decedent’s cotenants should not have been set aside. Because decedent died intestate, the cotenants’ interests in the real property vested upon death and the cotenants could validly convey their interests in the property:

The Surrogate’s Court should not have granted those branches of the petition which sought to set aside the subject deeds and to determine that title to the subject property was vested in the decedent’s estate. When the decedent died intestate, title to the subject property automatically vested in her distributees as tenants in common … . “[W]hen a cotenant who has a partial interest in real property executes a deed that purports to convey full title to the property, the deed is not entirely void; rather, the deed is effective, but only to the extent of conveying the grantor’s interest in the property” … . Matter of Blango, 2018 NY Slip Op 07721, Second Dept 11-14-18

REAL PROPERTY LAW (DECEDENT DIED INTESTATE, COTENANTS’ INTERESTS IN THE REAL PROPERTY VESTED UPON DEATH, COTENANTS COULD THEREFORE CONVEY THEIR INTERESTS IN THE PROPERTY, SURROGATE’S COURT SHOULD NOT HAVE SET ASIDE DEEDS (SECOND DEPT))/TRUSTS AND ESTATES (REAL PROPERTY, COTENANTS, DECEDENT DIED INTESTATE, COTENANTS’ INTERESTS IN THE REAL PROPERTY VESTED UPON DEATH, COTENANTS COULD THEREFORE CONVEY THEIR INTERESTS IN THE PROPERTY, SURROGATE’S COURT SHOULD NOT HAVE SET ASIDE DEEDS (SECOND DEPT))/TENANTS IN COMMON (TRUSTS AND ESTATES, COTENANTS’ INTERESTS IN THE REAL PROPERTY VESTED UPON DEATH, COTENANTS COULD THEREFORE CONVEY THEIR INTERESTS IN THE PROPERTY, SURROGATE’S COURT SHOULD NOT HAVE SET ASIDE DEEDS (SECOND DEPT))/TRUSTS AND ESTATES (REAL PROPERTY LAW, COTENANTS’ INTERESTS IN THE REAL PROPERTY VESTED UPON DEATH, COTENANTS COULD THEREFORE CONVEY THEIR INTERESTS IN THE PROPERTY, SURROGATE’S COURT SHOULD NOT HAVE SET ASIDE DEEDS (SECOND DEPT))/DEEDS (TRUSTS AND ESTATES, TENANTS IN COMMON, COTENANTS’ INTERESTS IN THE REAL PROPERTY VESTED UPON DEATH, COTENANTS COULD THEREFORE CONVEY THEIR INTERESTS IN THE PROPERTY, SURROGATE’S COURT SHOULD NOT HAVE SET ASIDE DEEDS (SECOND DEPT))

November 14, 2018

Appeals, Civil Procedure, Trusts and Estates

PETITIONER WAS A PARTY ALONG WITH DECEDENT IN SEVERAL ACTIONS WHICH RESULTED IN PENDING APPEALS, PETITIONER THEREFORE HAD STANDING TO SEEK THE APPOINTMENT OF AN ADMINISTRATOR OF THE ESTATE OF THE DECEDENT, SURROGATE’S COURT REVERSED (SECOND DEPT).

The Second Department, reversing Surrogate’s Court, determined that petitioner had standing to seek the appointment of an administrator of the estate of the decedent who was a party, along with petitioner, is several actions which resulted in appeals pending before the Second Department:

In this proceeding, the petitioner, the founder of Five Towns College, seeks the appointment of an administrator for the estate of John D. Quinn (hereinafter the decedent), a former member of the college’s board of trustees. Prior to the decedent’s death, the petitioner and decedent were parties in a number of actions that resulted in four appeals pending before this Court … . Those appeals were automatically stayed pending the substitution of a legal representative for the decedent pursuant to CPLR 1015(a).

The Surrogate’s Court dismissed the petition, finding that the petitioner lacked standing to bring the petition. The petitioner, in effect, moved for leave to reargue the dismissal of the petition, and upon reargument, the court adhered to its original determination.

Upon reargument, the Surrogate’s Court should have found that the petitioner has standing to bring the petition. SCPA 1002(1) provides, in relevant part, that “a person interested in an action . . . in which the intestate . . . , if living, would be a proper party may present a petition to the court having jurisdiction praying for a decree granting letters of administration to him or to another person upon the estate of the intestate.” In this case, the decedent was named as a party in the actions in which appeals are pending before this Court, and the petitioner, as a defendant in those actions and an appellant before this Court, has an interest in those actions. Thus, pursuant to SCPA 1002(1), the petitioner has standing to petition the Surrogate’s Court for the appointment of an administrator for the decedent’s estate. Matter of Quinn, 2018 NY Slip Op 07433, Second Dept 11-7-18

TRUSTS AND ESTATES (PETITIONER WAS A PARTY ALONG WITH DECEDENT IN SEVERAL ACTIONS WHICH RESULTED IN PENDING APPEALS, PETITIONER THEREFORE HAD STANDING TO SEEK THE APPOINTMENT OF AN ADMINISTRATOR OF THE ESTATE OF THE DECEDENT, SURROGATE’S COURT REVERSED (SECOND DEPT))/CIVIL PROCEDURE (TRUSTS AND ESTATES, PETITIONER WAS A PARTY ALONG WITH DECEDENT IN SEVERAL ACTIONS WHICH RESULTED IN PENDING APPEALS, PETITIONER THEREFORE HAD STANDING TO SEEK THE APPOINTMENT OF AN ADMINISTRATOR OF THE ESTATE OF THE DECEDENT, SURROGATE’S COURT REVERSED (SECOND DEPT))/APPEALS (TRUSTS AND ESTATES, CIVIL PROCEDURE, (PETITIONER WAS A PARTY ALONG WITH DECEDENT IN SEVERAL ACTIONS WHICH RESULTED IN PENDING APPEALS, PETITIONER THEREFORE HAD STANDING TO SEEK THE APPOINTMENT OF AN ADMINISTRATOR OF THE ESTATE OF THE DECEDENT, SURROGATE’S COURT REVERSED (SECOND DEPT))/SURROGATE’S COURT PROCEDURE ACT (SPCA) (PETITIONER WAS A PARTY ALONG WITH DECEDENT IN SEVERAL ACTIONS WHICH RESULTED IN PENDING APPEALS, PETITIONER THEREFORE HAD STANDING TO SEEK THE APPOINTMENT OF AN ADMINISTRATOR OF THE ESTATE OF THE DECEDENT, SURROGATE’S COURT REVERSED (SECOND DEPT))/CPLR 1015 (TRUSTS AND ESTATES, PETITIONER WAS A PARTY ALONG WITH DECEDENT IN SEVERAL ACTIONS WHICH RESULTED IN PENDING APPEALS, PETITIONER THEREFORE HAD STANDING TO SEEK THE APPOINTMENT OF AN ADMINISTRATOR OF THE ESTATE OF THE DECEDENT, SURROGATE’S COURT REVERSED (SECOND DEPT))

November 7, 2018

Trusts and Estates

UNSIGNED FORM INSUFFICIENT TO MAKE RESPONDENT THE BENEFICIARY OF DECEDENT’S IRA (FIRST DEPT).

The First Department determined an unsigned form purporting to make respondent (Cunney) the beneficiary of decedent’s IRA was insufficient and did not constitute substantial compliance:

The Surrogate correctly determined that, despite the decedent’s clear intent to designate respondent Cunney as the beneficiary of her IRAs, Cunney is not entitled to the proceeds of the IRAs in the absence of a signed change of beneficiary form (see EPTL 13-3.2[e][1] [“A designation of a beneficiary or payee to receive payment upon death of the person making the designation . . . must be made in writing and signed by the person making the designation”] …).

Citing the doctrine of substantial compliance, Cunney argues that Morgan Stanley’s Client Data Form for New Personal Accounts filled out in the decedent’s handwriting is sufficient to satisfy the requirement of a signed writing, as that document did not require a signature. However, she cites no authority for excusing the signed writing requirement in the context of a retirement account. Indeed, as the Surrogate noted, even in the insurance context, where strict compliance is not always required … , this Court has rejected the contention that an insured’s specific testamentary disposition of an insurance policy in a will constitutes substantial compliance with the policy’s requirements for effecting a change in the beneficiary of the policy … . Matter of Durcan, 2018 NY Slip Op 07241, First Dept 10-30-18

TRUSTS AND ESTATES (UNSIGNED FORM INSUFFICIENT TO MAKE RESPONDENT THE BENEFICIARY OF DECEDENT’S IRA (FIRST DEPT))/ESTATES POWERS AND TRUSTS LAW (EPTL) 13-3.2 (UNSIGNED FORM INSUFFICIENT TO MAKE RESPONDENT THE BENEFICIARY OF DECEDENT’S IRA (FIRST DEPT))/IRA (TRUSTS AND ESTATES, UNSIGNED FORM INSUFFICIENT TO MAKE RESPONDENT THE BENEFICIARY OF DECEDENT’S IRA (FIRST DEPT))/BENEFICIARIES (IRA, UNSIGNED FORM INSUFFICIENT TO MAKE RESPONDENT THE BENEFICIARY OF DECEDENT’S IRA (FIRST DEPT))

October 30, 2018

Civil Procedure, Real Property Tax Law, Trusts and Estates

TAX FORECLOSURE PROCEEDING IS A NULLITY, THE PROPERTY OWNERS HAD DIED AND NO REPRESENTATIVES OF THE ESTATES HAD BEEN APPOINTED OR NAMED PURSUANT TO THE SURROGATE’S COURT PROCEDURE ACT OR THE CPLR (SECOND DEPT).

The Second Department, reversing Supreme Court, over an extensive dissent, determined the county’s attempt to foreclose on tax liens was a nullity because the property owners had died and no representative of the estate had been appointed under the Surrogate’s Court Procedure Act (SCPA) or the CPLR. The dissent argued that an in rem proceeding was appropriate:

“[I]t is well established that the dead cannot be sued” … . Accordingly, “[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” … . …

Although the passage of time is no bar to the County’s enforcement of tax liens (see RPTL 1160), as a general matter, “[t]he remedy for a [party] who faces the running of the Statute of Limitations under these circumstances is to petition the Surrogate’s Court pursuant to SCPA 1002 for the appointment of . . . [a] personal representative of the estate” … . The Surrogate’s Court Procedure Act provides that, depending on the circumstances of the particular case, letters of administration may be granted to “persons who are distributees of an intestate”… , or to certain other individuals including “the public administrator, . . . the chief fiscal officer of the county, . . . the petitioner, in the discretion of the court, or . . . any other person or persons” … .

Similarly, if the death of a party occurs after the commencement of a proceeding or action “and the claim for or against him [or her] is not thereby extinguished[,] the court shall order substitution of the proper parties” (CPLR 1015[a]). “A motion for substitution may be made by the successors or representatives of a party or by any party” (CPLR 1021 …). …

Our dissenting colleague contends, without citation to any positive authority, that in rem proceedings may be properly commenced and maintained against individuals who are known to be deceased so long as the County has provided those deceased individuals with notice of the proceeding in accordance with statutory law. We are unaware of any purpose such notice would serve to the deceased individuals, and unaware of “any method for serving with process those who have moved beyond the vale” … . Matter of Foreclosure of Tax Liens v Goldman, 2018 NY Slip Op 07123, Second Dept 10-24-18

REAL PROPERTY TAX LAW TAX (FORECLOSURE PROCEEDING IS A NULLITY, THE PROPERTY OWNERS HAD DIED AND NO REPRESENTATIVES OF THE ESTATES HAD BEEN APPOINTED OR NAMED PURSUANT TO THE SURROGATE’S COURT PROCEDURE ACT OR THE CPLR (SECOND DEPT))/TAX LIENS (FORECLOSURE PROCEEDING IS A NULLITY, THE PROPERTY OWNERS HAD DIED AND NO REPRESENTATIVES OF THE ESTATES HAD BEEN APPOINTED OR NAMED PURSUANT TO THE SURROGATE’S COURT PROCEDURE ACT OR THE CPLR (SECOND DEPT)/FORECLOSURE (TAX LIENS, FORECLOSURE PROCEEDING IS A NULLITY, THE PROPERTY OWNERS HAD DIED AND NO REPRESENTATIVES OF THE ESTATES HAD BEEN APPOINTED OR NAMED PURSUANT TO THE SURROGATE’S COURT PROCEDURE ACT OR THE CPLR (SECOND DEPT)).TRUSTS AND ESTATES (TAX LIENS, FORECLOSURE PROCEEDING IS A NULLITY, THE PROPERTY OWNERS HAD DIED AND NO REPRESENTATIVES OF THE ESTATES HAD BEEN APPOINTED OR NAMED PURSUANT TO THE SURROGATE’S COURT PROCEDURE ACT OR THE CPLR (SECOND DEPT))/CIVIL PROCEDURE (TRUSTS AND ESTATES, FORECLOSURE PROCEEDING IS A NULLITY, THE PROPERTY OWNERS HAD DIED AND NO REPRESENTATIVES OF THE ESTATES HAD BEEN APPOINTED OR NAMED PURSUANT TO THE SURROGATE’S COURT PROCEDURE ACT OR THE CPLR (SECOND DEPT))

October 24, 2018

Contract Law, Trusts and Estates

ALTHOUGH THE AGREEMENT BETWEEN BROTHER AND SISTER TO SHARE MOTHER’S ESTATE WAS NOT ENFORCEABLE UNDER THE STATUTE OF FRAUDS, THE COMPLAINT STATED CAUSES OF ACTION FOR PROMISSORY ESTOPPEL AND A CONSTRUCTIVE TRUST (FIRST DEPT).

The First Department, reversing Supreme Court, determined that the complaint stated causes of action for promissory estoppel and a constructive trust. Plaintiff alleged that his mother removed him from her will, not to disinherit him, but to prevent his former wife from sharing in the estate. Plaintiff and defendant are brother and sister. The agreement regarding the disposition of the estate made between plaintiff and defendant violated the statute of frauds. However promissory estoppel may be applicable:

The amended complaint alleges that, both before the mother’s death and subsequent to it, plaintiff and defendant entered into an oral agreement whereby, essentially, defendant would be the sole heir to the estate, and would, among other things, give plaintiff his 50% share after completion of plaintiff’s divorce, and, until the final transfer of his share of the estate, defendant would maintain a life insurance policy of at least $5 million, with plaintiff as the sole beneficiary. Giving the complaint “the benefit of every possible favorable inference” … , it may be inferred that this oral agreement was in furtherance of the mother’s wishes, as her decision to remove plaintiff from the will was for the sole purpose of denying the former wife any access to the estate, and not an affirmative wish to disinherit plaintiff. In furtherance of the oral agreement, following the mother’s death, plaintiff paid the estate tax from his share of the mother’s life insurance policy.

… “[W]here the elements of promissory estoppel are established, and the injury to the party who acted in reliance on the oral promise is so great that enforcement of the statute of frauds would be unconscionable, the promisor should be estopped from reliance on the statute of frauds” … .

Plaintiff here has also sufficiently alleged the elements of his constructive trust claim … . Castellotti v Free, 2018 NY Slip Op 07045, First Dept 10-23-18

CONTRACT LAW (PROMISSORY ESTOPPEL, ALTHOUGH THE AGREEMENT BETWEEN BROTHER AND SISTER TO SHARE MOTHER’S ESTATE WAS NOT ENFORCEABLE UNDER THE STATUTE OF FRAUDS, THE COMPLAINT STATED CAUSES OF ACTION FOR PROMISSORY ESTOPPEL AND A CONSTRUCTIVE TRUST (FIRST DEPT))/PROMISSORY ESTOPPEL (ALTHOUGH THE AGREEMENT BETWEEN BROTHER AND SISTER TO SHARE MOTHER’S ESTATE WAS NOT ENFORCEABLE UNDER THE STATUTE OF FRAUDS, THE COMPLAINT STATED CAUSES OF ACTION FOR PROMISSORY ESTOPPEL AND A CONSTRUCTIVE TRUST (FIRST DEPT))/CONSTRUCTIVE TRUST (ALTHOUGH THE AGREEMENT BETWEEN BROTHER AND SISTER TO SHARE MOTHER’S ESTATE WAS NOT ENFORCEABLE UNDER THE STATUTE OF FRAUDS, THE COMPLAINT STATED CAUSES OF ACTION FOR PROMISSORY ESTOPPEL AND A CONSTRUCTIVE TRUST (FIRST DEPT))/TRUSTS AND ESTATES (PROMISSORY ESTOPPEL, CONSTRUCTIVE TRUST, ALTHOUGH THE AGREEMENT BETWEEN BROTHER AND SISTER TO SHARE MOTHER’S ESTATE WAS NOT ENFORCEABLE UNDER THE STATUTE OF FRAUDS, THE COMPLAINT STATED CAUSES OF ACTION FOR PROMISSORY ESTOPPEL AND A CONSTRUCTIVE TRUST (FIRST DEPT))/STATUTE OF FRAUDS (PROMISSORY ESTOPPEL, CONSTRUCTIVE TRUST, ALTHOUGH THE AGREEMENT BETWEEN BROTHER AND SISTER TO SHARE MOTHER’S ESTATE WAS NOT ENFORCEABLE UNDER THE STATUTE OF FRAUDS, THE COMPLAINT STATED CAUSES OF ACTION FOR PROMISSORY ESTOPPEL AND A CONSTRUCTIVE TRUST (FIRST DEPT))

October 23, 2018

Attorneys, Fiduciary Duty, Trusts and Estates

IN A DISPUTE BETWEEN A HOSPITAL AND A DOCTOR CONCERNING A CHARITABLE GIFT TO THE HOSPITAL, DISQUALIFICATION OF THE DOCTOR’S LAW FIRM WAS PROPER, A LAWYER AT THE FIRM WAS ON THE HOSPITAL’S BOARD OF TRUSTEES (SECOND DEPT).

The Second Department determined the petitioner hospital's motion to disqualify an attorney. The underlying matter concerned a revocable trust related to a charitable gift to the hospital in the amount of $75 million. The oncologist, Williams, who treated the man who made the gift hired a law firm to represent him in the trust proceedings. A lawyer at the firm, Glassman, was on the hospital's board of trustees. The complaint … alleges … that the hospital and its executives are harassing Williams and trying to terminate his relationship with the hospital in order to take control of the gift in violation of the terms of the trust:

… [W]hile Glassman's status as member of the hospital's Board of Trustees did not constitute a traditional attorney-client relationship, there existed “sufficient aspects of such relationship”—notably the fiduciary duty owed by Glassman to the hospital—to trigger inquiry into the potential conflict arising from Fox Rothschild's simultaneous representation of Williams in litigation against the hospital … . Moreover, the hospital established that Glassman, as a member of the hospital's Board of Trustees, had access to confidential information regarding the gift and the ongoing dispute with Williams, both before and after this proceeding was commenced … . Matter of Blackman, 2018 NY Slip Op 06528, Second Dept 10-3-18

ATTORNEYS (CONFLICT OF INTEREST, IN A DISPUTE BETWEEN A HOSPITAL AND A DOCTOR CONCERNING A CHARITABLE GIFT TO THE HOSPITAL, DISQUALIFICATION OF THE DOCTOR'S LAW FIRM WAS PROPER, A LAWYER AT THE FIRM WAS ON THE HOSPITAL'S BOARD OF TRUSTEES (SECOND DEPT))/CONFLICT OF INTEREST (ATTORNEYS, IN A DISPUTE BETWEEN A HOSPITAL AND A DOCTOR CONCERNING A CHARITABLE GIFT TO THE HOSPITAL, DISQUALIFICATION OF THE DOCTOR'S LAW FIRM WAS PROPER, A LAWYER AT THE FIRM WAS ON THE HOSPITAL'S BOARD OF TRUSTEES (SECOND DEPT))/DISQUALIFICATION (ATTORNEYS, CONFLICT OF INTEREST, IN A DISPUTE BETWEEN A HOSPITAL AND A DOCTOR CONCERNING A CHARITABLE GIFT TO THE HOSPITAL, DISQUALIFICATION OF THE DOCTOR'S LAW FIRM WAS PROPER, A LAWYER AT THE FIRM WAS ON THE HOSPITAL'S BOARD OF TRUSTEES (SECOND DEPT))/TRUSTS AND ESTATES (ATTORNEYS, CONFLICT OF INTEREST, IN A DISPUTE BETWEEN A HOSPITAL AND A DOCTOR CONCERNING A CHARITABLE GIFT TO THE HOSPITAL, DISQUALIFICATION OF THE DOCTOR'S LAW FIRM WAS PROPER, A LAWYER AT THE FIRM WAS ON THE HOSPITAL'S BOARD OF TRUSTEES (SECOND DEPT))

October 3, 2018

Foreclosure, Trusts and Estates

APPELLANT EXERCISED UNDUE INFLUENCE OVER DECEDENT, SATISFACTION OF MORTGAGE PROVIDED TO APPELLANT NULLIFIED PURSUANT TO THE RIGGS DOCTRINE, FORECLOSURE OF THE MORTGAGE DEEMED PROPER (SECOND DEPT).

The Second Department determined the appellant, Rajic, had exercised undue influence over the decedent resulting in decedent's signing over her home to Rajic and providing a satisfaction of mortgage to Rajic for a fraction of the amount due. The satisfaction of mortgage was nullified and the foreclosure action brought on behalf of the estate was deemed proper:

Sometimes referred to as the “Riggs doctrine” … , from the seminal case in which a grandson, who had intentionally killed his grandfather in order to ensure his inheritance, was prevented from inheriting under the grandfather's will … , ” this fundamental equitable principle'” dictates that ” [n]o one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to acquire property by his own crime'” … . “Pursuant to this doctrine, which has been applied in both civil and criminal cases, the wrongdoer is deemed to have forfeited the benefit that would flow from his or her wrongdoing” … . “In determining whether the Riggs doctrine applies to a particular case, the court must examine the facts and circumstances before it, and determine whether the causal link between the wrongdoing and the benefits sought is sufficiently clear that application of the Riggs doctrine will prevent an injustice from occurring” … . * * *

The record supports the Supreme Court's conclusion that, by exercising “undue influence over the decedent,” “handling the decedent's financial affairs unscrupulously,” and, in effect, obtaining the deed to the decedent's house through fraud, then “accepting a satisfaction of mortgage from the decedent knowing the mortgage was far from being satisfied,” Rajic, “[b]y her conduct, . . . forfeited any rights that would flow” from the note and mortgage and from the subsequent satisfaction of mortgage … . …

As to the respondent's failure to provide notice of the intent to accelerate and notice of acceleration, the note contains an acceleration clause, “with no requirement of notice and demand”… , as well as a clause pursuant to which Rajic specifically waived any right to notice and demand, notice of intent to accelerate, or notice of acceleration. “Consequently, . . . [the respondent] had the right to exercise the acceleration option anytime after [default] without serving a notice of default or demand for payment” … , or notice of intent to accelerate or notice of acceleration. Rajic v Faust, 2018 NY Slip Op 06582, Second Dept 10-3-18

TRUSTS AND ESTATES (APPELLANT EXERCISED UNDUE INFLUENCE OVER DECEDENT, SATISFACTION OF MORTGAGE PROVIDED TO APPELLANT NULLIFIED PURSUANT TO THE RIGGS DOCTRINE, FORECLOSURE OF THE MORTGAGE DEEMED PROPER (SECOND DEPT))/RIGSS DOCTRINE (TRUSTS AND ESTATES, APPELLANT EXERCISED UNDUE INFLUENCE OVER DECEDENT, SATISFACTION OF MORTGAGE PROVIDED TO APPELLANT NULLIFIED PURSUANT TO THE RIGGS DOCTRINE, FORECLOSURE OF THE MORTGAGE DEEMED PROPER (SECOND DEPT))/UNDUE INFLUENCE (TRUSTS AND ESTATES, APPELLANT EXERCISED UNDUE INFLUENCE OVER DECEDENT, SATISFACTION OF MORTGAGE PROVIDED TO APPELLANT NULLIFIED PURSUANT TO THE RIGGS DOCTRINE, FORECLOSURE OF THE MORTGAGE DEEMED PROPER (SECOND DEPT))/FORECLOSURE (TRUSTS AND ESTATES, UNDUE INFLUENCE, (APPELLANT EXERCISED UNDUE INFLUENCE OVER DECEDENT, SATISFACTION OF MORTGAGE PROVIDED TO APPELLANT NULLIFIED PURSUANT TO THE RIGGS DOCTRINE, FORECLOSURE OF THE MORTGAGE DEEMED PROPER (SECOND DEPT))

October 3, 2018

Environmental Law, Labor Law, Labor Law-Construction Law, Negligence, Trusts and Estates

ACTION ALLEGING LEAD POISONING IN UTERO FROM FATHER’S CLOTHES WHICH WERE SATURATED WITH LEAD AND OTHER HAZARDOUS MATERIALS AT WORK DISMISSED (SECOND DEPT).

The Second Department determined the action based upon exposure to lead in utero was properly dismissed. Plaintiff alleged his father’s clothes were saturated with lead at work:

At common law, employers have a duty to provide a safe workplace, but this duty has been limited to employees (see Labor Law § 200…). It has not, as the plaintiff contends, been extended to encompass individuals who were not employed at the worksite such as the plaintiff or his mother during her pregnancy … .

While “[a] landowner generally must exercise reasonable care, with regard to any activities which he carries on, for the protection of those outside of his premises'” … , the facts alleged in this case differ from those to which a landowner’s duty to exercise reasonable care for the protection of individuals off site has been held to extend … .

Contrary to the plaintiff’s contention, the alleged violations of Occupational Safety and Health Administration (hereinafter OSHA) regulations … , the Occupational Health and Safety Act of 1970 , specifically 29 USC § 654(a), and Labor Law § 27-a do not constitute negligence per se. The violation of OSHA regulations provides only evidence of negligence … . Moreover, neither the plaintiff nor his mother during her pregnancy belonged to the class intended to be protected by OSHA or its implementing regulations, 29 USC § 654(a), or Labor Law § 27-a, namely employees … . Campanelli v Long Is. Light. Co., 2018 NY Slip Op 06225, Second Dept 9-26-18

NEGLIGENCE (ACTION ALLEGING LEAD POISONING IN UTERO FROM FATHER’S CLOTHES WHICH WERE SATURATED WITH LEAD AND OTHER HAZARDOUS MATERIALS AT WORK DISMISSED (SECOND DEPT))/LABOR LAW-CONSTRUCTION LAW (ACTION ALLEGING LEAD POISONING IN UTERO FROM FATHER’S CLOTHES WHICH WERE SATURATED WITH LEAD AND OTHER HAZARDOUS MATERIALS AT WORK DISMISSED (SECOND DEPT))/LABOR LAW (ACTION ALLEGING LEAD POISONING IN UTERO FROM FATHER’S CLOTHES WHICH WERE SATURATED WITH LEAD AND OTHER HAZARDOUS MATERIALS AT WORK DISMISSED (SECOND DEPT))/TOXIC TORTS (ACTION ALLEGING LEAD POISONING IN UTERO FROM FATHER’S CLOTHES WHICH WERE SATURATED WITH LEAD AND OTHER HAZARDOUS MATERIALS AT WORK DISMISSED (SECOND DEPT))/ENVIRONMENTAL LAW (ACTION ALLEGING LEAD POISONING IN UTERO FROM FATHER’S CLOTHES WHICH WERE SATURATED WITH LEAD AND OTHER HAZARDOUS MATERIALS AT WORK DISMISSED (SECOND DEPT))

September 26, 2018