Trusts and Estates – Page 21 – New York Appellate Digest

UNDER THE TERMS OF THE LIMITED LIABILITY AGREEMENT, THE ESTATE OF A DECEASED MEMBER OF THE LIMITED LIABILITY COMPANY (LLC) WAS NOT A MEMBER OF THE LLC AND THEREFORE COULD NOT PARTICIPATE IN THE RUNNING OF THE LLC OR INSPECT ITS BOOKS AND WAS NOT OWED A FIDUCIARY DUTY (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Kapnick, determined the limited liability agreement controlled in this action by the estate of a member of the limited liability company (LLC) against the LLC. Under the terms of the agreement the estate of the deceased member (Alex) was not a member of the LLC and therefore could not participate in the running of the company, could not demand to inspect the LLC’s books, and was not owed a fiduciary duty:

Ultimately, the parties disagree on the Estate’s rights and status under the LLC Agreement … . The Estate contends that it stepped into Alex’s shoes upon his death, and that it possesses all of his rights and privileges as a Member under the LLC Agreement. Defendants, on the other hand, contend that under the terms of the LLC Agreement, the Estate is considered the successor in interest of a Withdrawing Member (Alex) with rights only to potential distributions, and no rights to control or participate in the running of the company. Estate of Calderwood v ACE Group Intl. LLC, 2017 NY Slip Op 08750, First Dept 12-14-17

TRUSTS AND ESTATES (DEATH OF MEMBER OF LLC, UNDER THE TERMS OF THE LIMITED LIABILITY AGREEMENT, THE ESTATE OF A DECEASED MEMBER OF THE LIMITED LIABILITY COMPANY (LLC) WAS NOT A MEMBER OF THE LLC AND THEREFORE COULD NOT PARTICIPATE IN THE RUNNING OF THE LLC OR INSPECT ITS BOOKS AND WAS NOT OWED A FIDUCIARY DUTY (FIRST DEPT))/LIMITED LIABILITY COMPANY (TRUSTS AND ESTATES, DEATH OF A MEMBER, UNDER THE TERMS OF THE LIMITED LIABILITY AGREEMENT, THE ESTATE OF A DECEASED MEMBER OF THE LIMITED LIABILITY COMPANY (LLC) WAS NOT A MEMBER OF THE LLC AND THEREFORE COULD NOT PARTICIPATE IN THE RUNNING OF THE LLC OR INSPECT ITS BOOKS AND WAS NOT OWED A FIDUCIARY DUTY (FIRST DEPT))/CORPORATION LAW (LIMITED LIABILITY COMPANY, DEATH OF A MEMBER, UNDER THE TERMS OF THE LIMITED LIABILITY AGREEMENT, THE ESTATE OF A DECEASED MEMBER OF THE LIMITED LIABILITY COMPANY (LLC) WAS NOT A MEMBER OF THE LLC AND THEREFORE COULD NOT PARTICIPATE IN THE RUNNING OF THE LLC OR INSPECT ITS BOOKS AND WAS NOT OWED A FIDUCIARY DUTY (FIRST DEPT))

December 14, 2017

Civil Procedure, Contract Law, Securities, Trusts and Estates

BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT).

The First Department determined this breach of contract action stemming from a mortgage-backed-securities trust, brought by a California plaintiff (trustee) ,and concerning California lenders must be timely under both California and New York law. The action, although timely in New York, was not timely under California law, which has a four-year statute of limitations. The New York choice-of-law provisions in the agreements did not expressing incorporate the NY statute of limitations:

CPLR 202 requires that an action brought by a nonresident plaintiff, “based upon a cause of action accruing without the state,” be timely under the respective statutes of limitations of both New York and “the place without the state where the cause of action accrued.” In Global Fin. Corp. v Triarc Corp. (93 NY2d 525, 529-530 [1999]), the Court of Appeals set forth the general rule that, in cases where (as here) the alleged injury is purely economic, a cause of action is deemed, for purposes of CPLR 202, to have accrued in the jurisdiction of the plaintiff’s residence. …

it is undisputed that the domiciles of the trust beneficiaries, which are in various jurisdictions, do not provide a workable basis for determining the place of accrual. As to the New York choice-of-law clauses of the relevant agreements, because these provisions do not expressly incorporate the New York statute of limitations, they “cannot be read to encompass that limitation period” … . By contrast, the subject trust in each action comprises a pool of mortgage loans, originated by California lenders and encumbering California properties, either exclusively … or predominantly ,,,, and … administered in California by plaintiff, a California-based trustee …. Further, it is undisputed that the relevant pooling and servicing agreement (PSA) for each trust contemplates the payment of state taxes, if any, in California … . To the extent the physical location of the notes memorializing the securitized mortgage loans has relevance to the analysis, each trust’s PSA contemplates that the notes may be maintained in California, but neither contemplates maintaining the notes in New York … . Deutsche Bank Natl. Trust Co. v Barclays Bank PLC, 2017 NY Slip Op 08459, First Dept 12-5-17

CIVIL PROCEDURE (BORROWING STATUTE, CONTRACT LAW, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/BORROWING STATUTE (CIVIL PROCEDURE, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/CONTRACT LAW (CIVIL PROCEDURE, BORROWING STATUTE, STATUTE OF LIMITATIONS, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/SECURITIES (MORTGAGE-BACKED SECURITIES, CONTRACT LAW, CIVIL PROCEDURE, BORROWING STATUTE, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))/TRUSTS AND ESTATES (MORTGAGE-BACKED SECURITIES TRUST, BREACH OF CONTRACT, CIVIL PROCEDURE, BORROWING STATUTE, BREACH OF CONTRACT ACTION BY CALIFORNIA TRUSTEE OF MORTGAGE-BACKED-SECURITIES TRUSTS IS CONTROLLED BY NEW YORK’S BORROWING STATUTE AND MUST BE TIMELY UNDER BOTH CALIFORNIA AND NEW YORK LAW, SUIT WAS UNTIMELY UNDER CALIFORNIA LAW (FIRST DEPT))

December 5, 2017

Civil Procedure, Judges, Trusts and Estates

SUPREME COURT SHOULD NOT HAVE AWARDED A MONEY JUDGMENT AGAINST DEFENDANT PERSONALLY, DEFENDANT WAS ONLY A PARTY TO THE ACTION AS A TRUSTEE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined Supreme Court exceeded its authority when it, sua sponte, awarded a money judgment against defendant personally. Defendant was only a party to the action in his representative capacity (trustee):

“[A] court may grant relief that is warranted by the facts plainly appearing on the papers on both sides, if the relief granted is not too dramatically unlike the relief sought, the proof offered supports it, and there is no prejudice to any party” … . Here, the Supreme Court not only strayed from this principle … , but did so by purporting to impose liability on an individual who was not even a party to the action. ” It has been repeatedly held that persons suing or being sued in their official or representative capacity are, in contemplation of law, distinct persons, and strangers to any right or liability as an individual, and consequently a former judgment concludes a party only in the character in which he was sued'” … . Magid v Sunrise Holdings Group, LLC, 2017 NY Slip Op 07718, Second Dept 11-8-17

CIVIL PROCEDURE (PARTIES, SUPREME COURT SHOULD NOT HAVE AWARDED A MONEY JUDGMENT AGAINST DEFENDANT PERSONALLY, DEFENDANT WAS ONLY A PARTY TO THE ACTION AS A TRUSTEE (SECOND DEPT))/TRUSTS AND ESTATES (CIVIL PROCEDURE, PARTIES, SUPREME COURT SHOULD NOT HAVE AWARDED A MONEY JUDGMENT AGAINST DEFENDANT PERSONALLY, DEFENDANT WAS ONLY A PARTY TO THE ACTION AS A TRUSTEE (SECOND DEPT))/TRUSTEES (CIVIL PROCEDURE, PARTIES, SUPREME COURT SHOULD NOT HAVE AWARDED A MONEY JUDGMENT AGAINST DEFENDANT PERSONALLY, DEFENDANT WAS ONLY A PARTY TO THE ACTION AS A TRUSTEE (SECOND DEPT))

November 8, 2017

Trusts and Estates

EXECUTOR’S DISCLOSURE OF THE INFORMAL ACCOUNTING OF THE ESTATE TO BENEFICIARIES WAS SUFFICIENT, BENEFICIARY’S MOTION TO SET ASIDE A RELEASE PROPERLY DENIED (SECOND DEPT).

The Second Department determined the executor’s informal accounting and disclosures to beneficiaries were sufficient, therefore the release signed by a beneficiary could not be set aside:

“[A] fiduciary, as an executor or trustee, is obligated to account for his or her decisions and actions in administering an estate or trust” … . “While formal accountings of an estate are done in the context of a judicial proceeding, [a] fiduciary may also account informally by obtaining receipts and releases from interested parties regarding the handling of the estate or trust'” … . ” [S]uch an informal accounting is as effectual for all purposes as a settlement pursuant to a judicial decree'” … . ” [I]f a fiduciary gives full disclosure in his [or her] accounting, to which the beneficiaries are parties . . . they should have to object at that time or be barred from doing so after the settlement of the account'” … . “Where the validity of a release is challenged, the fiduciary must affirmatively demonstrate that the beneficiaries were made aware of the nature and legal effect of the transaction in all its particulars'” … .

Here, the documents provided by [the executor] to … the … beneficiaries along with the release made the beneficiaries aware of all the distributions that would be made from the estate. The tax return showed that [the executor] would receive a greater share of the estate as a result of bank accounts she held jointly with the decedent. Thus, the Surrogate’s Court correctly denied [the beneficiary’s] motion to set aside the release. Matter of Spacek, 2017 NY Slip Op 07737, Second Dept 11-8-17

TRUSTS AND ESTATES (EXECUTOR’S DISCLOSURE OF THE INFORMAL ACCOUNTING OF THE ESTATE TO BENEFICIARIES WAS SUFFICIENT, BENEFICIARY’S MOTION TO SET ASIDE A RELEASE PROPERLY DENIED (SECOND DEPT))/ACCOUNTING (TRUSTS AND ESTATES, XECUTOR’S DISCLOSURE OF THE INFORMAL ACCOUNTING OF THE ESTATE TO BENEFICIARIES WAS SUFFICIENT, BENEFICIARY’S MOTION TO SET ASIDE A RELEASE PROPERLY DENIED (SECOND DEPT))/EXECUTORS (ACCOUNTING, EXECUTOR’S DISCLOSURE OF THE INFORMAL ACCOUNTING OF THE ESTATE TO BENEFICIARIES WAS SUFFICIENT, BENEFICIARY’S MOTION TO SET ASIDE A RELEASE PROPERLY DENIED (SECOND DEPT))/RELEASES (TRUSTS AND ESTATES, INFORMAL ACCOUNTING, EXECUTOR’S DISCLOSURE OF THE INFORMAL ACCOUNTING OF THE ESTATE TO BENEFICIARIES WAS SUFFICIENT, BENEFICIARY’S MOTION TO SET ASIDE A RELEASE PROPERLY DENIED (SECOND DEPT))/INFORMAL ACCOUNTINGS (TRUSTS AND ESTATES, EXECUTOR’S DISCLOSURE OF THE INFORMAL ACCOUNTING OF THE ESTATE TO BENEFICIARIES WAS SUFFICIENT, BENEFICIARY’S MOTION TO SET ASIDE A RELEASE PROPERLY DENIED (SECOND DEPT))

November 8, 2017

Civil Procedure, Trusts and Estates

DECEASED PLAINTIFF’S LAWSUIT DISMISSED FOR FAILURE TO TIMELY SUBSTITUTE A REPRESENTATIVE OF PLAINTIFF’S ESTATE (SECOND DEPT).

The Second Department determined the causes of action brought by plaintiff’s decedent were properly dismissed because counsel did not timely substitute a representative for the deceased plaintiff:

“CPLR 1021 requires a motion for substitution to be made within a reasonable time”… . “The determination of reasonableness requires consideration of several factors, including the diligence of the party seeking substitution, the prejudice to the other parties, and whether the party to be substituted has shown that the action or the defense has potential merit” … .

Here, the plaintiff’s counsel failed to demonstrate that he made any diligent efforts to substitute a representative for the deceased plaintiff. Additionally, the plaintiff’s counsel did not demonstrate a reasonable excuse for failing to seek a substitution. Further, the plaintiff’s counsel failed to submit an affidavit of merit, and did not rebut the contention of [defendants] that they were prejudiced in their ability to defend the case. Howlader v Lucky Star Grocery, Inc., 2017 NY Slip Op 06067, Second Dept 8-9-17

CIVIL PROCEDURE (TRUSTS AND ESTATES, SUBSTITUTION FOR DECEASED PLAINTIFF, DECEASED PLAINTIFF’S LAWSUIT DISMISSED FOR FAILURE TO TIMELY SUBSTITUTE A REPRESENTATIVE OF PLAINTIFF’S ESTATE (SECOND DEPT))/TRUSTS AND ESTATES (CIVIL PROCEDURE, SUBSTITUTION FOR DECEASED PLAINTIFF, DECEASED PLAINTIFF’S LAWSUIT DISMISSED FOR FAILURE TO TIMELY SUBSTITUTE A REPRESENTATIVE OF PLAINTIFF’S ESTATE (SECOND DEPT))/ATTORNEYS (TRUSTS AND ESTATES, SUBSTITUTION FOR DECEASED PLAINTIFF, DECEASED PLAINTIFF’S LAWSUIT DISMISSED FOR FAILURE TO TIMELY SUBSTITUTE A REPRESENTATIVE OF PLAINTIFF’S ESTATE (SECOND DEPT))

August 9, 2017

Contract Law, Fiduciary Duty, Securities, Trusts and Estates

ALTHOUGH THE DEFENDANT INDENTURE TRUSTEE DID NOT OWE PLAINTIFFS A FIDUCIARY DUTY, THE TRUSTEE DID OWE PLAINTIFFS A DUTY OF CARE AS DESCRIBED IN THE TRUST AGREEMENT, THE BREACH OF CONTRACT CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, in a full-fledged opinion by Justice Gische, determined that defendant’-trustee’s motion to dismiss the breach of contract cause of action should not have been granted. Although the defendant indenture trustee did not owe the plaintiffs a fiduciary duty with regard to the sale of securities, the trustee still owed plaintiffs a duty of care as described in the trust agreement, including a duty to avoid conflicts of interest. Here the plaintiffs alleged the trustee sold the securities below market price and then sold them for a profit, thereby depriving plaintiffs of the equity in the securities:

This appeal concerns the rights and obligations of the parties with respect to the termination of certain REMIC (real estate mortgage investment conduit) trusts. The assets held by the trusts were mortgage loans. The trusts originally sold securities to outside investors, representing two classes of holders, i.e., regular security holders and residual security holders. Plaintiffs … are holders of the residual security interests in those trusts. While the holders of regular securities were entitled to receive regular payments on distribution dates, the residual security holders had no such right. Instead, they were entitled to receive the proceeds of the disposition of any asset remaining in the trust REMICs upon their termination, but only after each class of regular security holder had been paid. Plaintiffs’ interest is referred to as the trust “equity.” The residual holder interest was the riskiest tranche of ownership and any right to payment was subordinate to payment in full of amounts due to the regular interest holders.

… The trustee argues that under the trust documents, it had the right to purchase trust assets at below market, even though it could resell them within days of acquiring them, allowing the trustee to realize millions of dollars in personal profit. The trustee is alleged to have kept for itself the profit it realized on the forward sale, which was in excess of $3,000,000.

… Even if the sale of assets to the trustee had been conclusively established by documentary evidence, there is still a valid claim that the trustee’s actions create a conflict of interest prohibited under the operative trust agreements and in violation of the trustee’s contractual obligations. The trust documents do not give the trustee the express right to purchase the trust assets for its own financial benefit at less than market value and to thereby diminish, let alone extinguish, plaintiffs’ interest as residual security holders. NMC Residual Ownership L.L.C. v U.S. Bank N.A., 2017 NY Slip Op 05923, First Dept 8-1-17

SECURITIES (ALTHOUGH THE DEFENDANT INDENTURE TRUSTEE DID NOT OWE PLAINTIFFS A FIDUCIARY DUTY, THE TRUSTEE DID OWE PLAINTIFFS A DUTY OF CARE AS DESCRIBED IN THE TRUST AGREEMENT, THE BREACH OF CONTRACT CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT))/TRUSTS AND ESTATES (REAL ESTATE MORTGAGE INVESTMENT CONDUIT TRUSTS, ALTHOUGH THE DEFENDANT INDENTURE TRUSTEE DID NOT OWE PLAINTIFFS A FIDUCIARY DUTY, THE TRUSTEE DID OWE PLAINTIFFS A DUTY OF CARE AS DESCRIBED IN THE TRUST AGREEMENT, THE BREACH OF CONTRACT CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT))/REAL ESTATE MORTGAGE INVESTMENT CONDUIT TRUSTS (ALTHOUGH THE DEFENDANT INDENTURE TRUSTEE DID NOT OWE PLAINTIFFS A FIDUCIARY DUTY, THE TRUSTEE DID OWE PLAINTIFFS A DUTY OF CARE AS DESCRIBED IN THE TRUST AGREEMENT, THE BREACH OF CONTRACT CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT))/CONTRACT LAW (REAL ESTATE MORTGAGE INVESTMENT CONDUIT TRUSTS, ALTHOUGH THE DEFENDANT INDENTURE TRUSTEE DID NOT OWE PLAINTIFFS A FIDUCIARY DUTY, THE TRUSTEE DID OWE PLAINTIFFS A DUTY OF CARE AS DESCRIBED IN THE TRUST AGREEMENT, THE BREACH OF CONTRACT CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT))

August 1, 2017

Trusts and Estates

THE TRUST AGREEMENT INDICATED THE DECEDENT INTENDED A CHARITABLE GIFT BE MADE TO A PARTICULAR LOCAL CATHOLIC SCHOOL WHICH HAD CLOSED, NOT TO THE ROMAN CATHOLIC CHURCH WHICH HAD OPERATED THE CLOSED SCHOOL 3RD DEPT.

The Third Department determined the intent of the decedent was to support a particular local (Oneonta) Catholic school with a charitable gift. The school had closed in 2011. The trustee wanted to distribute the gift equally to the two other named beneficiaries of the trust. Respondents, St. Mary’s Roman Catholic Church, New York and Roman Catholic Diocese of Albany, New York, which operated the closed school, argued the gift should be made to them. The court looked at the nature of the trust as a whole and determined the intent of the gift was to benefit the particular school which closed, not the larger Roman Catholic church generally:

The gift to the school was “charitable in nature and, for cy pres relief [to be appropriate], it was further necessary that the instrument[] establishing the gift[] revealed a general charitable intent and that circumstances had changed rendering impracticable or impossible strict compliance with the terms of the gift instrument[]”… . Strict compliance with the terms of the trust agreement was impossible due to the closure of the school. We accordingly turn to whether the evidence evinces a general charitable intent on the part of decedent, defined “as a desire to give to charity generally, rather than merely to give to a particular object or institution” … . In answering that question, we will read the trust agreement in its entirety and afford its words “their ordinary and natural meaning” … .

Turning to that agreement, all of the institutions to which decedent made gifts are in the City of Oneonta, Otsego County, suggesting an intent to limit her largesse to organizations in that area. When viewed in that context, a direction to distribute part of the residuary trust corpus “to the [school at] 5588 State Route 7, Oneonta, New York 13820” indicates a desire to support a school at that location rather than religious education projects in general. This reading is bolstered by the silence of the trust agreement as to decedent’s Catholic faith and the absence of gifts to the parish or other Roman Catholic institutions. Matter of Gurney, 2017 NY Slip Op 05902, 3rd Dept 7-27-17

TRUSTS AND ESTATES (CY PRES, THE TRUST AGREEMENT INDICATED THE DECEDENT INTENDED A CHARITABLE GIFT BE MADE TO A PARTICULAR LOCAL CATHOLIC SCHOOL WHICH HAD CLOSED, NOT TO THE ROMAN CATHOLIC CHURCH WHICH HAD OPERATED THE CLOSED SCHOOL 3RD DEPT)/CY PRES (THE TRUST AGREEMENT INDICATED THE DECEDENT INTENDED A CHARITABLE GIFT BE MADE TO A PARTICULAR LOCAL CATHOLIC SCHOOL WHICH HAD CLOSED, NOT TO THE ROMAN CATHOLIC CHURCH WHICH HAD OPERATED THE CLOSED SCHOOL 3RD DEPT)/CHARITABLE GIFTS (TRUSTS, CY PRES, THE TRUST AGREEMENT INDICATED THE DECEDENT INTENDED A CHARITABLE GIFT BE MADE TO A PARTICULAR LOCAL CATHOLIC SCHOOL WHICH HAD CLOSED, NOT TO THE ROMAN CATHOLIC CHURCH WHICH HAD OPERATED THE CLOSED SCHOOL 3RD DEPT)

July 27, 2017

Court of Claims, Trusts and Estates

NOTICE OF INTENTION TO FILE A CLAIM CAN BE FILED BY ANY INTERESTED PERSON, THE NOTICE WAS NOT INVALID BECAUSE THE FILER, DECEDENT’S WIFE, WAS NOT REPRESENTING DECEDENT’S ESTATE AT THE TIME 2ND DEPT.

The Second Department, reversing the Court of Claims, determined a notice of intention to file a claim for medical malpractice was valid. A notice of intention to file a claim, unlike a notice of claim, may be filed by any “interested person,” here the wife of decedent (who was not representing the decedent’s estate at the time):

The claimant’s husband (hereinafter the decedent) was treated at Stony Brook University Hospital (hereinafter Stony Brook) from February 13, 2005, through March 3, 2005. The decedent was later treated at Mount Sinai Hospital from March 18, 2006, until his death on October 30, 2006. On April 19, 2006, the claimant, “as Proposed Guardian for” the decedent, filed a notice of intention to file a claim against the defendant State of New York to recover damages for medical malpractice that allegedly occurred while the decedent was treated at Stony Brook (hereinafter the notice of intention). On January 3, 2008, the claimant was granted letters of administration for the decedent’s estate. On January 11, 2008, the claimant filed a claim against the defendant to recover damages for medical malpractice, wrongful death, and loss of services.

The Court of Claims should have denied the defendant’s motion pursuant to Court of Claims Act §§ 10 and 11 to dismiss so much of the claim as sought to recover damages for the decedent’s conscious pain and suffering arising from medical malpractice. Contrary to the defendant’s contention and the court’s conclusion, the notice of intention filed by the claimant on April 19, 2006, was not invalid on the ground that the claimant lacked the authority to file it on behalf of the decedent, as the notice may be given by “any interested person” … . The Court of Appeals’ decision in Lichtenstein v State (93 NY2d 911) does not compel a different result, as that case involved the filing of a claim itself, as opposed to a notice of intention to file a claim. Matter of Dolce v State of New York, 2017 NY Slip Op 05434, 2nd Dept 7-5-17

COURT OF CLAIMS (NOTICE OF INTENTION TO FILE A CLAIM, NOTICE OF INTENTION TO FILE A CLAIM CAN BE FILED BY ANY INTERESTED PERSON, THE NOTICE WAS NOT INVALID BECAUSE THE FILER, DECEDENT’S WIFE, WAS NOT REPRESENTING DECEDENT’S ESTATE AT THE TIME 2ND DEPT)/NOTICE OF INTENTION TO FILE A CLAIM (COURT OF CLAIMS, NOTICE OF INTENTION TO FILE A CLAIM CAN BE FILED BY ANY INTERESTED PERSON, THE NOTICE WAS NOT INVALID BECAUSE THE FILER, DECEDENT’S WIFE, WAS NOT REPRESENTING DECEDENT’S ESTATE AT THE TIME 2ND DEPT)/TRUSTS AND ESTATES (COURT OF CLAIMS, NOTICE OF INTENTION TO FILE A CLAIM CAN BE FILED BY ANY INTERESTED PERSON, THE NOTICE WAS NOT INVALID BECAUSE THE FILER, DECEDENT’S WIFE, WAS NOT REPRESENTING DECEDENT’S ESTATE AT THE TIME 2ND DEPT)

July 5, 2017

Contract Law, Trusts and Estates

THE DOCTRINE OF PROMISSORY ESTOPPEL CAN BE APPLIED TO BYPASS THE STATUTE OF FRAUDS IF THE RESULT OF ENFORCING THE STATUTE WOULD BE UNCONSCIONABLE, THE RESULT HERE WAS NOT UNCONSCIONABLE.

The Court of Appeals, in a full-fledged opinion by Judge Fahey, over a dissent (raising a different issue), agreeing with the Third Department, held that the doctrine of promissory estoppel can be applied to bypass the Statute of Frauds if enforcing the Statute of Frauds would lead to an unconscionable result. Here, however, disagreeing with the Third Department, the Court of Appeals found that enforcement of the Statute of Frauds would not lead to an unconscionable result. The case involved devised property with a mortgage on it. The decedent, in an earlier will, provided that the mortgage should be paid off with estate funds. However, that provisions was not included in a subsequent will. The petitioners sought to enforce an oral agreement to pay off the mortgage. Because the value of the property was about three times the amount of the mortgage, the Court of Appeals reasoned the result was not unconscionable and the Statute of Frauds should be enforced:

“The Statute of Frauds was designed to guard against the peril of perjury; to prevent the enforcement of unfounded fraudulent claims. But, as Professor Williston observed: ‘The Statute of Frauds was not enacted to afford persons a means of evading just obligations; nor was it intended to supply a cloak of immunity to hedging litigants lacking integrity; nor was it adopted to enable defendants to interpose the Statute as a bar to a contract fairly, and admittedly, made'” … ,

In other words, equity “will not permit the statute of frauds to be used as an instrument of fraud” … .

We hold that where 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. * * *

The standard for unconscionability where one party is seeking to avoid the statute of frauds must be equally demanding, lest the statute of frauds be rendered a nullity. …

“The strongly held public policy reflected in New York’s Statute of Frauds would be severely undermined if a party could be estopped from asserting it every time a court found that some unfairness would otherwise result. For this reason, the doctrine of promissory estoppel is properly reserved for that limited class of cases where the circumstances are such as to render it unconscionable to deny the promise upon which the plaintiff has relied” … . Matter of Hennel, 2017 NY Slip Op 05266, CtApp 6-29-17

June 29, 2017

Civil Procedure, Evidence, Real Property Law, Trusts and Estates

PROPERTY OWNED AS TENANTS BY THE ENTIRETY PASSES FREE AND CLEAR TO THE SURVIVING SPOUSE, PURCHASE FROM THE SURVIVING SPOUSE PROVIDES CLEAR TITLE, HEARSAY ALONE WILL NOT DEFEAT SUMMARY JUDGMENT.

The Second Department determined plaintiffs had received title to real property free of any encumbrances. Plaintiffs had purchased the property from Edwin Ramsey. Ramsey and his wife. Bertha, had owned the property as tenants by the entirety. Upon the death of Bertha, Edwin owned the property free and clear. Defendant’s argument that the Ramsey’s had agreed to hold separate interests in the property was based upon hearsay, which, standing alone, will not defeat a summary judgment motion:

A disposition of real property to a husband and wife creates in them a tenancy by the entirety, unless expressly declared to be a joint tenancy or a tenancy in common” (EPTL 6-2.2[b]…). “[A] surviving tenant in a tenancy by the entirety receives the fee interest in its entirety, free and clear of any debts, claims, liens or other encumbrances as against the deceased spouse” … . Here, the plaintiffs demonstrated, prima facie, that they were entitled to summary judgment. Their evidence, including Edwin and Bertha’s 1968 marriage certificate and the 1972 deed, showed that Edwin and Bertha had a tenancy by the entirety in the property, as they were married at the time of the 1972 deed conveying the property to them and the deed did not “expressly declare[ ] [there] to be a joint tenancy or a tenancy in common” (EPTL 6-2.2[b]). Thus, when Bertha died in 2012, Edwin, as the surviving spouse, “receive[d] the fee interest in its entirety, free and clear of any debts, claims, liens or other encumbrances as against” Bertha … . Edwin was thereafter free to convey the property to the plaintiffs, which he did. Cormack v Burks, 2017 NY Slip Op 04252, 2nd Dept 5-31-17

TRUSTS AND ESTATES (PROPERTY OWNED AS TENANTS BY THE ENTIRETY PASSES FREE AND CLEAR TO THE SURVIVING SPOUSE, PURCHASE FROM THE SURVIVING SPOUSE PROVIDES CLEAR TITLE, HEARSAY ALONE WILL NOT DEFEAT SUMMARY JUDGMENT)/REAL PROPERTY (TENANTS BY THE ENTIRETY, PROPERTY OWNED AS TENANTS BY THE ENTIRETY PASSES FREE AND CLEAR TO THE SURVIVING SPOUSE, PURCHASE FROM THE SURVIVING SPOUSE PROVIDES CLEAR TITLE, HEARSAY ALONE WILL NOT DEFEAT SUMMARY JUDGMENT)/TENANTS BY THE ENTIRETY (TRUSTS AND ESTATES, PROPERTY OWNED AS TENANTS BY THE ENTIRETY PASSES FREE AND CLEAR TO THE SURVIVING SPOUSE, PURCHASE FROM THE SURVIVING SPOUSE PROVIDES CLEAR TITLE, HEARSAY ALONE WILL NOT DEFEAT SUMMARY JUDGMENT)/CIVIL PROCEDURE (SUMMARY JUDGMENT, HEARSAY ALONE WILL NOT DEFEAT A SUMMARY JUDGMENT MOTION)/EVIDENCE (SUMMARY JUDGMENT, HEARSAY ALONE WILL NOT DEFEAT A SUMMARY JUDGMENT MOTION)/HEARSAY (SUMMARY JUDGMENT, HEARSAY ALONE WILL NOT DEFEAT A SUMMARY JUDGMENT MOTION)/EVIDENCE (HEARSAY, SUMMARY JUDGMENT, HEARSAY ALONE WILL NOT DEFEAT A SUMMARY JUDGMENT MOTION)

May 31, 2017