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The Guardian of an Incapacitated Person May Not, After the Incapacitated Person’s Death, Use Guardianship Funds to Pay a Debt Incurred by the Incapacitated Person Prior to Death (Here a Debt Owed the Nursing Home Where the Incapacitated Person Was Cared For)

The Court of Appeals, in a full-fledged opinion by Judge Fahey, determined Mental Hygiene Law 81.44 does not permit “a guardian to retain property of an incapacitated person after the incapacitated person has died for the purpose of paying a claim against the incapacitated person that arose before such person’s death.” “… [T]he issue [here was] whether property held by … [the] guardian at the time of [the incapacitated person’s] death automatically became the property of her estate or could be withheld by [the guardian] for the purpose of paying the claim, out of the guardianship account, that [the nursing home] had noticed before [the incapacitated person] died.” Based upon the legislative history of Mental Hygiene Law 81.44, the court determined that, after an incapacitated person’s death, the guardian may use guardianship funds only to pay claims related to the administration of the guardianship, and may not use them to pay debts incurred by the incapacitated person:

The plain language of subdivision (d) of Mental Hygiene Law § 81.44 requires that it is to be read in conjunction with subdivision (e) of the same section, which considers the property a guardian may retain following the death of an incapacitated person. Further, our precedent requires such a review … . In subdivision (e) of section 81.44, the Legislature allowed a guardian to retain from the estate of a deceased incapacitated person “property equal in value to the claim for administrative costs, liens and debts” (emphasis added). That construct suggests that the Legislature meant to permit the retention only of property equal in value to the expenses incurred with respect to the administration of the guardianship, i.e., property needed to satisfy administrative costs, administrative liens, and administrative claims. * * *

…[The legislative history] compels the conclusion that the Legislature did not intend for section 81.44 to permit a guardian to retain funds following the death of an incapacitated person for the purpose of paying a claim (other than a claim related to the administration of the guardianship) against the incapacitated person that arose before that person’s death. Inasmuch as [the nursing home’s] claim for medical services rendered to [the incapacitated person] is unrelated to the administration of her guardianship, we conclude that Mental Hygiene Law § 81.44 does not allow [the guardian] to withhold from [the incapacitated person’s] estate funds to pay [the incapacitated person’s] debt to [the nursing home]. Matter of Shannon, 2015 NY Slip Op 04789, CtApp 6-10-15

 

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Administrator’s Delay In Seeking to Be Substituted for the Decedent In a Lawsuit Justified Dismissal of the Complaint with Prejudice

The Second Department determined the estate’s administrator’s more than five-year delay in seeking to be substituted for the decedent as plaintiff in a lawsuit (CPLR 1021), together with the administrator’s failure to provide an excuse for the delay and demonstrate the action had merit, warranted the dismissal of the complaint with prejudice:

CPLR 1021 provides, in pertinent part, that if the event requiring the substitution of a party “occurs before final judgment and substitution is not made within a reasonable time, the action may be dismissed as to the party for whom substitution should have been made, however, such dismissal shall not be on the merits unless the court shall so indicate.” 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 administrator’s failure to effect the required substitution until more than 6 ½ years after the decedent’s death and nearly 5 ½ years after he was appointed administrator of the decedent’s estate evinced a lack of diligence on the part of the administrator in prosecuting this action, which had been pending for nearly 8 years at the time the administrator sought substitution … . The administrator failed to demonstrate a reasonable excuse for the delay in seeking substitution, which he did only after the defendants moved to dismiss the complaint … . Furthermore, the administrator failed to demonstrate a potentially meritorious cause of action through the submission of admissible evidence, and did not rebut the defendants’ allegations of prejudice. Accordingly, the Supreme Court providently exercised its discretion in granting the defendants’ motion pursuant to CPLR 1021 to dismiss the complaint, with prejudice…  Alejandro v North Tarrytown Realty Assoc., 2015 NY Slip Op 04792, 2nd Dept 6-10-15

 

Questions Concerning the Presumption that a Will Not Found After a Thorough Search Had Been Revoked (by Destruction) Should Have Been Resolved Before the Will Was Admitted to Probate—Matter Remitted to Surrogate’s Court

The Court of Appeals, in a full-fledged opinion by Judge Lippman, with a cautionary concurrence (describing the majority’s factual discussion as dicta, not binding on remittal), determined that there was an open question whether a 1996 will had been revoked. No will was found upon decedent’s death in 2010 and letters of administration were issued to decedent’s parents. Petitioner sought to revoke the letters and admit to probate a 1996 will which was drawn up when decedent was married to petitioner’s son. Petitioner had been named executor in the 1996 will. The 1996 will left all of decedent’s property to her then husband (petitioner’s son). Decedent and petitioner’s son divorced in 2007. Based upon the testimony of decedent’s ex-husband (petitioner’s son), the majority concluded it was possible there were four “duplicate original” 1996 wills, one of which had been in the possession of the decedent at her Clayton, New York, residence. Because that will was not found after a thorough search, a presumption arose that the 1996 will had been destroyed by the decedent and thereby revoked. The open questions concerning whether decedent was in possession of a “duplicate original” 1996 will (as opposed to merely a copy), and whether that will was revoked by destruction, should have been resolved before admitting the 1996 will to probate.  The matter was remitted to Surrogate’s Court to settle the open questions:

A will may, of course, be revoked not only by means of a writing executed in the manner of a will, but by the testator’s act of destroying it with revocatory intent (EPTL 3-4.1 [a] [2] [A] [i]), which act achieves the revocatory purpose even if there remain will duplicates outstanding (Crossman v Crossman, 95 NY 145, 152 [1884]). That a testator has in fact revoked a will by destruction is strongly presumed where the will, although once possessed by the testator, cannot be found posthumously despite a thorough search … . The presumption, once raised, “stands in the place of positive proof” … and must be rebutted by the will’s proponent as a condition of probate

Here, the facts of record, adduced in critical part through the testimony of petitioner’s son, supported inferences that decedent executed her 1996 will in quadruplicate, with each document having been meant to possess the force of an original instrument; that one of the will duplicates was kept at the Clayton, New York home where decedent resided after her divorce; and that, after a thorough search, no will was found there. Plainly, these circumstances sufficed to raise the presumption that decedent revoked her 1996 will by destroying it. It is equally plain that that presumption was not rebutted. None of the other duplicate wills was produced or otherwise accounted for. And, although petitioner now urges that the unproduced duplicates were merely copies, the uncertain status of the will duplicates, although commented upon by the Surrogate, was never resolved. We are left then with a will admitted to probate upon a record sufficient only to disprove it.

It is precisely to avoid such an incongruous outcome that the governing rule of proceeding has long been that “[a]s soon as it is brought to the attention of the surrogate that there are duplicates of a will presented to him for probate, it is proper that he should require [the] duplicates to be presented, not for the purpose of admitting both as separate instruments to probate, but that he may be assured whether the will has been revoked, and whether each completely contains the will of the testator” (Crossman, 95 NY at 152…). Here, it is manifest that the Surrogate’s attention was drawn to the existence of will duplicates, but the consequently arising issues as to the will’s validity were not resolved as they should have been in accordance with Crossman’s instruction. Petitioner was required not merely to exclude the possibility, but to rebut the legal presumption of revocation, sufficiently raised by the ex-husband’s testimony as to the existence of will duplicates, one of which had been kept, but was not found after decedent’s passing, at her post-divorce residence.  Matter of Lewis, 2015 NY Slip Op 04674, CtApp 6-4-15

 

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Absence of Privity Between Beneficiary of an Estate and the Attorneys Who Represented the Estate in Medical Malpractice and Wrongful Death Actions Precluded Legal Malpractice Action by Beneficiary

The Third Department determined the plaintiff-beneficiary of an estate represented by defendants-attorneys in medical malpractice and wrongful death actions could not bring a legal malpractice action against the attorneys (based upon the medical malpractice and wrongful death actions) because no attorney-client relationship existed. Absent fraud or collusion, the absence of privity between the beneficiary and the attorneys precluded the legal malpractice action:

There is no question that a legal malpractice claim requires — in the first instance — “the existence of an attorney-client relationship” … . Plaintiff does not contend, and the record does not otherwise reflect, that he had a contractual relationship with defendants. Rather, plaintiff argues that because defendants represented [plaintiff’s mother] in her capacity as the administrator of decedent’s estate in both the medical malpractice and wrongful death actions and plaintiff, in turn, is a beneficiary of decedent’s estate, it necessarily follows that defendants were duty bound to represent plaintiff’s best interests in the context of those two actions. The flaw in plaintiff’s argument on this point is that “[i]n New York, a third party, without privity, cannot maintain a claim against an attorney in professional negligence, absent fraud, collusion, malicious acts or other special circumstances” … . Although a limited exception has been carved out with respect to an action brought by the personal representative of an estate, “strict privity remains a bar against beneficiaries’ and other third-party individuals’ estate planning malpractice claims absent fraud or other circumstances” … . Sutch v Sutch-Lenz, 2015 NY Slip Op 04692, 3rd Dept 6-4-15

 

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As a Contingent Remainder of the Subject Trust, the “Charitable Trust” Had the Right to Intervene in a Proceeding to Remove and Replace the Trustee of the Subject Trust

The Second Department determined that the contingent remainder, Charitable Trust, of the subject trust had standing to intervene in a proceeding which removed the father and appointed the mother trustee of the subject trust:

…[T]he Charitable Trust, as a contingent remainder of the subject trust, has standing to intervene in this proceeding …, and a real and substantial interest in the outcome of the proceeding …. Thus, the Supreme Court should have granted it leave to intervene as a party respondent (see CPLR 1012[a];[2], [3]…). Upon granting the Charitable Trust leave to intervene as a party respondent, the Supreme Court should have granted that branch of the motion which was to vacate the order …removing the father as the trustee of the subject trust and appointing the mother as successor trustee of the subject trust, and thereupon directed that the petition be amended by adding the Charitable Trust as a party respondent and that the Charitable Trust be permitted to serve a verified answer and counterclaims if it be so advised. Matter of Ramm v Allen, 2014 NY Slip Op 04015, 2nd Dept 6-4-14

 

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“Lack of Capacity to Sue” Defense Waived If Not Raised in Pleadings/Court Should Not Have Decided Summary Judgment Motion by Searching the Record and Ruling On Issues Not Raised by Anyone

In the context of a suit alleging conversion stemming from the handling of an estate, the Second Department determined the “lack of capacity to sue” defense had been waived because it was not raised by defendant in his pleadings.  The court further determined Surrogate’s Court exceeded its powers when it went beyond the issues placed before it plaintiff’s summary judgment motion, searched the record and decided the motion in defendant’s favor on grounds not raised by anyone:

[The defendant] waived the defense of lack of capacity by failing to raise such defense in a pre-answer motion to dismiss or in his answer to the amended complaint in the action (see CPLR 3211[e]…).

… [O]n a motion for summary judgment, the court is limited to the issues or defenses that are the subject of the motion before the court … . “A motion for summary judgment on one claim or defense does not provide a basis for searching the record and granting summary judgment on an unrelated claim or defense” … .

The Surrogate’s Court improperly searched the record and awarded summary judgment to [defendant] dismissing objections 1(i) and 9. [Plaintiff] moved for summary judgment on these objections solely on the grounds that he established that [defendant] converted funds from the father’s estate and failed to account for funds that the estate owed to [plaintiff]. [Defendant] did not cross-move for summary judgment dismissing those objections on the basis of the statute of limitations, nor did he argue it in opposition. In view of the limited scope of [plaintiff’s] motion, it was not appropriate to search the record and award summary judgment to [defendant] dismissing these objections upon arguments that were not raised … . Matter of Ray C., 2015 NY Slip Op 04134, 2nd Dept 5-13-15

 

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Questions of Fact Re: Whether a Deed Was Forged and Whether a Will Was Duly Executed

The Second Department determined there existed questions of fact whether a deed was a forgery and whether a will was duly executed.  In the course of the decision, the court explained: (1) there can be no bona fide purchasers or encumbrancers of real property based on a forged deed; (2) the transfer of title of real property devised under a will title vests on death not probate; (3) forged deeds are null and void ab initio; and (4) there was insufficient proof due execution of the will—no proof an attorney drafted the will or supervised its execution–no proof decedent possessed testamentary capacity:

Pursuant to Real Property Law § 266, a bona fide purchaser or encumbrancer for value is protected in his or her title unless he or she had previous notice of the alleged prior fraud by the seller … . However, a person cannot be a bona fide purchaser or encumbrancer for value through a forged deed, as it is void and conveys no title … . …

Generally, “title to real property devised under the will of a decedent vests in the beneficiary at the moment of the testator’s death and not at the time of probate” … . Here, however, since the validity of the will is being challenged by the petitioner, it was incumbent upon the respondents, as the proponents of the will, to prove due execution of the will and testamentary capacity … . …

… [T]he … evidence was insufficient to establish that the will was executed in accordance with the formalities required by law (see EPTL 3-2.1), and that the decedent was of sound mind and memory when he executed the will and understood the nature and consequences of executing the will … . While there is a presumption of regularity where the drafting attorney supervised the will’s execution …, here, there was no evidentiary support for the respondents’ conclusory contention that the will was drafted by [the attorney] or that he supervised the execution ceremony. Moreover, the respondents failed to adduce any evidence demonstrating that the decedent possessed testamentary capacity when he signed the will. Matter of Raccioppi, 2015 NY Slip Op 04135, 2nd Dept 5-13-15

 

Sole Heir Did Not Have Standing to Bring Action for Recovery of Estate Property—No Allegations of Misconduct by Personal Representative

The Fourth Department determined plaintiff the sole heir, did not have standing to bring his own action for recovery of the property of the estate because there were no allegations of misconduct on the part of the personal representative:

…[T]he estate representative is charged with the duty of recovering property of the estate, and that plaintiff, as decedent’s sole heir, has no independent cause of action, either in his own right or the right of the estate, to maintain an action for recovery of the property of the estate, absent extraordinary circumstances … . Extraordinary circumstances include collusion of the personal representative with others or an “unreasonable refusal” of the personal representative of the estate to commence an action … . Inasmuch as the extraordinary circumstances must relate directly to the actions of the personal representative of the estate, we conclude that the court erred in determining that the “unique and novel circumstances” of this case, i.e., “homicide, possible forgery, perjury, false statements, and possible conflicts of interest,” constitute the requisite extraordinary circumstances… . Castor v Pulaski, 2014 NY Slip Op 03386, 4th Dept 5-9-14

 

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Request for Petitioner’s Income Tax Records Properly Denied—Insufficient Showing the Desired Information Could Not Be Gained from Other Sources

Over a two-justice dissent, the Fourth Department determined petitioner could not be ordered to turn over his income tax records.  Petitioner claimed that he had provided the down payment and monthly mortgage payments for decedent’s home where petitioner resided. Petitioner further claimed that decedent promised the home to him in a verbal agreement (and therefore the home should not pass by the will to petitioner’s sister).  Respondent wanted access to petitioner’s tax records to see if petitioner had sufficient income to make the down payment:

We conclude that Surrogate’s Court properly denied respondent’s motion, inasmuch as respondent has not made a sufficiently strong showing that the information contained in petitioner’s income tax records “were indispensable to this litigation and unavailable from other sources” …, such as “other financial or business records” … . Indeed, respondent “failed to make any factual showing in this regard, since the hearsay affirmation[s] of [respondent’s] attorney [are] wholly conclusory” …, petitioner’s deposition testimony, the only exhibit submitted in support of the motion, accounted for petitioner’s employment history during the times in question, although in a vague manner …, and respondent did not establish that it sought the requested information from any alternate source… .  Matter of Monaco, 2014 NY Slip Op 03423, 4th Dept 5-9-14

 

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Divorce and Right to Equitable Distribution Did Not Abate Upon Husband’s Death

The Second Department determined the divorce action and the right to equitable distribution did not abate upon the husband’s death. The final adjudication of divorce had been made before the husband’s death and death did not abate a vested right to equitable distribution:

Contrary to the contention of the executor of the husband’s estate, the actions did not abate upon the death of the husband. The Supreme Court had made the final adjudication of divorce before the husband’s death, but had not performed the ” mere ministerial act of entering the final judgment'” … . Moreover, a cause of action for equitable distribution does not abate upon the death of a spouse … . ” Consequently, if a party dies in possession of a vested right to equitable distribution, and that right has been asserted during the party’s lifetime in an action in a court of this State, that right survives the party’s death and may be asserted by the estate'” … .  Charasz v Rozenblum, 2015 NY Slip Op 03798, 2nd Dept 5-6-15

 

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