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Complaint Stated Causes of Action for a Constructive Trust and Quantum Meruit

Plaintiff alleged the expenditure of resources for the development of a quarry on defendant’s land. Defendant had changed the locks to the property and refused plaintiff further access. In determining that plaintiff had stated causes of action for a constructive trust and quantum meruit, the Third Department explained the relevant criteria:

Supreme Court correctly denied the motion to dismiss the cause of action seeking to impose a constructive trust on the business property. This equitable remedy 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” … . To prove entitlement to this relief, a plaintiff must establish “a confidential or fiduciary relationship, a promise, a transfer in reliance thereon and unjust enrichment” … . The element of transfer has been interpreted to include the expenditure of effort and resources in reliance upon a promise to share in a property interest … .

Here, the complaint alleges that plaintiff had a confidential or fiduciary relationship with defendant, that defendant made promises that plaintiff and defendant had a partnership and that plaintiff had vested rights and interests in the quarry business and property, that plaintiff relied on these promises and the fiduciary relationship in contributing resources to develop the business, and that defendant breached these promises and would be unjustly enriched in the absence of a constructive trust. Deeming these allegations to be true, construing them liberally, and granting plaintiff the benefit of every favorable inference, as we must …, we find that the amended complaint adequately states a cause of action for the imposition of a constructive trust… .

The cause of action in quantum meruit requires a showing of “a plaintiff’s performance of services in good faith, acceptance of those services by a defendant, an expectation of compensation and proof of the reasonable value of the services provided” … . The complaint alleges that plaintiff acted in good faith and in the expectation of compensation in making the previously-discussed contributions to the business, that defendant accepted its services and contributions, and that plaintiff has been damaged in the amount of the reasonable value of its contributions. Plaintiff further submitted the affidavit of its principal (see CPLR 3211 [a] [7]…) , alleging that plaintiff contributed more than $200,000 toward the business as well as all of the knowledge, labor, equipment and other resources necessary for its development, that a substantial amount of processed material that it had paid to create remained on the property when plaintiff was locked out in 2011, and that defendants have continued to benefit from plaintiff’s contributions thereafter by selling materials from the business without compensating plaintiff accordingly. Thus, despite defendants’ contention that plaintiff’s services were performed primarily for its own benefit, we agree with Supreme Court that the complaint states a cause of action in quantum meruit … . Rafferty Sand & Gravel LLC v Kalvaitis, 2014 NY Slip Op 02656, 3rd Dept 4-17-14

 

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Attorneys Represent the Administrators Individually and Not the Estate Itself/Therefore an Estate May Seek Restitution of Attorney’s Fees Paid from the Estate for the Representation of an Executor Who Defrauded the Estate

After it had bee determined the first executor (Carbone) had looted the estate, the new executor sued the law firm which defended the first executor.  The Second Department determined that the law firm could not be sued by the estate for legal malpractice because the retainer agreement with the first executor did not encompass “administration of the estate.”  Therefore, absent allegations of fraud and collusion with the first executor, the law firm, which was not in privity with the estate, could not be sued for malpractice with respect to the estate.  However the cause of action for restitution, which alleged the payment of lawyers’ fees for the representation of the first executor from the estate, could go forward:

This Court has held that “an attorney represents the administrators individually and not the estate itself” … . Accordingly, an attorney may recover fees from the estate only where the services rendered benefit the estate … . Where a plaintiff asserts a cause of action for restitution, the ” essential inquiry'” is ” whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered'” … . In determining whether this equitable remedy is warranted, a court should ” look to see if a benefit has been conferred on the defendant under mistake of fact or law, if the benefit still remains with the defendant, if there has been otherwise a change of position by the defendant, and whether the defendant’s conduct was tortious or fraudulent'” … .Here, the plaintiff alleged that the [attorney’s] fees for representing Carbone were paid from estate assets even though those services were not beneficial to the estate and were, in fact, adverse to it. Thus, the plaintiff has pleaded facts sufficient to assert a cause of action for restitution … . Betz v Blatt, 2014 NY Slip Op 02554, 2nd Dept 4-16-14

 

Objections Based Upon Lack of Due Execution and Lack of Testamentary Capacity Properly Dismissed/Relevant Criteria Explained

The Second Department determined the objections to probate based upon lack of due execution and lack of testamentary capacity were properly dismissed:

In support of that branch of her motion which was for summary judgment dismissing the objection based on lack of due execution, the petitioner made a prima facie showing that the will was duly executed pursuant to EPTL 3-2.1. The deposition testimony of the attorney-drafter, who supervised the execution of the will and acted as an attesting witness, and of the second attesting witness, demonstrated that the statutory requirements for due execution were satisfied … . “Further, where, as here, the drafting attorney supervised the will’s execution, there is a presumption of regularity that the will was properly executed in all respects” … . “The attestation clause and self-proving affidavit accompanying the propounded will also give rise to a presumption of compliance with the statutory requirements” … . In opposition to the petitioner’s prima facie showing of entitlement to judgment as a matter of law dismissing the objection based on lack of due execution, the objectant relied on hearsay evidence, which, by itself, was insufficient to raise a triable issue of fact … .

The petitioner established her prima facie entitlement to judgment as a matter of law dismissing the objection based on lack of testamentary capacity by submitting the self-proving affidavit and the deposition testimony of the attesting witnesses. The petitioner’s submissions demonstrated that the decedent understood the nature and consequences of making the will, the nature and extent of her property, and the natural objects of her bounty … . In opposition, the objectant failed to raise a triable issue of fact as to whether the decedent lacked testamentary capacity … . Matter of Templeton, 2014 NY Slip Op 02445, 2nd Dept 4-9-14

 

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Suit by Beneficiaries to Recoup Estate Property, Alleging Breach of Fiduciary Duty by Executor, Allowed to Go Forward

The Third Department determined the beneficiaries of an estate had stated a cause of action to recoup property for an estate (the role of the executor).  The complaint alleged misappropriation of decedent’s assets and included a cause of action against the executor (DiMaggio) for breach of fiduciary duty:

Initially, we note that, absent extraordinary circumstances, beneficiaries of an estate generally do not have a right to bring an action seeking to recoup property for the estate since that role belongs to the executor … . However, such extraordinary circumstances may be implicated where the executor is allegedly directly involved in purported egregious conduct and self-dealing that negatively impacts the potential assets of the estate … . When asserting conduct involving fraud or undue influence, the complaint must set forth in detail the circumstances constituting the wrong (see CPLR 3016 [b]…). .

Plaintiffs’ amended complaint sets forth a series of purported acts by defendants occurring during the last two years of decedent’s life when she was allegedly suffering from cancer and depression. Among other things, defendants allegedly induced decedent to give DiMaggio power of attorney by telling decedent that she would retain control over her accounts, but then used the power of attorney to withdraw funds, modify ownership interest, and change beneficiaries on accounts. Plaintiffs contend that defendants convinced decedent to cash about $360,000 in United States savings bonds by informing her it was illegal to continue to hold the bonds and that the government would take all her money. Most of that money was moved into a trust that defendants allegedly falsely informed decedent would benefit her descendants when proceeds of the trust actually went to defendants and their families. Plaintiffs further assert thatDiMaggio, who was substituted for decedent’s daughter as executor when decedent executed a new will in 2007, neglected to make an effort to recover funds inappropriately diverted from the estate. Lewis v DiMaggio…, 516811, 3rd Dept 3-6-14

 

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Public Trust Doctrine Re: Allowing a Restaurant in a Public Park/License and Lease Characteristics Compared

In a full-fledged opinion by Judge Graffeo, the Court of Appeals determined that a the city’s allowing a restaurant to operate in a public park did not violate the public trust doctrine and the arrangement between the city and the restaurant was a valid license, not a lease (which would have required approval by the legislature):

Under the public trust doctrine, dedicated parkland cannot be converted to a non-park purpose for an extended period of time absent the approval of the State Legislature … . * * * … [A]lthough it is for the courts to determine what is and is not a park purpose, … the Commissioner enjoys broad discretion to choose among alternative valid park purposes. Observing that restaurants have long been operated in public parks, we [in 795 Fifth Ave Corp v City of New York, 15 NY2d 221] rejected plaintiffs' public trust claim, holding that they could show only a “difference of opinion” as to the best way to use the park space and that this “mere difference of opinion [was] not a demonstration of illegality”… . * * *

We have stated that parkland cannot be leased, even for a park purpose, absent legislative approval … . * * *

A document is a lease “if it grants not merely a revocable right to be exercised over the grantor's land without possessing any interest therein but the exclusive right to use and occupy that land” … . It is the conveyance of “absolute control and possession of property at an agreed rental which differentiates a lease from other arrangements dealing with property rights” …. . A license, on the other hand, is a revocable privilege given “to one, without interest in the lands of another, to do one or more acts of a temporary nature upon such lands” … . That a writing refers to itself as a license or lease is not determinative; rather, the true nature of the transaction must be gleaned from the rights and obligations set forth therein. Finally, a broad termination clause reserving to the grantor “the right to cancel whenever it decides in good faith to do so” is strongly indicative of a license as opposed to a lease … . Union Square Park Community Coalition Inc v New York City Department of Parks and Recreation, 17, CtApp 2-20-14

 

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Malpractice Cause of Action Stated Against an Attorney Who Died Just Before the Statute of Limitations on Plaintiffs’ Action Ran Out

In a full-fledged opinion by Justice Tom, the First Department determined that plaintiffs had stated a valid malpractice claim against an attorney who died just before the statute of limitations expired:

That a cause of action might accrue when the plaintiff actually sustains a loss, however, does not require the conclusion that an attorney is absolved of responsibility for any and all consequences of his neglect of the matter simply because it occurred prior to accrual of an actionable claim. Giving plaintiff the benefit of every possible favorable inference that can reasonably be drawn from the pleadings … , as we must on a pre-answer motion to dismiss … it appears that the inaction of counsel rendered the lapse of plaintiff’s cause of action not merely possible—or even probable—but inevitable. On a motion directed at the sufficiency of the pleadings, the issue is whether the facts alleged fit within any cognizable theory of recovery, not whether the complaint is artfully pleaded …, and the circumstances of this matter do not warrant dismissal of the action, at this juncture, as against the … defendants. Cabrera v Collazo, 2014 NY Slip Op 00622, 1st Dept 2-4-14

 

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“Undue Influence” and “Fraud” Criteria Explained Re: Objections to Probate of a Will

The Second Department, in affirming Surrogate’s Court’s dismissal of objections to the probate of a will, explained the criteria for a demonstration of “undue influence” and “fraud:”

“An objectant contesting the admission of a propounded instrument to probate based on the alleged exercise of undue influence must show that the influence exercised amounted to a moral coercion, which restrained independent action and destroyed free agency, or which, by importunity which could not be resisted, constrained the testator to do that which was against his free will and desire, but which he was unable to refuse or too weak to resist'” … . “An objectant seeking to establish that a will is the product of fraud has the burden of proving by clear and convincing evidence that the proponent of the will knowingly made false statements to the testator to induce him or her to make a will which disposed of property in a manner different from that in which the testator would otherwise have disposed of the property” … . The petitioners demonstrated their prima facie entitlement to judgment as a matter of law by showing, among other things, that the will had been duly executed, that the decedent possessed testamentary capacity, and that no undue influence or fraud had been exercised upon the decedent … . In opposition, the objectants failed to submit any evidence, beyond conclusory allegations and speculation, that the petitioners actually exercised undue influence over the decedent or that any fraudulent statements were made to the decedent, that the proponents of the made statements they knew to be false, or that any such statements caused the decedent to change his will… . Matter of Mele, 2014 NY Slip Op 00512, 2nd Dept 1-29-14

 

Question of Fact Whether Wife of Decedent Had Abandoned Decedent

The Third Department determined that a question of fact had been raised about whether decedent’s wife had abandoned decedent such that she should be disqualified as surviving spouse:

A person may be disqualified from inheriting from his or her deceased spouse where the surviving “spouse abandoned the deceased spouse, and such abandonment continued until the time of death” (EPTL 5-1.2 [a] [5]).  The party asserting abandonment bears the burden of establishing that the surviving spouse departed from the marital abode and that such departure was both “unjustified and without the consent of the other spouse” ,,, .  In determining whether one spouse has abandoned the other, a court employs the same standards as are applied in the context of an action for a separation or divorce based on abandonment … . Matter of Yengle…, 516840, 3rd Dept 1-9-14

 

Decedent’s Divorce Did Not Invalidate Provisions of Her 1996 Will Which Made Her Former Father-In-Law the Alternate Executor and Alternate Beneficiary/Proof Was Insufficient to Demonstrate the 1996 Will Had Been Revoked by a Lost Will

In a full-fledged opinion by Justice Scudder, over a lengthy dissent by Justice Peradotto, the Fourth Department affirmed Surrogate’s Court’s determination that a 1996 will must be admitted to probate and any provisions of the will not affected by decedent’s divorce must be honored.  The petitioner was the (divorced) decedent’s former father-in-law who was named alternate executor and alternate beneficiary of the 1996 will.  Under New York law, decedent’s divorce revoked the testamentary distribution to her ex-husband and revoked her ex-husband’s appointment as executor, but the provisions of the will relating to decedent’s former father-in-law remained viable. The objectants argued that the 1996 will had been revoked by a subsequent will which was lost. The Fourth Department found that there was insufficient evidence presented at the hearing to show that the lost will was duly executed and attested and, therefore, there was insufficient evidence the prior will had been revoked:

Pursuant to New York law, the testamentary distribution to the ex-husband and his appointment as executor are revoked, but all other provisions of the will remain valid (see EPTL 5-1.4 [a], [b]…). * * *

We are constrained to conclude that the evidence at the hearing is insufficient to establish that the Lost Will was duly executed and attested … .  With respect to New York’s EPTL 3-2.1, there was no testimony that the document was signed or acknowledged by decedent in the presence of the witnesses. Furthermore, there was no evidence that decedent declared to the witnesses that the document was her will.  Finally, although the neighbor testified that decedent’s signature appeared on the document, there was no evidence that the signature was at the end of the document. Matter of Lewis…, 1170, 4th Dept 1-3-14

 

Relatives of Persons Buried in Defendant Cemetery Could Not Sue As Beneficiaries of the Charitable Trust Set Up to Ensure Perpetual Care of the Cemetery Plots

In a full-fledged opinion by Justice Saxe, the First Department determined that the relatives of persons buried in defendant cemetery did not have standing to sue as beneficiaries of a charitable trust which was supposed to ensure perpetual care of the cemetery plots.  [However, one of the plaintiffs, who himself was a donor to the charitable trust, did have standing to sue:

EPTL article 1, which governs charitable trusts, specifically includes trusts for the perpetual care of graves: “Dispositions of property in trust for the purpose of the perpetual care … of cemeteries or private burial lots in cemeteries … shall be deemed to be for charitable and benevolent purposes” (EPTL 8-1.5). The statute directs the State Attorney General to protect and enforce the interests and rights of the beneficiaries: “The attorney general shall represent the beneficiaries of such dispositions for religious, charitable, educational or benevolent purposes and it shall be his duty to enforce the rights of such beneficiaries by appropriate proceedings in the courts” (EPTL § 8-1.1[f] [emphasis added]). “The obvious purpose of this provision was to provide a mechanism for enforcement of trusts whose beneficiaries were unascertainable” … . * * *

… [A]llowing relatives to bring lawsuits as to each lot, plot or grave could create endless litigation, substantially depleting the trust assets. Enforcement of the subject charitable trusts is therefore best left to the Attorney General, so as not to expose the trust funds to money-draining multiple lawsuits, and to avoid setting a precedent of allowing a broad, vague beneficiary base to commence multiple actions against a charitable trust. Lucker v Bayside Cemetary, 2013 NY Slip Op 08835, 1st Dept 12-31-13

 

 

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