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Aikaterini P. VITHOULKAS, Plaintiff, v. Frank META, et al., Defendants.
The following papers numbered below were read on this motion by plaintiff Aikaterini Vithoulkas for leave to renew her prior motion for provisional relief and on this cross motion by defendant Frank Meta and defendant Evelina Meta for summary judgment dismissing the complaint against them
Papers Numbered․NYSCEF Document Nos. 35-55, 105-160, & 162
Upon the foregoing papers it is ordered that the cross motion by the defendants for summary judgment is denied. Leave to renew is granted to the plaintiff, but, upon renewal, the court again denies the plaintiff's application for provisional relief.
I. The Allegations of Plaintiff Aikaternini Vithouklas
The plaintiff alleges the following:
In or about 2011, defendant Frank Meta, a handyman, “befriended” the plaintiff and her parents, now both deceased. Although defendant Meta had no familial relationship with them, he held himself out as a relative. The plaintiff's parents owned real property, and defendant Meta obtained information concerning the tenants and the rents they paid. After the death of the plaintiff's mother on January 11, 2012, the plaintiff's father, as the surviving joint tenant, signed a deed dated March 7, 2012 transferring premises known as 31-05 24th Avenue, Astoria, Queens County, New York (“the tire shop property”) to himself and the plaintiff. (The tire shop property is comprised of commercial units, currently used for a tire shop and an electrical shop, and residential units.)
As a result of defendant Meta's false representations, and at his urging, the plaintiff's father, suffering from Parkinson's disease, signed another deed transferring his interest in the tire shop property to himself, the plaintiff, and defendant Meta, who paid nothing for his share. On or about November 13, 2014, defendant Meta hired an attorney, James Lee, Esq., who prepared another deed, which was executed and which transferred the father's remaining interest in the tire shop property to the plaintiff and defendant Meta. The plaintiff's father died on April 23, 2015. Defendant Meta found tenants for the tire shop property, but he only pays a nominal sum to the plaintiff and does not account for income and expenses. The plaintiff alleges that the March 7, 2012 deed is the last valid recorded deed for the tire shop property, and it vests her as the sole owner of that property.
On April 10, 2000, the plaintiff's parents purchased property known as 25-81 31st Street, Astoria, New York which had been improved by a three family dwelling (the three family dwelling). The plaintiff's father, who had become the sole owner through operation of law, executed a deed to the three family dwelling on March 7, 2012 transferring the property to himself and to the plaintiff as joint tenants with a right of survivorship. For some reason, the plaintiff and the plaintiff's father transferred the three family dwelling back to the latter alone, but on or about June 19, 2013, the plaintiff's father executed another deed again transferring the three family dwelling to himself and to the plaintiff.
On June 19, 2013, the plaintiff and her father placed a mortgage in the amount of $300,000 obtained from the Quontic Bank on the three family dwelling. About six weeks later, on or about July 31, 2013, the plaintiff and her father, in declining physical and mental health because of Parkinson's disease which made him vulnerable to defendant Meta's fraudulent misrepresentations, executed another deed transferring the three family dwelling to the plaintiff, her father, and to defendant Meta who paid nothing for his one-third interest. Pursuant to a deed prepared on August 14, 2014, the three owners of the three family dwelling conveyed the property to the plaintiff and defendant Meta as equal joint tenants with a right of survivorship. The grantors executed the deed without the knowledge of Quontic Bank.
On April 23, 2015, the day her father died, defendant Frank Meta took the plaintiff to a closing which he falsely represented to her was only for a mortgage to be placed on the three family dwelling. Instead, in a vulnerable emotional state because of her father's death a few hours before, she unknowingly signed a deed for the premises, transferring her entire interest to defendant Frank Meta and defendant Evelina Meta, his wife. The plaintiff, without legal representation at the transaction, thought she was just signing papers for a new mortgage. The defendants subsequently placed a $500,000 mortgage on the three family dwelling. The plaintiff did not share in the mortgage proceeds, nor did she receive any other consideration for the transfer. The defendants have collected the rents from the three apartments which comprise the dwelling.
The two subject properties have a combined market value of over $3,000,000 , and they generate a monthly income of approximately $15,000. Defendant Meta and his wife did not pay a dime for their purported complete ownership of the three family dwelling, nor did defendant Meta pay a dime for his purported interest in the tire shop property. The plaintiff has not received any monthly income from the three family dwelling since September, 2015. Defendant Meta's company, Bruni Electric, Inc., occupies one of the commercial units in the tire shop property, which should generate a monthly rent of approximately $2,500, but the defendant pays nothing. On December 5, 2017, defendant Meta issued a check to the plaintiff in the amount of $195.19 which he told her was her share of the rent from the tire shop property.
The plaintiff has a small monthly income from a part time job that pays the minimum wage, and she needs the rents generated by the subject properties to support herself.
II. The Allegations of Defendant Frank Meta
Defendant Frank Meta alleges the following:
By a deed dated July 31, 2013, plaintiff Katerina's father, John Vithoulkas (Johnny), conveyed the tire shop property to himself, to the plaintiff, and to defendant Frank Meta as joint tenants with a right of survivorship. By a second deed dated July 31, 2013, Johnny conveyed the three family dwelling to plaintiff Katerina and defendant Meta. While there may be technicalities affecting these deeds, defendant Meta took valid interests in the two properties. Although not related by blood to defendant Meta, Johnny regarded him as family, and, moreover, Johnny had concerns about plaintiff Katerina's financial responsibility.
According to an affidavit executed by defendant Meta on November 8, 2016: “Johnny began confiding in me about his concerns for Katerina. She was in her early 20's. She did not work. Johnny told me that she often was out late at night. He was not sure what she was doing on her late nights. He worried a lot about his properties, and what would happen if he died and they were left in her hands. He was concerned about this because Katerina had no income from a job and often was irresponsible with the money she had. He therefore worried that she would be unable to maintain the properties and preserve them as income-generating assets and a home. As a result, he was worried about Katerina's well-being, should something happen to him. He wanted the properties left in safe hands, for his daughter's benefit, if he was not around.” (¶ 29)
In or around the fall of 2014, the parties, facing a problem with the July 31, 2013 deed for the three family dwelling in that the transfer had been made without the consent of a mortgagee bank, decided to refinance the property. However, because plaintiff Katerina, long unemployed, would have difficulty in obtaining the mortgage, they decided to place title to the three family dwelling in defendant Meta's name alone. The parties agreed that while the plaintiff's name would not appear on the deed, she would share in the ownership and income of the property. “I made that promise to Johnny and I will keep it today.” (Affidavit dated November 8, 2016, ¶ 48.) (Italics in the original.) Johnny was alive at the time, and he approved of the arrangement. Pursuant to the agreement of the parties, plaintiff Katerina and defendant Meta executed a deed dated April 23, 2015, conveying the three family dwelling to the latter and his wife, who the bank wanted to be liable also as a mortgagor.
Pursuant to a deed dated November 13, 2014, plaintiff Katerina and defendant Frank Meta now own the tire shop property as equal tenants in common.
Shortly after the death of her father, the plaintiff, not defendant Meta, began to collect the rents from both the three family dwelling and the tire shop property. However, in or around September, 2015, when defendant Meta learned that plaintiff Katerina had incurred excessive personal expenses, run up significant unpaid credit card expenses, and had left some of the property bills unpaid, they agreed that defendant Meta would collect the rents and pay both the property bills and her personal bills. In April, 2016, Katerina decided that she no longer wanted defendant Meta to pay her personal bills, so the parties decided to share the rental income from the tire shop property on an equal basis. The plaintiff signed a receipt for each time defendant Meta paid her a share of the rents.
The commercial tenant in the tire shop property has paid the rent due into an escrow account until this case is resolved, and neither defendant Meta nor the plaintiff has received the rental payments. One of the tenants in a residential unit in the tire shop property moved out, the unit remains vacant, and defendant Meta has not collected any rents since November, 2017.
III. Procedural History
The plaintiff began this action by the filing of a summons and a complaint on August 15, 2016. The first cause of action is for fraud allegedly committed in connection with the tire shop property. The second cause of action seeks a declaratory judgment in connection with the tire shop property. The third cause of action seeks a determination of claims to real property (the tire shop property) pursuant to Article 15 of the RPAPL. The fourth cause of action is for an accounting in connection with the tire shop property. The fifth cause of action is for unjust enrichment in connection with the tire shop property. The sixth cause of action seeks the appointment of a receiver in connection with the tire shop property. The seventh cause of action is for fraud allegedly committed in connection with the three family dwelling. The eighth cause of action seeks the imposition of a constructive trust over the three family dwelling. The ninth cause of action seeks a declaratory judgment concerning the three family dwelling. The tenth cause of action seeks a determination of claims to real property (the three family dwelling) pursuant to Article 15 of the RPAPL. The eleventh cause of action is for injunctive relief. The twelfth cause of action is for the appointment of a receiver.
IV. Legal Discussion
A. The Defendants' Motion for Summary Judgment
The opponent of a motion for summary judgment has the burden of producing evidence sufficient to show that there is a genuine issue of fact which must be tried. (Alvarez v. Prospect Hospital, 68 NY2d 320.)
In order to prove a cause of action for fraud, a plaintiff must show that (1) the defendant made material representations that were false or concealed a material existing fact, (2) the defendant knew the representations were false and made them with the intent to deceive the plaintiff, (3) that the plaintiff was deceived, (4) the plaintiff justifiably relied on the defendant's representations, and (5) the plaintiff was injured as a result of the defendant's representations. (See, Lama Holding Co. v. Smith Barney, 88 NY2d 413; New York Univ. v. Continental Ins. Co., 87 NY2d 308; Watson v. Pascal, 27 AD3d 459; Cerabono v. Price, 7 AD3d 479; New York City Transit Authority v. Morris J. Eisen, P.C., 276 AD2d 78; American Home Assur. Co. v. Gemma Const. Co., Inc., 275 AD2d 616; Swersky v. Dreyer & Traub, 219 AD2d 321; accord, Ernest Edward Badway New York Causes of Action: Elements & Defenses 2018 (New York Law Journal publishers 2018).
A false representation of a present intent can provide a basis for a cause of action sounding in fraud. (See, Starr v. Akdeniz, 162 AD3d 948; Neckles Builders, Inc. v. Turner, 117 AD3d 923) “A false statement of intention is sufficient to support an action for fraud, even where that statement relates to an agreement between the parties * * *.” (Graubard Mollen Dannett & Horowitz v. Moskovitz, 86 NY2d 112, 122; see, El Entm't U.S. LP v. Real Talk Entm't, Inc., 85 AD3d 561.)
Based on all of the facts and circumstances of this case, the Court finds that there is an issue of fact concerning whether defendant Meta made false representations to the plaintiff's father and to the plaintiff concerning his intent to hold the subject properties for the plaintiff's benefit. According to defendant Meta's own statements, “ [h]e wanted the properties left in safe hands, for his daughter's benefit, if he was not around.” (Emphasis added.) Defendant Meta also states:” I made that promise to Johnny [that the plaintiff would share in the ownership and benefits of the three family dwelling] and I will keep it today.” (Affidavit dated November 8, 2016, ¶ 48[italics in original].)
According to the plaintiff's attorney, “Frank Meta stated in his prior affidavit and at his deposition held on August 15, 2017 that he intended to act and was acting in a fiduciary relationship to [the plaintiff]— in the capacity of a poor man's trustee. * * * Frank Meta made several promises to [the plaintiff's] father and [to the plaintiff] * * *.” The record shows that, under all of the circumstances of this case, there is an issue of fact pertaining to whether defendant Meta falsely represented his intent to hold the subject properties for the plaintiff's benefit.
“Fraud may arise from words or conduct; fraudulently producing a false impression in the mind of another party is the gist of a cause of action for deceit, and where this is accomplished, it is unimportant whether the means of accomplishing it are words or acts of the defendant. With regard to modes of perpetration, fraud may be effected by misrepresentation, concealment, or false pretenses” (60A NY Jur2d, “ Fraud and Deceit,” § 20.) “A fraud may be perpetrated by false pretenses or by any trick, device, or scheme calculated to injure another. The common characteristic of cases involving fraudulent devices or false pretenses is the deprivation of another's right, money, or property by artful and deceptive words or acts that, when the facts are known, prove to have been more or less obviously said or done with the intention to defraud.” (60A NY Jur 2d.” Fraud and Deceit,” § 23.)
In the case at bar, the parties offer sharply conflicting versions of the facts concerning how defendant Meta managed to acquire sole title to properties allegedly worth approximately $3,000,000 without paying a dime in consideration. Whether he managed to acquire the properties through a fraudulent scheme involves issues which should be heard and determined by the trier of fact. There are issues of fact and credibility in this case which are inappropriate for summary judgment treatment. (See, Chimbo v. Bolivar, 142 AD3d 944; Bi Bo Chiu v. Malik, 86 AD3d 548; Dayan v. Yurkowski, 238 AD2d 541; T & L Redemption Center Corp. v. Phoenix Beverages, Inc., 238 AD2d 504.)
Turning to the cause of action for unjust enrichment, such a cause of action arises when one party possesses money or obtains a benefit that in equity and good conscience they should not have obtained or possessed because it rightfully belongs to another * * *.” (Mente v. Wenzel, 178 AD2d 705, 706; see, Strong v. Strong, 277 AD2d 533). To state a claim for unjust enrichment, the plaintiff must allege “that (1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered * * *.” ( Mandarin Trading Ltd. v. Wildenstein, 16 NY3d 173, 182 [brackets and internal quotation marks omitted]; Georgia Malone & Co., Inc. v. Rieder, 19 NY3d 511, 516.). In the case at bar, the plaintiff produced sufficient evidence to show that there are genuine issues of fact to be tried regarding the elements of a cause of action for unjust enrichment.
Turning to the cause of action for the imposition of a constructive trust, in order to have a constructive trust imposed, a plaintiff generally must “plead and prove four essential elements: (1) a confidential or fiduciary relationship, (2) a promise, express or implied, (3) a transfer in reliance thereon, and (4) unjust enrichment caused by the breach of the promise * * *.” (Valvo v. Spitale, 305 AD2d 668, 669; Sanxhaku v. Margetis, 151 AD3d 778; see, Sharp v. Kosmalski, 40 NY2d 119; Lipton v. Donnenfeld, 5 AD3d 356; accord, Ernest Edward Badway New York Causes of Action: Elements & Defenses 2018 (New York Law Journal publishers 2018) (containing excellent discussion).
In Cullen v. Torsiello, 156 AD3d 680 (2nd Dept. 2017), the Second Department, reversing the court below, recently emphasized “the broad and flexible constructive trust doctrine.”
In New York, “a constructive trust 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.” Sharp v. Kosmalski, 40 NY2d 119 (1976) (alteration and internal quotation marks omitted). Constructive trust is “the formula through which the conscience of equity finds expression,” and thus “[w]hen property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.” Simonds v. Simonds, 45 NY2d 233 (1978) (internal quotation marks omitted).
The purpose of the constructive trust doctrine “is to prevent unjust enrichment, although unjust enrichment does not necessarily implicate the performance of a wrongful act.” Counihan v. Allstate Ins. Co., 194 F.3d 357, 361 (2nd Cir. 1999). Such “[u]njust enrichment results when a person retains a benefit which, under the circumstances of the transfer and considering the relationship of the parties, it would be inequitable to retain.” Id.; see also, Simonds, 45 N.Y2d 233 (“What is required, generally, is that a party hold property under such circumstances that in equity and good conscience he ought not to retain it.” (internal quotation marks omitted) ).
Four factors have been set forth for evaluating whether a constructive trust should be imposed: “(1) a confidential or fiduciary relation, (2) a promise, (3) a transfer in reliance thereon and (4) unjust enrichment.” Sharp, 40 NY2d 119. These factors, however, are only guidelines, as the “constructive trust doctrine is not rigidly limited.” Simonds, 45 NY2d 233; see also Counihan v. Allstate Ins. Co., 194 F.3d at 362 (“[W]e have observed that, although these factors provide important guideposts, the constructive trust doctrine is equitable in nature and should not be rigidly limited.” (alteration and internal quotation marks omitted). The New York Court of Appeals aptly and eloquently stated that the applicability of the constructive trust doctrine “is limited only by the inventiveness of men who find new ways to enrich themselves unjustly by grasping what should not belong to them.” Latham v. Father Divine, 299 NY 22, 27 (1949).
Almost seventy years later, those memorable words in Latham v. Father Divine still ring true. As long as the unprincipled knavery and manipulative misconduct of deceitful predators continue to victimize the trusting, vulnerable, and unwary, courts are adept at using the constructive trust doctrine to combat such betrayal, greed, and treachery. “The doctrine of constructive trust is not limited to that subspecies, but is given broad scope to flex in response to all human implications of the transaction, to remedy whatever knavery ingenious wrongdoers can invent, to give expression to the conscience of equity, and to satisfy the demands of justice.” Nastasi v. Nastasi, 26 AD3d 32, 38 (2nd Dept. 2005). “The constructive trust doctrine is given broad scope to respond to all human implications of a transaction in order to give expression to the conscience of equity and to satisfy the demands of justice.” Kaprov v. Stalinsky, 145 AD3d 869, 872 (2nd Dept. 2016), lv. to appeal denied, 29 NY3d 913 (2017).
For the purposes of this cause of action, a confidential relationship can exist between family members (see, Igneri v. Igneri, 125 AD3d 813 [uncle and niece] ), and defendant Meta himself alleges that the plaintiff's father regarded him as family. “Over time, I became like family with Johnny and his wife.” In any event, the doctrine of constructive trust “ is available to prevent unjust enrichment in a wide range of circumstances” and “[t]he factors are not rigidly applied but are flexible, and a constructive trust will be imposed to satisfy the demands of justice * * *.” (Lipton v. Donnenfeld, 5 AD3d 356, supra; Sanxhaku v. Margetis, 151 AD3d 778, supra.)
In the case at bar, the plaintiff produced sufficient evidence to show that there are genuine issues of fact to be tried regarding the elements of a cause of action for the imposition of a constructive trust.
The plaintiff's case is sufficient to withstand this motion for summary judgment.
B. Provisional Relief for the Plaintiff
Although the Court will permit the plaintiff to renew her prior cross motion for provisional relief that was denied by decision and order of this Court dated January 20, 2017 (one paper), the Court denies the plaintiff's renewed motion on substantive grounds. The plaintiff is again essentially seeking to obtain part of the rents generated by the subject properties. In light of the existence of sharp issues of fact pertaining to the merits of the plaintiff's case (see, Buchanan Capital Markets, LLC v. DeLucca, 144 AD3d 508), the Court again finds that provisional relief is unwarranted. There are also sharp issues of fact pertaining to whether defendant Meta is paying the plaintiff her share of the rents.
The plaintiff's remedy is to press for an early trial date. The Court notes that this case is already in the Trial Scheduling Part with the next appearance set for December 6, 2018.
The foregoing constitutes the decision, order, and opinion of the Court.
Salvatore J. Modica, J.
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Docket No: 704554/2017
Decided: October 03, 2018
Court: Supreme Court, Queens County, New York.
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