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IN RE: the Petition by Chava Wolin, as Administrator C.T.A. of the Estate of Leo Ziegel, Deceased, To Discover Property and Obtain Information Withheld.
Petitioner in this SCPA 2103 proceeding, Chava, moves for summary judgment granting the petition seeking turnover of property allegedly belonging to the estate from respondent, Annette. Respondent cross-moves for summary judgment dismissing the petition.1
Decedent died testate on April 4, 2014 survived by three children: Annette, Doris, and a son Uri who post-deceased decedent in 2015. Annette, the nominated executor in decedent's will dated March 11, 2009 filed the instrument but did not seek to admit it to probate purportedly because there were no testamentary assets. Chava, Uri's daughter and the administrator of his estate, thereafter petitioned for probate and limited letters of administration c.t.a. were granted to her on January 2, 2018. The letters were restricted to the collection of $250,000.00, which was the amount of decedent's sole bequest to Uri.
The verified petition alleges that decedent had an ownership interest in R & Z Metal ("R & Z"), a scrap metal company that ceased operations in April 2009 and was dissolved in September 2010, about four years prior to decedent's death. R & Z's 2009 corporate tax returns show that distributions were made that year to decedent and his partner, each receiving a payout of $1,750,000.00. The petitioner seeks turnover of $1,620,000.00 of decedent's share that was allegedly transferred from decedent to respondent during the period of May 2009 through March 2010 because she alleges decedent lacked capacity to handle his financial affairs due to Alzheimer's dementia. Petitioner argues that this money was intended to be part of decedent's estate and that respondent unlawfully received it, retained it, and continues to possess it. Additional grounds for turnover of the money include allegations that the transfers to respondent were due to fraudulent misrepresentations and undue influence, and that it was a breach of fiduciary duty to accept and retain the money.
Notably, petitioner fails to comply with the drafting requirement for pleadings that "[s]eparate causes of action . . . shall be separately stated and numbered" (CPLR 3014). Nevertheless, inasmuch as a single set of material facts appears to be involved in this case, regardless of the theory of liability, and respondent has not claimed any prejudice, the drafting defects are ignored (CPLR 3026).
For each of the several theories of liability stated, petitioner demands the same relief in the addendum, as follows:
1) Respondent turnover to the estate the sum of $1,620,000.00, together with interest accrued since 2009 and 2010;
2) Sanctions against respondent for giving false deposition testimony in the prior turnover proceeding (File No. 2015-4928/E); and
3) Sanctions against respondent for failure to provide responsive discovery in the prior turnover proceeding (File No. 2015-4928/E)
Respondent's verified answer interposes specific denials to the allegations of the petition and raises, inter alia, the affirmative defense that this proceeding is barred by the statute of limitations.
The proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form to demonstrate the absence of any material issues of fact (Ferluckaj v Goldman Sachs & Co., 12 NY3d 316 ; Alvarez v Prospect Hosp., 68 NY2d 320, 324 ; see Trustees of Columbia Univ. in the City of NY v D'Agostino Supermarkets, Inc., 36 NY3d 69 ; Zuckerman v City of New York, 49 NY2d 557, 562 ; Friends of Animals, Inc. v Associated Fur Mfrs., Inc., 46 NY2d 1065 ). "Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers" (Winegrad v New York Univ. Med. Center, 64 NY2d 851, 853 ; Tulino v Pipa, 162 AD3d 709 [2d Dept 2018]).
Initially, the court observes that counsel follow an unorthodox procedure to assert and defend their claims for relief. First, petitioner submits an unaffirmed document titled "Statement of Undisputed Material Facts" comprised of 173 separately enumerated paragraphs containing statements of purported facts obtained through the discovery process. These "undisputed" facts were contradicted by an unaffirmed document submitted by respondents' counsel titled "Counter-Statement of Undisputed Material Facts" which admits, denies, explains or distinguishes petitioner's statements, and further sets forth an additional 38 paragraphs of purported undisputed material facts gleaned from discovery. A final submission, entitled "Response to Respondent's Counterstatement of Undisputed Material Facts," is provided by petitioner which includes denials and disputations of respondents' counterstatements.
Neither the SCPA nor the Surrogate's Court Rules (22 NYCRR 207 et seq.) envision or contemplate that a Statement of Undisputed Material Facts ("Statement") be submitted on a summary judgment motion. CPLR 3212 (a) requires that a motion for summary judgment "be supported by affidavit, by a copy of the pleadings and by any other proof, such as depositions and written admissions" (CPLR 3212 [a] [emphasis added]). Counsel aver that these Statements must be considered because SCPA 102, which sets the priority for application of laws in this court, requires that the Uniform Rules for the Supreme Court and the County Court (22 NYCRR 202.8-g) be applied.
SPCA 102 provides that "[t]he CPLR and other laws applicable to practice and procedure apply to the surrogate's court except where other procedure is provided by this act" (emphasis added). The CPLR therefore applies in the absence of a specific provision in the SCPA or EPTL. There are also specific Uniform Rules governing practice in the Surrogate's Courts that have been enacted (22 NYCRR § 207). Likewise, Uniform Rules for the Supreme and County courts have separately been enacted (22 NYCRR § 202).
Contrary to counsel's argument regarding the order of priority of laws and rules applicable to this court, 22 NYCRR § 202 is specifically "applicable to civil actions in the Supreme Court and the County Court" (22 NYCRR § 202.1 [a]). Likewise, the Surrogate's Court rules (22 NYCRR 207 et seq.) expressly limit their application to the Surrogate Courts (see 22 NYCRR 207.1 [a]). Despite numerous attempts to merge these courts, the Surrogate's Court is still a separate and distinct entity from both the Supreme Court and County Courts (NY Const, art VI, § 12). The aforementioned court rules are not legislatively endorsed or created but are established by various advisory committees and adopted by the Chief Administrative Judge. They are not laws as contemplated by SCPA 102.
Counsel for the respective parties rely upon Estate of Maloy, 75 Misc 3d 390 (Sur Ct, Monroe County 2022) as authority for the proposition that 22 NYCRR 202.8-g [c] applies to Surrogate's Courts. In Maloy, the Surrogate found that 22 NYCRR 202.8-g applied to the Surrogate's Court by operation of SCPA 102. The Maloy case, which interpreted the prior version of the rule containing language mandating the submission of these Statements, is non-binding on this court, without precedential value and, in this court's opinion, completely erroneous concerning the ability of a Uniform Court Rule to supersede a statute. As stated above, the CPLR, SCPA and EPTL are laws legislatively adopted. The Uniform Rules do not have such cachet. It is axiomatic that the desire and intent of the legislature, as expressed in statute, cannot be vitiated by administrative fiat set forth in a court rule (see Statutes § 73). While obviously, each Surrogate is free to adopt whatever procedures they deem productive, no Surrogate is bound to apply court rules which clearly, on their face, are inapplicable to our practice.
In any event, as a practical matter, given the size, breadth and contradictory nature of the competing "Undisputed Facts," they are useless. Accordingly, the court finds that the Statement, Counter-Statement and Response to Counter-Statement prepared by respective counsel, which are not in evidentiary form, are disregarded from consideration.
Respondent moves for summary judgment arguing that the turnover proceeding is barred by the applicable statute of limitations. In support thereof are submitted, inter alia, the pleadings, the transcript of petitioner's examination before trial and supporting documents.
A turnover proceeding pursuant to SCPA 2103 is likened to an action for conversion or replevin and a three-year statute of limitations is applied (CPLR 214 ; see Matter of Chustckie, 203 AD3d 820, 822 [2d Dept 2022]; Matter of Asch, 164 AD3d 787, 788 [2d Dept 2018]). "A conversion cause of action accrues and the limitations period begins to run on the date the conversion actually occurred" (Matter of Asch, 164 AD3d at 788; Matter of Chung Li, 95 AD3d 881, 881-882 [2d Dept 2012]).
Here, the petition alleges that Annette converted $1,620,000.00 that had been the disbursed from the R & Z bank account from March 2009 through March 2010. Respondent correctly argues that, based upon these uncontroverted dates, the three-year statute of limitations expired in March 2013 while decedent was still alive. Respondent also submits petitioner's testimony averring that she never met the decedent or had any form of communication with him. Based upon the evidence presented, petitioner clearly lacks personal knowledge of the alleged conversion, and her theory is merely based upon a post-mortem review of banking and medical records with her spouse, who is her attorney of record herein.
Respondent has satisfied the burden of establishing, prima facie, that the three-year statute of limitations for the SCPA 2103 proceeding expired prior to decedent's death.
In opposition, petitioner argues that the statute of limitations was tolled until decedent's death on April 4, 2014 because he was not competent to handle financial affairs at the time the transfers were made; that it was tolled again from decedent's death until the day letters issued to her on January 2, 2018; and that it was tolled again when former Governor Cuomo issued emergency orders tolling the statute of limitations "in the spring of 2020"2 ; so that the turnover proceeding was timely commenced on July 9, 2020.
Starting with the argument that the statute was tolled during decedent's lifetime until his death, the court, in the related turnover proceeding (File No. 2015-4928/E), granted summary judgment dismissing petitioner's claim that decedent lacked the mental capacity to transfer assets to respondent. Although that proceeding did not concern the distributions received by decedent from R & Z and allegedly transferred to respondent, that proceeding involved the same parties, the same time period in question and, notably, petitioner submits the same transcripts, homecare agency and insurance records, medical records and forensic medical report by Dr. C. that were submitted in the prior proceeding. The mere addition of R & Z records and other bank statements submitted here do not compel a different result. Since the parties had a full and fair opportunity to litigate this issue, the court considers it the law of the case that there is no triable issue of fact concerning decedent's capacity at that time (see Matter of Hanlon, 189 AD3d 1405, 1407-1408 [2d Dept 2020]).
To the extent that petitioner otherwise argues that a toll is warranted on the grounds of insanity (CPLR 208), it is without merit because petitioner's submissions are insufficient to raise an issue as to whether a disability existed at the time of each transaction, that it continued until decedent's death (see Seppala v Meadowbrook Care Ctr. Inc., 292 AD2d 368 [2d Dept 2002]), and that decedent was "unable to protect his legal rights because of an overall inability to function in society" (McCarthy v Volkswagen of Am., 55 NY2d 543, 548 ; see Cerami v City of Rochester Sch. Dist., 82 NY2d 809 ).
Petitioner makes the alternative argument that the statute of limitations for this turnover proceeding began to run on the date of decedent's death, and it was tolled until letters issued to her on January 2, 2018. In support, petitioner cites to CPLR 210 [c] which provides that, where a cause of action for taking personal property accrues after death, the personal representative may commence the action within the limitations period measured "from the time the letters are issued or from three years after the death, whichever event first occurs" (CPLR 210 [c]). However, this statute does not apply because it governs the date of accrual for a cause of action for conversion during the interval between decedent's death and the appointment of a personal representative. Here, the alleged conversion occurred prior to decedent's death during the period between March 2009 to March 2010.3
Finally, petitioner argues that the statute of limitations should be deemed tolled until some unspecified date, after decedent's death, due to respondent's decision to not probate decedent's will. This argument is patently without merit in the absence of legal and factual authority, and would result in the accrual date and tolling dates being indeterminate.
Accordingly, petitioner's action seeking turnover of the money is barred by the statute of limitations (CPLR 214 [g]). The branch of respondent's cross motion for summary judgment dismissing that part of the petition is granted, and petitioner's motion for summary judgment thereon is denied.
Respondent next moves for summary judgment arguing that the claims based upon fraud, undue influence and breach of fiduciary duty are barred by the applicable statute of limitations.
The statute of limitations with respect to actions for fraud, undue influence, and the breach of a fiduciary duty when based upon the alleged fraud, is the greater of either six years from the date of the fraud or two years from the date of its discovery, whichever is later (CPLR 213 ); see e.g. IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132 ; Matter of Hersh, 198 AD3d 766, 769 [2d Dept 2021]; Pike v New York Life Insurance Co., 72 AD3d 1043, 1047 [2d Dept 2010]; Matter of Neidich, 290 AD2d 557 [2d Dept 2002]).
Here, the three additional actions for fraud, undue influence and breach of fiduciary duty all arise from the same transactions, i.e., the distribution of money to decedent from R & Z bank account between March 2009 and March 2010 that, allegedly, then came into respondent's possession. Applying a six-year statute of limitations, the date for accrual of these actions was in March 2010. Then, after applying a toll to the statute for a period of one year after decedent's death on April 4, 2014 (CPLR 210 [a]), these actions would be time-barred as of April 2017.
Based upon the above, respondent has satisfied her burden of establishing, prima facie, that the six-year statute of limitations for actions based upon fraud, undue influence and breach of fiduciary duty (CPLR 213 ) expired prior to the commencement of this proceeding.
In opposition, petitioner argues that the fraud was not discovered until this proceeding was filed in July 2020, and therefore these causes of action are timely commenced if the two-year discovery rule is applied. Petitioner has the burden of establishing that the fraud could not have been discovered earlier than two-years before the commencement of the proceeding (see Von Blomberg v Garis, 44 AD3d 1033, 1034 [2d Dept 2007]).
Here, it is alleged in the petition that when decedent executed his will in 2009 respondent knew that "he wanted and expected that all or most of the funds left in R & Z Metal's account would become part of his eventual estate"; that respondent "fraudulently induced [decedent] to sign checks distributing his money to her and/or financial instruments, products of accounts that [she] controlled"; that respondent misrepresented that she was "looking out" for decedent; that at some point respondent decided that the funds from R & Z would not be part of decedent's estate; and that respondent possessed and continues to possess decedent's money from R & Z totaling $1,620,000.00.
A cause of action for fraud require allegations that: 1) the respondent made a false representation, 2) the respondent had knowledge of its falsity, 3) the misrepresentation was made in order to induce the decedent's reliance, and 4) there was justifiable reliance on the part of the decedent resulting in an injury for which compensable damages are sought (Connaughton v Chipotle Mexican Grill, 29 NY3d 137, 142 ; Mariano v Fiorvante, 118 AD3d 961, 962 [2d Dept 2014]; Sokolow v Lacher, 299 AD2d 64 [1st Dept 2002]). The allegations concerning decedent's presumed testamentary intent and respondent's promise to "look out" for decedent are so vague that they fail to comply with the requirement that a cause of action for fraud state the circumstances of the wrong in detail (CPLR 3016 [b]).
Yet, even if the deficiency in the petition were overlooked by liberally construing the allegations in their most favorable light, there is nothing in the evidentiary record on these competing summary judgment motions to support the allegation regarding petitioner's statement of decedent's testamentary intent or respondent's alleged false promise to comply therewith. There is no evidence that respondent knowingly made a false statement to decedent that was justifiably relied on by decedent to his detriment. In fact, there aren't even cancelled checks or other evidence to support petitioner's allegation that respondent had possessed or continues to possess the money allegedly distributed from H & Z. The only evidence in this regard is respondent's testimony that she doesn't know where the money from R & Z went and that "nobody ever gave [her] any money."
Although petitioner does submit H & Z banks statements from March, 2009 to May, 2010 and decedent's personal HSBC account statements, these documents merely show deposits, withdrawals and checks paid and there is no evidence of who received these withdrawals and checks. Petitioner does submit eight checks signed by respondent to pay ordinary bills out of a different HSBC account. However, that money is not traceable to the R & Z proceeds and the ownership of the account is not established by a signature card or its equivalent from the bank (Banking Law § 675). Petitioner's counsel, evolving into a fact witness, affirms, however, that it was a jointly owned account between decedent and respondent.
In actuality, it simply appears that petitioner's allegations of fraud, undue influence and breach of fiduciary duty were merely tacked onto this second turnover proceeding against respondent in anticipation of a statute of limitations defense, for the purpose of extending same. Courts will not apply the fraud statute of limitations if the allegations plead are only a means to litigate a stale claim (see Kaufman v Cohen, 307 AD2d 113, 119 [1st Dept 2003], quoting Powers Mercantile Corp. v Feinberg, 109 AD2d 117, 120 , affd 67 NY2d 981 ). Where the allegation of fraud is not essential to the cause of action except as an answer to an anticipated defense of statute of limitations, courts 'look for the reality, and the essence of the action and not its mere name" (Klein v Gutman, 12 AD3d 417 [2d Dept 2004], quoting Brick v Cohn-Hall-Marx Co., 276 NY 259 ; see Gold Sun Shipping v Ionian Transp., 245 AD2d 420 [2d Dept 1997]).
Additionally, the evidence fails to establish that the claimed fraud could not have been discovered by petitioner prior to the two-year period before the commencement of the proceeding (see Von Blomberg v Garis, 44 AD3d 1033, 1034 [2d Dept 2007]; Sargiss v Magarelli, 50 AD3d 1117, 1118 [2d Dept 2008]; Dumas v Fiorito, 13 AD3d 332 [2d Dept 2004]). Accordingly, petitioner's actions for fraud, undue influence and breach of fiduciary duty are dismissed as barred by the statute of limitations. The branch of respondent's cross motion for summary judgment dismissing that part of the petition is granted, and petitioner's motion for summary judgment granting the petition is denied.
The branch of petitioner's motion for summary judgment granting sanctions against respondent "for giving false testimony" and for failing to provide responsive documents in a prior discovery proceeding (File No. 2015-4928-E) is denied. The application for sanctions against respondent is not properly made in this proceeding but should have been made returnable in that prior proceeding (CPLR 2214; SCPA 102; 22 NYCRR 120-1.1). Further, counsel's arguments for sanctions only concern generalized complaints about respondent's conduct in the prior proceeding and no specific grounds for frivolous conduct are set forth as defined by 22 NYCRR 130-1.1.
Accordingly, respondent's cross motion for summary judgment dismissing that part of the petition seeking sanctions is granted.
This is the decision and order of the court.
Dated: April 12, 2023
1. This is the second of two turnover proceedings by petitioner. This petition initially sought relief against both Annette and Manfred, however, that part of the petition against Manfred was withdrawn by petitioner prior to service of a responsive pleading (CPLR 3217 [a]). A second amended verified petition seeking relief against Annette, and the verified answer, were filed pursuant to the parties' stipulation (CPLR 3025 [b]).
2. Counsel fails to provide the legal citation or the date(s) for the specific executive order(s) referred to.
3. More fatal, even if CPLR 210 (c) were applicable, the statute of limitations would expire on April 4, 2014, three years after decedent's death without further tolls available.
Peter J. Kelly, J.
Response sent, thank you
Docket No: File No. 2015-4928/F
Decided: April 12, 2023
Court: Surrogate's Court, New York,
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