Ellen Sarkin et al. v. Edward A. Zelinsky
MEMORANDUM OF DECISION
By way of a twenty-five-count complaint, the plaintiffs have brought suit seeking various forms of relief against the defendant based upon various allegations of mismanagement of certain trusts.
A brief summary of the foundational facts as alleged in the complaint are as follows. The plaintiffs are the only two children of Milton Sarkin (the grantor) who created two trusts in 1996: the “Milton Sarkin Revocable Trust Agreement” (revocable trust) and the “Milton Sarkin Irrevocable Trust Agreement” (irrevocable trust). The plaintiffs allege that they are beneficiaries of the two trusts. The grantor also created the “Rhona Guberman Revocable Trust” (the Guberman trust) in 2000. The defendant, Attorney Edward A. Zelinsky, has been the trustee of all three trusts since their creation. The grantor died in 2001 and Zelinsky was appointed executor of the grantor's estate.
The defendant moved to dismiss counts nineteen, twenty, and twenty-one of the plaintiffs' complaint on the ground that the plaintiffs do not have standing to bring these counts because they concern allegations of mismanagement of the Guberman trust and the plaintiffs are not beneficiaries of that trust. The defendant does not contest that the plaintiffs are beneficiaries of the revocable and irrevocable trusts.
The plaintiffs have objected and claim that the defendant has misconstrued counts nineteen, twenty, and twenty-one of the complaint inasmuch as these counts actually concern mismanagement of the irrevocable trust. Because the plaintiffs claim to be beneficiaries of the irrevocable trust, they argue that they have established standing. The matter was heard at short calender on September 16, 2013.
The counts at issue, which incorporate the foregoing summary of foundational facts, provide as follows:
COUNT NINETEEN (Misrepresentation—Bell and Bezas Notes)
1–29. Paragraphs 1 through 29 of Count Five are hereby incorporated as Paragraphs 1 through 29 of Count Nineteen as if fully set forth herein.
30. On or about October 18, 2004, Attorney Zelinsky—acting as trustee of the Irrevocable Trust—negotiated the sale of nineteen (19) shares of DCL stock from the Irrevocable Trust to J. Truitt Bell in consideration of $21,840.00 per share.
31. Mr. Bell's purchase was paid for, in part, by a cash payment of $218,400.00, with the remainder by a promissory note in the amount of $196,560.00 (hereinafter the “Bell Note”).
32. The Bell Note was secured by a pledge agreement bearing the same date (hereinafter, the “Pledge Agreement”) whereby Mr. Bell granted the Irrevocable Trust a security interest in and to nine (9) of the shares of DCL as collateral for the underlying Bell Note.
33. On or about October 18, 2010, and subsequent to a partial payment of principal, the remaining balance due and owing to the Irrevocable Trust on account of the Bell Note was approximately $119,919.16.
34. On said date, Attorney Zelinsky directed Mr. Bell to execute an Amendment to Pledge Agreement and two new “replacement notes” (as defined in the amendment and hereinafter referred to as “Replacement Notes”) whereby the Bell Note was replaced by one note in the principal amount of $59,959.58 payable to the Irrevocable Trust and a second note also in the principal amount of $59,959.58 payable to the Gubeiivan Trust.
35. For all intents and purposes, the effect of this transaction was to assign the right to collect one-half (1/2) of the remaining balance due and owing on the Bell Note from the Irrevocable Trust to yet another trust for which Attorney Zelinsky is trustee (but of which Sarkin and Feller are not beneficiaries), to wit, the Rhona Guberman Revocable Trust (hereinafter, the “Guberman Trust”), which assignment was made, upon information and belief, without consideration.
36. Upon information and belief, a similar or identical fact pattern exists concerning shares of DCL stock sold from the Irrevocable Trust to Gus Bezas.
37. On September 29, 2012, Attorney Zelinsky sent a correspondence to Sarkin and Feller in which he informed them that the Guberman Trust was the holder of notes from both Mr. Bell and Mr. Bezas, which notes are, upon information and belief, said Replacement Notes.
38. In said correspondence, Attorney Zelinsky represented to Sarkin and Feller that he was agreeing to convey to Ms. Guberman, individually, certain property in Boca Raton, Florida, which he claimed was appraised at $140,000.00, provided that “she [i.e., Ms. Guberman] agreed in writing that the [Replacement] notes will belong to the Sarkin family. She has agreed to this.”
39. A search of Palm Beach County records reveals that, on October 17, 2012, in furtherance of the purported “agreement,” Attorney Zelinsky conveyed the property in Boca Raton, Florida to Ms. Guberman, individually, the foregoing conveyance was given in consideration of $152,500.00, well below the County's assessed value of $215,591.00.
40. Upon information and belief, at all times since, Attorney Zelinsky has failed and refused to assign the Replacement Notes to the “Sarkin Family,” to wit, Sarkin and Feller.
41. At all times since, Attorney Zelinsky has continued to maintain suit against Mr. Bell for collection of the Bell Replacement Note in the name of the Guberman Trust, despite this Trust no longer holding the notes. See, Zelinsky v. Bell, docket # NNH–CV11–6024978–S.
42. Attorney Zelinsky knew or should have known that his representations were false.
43. At no time were the facts set forth in ¶¶ 34–36 and 39 disclosed by Attorney Zelinsky to Sarkin or Feller, despite a duty on his part to disclose same.
44. Attorney Zelinsky's representations and non-disclosures were made for the purpose of inducing Sarkin and Feller into the following:
a. not objecting or otherwise hindering the transfer of the Boca Raton property to Ms. Guberman personally for consideration less than the appraised value; and
b. believing that they would receiving something of value—to wit, the Replacement Notes—in consideration of the purported “agreement,” notwithstanding the fact the replacement notes should, upon information and belief, never have rightly been given to the Guberman Trust in the first place.
45. Inasmuch as Attorney Zelinsky had specialized knowledge as trustee, Sarkin and Feller justifiably relied on the representations, and thus were so induced, all to their detriment.
46. Attorney Zelinsky's foregoing acts and omissions have evidenced willful misconduct, gross negligence and/or bad faith.
47. As a result thereof, Sarkin and Feller have suffered damages.
COUNT TWENTY (Specific Performance and/or Constructive Trust—Bell and Bezas Notes)
1–41. Paragraphs 1 through 41 of Count Nineteen are hereby incorporated as Paragraphs 1 through 41 of Count Twenty as if fully set forth herein.
42. Attorney Zelinsky, as trustee of the Gruberman Trust, is subject to an equitable duty to convey the Bell and Bezas Replacement Notes described above to Sarkin and Feller on the ground that he would be unjustly enriched if he were permitted to retain them.
43. As a result thereof, Sarkin and Feller enjoy a constructive trust in and to the Bell and Bezas Replacement Notes described above.
44. Equity demands that Sarkin and Feller are entitled to a judgment against Attorney Zelinsky in the form of an order of specific performance directing and compelling Attorney Zelinsky to assign the Bell and Bezas Replacement Notes to Sarkin and Feller.
COUNT TWENTY–ONE (Breach of Fiduciary Duty—Failure to Collect Promissory Note)
1–36. Paragraphs 1 through 36 of Count Nineteen are hereby incorporated as Paragraphs 1 through 36 of Count Twenty as if fully set forth-herein.
37. Despite not having received an accounting, upon information and belief, the Bezas Replacement Note matured on October 18, 2011.
38. Upon information and belief, there remains a balance due on the Bezas Replacement Note held by the Irrevocable Trust.
39. Upon information and belief, Attorney Zelinsky has failed to take reasonable steps to collect upon the Bezas Replacement Note.
40. Upon information and belief, Attorney Zelinsky's forbearance is due, in part, to the fact that Bezas is a DCL employee, and as such, he has put DCL before the Irrevocable Trust.
41. On account of the foregoing, Attorney Zelinsky has breached his common-law and statutory fiduciary duties of loyalty and care to Sarkin and Feller.
42. In so doing, Attorney Zelinsky's acts and omissions have evidenced willful misconduct, gross negligence and/or bad faith.
43. As a result thereof, Sarkin and Feller have been suffered damages.
“[A] motion to dismiss ․ properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court.” (Internal quotation marks omitted.) Santorso v. Bristol Hospital, 308 Conn. 338, 350, 63 A.3d 940 (2013). “A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction.” (Internal quotation marks omitted.) Dayner v. Archdiocese of Hartford, 301 Conn. 759, 774, 23 A.3d 1192 (2012).
“[B]ecause the issue of standing implicates subject matter jurisdiction, it may be a proper basis for granting a motion to dismiss ․ [S]ee Practice Book § 10–31(a)(1).” (Citation omitted.) Electrical Contractors, Inc. v. Dept. of Education, 303 Conn. 402, 413, 35 A.3d 188 (2012). “The proper procedural vehicle for disputing a party's standing is a motion to dismiss.” (Internal quotation marks omitted.) D'Eramo v. Smith, 273 Conn. 610, 615 n.6, 872 A.2d 408 (2005). “If ․ the plaintiff's standing does not adequately appear from all materials of record, the complaint must be dismissed.” (Internal quotation marks omitted.) Burton v. Dominion Nuclear Connecticut, Inc., 300 Conn. 542, 550, 23 A.3d 1176 (2011). “Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he [or she] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy ․ Standing is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticiable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented.” (Internal quotation marks omitted.) West Farms Mall, LLC v. West Hartford, 279 Conn. 1, 11, 901 A.2d 649 (2006).
“When standing is put in issue, the question is whether the person whose standing is challenged is a proper party to request an adjudication of the issue ․ Standing requires no more than a colorable claim of injury; a [party] ordinarily establishes ․ standing by allegations of injury.” (Citation omitted;. emphasis in original; internal quotation marks omitted.) Avalonbay Communities, Inc. v. Orange, 256 Conn. 557, 568, 775 A.24 284 (2001). “Standing focuses on the party seeking to be heard and not on the issues that party wants to have heard ․ The question of standing does not involve an inquiry into the merits of the case.” (Internal quotation marks omitted.) Lowe v. Lowe, 47 Conn.App. 354, 364, 704 A.2d 236 (1997).
“In ruling upon whether a complaint survives a motion to dismiss, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader ․ A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction.” Brookridge District Assn. v. Planning & Zoning Commission, 259 Conn. 607, 611, 793 A.2d 215 (2002).
The court has read the operative counts of the complaint and agrees with the plaintiffs that their allegations concern the mismanagement of the irrevocable trust and do not seek redress for mismanagement of the Guberman trust. While the counts discuss the actions taken with respect to the Guberman trust, it is only because it is necessary to put the allegations into a proper context and such discussion does not detract from the plain import of the allegations, which is that harm was done to the irrevocable trust.
Accordingly, the motion to dismiss is denied.
BY THE COURT
Jack W. Fischer, Judge
Fischer, Jack W., J.