In re the Estates of Thomas

124 A.D.3d 1235, 1 N.Y.S.3d 598
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJanuary 2, 2015
DocketAppeal No. 1
StatusPublished

This text of 124 A.D.3d 1235 (In re the Estates of Thomas) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the Estates of Thomas, 124 A.D.3d 1235, 1 N.Y.S.3d 598 (N.Y. Ct. App. 2015).

Opinion

Appeal from an order of the Surrogate’s Court, Monroe County (Edmund A. Calvaruso, S.), entered July 22, 2013. The order granted respondent’s motion to dismiss the petition in part.

It is hereby ordered that the order so appealed from is unanimously modified on the law by denying that part of respondent’s motion to dismiss the claim for the imposition of a constructive trust with respect to stock in the New York State Fence Company and reinstating that claim and as modified the order is affirmed without costs.

Memorandum: Petitioners, nonparty Daniel J. Thomas (Daniel), and respondent are the four children of Anthony J. [1236]*1236Thomas and Dorothy Thomas (collectively, decedents), who died in April 2012 and August 2012, respectively. Petitioners, Daniel and respondent are named in decedents’ wills as, inter alia, beneficiaries of either their residuary estates or a trust that is itself a beneficiary of the residuary estate. Respondent was the named executor under both wills, and he was also appointed as trustee to numerous trusts created by decedents’ wills. The wills were admitted to probate and letters testamentary were issued to respondent.

In March 2013, petitioners commenced this proceeding challenging numerous real estate transactions between respondent and decedents. According to petitioners, respondent “exploited his close relationship with [decedents] by inducing them to transfer to him certain properties they owned, with the promise of payment for, and/or re-conveyance of, the parcels to [decedents] and/or his siblings.” Inasmuch as respondent never paid for the parcels or reconveyed them to decedents or his siblings, petitioners sought to impose a constructive trust, inter alia, on monies received by respondent or entities controlled by him related to the sale of property on North Greece Road (NGR property), and-on the Manitou Road property and any monies received by respondent or entities controlled by him related to a lease on that property.

Petitioners also challenged respondent’s failure to identify any shares of New York State Fence Company (NYSFC) as being included within the assets of decedents’ estates. According to respondent, he was the sole shareholder of NYSFC, a company founded by decedent Anthony J. Thomas in 1958 and incorporated in 1977. Due to the fact that respondent had failed to produce any records reflecting the transfer of NYSFC stock from Anthony to respondent or any records reflecting respondent’s payments for the stock, petitioners contended that a constructive trust should be imposed on “all stock certificates in NYSFC owned by Anthony.”

In addition to seeking the imposition of a constructive trust, petitioners also sought, inter alia, a partial distribution pursuant to SCPA 2102 (5), information pursuant to SCPA 2102 (1), an accounting pursuant to SCPA 2205 and revocation of letters granted to respondent pursuant to SCPA 711 (1) and (2). After filing his answer, respondent moved pursuant to CPLR 3211 (a) (5) and (7) to dismiss the petition insofar as it sought relief pertaining to the real property and respondent’s ownership of stock in NYSFC. Respondent contended that any claims for relief pertaining to the real property and corporate stock of NYSFC were time-barred and that the petition failed to state a cause of action for relief related thereto.

[1237]*1237In appeal No. 1, petitioners appeal from the order of Surrogate’s Court (Calvaruso, S.) granting that motion. In appeal No. 2, petitioners appeal from a subsequent order of Surrogate’s Court (Owens, A.S.) directing that they may not inquire of the executor or otherwise obtain disclosure concerning the NYSFC stock or the finances or affairs of that company. We now modify the order in appeal No. 1 by denying respondent’s motion in part, and we reverse the order in appeal No. 2.

We agree with petitioners that the petition sufficiently states a cause of action for a constructive trust with respect to the NGR property, the Manitou Road property and NYSFC stock. “On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction . . . We accept the facts as alleged in the [petition] as true, accord [the petitioners] the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory ... In assessing a motion under CPLR 3211 (a) (7), . . . a court may freely consider affidavits submitted by the [petitioner] to remedy any defects in the [petition] . . . and ‘the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one’ ” (Leon v Martinez, 84 NY2d 83, 87-88 [1994]; see Lawrence v Graubard Miller, 11 NY3d 588, 595 [2008]).

“[I]t is well settled that [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 ... In order to invoke the court’s equity powers, [a petitioner] must show a confidential or fiduciary relationship, a promise, a transfer in reliance thereon, a breach of the promise, and [the respondent’s] unjust enrichment . . . Inasmuch as a constructive trust is an equitable remedy, however, courts do not rigidly apply the elements but use them as flexible guidelines ... In this flexible spirit, the promise need not be express, but may be implied based on the circumstances of the relationship and the nature of the transaction” (Beason v Kleine, 96 AD3d 1611, 1613 [2012] [internal quotation marks omitted]; see generally Sharp v Kosmalski, 40 NY2d 119, 121-122 [1976]; Moak v Raynor, 28 AD3d 900, 902 [2006]).

The facts as alleged in the petition and set forth in the corresponding affidavits establish the existence of a confidential and fiduciary relationship between respondent and decedents. The facts with respect to the NGR and Manitou Road properties establish that respondent promised to pay decedents for the NGR property and to reconvey the Manitou Road property to decedents after it was subdivided by respondent. The petition [1238]*1238further alleges that the properties were transferred to respondent as a result of those promises, and that respondent breached those promises and was thereby unjustly enriched.

With respect to the NYSFC stock, the petition and corresponding affidavits allege that Anthony believed, until the day that he died, that he still owned the company and that respondent had made promises to “allow all of [decedents’] children to share in NYSFC.” While the allegations of an express promise are lacking, “[e]ven without an express promise, . . . courts of equity have imposed a constructive trust upon property transferred in reliance upon a confidential relationship. In such a situation, a promise may be implied or inferred from the very transaction itself. As Judge Cardozo so eloquently observed: ‘Though a promise in words was lacking, the whole transaction, it might be found, was “instinct with an obligation” imperfectly expressed’ ” (Sharp, 40 NY2d at 122). Based on the circumstances of the relationship between respondent and decedents and the nature of their multiple transactions, we conclude that there are sufficient facts from which we can conclude that there was an implied promise made by respondent to decedents; that the transfer of stock, if indeed there was a transfer, was made in reliance upon that promise; and that the promise was thereafter broken, resulting in an unjust enrichment to respondent.

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Bluebook (online)
124 A.D.3d 1235, 1 N.Y.S.3d 598, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-estates-of-thomas-nyappdiv-2015.