Sherman v. Eisenberg

267 A.D.2d 29, 699 N.Y.S.2d 371, 1999 N.Y. App. Div. LEXIS 12652
CourtAppellate Division of the Supreme Court of the State of New York
DecidedDecember 7, 1999
StatusPublished
Cited by1 cases

This text of 267 A.D.2d 29 (Sherman v. Eisenberg) 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
Sherman v. Eisenberg, 267 A.D.2d 29, 699 N.Y.S.2d 371, 1999 N.Y. App. Div. LEXIS 12652 (N.Y. Ct. App. 1999).

Opinion

—Judgment, Supreme Court, New York County (Ira Gammerman, J.), entered June 15, 1999, which, in an action to declare the validity of the parties’ agreement settling a prior action, upon the parties’ respective motions for summary judgment, inter alia, declared that the Settlement Agreement is null and void, and directed a hearing on whether plaintiffs and their attorney should be sanctioned, unanimously affirmed, with costs.

The three plaintiffs are the children of Irving Sherman and Helen Sherman. In 1965, Irving and Helen entered into a Separation Agreement in the context of their divorce; in their Separation Agreement Irving agreed to bequeath to the three children certain corporate stock.

In 1985, Irving, now remarried to defendant Thelma Sherman, asked his children to waive the benefits to which they were entitled under the Separation Agreement. In July and August 1985, each of the three plaintiffs executed an irrevocable Waiver and Renunciation (the Waivers) of their right to inherit the stock. These Waivers included a statement that consideration for signing had been made through the “various gifts received * * * prior to the execution of this instrument.”

Irving died in 1994. In January 1995, the three adult children commenced an action (the Prior Action) against their father’s estate and his second wife, Thelma, for the value of the stock due them under the Separation Agreement. Although Bruce Bordelon, Esq. had represented Thelma and Irving during the execution of the Waivers in 1985, by 1995 Bordelon was unable to locate the Waivers so as to defend that action by conclusively proving that the children had previously given up all rights to the stock. Bordelon advised Thelma that he could not locate the Waivers, and had no other documentation in his possession proving the existence of the Waivers, nor any specific memory of having obtained them. Upon his advice, Thelma agreed to settle the Prior Action.

This Settlement Agreement provided Thelma with a life estate in her home in Maine, the remainder to be left to plaintiffs, along with 90% of her estate. Thelma also helped plaintiffs obtain life insurance on her life, for which the plaintiffs expended more than $100,000 in premiums.

Three years later, in August 1998, after Thelma learned that Bordelon died, she requested that the attorney handling his estate make a last attempt to locate the missing Waivers. This time, the Waivers were located and sent to Thelma.

When Thelma’s current attorney wrote to Philip A. Green-[30]*30berg, Esq., plaintiffs’ attorney, to inquire as to plaintiffs’ position regarding the import of these Waivers, plaintiffs commenced the present action, seeking declaratory relief asserting that the Settlement Agreement of the prior action was valid and that Thelma has no right, by virtue of the Waivers, to avoid her obligations under the Settlement Agreement. Thelma interposed a counterclaim for rescission of the Settlement Agreement on grounds of fraud.

The IAS Court granted Thelma’s cross-motion for summary judgment on her claim for rescission of the Settlement Agreement, concluding as a matter of law that plaintiffs had committed a fraud by their misrepresentations of fact. On appeal, plaintiffs challenge the propriety of overturning the Settlement Agreement on the basis of the newly-found Waivers. Plaintiffs contend that Thelma knew or should have known of the existence of the Waivers before entering into the Settlement Agreement, and therefore may not now rely upon them to rescind the agreement.

We reject plaintiffs’ contentions. It cannot be disputed that each plaintiff signed the document entitled “Waiver and Renunciation”, and then, in the context of the prior action, denied that they had done so. Such a blatant misrepresentation cannot be excused by protests that counsel informed them that the documents were invalid. Importantly, in none of the submitted affidavits do plaintiffs assert that they either forgot about the Waivers or misunderstood their import.

Nor may plaintiffs avoid the ramifications of their misrepresentation by reliance on Liling v Segal (220 AD2d 724). There, the Court dismissed an action brought by an attorney named Bernard Liling against his former law partners, holding that the action was barred because Liling had executed a general release. The Court rejected Liling’s argument that the general release he signed should be set aside because of fraud, since one of his former law partners had assured him that the partnership agreement had not been executed by the defendants and was therefore unenforceable (supra). Noting that fraud claims require specific assertions of what was said and when it was said, the Court explained that the plaintiff’s complaint neither specified when this alleged misrepresentation was made nor even specified whether it was false at the time the defendant made it (supra). Thus, the Court in Liling concluded that the plaintiff’s allegations of fraud were insufficient to make a prima facie showing. The Court also rejected plaintiff’s argument that it should ignore the fully executed partnership agreement that he belatedly discovered in his pos[31]*31session, holding that plaintiffs “purported reliance on the defendants’ assertions that the agreement was unenforceable is unjustifiable as a matter of law” (supra, at 726).

In contrast to Liling, here the fraud claim is quite specific. Fraud claims require their proponents to explain in detail the specific circumstances that constitute the fraud (CPLR 3016 [b]). To establish a claim of fraud, the proponent must allege representation of a material existing fact, falsity, scienter, deception and injury (see, Lanzi v Brooks, 54 AD2d 1057, affd 43 NY2d 778). Here, it is clear that plaintiffs knowingly made an affirmative misrepresentation that they never signed Waivers. This unassailable misrepresentation is documented by the January 13, 1995 letter from Greenberg to Thelma’s former attorney, Bordelon, in which he “clarifies” his clients’ position by affirmatively stating: “[M]y clients did not sign a waiver. Furthermore, they do not have, nor did they ever have, ‘in hand’, any signed waiver. Therefore, this imaginary waiver most certainly shall be ‘ignored in reviewing this claim’.” This assertion was a response to Bordelon’s letter of January 10, 1995, in which he attempted to clarify whether Greenberg’s position regarding the Waivers was that they had no legal effect or that they had never been signed. Furthermore, the misrepresentation contained in Greenberg’s January 13, 1995 letter was echoed in the challenged Settlement Agreement, signed off on by plaintiffs, which included a statement that “[E]ach of the Sherman Children has denied ever signing any such instrument and has asserted that no such instrument waiving certain rights in the Sherman Estate exists.” Since it is now undisputed that plaintiffs in fact did sign the Waivers, it is established that they misrepresented a material fact. Thus, unlike the Liling case, here we have sufficient allegations in support of a fraud claim.

Also in contrast to Liling, here, Thelma’s reliance upon the misrepresentation was justifiable. Plaintiffs contend that since Bordelon knew or should have known that plaintiffs had executed the Waivers, and since his knowledge must be imputed to his client, Thelma was not justified in relying upon Green-berg’s statement that his clients had not executed waivers.

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Cite This Page — Counsel Stack

Bluebook (online)
267 A.D.2d 29, 699 N.Y.S.2d 371, 1999 N.Y. App. Div. LEXIS 12652, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sherman-v-eisenberg-nyappdiv-1999.