Matter of Nellie G.

[*1] Matter of Nellie G. 2009 NY Slip Op 50069(U) [22 Misc 3d 1108(A)] Decided on January 14, 2009 Supreme Court, Queens County Thomas, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 14, 2009
Supreme Court, Queens County

In the Matter of the Application of New York City Health & Hospitals Corp. - Queens Hospital Center, For the Appointment of a Guardian for Nellie G. An Incapacitated Person



16195/05



The attorneys of record are:

John E. Crowley, Esq.

Attorney for Guardian

Davidoff, Malito & Hutcher, LLP

605 Third Avenue

New York, NY 10158

(212) 557-7200

Kathleen C. Waterman, Esq.

Attorney for Cross-Petitioner

419 Park Avenue South, #407

New York, NY 10016

Allen Marcus, Esq.

Attorney for Petitioner

Federman & Marcus

118-21 Queens Blvd.

Forest Hills, NY 11375

(718) 268-3900

Jamie Butchin, Esq. and

Lisa Volpe, Esq.

Mental Hygiene Legal Services 170 Old Country Road

Mineola, NY 11501

(516) 746-4545

Charles J. Thomas, J.

The Property Management Guardian moves to judicially settle the final accounting and to approve the payment of fees to the guardians, counsel and the forensic accountant.

Joyce G. Dorusch, the Personal Needs Guardian opposes the payment of fees from the assets of the Incapacitated Person and argues that compensation must be paid by the Petitioner.

To appreciate the true nature of this case, and the underlying dispute between the parties, it is necessary

to understand the facts of this case as they unfolded.

On September 21, 1995 Nellie Gajewski, then 79 years of age, and a widow with four children, Joseph, Joan, Joyce and John (now deceased) hired counsel to execute advanced directives. At the time, Nellie Gajewski executed a "Springing Durable Power of

Attorney" (sic) and named her daughter, Joyce G. Dorusch, as her attorney in fact.

The "Springing Durable Power of Attorney" provided that it would become effective upon the occurrence of her incapacity defined therein as "substantial impairment of my ability to care for my property by reason of age, illness, mental weakness and/or addiction to drugs." The Power of Attorney further provided that, in the event of Nellie Gajewski's incapacity, Joyce G. Dorusch had the authority to act "in my name, place and stead, and for my use and benefit." The powers included the authority to manage, lease, or sell real property; engage in and transact lawful business "for [Nellie Gajewski and in [her] name"; and "sign, exercise, execute, acknowledge, deliver, receive and possess such... deeds, conveyances... mortgages, assignments... documents of title,... Glaringly omitted as a power not granted to the attorney in fact, Joyce G.Dorusch was the power to gift (not even the frequently used tax free maximum of $11,000.00.) The only other power to transfer was a restricted spousal transfer that which would allow Nellie Gajewski to qualify for Medicaid after she was admitted to a nursing home.[FN1]

The document also contained a provision which asked a Court of competent jurisdiction to consider her attorney-in-fact as a nominated individual to serve as her Personal Needs Guardian. No separate Health Care Proxy was ever executed and, absent the required witnesses to the document as required by Public Health Law 2981(z)(a), it is clear that the language can not be construed as anything more than a request that a Court consider Joyce G. Dorusch as her Personal Needs Guardian.

In 2003 prior to any "substantial impairment" Joyce G. Dorusch began little by little to [*2]take her mother's property and transfer it into her own name. First to be transferred was Nellie Gajewski's real properties valued at several million dollars. To accomplish the transfers, Joyce G. Dorusch fraudulently identified herself as her mother, Nellie Gajewski, to an Notary Public, and forged her mother's signature on eight deeds. Joyce G. Dorusch then filed these forged deeds with The City Register completing the transfer. It is clear to this Court, as it was to the Court Evaluator, Alan Kestenbaum, Esq. that these transfers were a knowing and intentional attempt to remove the property from Nellie Gajewski and preclude a probate contest by Nellie Gajewski's son and other daughter due to the undue influence exercised by Ms. Dorusch. Ms. Dorusch admitted as much both through counsel and personally upon cross examination, claiming that as far as she was concerned she was entitled to the property since she was the only one named in her mother's Last Will and Testament.(R:96-97).

Following the transfer of the real properties Joyce G. Dorusch began transferring over a million dollars worth of securities from the family business and bank accounts and corporate assets to herself individually.

In June 2005 Ms. Gajewski, who at the time the Article 81 petition was commenced was 91 years of age, suffered a stroke. Ms. Gajewski was admitted to Elmhurst Hospital and was completely bed ridden and uncommunicative.

In July 2005 Petitioner, New York City Health and Hospital Corporation - Queens Hospital Center, commenced a Guardianship Petition pursuant to Article 81 of the Mental Hygiene Law requesting the appointment of both a Personal Needs and Property Management Guardian, to allow, inter alia, to make medical decisions for the processing of Nellie Gajewski's application for Medicaid and arrange for her transfer to a long term care facility.[FN2] Upon signing the Order to Show Cause the Court appointed Alan Kestenbaum, Esq., an experienced Elder Law Attorney and General Practitioner, as Court Evaluator and Mental Hygiene Legal Services as counsel for the Alleged Incapacitated Person. [*3]

Joyce G. Dorusch filed a cross-motion to dismiss claiming that the Petition was filed in retribution for her complaints against the hospital regarding her mother's care. She further claimed that the previously referenced document, "Springing Durable Power of Attorney", was sufficient to preclude the need for a Property Guardian.

On the return date of the hearing Jamie Butchin, Esq. of Mental Hygiene Legal Services informed the Court that Nellie Gajewski had difficulty communicating and, based upon the information she had acquired during the course of her representation, requested on her client's behalf, that an independent guardian of the person and property be appointed.

At the hearing Joseph Gajewski, Nellie Gajewski's son, testified that Joyce G. Dorusch had isolated his mother from himself and his brother and sister. Ms. Dorusch never advised her siblings that their mother had been transferred to Meadow Park Nursing Home (R:66, 69). He testified that his mother owned stocks, bonds, approximately $300,000.00 in cash, real property in several states and several properties in Queens as well as substantial business (rubbish removal) which also had several hundred of thousands of dollars in liquid assets. The Court Evaluator also testified regarding the improper transfer of property.[FN3]

During the course of the proceeding, the Court directed

Joyce G. Dorusch to return the property she had taken and execute deeds restoring the properties she took from her mother. At the conclusion of the hearing many of the properties had still not been turned over.

On December 8, 2005 finding that Joyce G. Dorusch had isolated her mother from her other children, stolen millions of dollars in real property, securities and cash from her mother which was not returned she had promised, the Court signed an Order revoking the "Springing Durable Power of Attorney" and as requested by Nellie G's counsel, appointed John Crowley, Esq. an Independent Personal Needs and Property Management Guardian.

Subsequent to the hearing John Crowley, the Court appointed Guardian for Nellie G., moved for an Order directing Joyce G. Dorusch to turn over her mother's property as she agreed she would at the hearing. (R:96-97)

Despite her earlier agreement Ms. Dorusch retreated to her earlier position claiming the property was hers as it was bequeathed to her in her mother's will. Despite the direction by the Court and the Guardian to turn over the property, Joyce G. Dorusch continued to delay more than two months. [It also became apparent to the Court at that time that a Medicaid application had [*4]been filed on behalf of Nellie G without the property being listed on the application.] The motion was returnable on March 1, 2006. It took over ten months to get Ms. Dorusch to transfer the property back into Nellie G's name.

Finally, on January 22, 2007, with some of the properties finally accounted for and returned, the Court, confident in Mr. Crowley's ability to secure and monitor the property, appointed Joyce G. Dorusch as Personal Needs Guardian, a position she continues to hold.

In the interim, Ms. Dorusch proceeded with an appeal of the judgment. Oral argument was heard on January 18, 2007 and a decision was rendered by the Appellate Division on March 6, 2007.

The Appellate Division modified that portion of this Court's Order which appointed Sean Crowley, Esq. as the Independent Property Management Guardian.

Ignoring the well settled understanding that an agent-in-fact must act in the utmost good faith and undivided loyalty towards the principal and "must act in accordance with the highest principles morality fidelity loyalty and fair dealing," Mtr. of DeBelardino 77 Misc 2d 253, 256 affd 47 AD2d 589 (3d Dept 200), as well as its own precedent which holds that "[c]onsistent with this duty, an agent may not make a gift to himself or a third party of the money or property which is the subject of the agency relationship," (Semmler v. Maples, 166 AD2d 751, 752), the Court found Joyce G. Dorusch was nonetheless fit to act as an agent-in-fact.

The decision of the Appellate Division clearly recognized the impropriety of the conduct but dispensed with it claiming that Joyce G. Dorusch received no benefit since the property had been transferred back to the Incapacitated Person. Absent from the court's decision is recognition of the fact that deeds were executed and the property transferred only upon the insistence of the Court and under the threat of contempt. Such a result is tantamount to putting the proverbial fox back in hen house.

While the dispute over the wisdom of the reinstatement of the Power of Attorney and Joyce G. Dorusch as the agent-in-fact may be in many ways academic, however the last paragraph of the decision presents this Court with great difficulty.

In its decretal paragraph the Court directed the Property Management Guardian to restore the property held to the Incapacitated Person, file a final report and accounting and directed the Supreme Court to fix the compensation, if any, of the Guardian, which shall be paid by the Petitioner, New York City Health and Hospitals Corp. - Queens Hospital Center.

Initially, the Court must differentiate between compensation in the form of commissions and legal fees. The payment of the commissions in a guardianship matter is strictly controlled by Article 81 of the Mental Hygiene Law. When assets of an Incapacitated Person are available to compensate the Guardians, the issues focus on what factors should be considered in determining a reasonable compensation. (Bailly, Rose Mary, McKinneys Practice Commentaries, Mental Hygiene Law Section 81.28, 2006).

Mental Hygiene Law Section 81.28 states:

Compensation of Guardian:

(a)The Court shall establish,... a plan for the reasonable compensation of the Guardian... The plan for compensation of such Guardian must take into account the specific authority of the Guardian or Guardians to provide for the personal [*5]needs and/or property management for the Incapacitated Person, and the services provided to the Incapacitated Person by such Guardian.

"When assets are available to compensate the Guardians, the issues focus on what factors should be considered in determining a reasonable compensation", (Mental Hygiene Law Section 81.28; McKinneys Practice Commentaries, p. 307).

While the statute does not spell out whose assets, it has traditionally been understood that the assets referred to are the assets of the Incapacitated Person. There is nothing in Article 81 that would permit the court to assess commissions for any individual involved in the guardianship proceeding against anyone other than the incapacitated person where the proceeding is not dismissed and a Guardianis appointed.

The Law Revision Commission Reports suggests that "in developing the plan for compensation, the Court may consider structuring the compensation to the extent that it reflects management in a manner similar to the compensation schedule for a trustee under Section 2309 of the Surrogate Court Procedure Act". Section 2309 (2)(c) of the Surrogate Court Procedure Act (as well as the frequently used Section 2307) requires that the "annual commissions shall be computed on the principal of the trust... A trust under SCPA 2307 or SCPA 2309 are assets of the estate and are the comparable of the assets of the ward under Article 81. The SCPA statute continues with the specifics of the computation of the compensation. Thus it is clear that whatever compensation is awarded, whether through calculation pursuant to Surrogate Court Procedure Act Section 2307 or 2309 or on based upon an annual, monthly, or hourly rate, the compensation must come from the ward's assets. The only exception sanctioned by Section 81.28(b) of the Mental Hygiene Law is where the Guardian has failed to satisfactorily discharge his duties in which case the Court can deny or reduce the commissions.[FN4]

Similarly, Article 79 Section 21(a) of the Mental Hygiene Law which provides for a Guardian of an infant states that a Guardian's compensation shall be fixed by the court in an amount not to exceed five percentum of the income of the ward (emphasis added).

The Court can not help but foresee the enormous chilling effect that such a change in legal precedent would have upon the legislative intent and effectiveness of the entire Elder Law practice.

A change from the traditional manner of compensation from the assets of the Incapacitated Person to the shoulders of the Petitioner would have enormous repercussions. First: those individuals, particularly family members, who sought to protect those most vulnerable in our society would be forced to bear the financial burden of the Guardianship [*6]proceeding. Under such circumstances, who would bring a Petition not knowing how much it would cost over the years. How many vulnerable individuals would go without protection because those closest to them could not bear the cost of both the Petition and the potentially long term commissions payable to a Guardian, be it a family member or independent Guardian. Second: What would the effect be on the appointing Court? Such a change would ostensibly paralyze the Court by adding a third element to the statute which would require that the Court determine whether Petitioner could reasonably compensate the Guardian before appointing a Guardian or only appoint a Guardian willing to serve without compensation regardless of the assets of the ward. And what would be the appropriate response by the Court at the failure of the Petitioner to pay compensation? Such situations are precisely what Article 81 was intended to avoid. When the legislature enacted Article 81 in 1992 it stated as its purpose was to "promote the public welfare by establishing a guardianship system which is appropriate to satisfy either personal or property management needs of an incapacitated person in a manner tailored to the individual needs of that person". (Mental Hygiene Law Section 81.01)

The Court does not believe that it was the Appellate Division's intention, in its decision, to enact or modify the statutes and so the Court is constrained to act in accordance with both to the best of its ability.The Court believes that the Appellate Division was misled by the Appellant into ignoring the fact that a Guardianship proceeding continues. The Appellate Division, in its decision, appears to have made its determination under the belief that the guardianship proceeding had come to a conclusion and that the petition had been ostensibly dismissed.[FN5]

That is not, in fact, the case and the decision itself is void of any such language. The Order and Judgment appealed from provided not only the appointment of a Guardian of the Property but of a Guardian of the Person as well. Joyce G. Dorusch continues in that position even now.

Additionally, as the parties never raised the issue of who should bear the cost of the Guardian's compensation either at the trial level or on appeal, the language in the decision by the [*7]Appellate Division as to who should pay it is outside the appeal and is therefore dicta. As such this Court is not bound by its language. "It [is] only those issues that the Court adjudicates... that has legal effect", (Towley v. Kings Arthur Rings, 40 NY Reports 2d 129, 132), not issues that were "neither argued nor factually relevant." (People v. Bourne, 139 AD2d 210, 216).

Therefore, the Court shall fix commissions and legal fees which shall be payable from the assets of the Incapacitated Person. If the deeds transferring the property back to Nellie Gajewski have not been filed, Mr. Crowley shall do so immediately so as to be consistent with the decision of the Appellate Division that Joyce G. Dorusch not benefit from the transactions.Accordingly, the accounting is hereby approved and the Property Management Guardian shall be discharged. Commissions and fees shall be fixed in the accompanying Order.

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CHARLES J. THOMAS, J.S.C. Footnotes

Footnote 1: Such authority was granted as follows:

"If I am ever admitted to a nursing care facility, such as a nursing home, for a period of continuous institutionalization, my attorney-in-fact may make any and all transfers to my spouse residing in the community, even if my spouse is my attorney-in-fact, that are necessary to provide my spouse with assets equal to the Spousal Resource Allowance as provided by Title XIX of the Social Security Act, Section 1924 (1),(2)."

Footnote 2: The papers in support of the Petition state: "Your Petitioner seeks powers relating to the Personal Needs of the Alleged Incapacitated Person as specifically set forth herein. Your Petitioner believes that the powers of the Guardian for the personal needs of the Alleged Incapacitated Person must include but not be limited to: determining who shall provide personal care or assistance to the Alleged Incapacitated Person; making decision regarding the social environment and other social aspects of the life of the Alleged Incapacitated Person; determining whether the Alleged Incapacitated Person should travel; be authorized access to or release of confidential records; consenting to or refusing generally accepted routine or major medical or dental treatment; maintain the Alleged Incapacitated Person in an appropriate long term care facility; choosing the place of abode of the Alleged Incapacitated Person; and any other power which the Court in its discretion shall deem appropriate to meet the personal needs of the Alleged Incapacitated Person."

Footnote 3: "If I am a little overwhelmed by the situation of at least six documents that I have in my possession which contain notarials of acknowledgments of Nellie Gajewski's signatures. I am also overwhelmed by the fact that the signatures on these deeds clearly are not the same signatures. While they may have been made by the same person, they are clearly designed to be looked at as made by different people. This is to me purposely done and it is very discouraging, overwhelming. I can't tell the Court how upset I am over seeing this and I think that this Court must make an investigation of this."

Footnote 4: "(b) If the Court finds that the Guardian has failed to discharge his or her duties satisfactorily in any respect, the Court may deny or reduce the compensation which would otherwise be allowed".

Footnote 5:

Relying upon Mtr. of Isadora R., 5AD3d 494, and Mtr. of Crump, 230 AD2d 850, Joyce G. Dorusch argues that "where a judgment appointing a Guardian is reversed upon the ground that the allegedly Incapacitated Person had efficiated a plan for the management of her affairs, the Petitioner must pay the Guardian's compensation, if any".

What has been overlooked is that in both of those cases the judgments were reversed as the allegedly Incapacitated Persons had executed a complete set of advanced directives including a Health Care Proxy. In such a case a Guardian of the person was not necessary. Here, the Petition correctly stated that "Ms. Gajewski is not responsive and unable to participate in any decision making. A Guardian is needed to oversee her future care... That continues to be the case.