Matter of Elmezzi

[*1] Matter of Elmezzi 2009 NY Slip Op 51449(U) [24 Misc 3d 1214(A)] Decided on June 25, 2009 Sur Ct, Nassau County Riordan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 25, 2009
Sur Ct, Nassau County

In the Matter of the Application of Stephen J. Saft, Lynn Grossman and Alfred LaRosa, Executors of the Estate of Thomas Elmezzi, Deceased, for an Order to Discover Property Withheld.



339363



Ruskin Moscou Faltischek, P.C.

(for Petitioners)

1425 Reckson Plaza

15th Floor East Tower

Uniondale, NY 11556

Kaye Scholer LLP

(for Petitioners)

425 Park Avenue

New York, NY 10022-3598

Fried, Frank, Harris, Shriver & Jacobson, LLP

(for Respondent)

One New York Plaza

New York, NY 10004-1980

Farrell Fritz, P.C.

(for Respondent)

1320 RexCorp Plaza

Uniondale, NY 11556

John B. Riordan, J.

This is a proceeding pursuant to SCPA 2103 to deliver property. The petitioners are Stephen Saft, Lynn Grossman and Alfred LaRosa, co-executors of the estate of Thomas Elmezzi. The respondent is Enrique Molina. Molina moved to dismiss this proceeding on four stated grounds including a lack of personal jurisdiction and forum non conveniens. In Decision No. 470, dated September 30, 2008, the court addressed the jurisdiction and forum issues, directing an evidentiary hearing respecting whether there were sufficient minimum contacts to confer personal jurisdiction on Molina and declining to address the forum non conveniens issue pending resolution of the factual issues regarding personal jurisdiction. Following the April 17, 2009 evidentiary hearing, Molina elected to withdraw his defenses of lack of personal jurisdiction and forum non conveniens, requesting that the court rule on the other two defenses addressed in his [*2]motion to dismiss, i.e., statute of frauds and statute of limitations.[FN1]

The decedent, Thomas Elmezzi, was an employee of Pepsico Corporation for more than thirty-five years. He died on October 3, 2005. He was survived by his spouse, Jeanne Elmezzi, who died three days after the decedent. The decedent's will was admitted to probate by this court on January 26, 2006. The will provides for a pour over of the decedent's assets into the Thomas Elmezzi Revocable Trust. The trust, in turn, provides for payments of specific bequests with the remainder to the Thomas and Jeanne Elmezzi Private Foundation.

The petitioners allege that Molina possesses property that belongs to the estate. Specifically, the petitioners allege that the decedent and Molina had a "lifetime business association and friendship" and that the decedent owned stock or an equity interest in the following companies: Bebidas Purificadas de Acapulco, S.A.; Immuebles para la Industria, S.A.; Embotelladora el Sol and REVAMSA; E.M.S.A. Embotelladora Metropolitana, S.A, and its subsidiaries; BEPURA; Grupo Azul; Troika; Industria Refrescos, S.A.; and REFRISA, all of which are Mexican corporations. In support of these claims, the petitioners attach copies of eight letters sent to the decedent from Molina covering the time period of 1971 through 1981.[FN2] The letters set forth the following terms:

1."This will confirm that I hold on your behalf and that you are the

beneficial owner of ten percent (10%) of the Bebidas Purificadas de

Acapulco, S.A. de C.V. and also Immuebles para la Industria, S.A.

shares which holds the Pepsi-Cola Franchise in Acapulco" (letter

dated January 15, 1971).

2."This will confirm that I hold on your behalf and that you are the

beneficial owner of five percent (5%) of EMSA and all of the present

subsidiaries and others in the future. E.M.S.A. Embotelladora

Metropolitano, S.A. and the subsidiaries owns the Mexico City

Pepsi-Cola and Morelos Franchises. Seven-Up in Mexico City

and the Garci Crespo Group" (letter dated October 1, 1984).

3."By means of this letter I confirm to you that you are the owner [*3]

of 15% of the 100% shares of Embotelladora el Sol and REVAMSA

which owns 7UP and Manzanita Sol Plant in Mexico City, which

you have fully paid. Those shares are issued in my name and

deposited in." (letter dated September 13, 1989).

4."By means of this letter I confirm that you are the owner of

15% of the 100% shares of BEPURA which owns the plant of

Pepsi in Acapulco Gro., which you have fully paid. Those shares

are issued in my name and deposited in." (letter dated

September 13, 1989).

5."By means of this letter I confirm to you that you are the owner

of 15% of the 100% shares of Grupo Azul which owns the

Garci-Crespo plant in Tehuacan, Pue., which you have fully paid.

Those shares are issued in my name and are deposited in." (letter

dated September 13, 1989).

6."By means of this letter I confirm that you are the owner of

15% of the 100% shares of the Holding Company - Troika

which owns the Pepsi plants in Mexico City, which you have

fully paid. Those shares were issued in my name and are

deposited in." (letter dated September 13, 1989).

7."By means of this letter I confirm to you that you are the owner

of 15% of the shares of Industria de Refrescos, S.A., - which

owns the Pepsi plant in Cuernavaca, Mor., which you have

fully paid. Those shares were issued in my name and are

deposited in." (letter dated September 13, 1989).

8."By means of this letter I confirm to you that you are the

owner of 15% of the 100% shares of - - - REFRISA which owns

the plant of Pepsi in Iguala, Gro, which you have fully

paid. Those shares were issued in my name and are

deposited in." (letter dated September 13, 1989).

Seven of the letters were allegedly signed by the respondent and witnessed by Fernando Molina and Jose Luis Bustos.

Petitioners further allege that "in addition to the Mexican Pepsi Bottling Plants, at all times up to and including the day of death of the decedent, decedent owned an equity interest held by Molina as nominee in Pepsi-Gemex, S.A. de C.V., a New York Stock Exchange Company ["Pepsi-Gemex"], which through a series of transactions acquired the stock of the Mexican Bottling Plants." Petitioners allege that the Mexican Bottling Plants were merged into a holding company named Troika which subsequently merged into a corporation which became Pepsi-Gemex and that the decedent's equity interest in Troika transferred to the Pepsi-Gemex shares. In 2002, the Pepsi Bottling Company made a cash tender offer of $1.2 billion to acquire [*4]all Pepsi-Gemex shares. Petitioners allege that Molina's share of the proceeds of that sale amounted to approximately $480 million and that through the respondent, as nominee, the decedent owned 6 percent of Pepsi-Gemex which amounts to approximately $72 million. The petitioner, Stephen Saft, alleges in his affidavit in opposition to respondent's motion that the decedent "often stated that he was owed a significant amount of the proceeds" or 15 percent of "whatever Molina owned." In a transaction statement under section 13(e) of the Securities and Exchange Act, also attached as an exhibit to petitioners' papers and received in evidence on April 17, 2009, the decedent is listed as a director of Pepsi-Gemex.

In his affidavit in support of his motion, Molina denies that he is in possession of property belonging to decedent and states that the decedent "never claimed to me that he owned stock or equity interests in the Mexican Bottling Plants or in any company that ultimately owns these plants" (Affidavit of Enrique Molina in support of the motion to dismiss). The court notes that Molina's affidavit, except as it contains admissions helpful to petitioners, has no probative value with respect to the remainder of the 3211 motion.

As noted in the court's prior decision [No. 470], SCPA 2103 provides that a fiduciary may present to the court a petition showing on knowledge or information and belief that property should be paid or delivered and is in the possession or control of a person who withholds it (SCPA 2103[1][a]). Here, the thrust of petitioners' claims is that the decedent owned 15 percent of Molina's interests in the bottling plants with Molina holding the decedent's interest as decedent's nominee, and Molina having sold his interest to the Pepsi Bottling Company in 2002 for approximately $480 million, the decedent's share is 15 percent of that sum or approximately $72 million.

MOTIONS UNDER CPLR 3211

On a motion to dismiss pursuant to CPLR 3211, the court determines whether the facts, as alleged by petitioners, fit within "any cognizable legal theory" (International Oil Field Supply Servs. Co. v Fadeyi, 35 AD3d 372, 375 [2d Dept 2006]; Ladenberg Thalmann & Co. v Tim's Amusements, Inc., 275 AD2d 243, 246 [1st Dept 2000]). The court must accept petitioners' factual allegations as true and afford petitioners every possible favorable inference (id). "In the context of a CPLR 3211 motion to dismiss, the pleadings are necessarily afforded a liberal construction" (Goshen v Mut. Life Ins. Co. of New York, 98 NY2d 314, 326 [2002]). The court may consider affidavits submitted to remedy any alleged defects in the pleadings in determining whether the petitioners have a cause of action (Leon v Martinez, 84 NY2d 83, 88 [1994]; Haire v Bonelli, 57 AD3d 1354 [3d Dept 2008]).

In reviewing a motion to dismiss, the court must interpret the pleadings in favor of the party moved against (Cron v Hargro Fabrics, 91 NY2d 362, 366 [1998]; Ozdemir v Caithness Corp., 285 AD2d 961 [3d Dept 2001]). The court must determine whether, "accepting as true the factual averments of the complaint, plaintiff can succeed upon any reasonable view of the facts stated" (People v New York City Transit Auth., 59 NY2d 343, 348 [1983]). A petition will not be dismissed where a cause of action may exist if the petitioner is given every benefit of the doubt (Hallman v Horowitz, 160 Misc 2d 225 [Dist Ct, Nassau County 1994]; Rovello v Orofino Realty Co., 40 NY2d 633, 634 [1976]).

Where the motion is brought under CPLR 3211(a)(1) based upon documentary evidence, the court will consider whether the documentary evidence submitted in support of the motion "conclusively establishes a defense to the claims asserted as a matter of law" (Ladenberg Thalmann & Co. v Tim's Amusements, Inc., 275 AD2d 243, 246 [1st Dept 2000]). Dismissal is [*5]only appropriate where "the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of New York, 98 NY2d 314, 326 [2002]).

On the other hand, a cause of action may not be predicated on mere conclusory statements unsupported by factual allegations (Kalmanash v Smith, 291 NY 142, 153 [1943]; Taylor v State, 36 AD2d 878 [1st Dept 1971]).

STATUTE OF FRAUDS

Molina urges that the applicable statute of frauds bars petitioners' claim under CPLR 3211(a)(5). More particularly, Molina urges that petitioners' claim is based upon a putative sale of securities[FN3] and is barred by the statute of frauds appearing in section 8-319 of New York's Uniform Commercial Code, which governs sales of securities that took place in New York prior to 1997. (New York's version of UCC § 8-319 was repealed effective October 10, 1997 [L. 1997, c. 566]). Relying on Kingston v Breslin, 25 AD3d 657, 658 (2d Dept 2006) and Strain v Strain, 296 AD2d 490 (2d Dept 2002), Molina asserts that despite its repeal, UCC 8-319 applies to sale agreements that purportedly occurred while the section was in effect. That section, Molina urges, "requires a writing containing specified information in order that a securities sale be enforceable"[FN4] and the letters produced by petitioners, while purportedly acknowledging that Molina is holding certain fully paid-for securities on decedent's behalf, do not comply with the requirements of former UCC 8-319. More specifically, according to Molina, the writings do not set forth "a defined or stated price" as required by UCC 8-319(a). To complete the argument, [*6]Molina urges that petitioners cannot establish any of the exceptions found in UCC 8-319 (b), (c) or (d), in that it is not alleged that a certificated security, uncertificated security or transfer instruction was ever sent or received by anyone; the decedent is not alleged to have ever confirmed in writing that a sale of securities transpired; and Molina has not admitted in a pleading, in testimony or in court that he had a contract with the decedent for the sale of a stated quantity of securities at a defined or stated price.[FN5]

Petitioners respond to the effect that UCC 8-319 is not applicable as it applies only to a contract for the sale of securities, while the documents before the court confirm decedent's ownership interest and Molina's role as nominee. Also, if UCC 8-319 were applicable, it would not bar the claim because the payment exception set forth at UCC 8-319(b) would permit enforcement of the contract.

In reply, Molina reiterates his position that petitioners are seeking to enforce a contract for the sale of securities, relying on the discussion in Kingston and arguing that a sale had to have taken place at some time. In effect, Molina asks the court to infer from the documents that a sale took place from Molina to decedent and such sale is unenforceable because there is no writing in conformity with UCC 8-319(a). The court notes that it could also be inferred from the documents that Molina purchased the shares from a third party, 85 percent on his own account and 15 percent on decedent's account; or one or more of the Bottling Companies issued 100 percent of the fully paid shares to Molina, 85 percent on his own account and 15 percent on decedent's account.[FN6]

Molina's reply also argues that petitioner does not adequately plead the subsection (b) exception as they were required to plead some form of documented payment or performance that unequivocally relates to the securities sale, citing Barash v Sperlin, 271 AD2d 558, 559 (2d Dept 1984).

STATUTE OF LIMITATIONS

Molina also argues that petitioners' claims are barred under CPLR 3211(a)(5) based upon the applicable statute of limitations. In support of that proposition, Molina urges that proceedings under SCPA 2103 and actions to recover property based upon theories of conversion or replevin are governed by three-year limitations, accruing when the property is wrongfully withheld (Matter of King, 759 NYS2d 895, 896 {305 AD2d 683} [2d Dept 2003]). Wrongful withholding occurs when the person in possession of the disputed property makes an overt "act in derogation of" the putative rights of the alleged owner (Estate of Davis v Trojer, 2001 WL 1645916, at *2 [SDNY 2001]). Molina claims that, assuming the decedent was the equitable owner of 15 percent of those shares, Molina's 2002 sale of his Pepsi-Gemex shares was such a triggering action and it occurred more than three years prior to the October 2, 2007 filing [*7]and commencement of this proceeding.[FN7]

Petitioners agree that a SCPA 2103 discovery proceeding is generally subject to a three-year limitation period (Matter of Jacobs, 35 AD3d 860, 861 [2d Dept 2006]), but argue that the period is subject to the CPLR 210 tolling provisions. Relying on Jacobs, they argue that under CPLR 210(c), when a cause of action accrues after the death of an individual, "the time within which the action must be commenced shall be computed from the time the letters are issued or from three years after the death, whichever event first occurs." Petitioners further argue that no demand was made on Molina until 2006, after decedent's death, when the estate demanded a turnover of decedent's share of the funds from the Pepsi-Gemex stock sale, and the claim, if it sounds in conversion, did not accrue until the demand was rejected, less than one year prior to commencement of the proceeding.

Petitioners also argue that Molina has been unjustly enriched by holding the proceeds from the sale of the shares he held on behalf of the decedent and seek imposition of a constructive trust on the $72 million (Matter of Witbeck, 245 AD2d 848, 850 [3d Dept 1997]; Williams v Eason, 49 AD3d 866 [2d Dept 2006]). A six-year limitation period applies under this theory of action (Matter of Witbeck, 245 AD2d 848 [3d Dept 1997]; Matter of Lamb, 145 AD2d 935 [2d Dept 1988]).

In reply, Molina reiterates his contention that the estate's claim accrued with Molina's 2002 sale of the Pepsi-Gemex shares and the three-year statute for conversion ran out on the third anniversary of such sale in 2005, and to the extent that CPLR 210(c) tolled the statute on such conversion claim, it ran out one year after decedent's October 3, 2005 death, or on October 3, 2006. Thus, the accrual date is crucial to this defense, and the question of whether Molina's sale of Pepsi-Gemex shares equitably owned by the decedent was an act in derogation of decedent's rights to that property is critical to Molina's argument.[FN8]

Respecting the constructive trust argument and unjust enrichment theory, Molina argues that such a claim was not set forth in the pleading, that there are no allegations to support the existence of a fiduciary relationship between Molina and decedent and that a fiduciary relationship is a sine qua non for creation of a constructive trust. Further, it is urged that the imposition of a constructive trust, subject to a six-year limitation, to alleged facts that support a discovery claim under SCPA 2103, with a three-year limitation period, would substantially [*8]negate the significance of SCPA 2103.[FN9]

DISCUSSION

For the reasons hereafter set forth, the balance of Molina's motion to dismiss the proceeding, based upon statute of frauds and statute of limitations, is denied. Inasmuch as Molina's statute of frauds defense is predicated solely on former UCC § 8-319,[FN10] Molina is characterizing the gravamen of petitioners' claim as being one to enforce a contract for the sale of securities governed by New York law,[FN11] a purported contract wherein Molina was selling and the decedent was buying securities.[FN12] Indeed, Molina relies on Strain v Strain, 296 AD2d 490 (2d Dept 2002), which involved an action for specific performance of an agreement for the sale of shares of a closely held corporation, and Kingston v Breslin, 25 AD3d 657 (2d Dept 2006), which involved breach of an oral agreement that purportedly made the plaintiff a shareholder. The court concludes that in the subject case, petitioners' pleading does not seek enforcement of a contract for the sale of securities, but rather the gravamen is that decedent was the equitable owner of approximately 6 percent of the Pepsi-Gemex stock when the shares were sold by Molina in 2002 and petitioners seek to recover the proceeds from Molina's sale of the securities held by Molina on decedent's behalf (Parsa v State of New York, 64 NY2d 143, 149 [1984]). The facts supporting such proposition are adequately pled.[FN13]

It can be reasonably inferred from petitioners' pleading that 15 percent of the shares of Pepsi-Gemex that Molina held and sold were equitably owned by decedent. Nominees are essentially agents. Based upon the alleged fact that Molina held certain stock as nominee for decedent, there could be a fiduciary relationship between Molina and the decedent, resulting from the manifestation of consent by decedent to Molina, allowing Molina to act on decedent's behalf, subject to decedent's control and consent.

As stated in EBC I, Inc. v Goldman Sachs & Co. (5 NY3d 11, 19-20 [2005] [internal quotation marks omitted]):

"A fiduciary relationship exists between two persons when one of them is under a duty to act for [*9]or to give advice for the benefit of another upon matters within the scope of the relation (Restatement [Second] of Torts § 874, Comment a ). Such a relationship, necessarily fact-specific, is grounded in a higher level of trust than normally present in the marketplace between those involved in arm's length business transactions (see Northeast Gen. Corp. v. Wellington Adv., 82 NY2d 158, 162, 604 NYS2d 1, 624 NE2d 129 [1993] ). Generally, where parties have entered into a contract, courts look to that agreement to discover ... the nexus of [the parties'] relationship and the particular contractual expression establishing the parties' interdependency

(see id. at 160, 604 NYS2d 1, 624 NE2d 129). If the parties ... do not create their own relationship of higher trust, courts should not ordinarily transport them to the higher realm of relationship and fashion the stricter duty for them ( id. at 162, 604 NYS2d 1, 624 NE2d 129). However, it is fundamental that fiduciary liability is not dependent solely upon an agreement or contractual relation between the fiduciary and the beneficiary but results from the relation (Restatement [Second] of Torts 874, Comment b)."

An agent, who has a fiduciary relationship with the principal, is a party who acts on behalf of the principal with the latter's express, implied, or apparent authority (Maurillo v Park Slope U-Haul, 194 AD2d 142, 146 [2d Dept 1992] ). "Agents are bound at all times to exercise the utmost good faith toward their principals. They must act in accordance with the highest and truest principles of morality" (Elco Shoe Mfrs. v Sisk, 260 NY 100, 103 [1932]; see Sokoloff v Harriman Estates Dev. Corp., 96 NY 409 [2001]; Wechsler v Bowman, 285 NY 284 [1941]; Lamdin v Broadway Surface Adv. Corp., 272 NY 133, 138 [1936]). An agent "is prohibited from acting in any manner inconsistent with his agency or trust and is at all times bound to exercise the utmost good faith and loyalty in the performance of his duties. The agent must account to his principal for profits..." (Lamdin v Broadway Surface Adv. Corp., 272 NY 133 [1936]).

Although the manner in which stock is registered does affect certain rights, it has long been recognized that owners of stock whose shares are registered in the names of fiduciaries or nominees are not precluded from all privileges with respect to the corporation. To the contrary, courts have permitted beneficial owners of stock held in the name of a nominee or fiduciary to bring law suits to protect their interests in the corporation (see York Prop. v Neidoff, 10 Misc 2d 439 [Sup Ct, New York County 1957]; Lewin v New York Ambassador, 61 NYS2d 492, affd. 271 App Div 927 [1st Dept 1947]; Oltarsh v National Velvet Corp., 195 Misc 634 [Sup Ct, New York County 1949]).

Here, this court concludes that petitioners have properly pled a claim to the proceeds under several legal theories and are not seeking to enforce a contract for the sale of securities as against Molina.[FN14] The motion to dismiss, insofar as it is based upon statute of frauds, is, accordingly, denied. [*10]

As noted above, the court concludes that the gravamen of the claims supported by the pleadings is not a claim to enforce a contract for the sale of securities. It is also not a claim to recover the securities that Molina purportedly held on decedent's behalf. Petitioners seek recovery of the ultimate cash proceeds from the sale of the equity interests held by Molina as nominee for the decedent. The court views such a claim as one for monies had and received, or sounding in quasi contract, or for imposition of a constructive trust or for unjust enrichment. The pleadings support the proposition that Molina held certain securities as decedent's nominee or agent. If Molina's nominee status creates a fiduciary/agency relationship between Molina and decedent, petitioners may have a claim for breach of fiduciary duty and would also be entitled to an accounting from Molina. This would mean that Molina owed the decedent and his successors in interest a fiduciary duty with respect to the securities and any proceeds derived from them. The pleading further alleges that the original securities were involved in a number of transfers and/or other transactions which resulted in Molina becoming the legal owner of approximately 40 percent of the capital stock of Pepsi-Gemex, 15 percent of which Molina held as nominee for decedent. Thus, when Molina sold the 40 recent interest registered in his name to Pepsi Cola Company in response to a 2002 tender offer, Molina then held 15 percent of the resulting proceeds, or approximately $72 million, as nominee for the decedent and continued to hold such funds in such nominee capacity at the time of decedent's death.

Statutes of limitations represent a balance between protecting individuals from stale claims and not imposing an undue hardship on a litigant with a meritorious claim (Zumpano v Quinn, 6 NY3d 666, 673 [2006]). "The test of a cause of action, for Statute of Limitations purposes, is its gravamen, and not the form in which it is pleaded" (Wilson v Bristol-Myers Co., 61 AD2d 965, 965 [1st Dept 1978]).

In Parsa v State of New York, (64 NY2d 143, 148 [1984] [ [internal quotation marks omitted]), the Court of Appeals described a claim for monies had and received as follows:

"The ... type [of implied contract] claimed here for money had and received is a contract implied in law. Although the action is recognized as an action in implied contract, the name is something of a misnomer because it is not an action founded on contract at all; it is an obligation which the law creates in the absence of agreement when one party possesses money that in equity and good conscience he ought not to retain and that belongs to another (Miller v Schloss, 218 NY 400, 406-407). It allows plaintiff to recover money which has come into the hands of the defendant impressed with a species of trust (see Chapman v Forbes, 123 NY 532, 537) because under the circumstances it is against good conscience for the defendant to keep the money (Federal Ins. Co. v Groveland State Bank, 37 NY2d 252, 258, quoting from Schank v Schuchman, 212 NY 352, 358). The remedy is available if one man has obtained money from another, through the medium of oppression, imposition, extortion, or deceit, or by the commission of a trespass (Miller v Schloss, supra , p 408). The action depends upon equitable principles in the sense that broad considerations of right, justice and morality apply to it, but it has long been considered an action at law (see Roberts v Ely, 113 NY 128; Diefenthaler v Mayor of City of NY, 111 NY 331, 337)"

The limitation period for a cause of action for breach of fiduciary duty is six years (Matter of Winne, 232 AD2d 956, 957 [3d Dept 1996]) and the claim begins to accrue when there is an open repudiation of the fiduciary's obligation (Matter of Barabash, 31 NY2d 76, 80 [1972]) or the relationship has "otherwise terminated" (Westchester Religious Inst. v [*11]Kammerman, 262 AD2d 131 [1st Dept 1999]). There being no evidence of an open repudiation prior to decedent's death on October 3, 2005, the statute of limitations for breach of fiduciary duty has not run.

The statute of limitations to compel a fiduciary to account is six years (Matter of Barabash, 31 NY2d 76 [1980]; Matter of Seaman, 146 Misc 2d 563 [Sur Ct, New York County1990]). "The claim does not begin to accrue until there is either an open repudiation of the fiduciary's obligation or a judicial settlement of the fiduciary's obligation to account" (Matter of Meyer, 303 AD2d 682, 683 [2d Dept 2003]. Thus, the statute of limitations for an accounting has not run.

"A cause of action for unjust enrichment arises when one party possesses money or obtains a benefit that in equity and good conscience they should not have obtained or possessed because it rightfully belongs to another" (Menthe v Wenzel, 178 AD2d 705 [3d Dept 1991]; see Parsa v State of New York, 64 NY2d 143 [1984]). The essence of such a cause of action is that one party is in possession of money or property that rightly belongs to another (see Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415 [1972]; Clifford R. Gray, Inc. v LeChase Constr. Servs., LLC, 31 AD3d 983 [3d Dept 2006]). The statute of limitations for unjust enrichment is six years (Matter of Lamb, 145 AD2d 935 [2d Dept 1988]), and such period has not run.

The court concludes that the pleading adequately sets forth a cause of action for monies had and received, imposition of a constructive trust, unjust enrichment, breach of fiduciary duty and an accounting. Claims for replevin or conversion respecting cash proceeds from the sale of the Pepsi-Gemex shares are not adequately set forth as there is no allegation that the proceeds from decedent's Pepsi-Gemex shares constitutes a separate and distinct fund of money (see Auguston v Spry, 282 AD2d 489, 491 [2d Dept 2001]; Walden Terrace v Broadwall Mgt. Corp., 213 AD2d 630 [2d Dept 1995]). However, should it be determined in this discovery proceeding that all or part of the proceeds from the sale of decedent's Pepsi-Gemex shares were utilized to acquire personal property, either with or without the decedent's consent, a conversion proceeding would lie with respect to such personal property. Whether or not a claim for conversion of such personal property would be time barred cannot be determined at this point in this proceeding as the facts and circumstances have not yet been determined with respect to events constituting the accrual of such a claim or application of the tolling provision of CPLR 203(c). Thus, the limitations defense with respect to any claims for conversion of personal property is denied without prejudice at this time.

The pleadings adequately allege that the proceeds from the sale of the Pepsi-Gemex shares were had and received by Molina for the decedent's benefit and the estate's claim for such monies accrued either when decedent died or when the estate made demand for payment and payment was refused. While it is too early in this proceeding to determine whether Molina's 2002 sale of Pepsi-Gemex shares purportedly owned by decedent was an act in derogation of decedent's rights so as to trigger a conversion claim (Estate of Davis v Trojer, 2001 WL 1645916, at *2 [SDNY 2001]), it appears to the court that if Molina was the decedent's nominee/agent with respect to the securities, as alleged in the pleadings, Molina was rightfully in possession of the securities at the time of sale and it can be reasonably inferred that he was rightly in possession of the proceeds from their sale until he repudiated his agency. The statute of limitations for such a claim is six years (CPLR 213[1]; Cohen v City Co. of New York, 283 NY 112, 117 (1940]). Regardless of whether the accrual date was the 2006 demand or the 2005 [*12]date of death or the 2002 stock sale, the action for unjust enrichment is timely.[FN15]

A cause of action to impose a constructive trust is governed by the six-year statute of limitations, which begins to run upon the occurrence of the allegedly wrongful act giving rise to a duty of restitution (Taintor v Taintor, 50 AD3d 687 [2 Dept 2008]; Matter of Lamb, 145 AD2d 935 [2d Dept 1988]; Matter of Witbeck, 245 AD2d 848 [3d Dept 1997]). That statute has not run.

The court notes that the SCPA does not include a limitations period for the discovery and recovery of property belonging to the estate. Historically, the three-year period set forth in CPLR 214 has been applied where the gravamen of the cause of action sounds in replevin or conversion. The replevin and conversion remedies apply to the recovery of personal property and generally do not lie to recover money (as to replevin, see 23 NY Jur2d Conversion, Etc., § 98; and as to conversion, see 90 CJS Trover and Conversion, § 16 and Auguston v Spry, 282 AD2d 489, 491 [2d Dept 2001]).[FN16] If the three-year limitation of CPLR 214[3] were to be applied, the date of accrual would be crucial. If the subject case were to be likened to a chattel bailment of indefinite duration, the statute of limitations would not begin to run against the bailee in lawful possession until the bailor made a demand for the chattel's return and the demand was refused (Sporn v MCA Records, 58 NY2d 482, 487 [1983]; Martin v Briggs, 235 AD2d 192 [1st Dept 1997]; Wichner v Fortunoff, 107 AD2d 585, 586 [1st Dept 1985]; Pine Hill Concrete Mix Corp. v Alto Corp., 25 AD2d 608, 609 [4th Dept 1966], affd 19 NY2d 770 [1967]; Hoelzer v Stamford, 933 F2d 1131, 1137 [2d Cir 1941]). Here, it appears that Molina was rightfully in possession of the Pepsi-Gemex shares purportedly owned by decedent and the proceeds derived from such shares until demand was made and refused for their turn over to the estate, and petitioners' demand was made in 2006, approximately one-year prior to commencement.[FN17]

The court finds the tolling provisions of CPLR 210(c) inapplicable to the gravamen of petitioners' claims, as well as unnecessary to render the proceeding timely. Under that section, if the wrongdoer takes personal property after the decedent's death, the statute starts running on the date letters testamentary or letters of administration are issued or three years after the decedent's death, whichever is earlier (see Matter of Esposito, NYLJ, May 1, 2002, at 21, col 2 [Sur Ct, [*13]New York County]).[FN18] Here, there is no allegation that Molina took any personal property claimed by decedent after decedent's death. Thus, CPLR 210(c) is unavailable to petitioners unless it is subsequently established that all or part of the proceeds from the sale of decedent's purported stock interest in Pepsi-Gemex had been converted into personal property, improper control of which property was taken subsequent to decedent's death.

As the court has concluded that the petition states several causes of action each of which has a six-year limitation period, the motion to dismiss, insofar as it is based upon statute of limitations, is denied. Since Molina's motion to dismiss is now fully disposed of, Molina shall serve his response and/or objections to the petition within 10 days following service of this order with notice of entry (CPLR 3211[f]).

The proceeding is set down for a preliminary conference on Wednesday, July 29, 2009, at 9:30 a.m.

This constitutes the decision and order of the court.

Dated: June 25, 2009

John B. Riordan

Judge of the

Surrogate's Court

Footnotes

Footnote 1: The correspondence from counsel to the court advising of Molina's withdrawal of his personal jurisdiction and forum non conveniens defenses and petitioners' consent to such withdrawal raised the question of whether the court could utilize the testimony adduced and the documents admitted into evidence at the April 17, 2009 hearing with respect to the balance of Molina's 3211 motion. Molina's counsel argues the court could not because the motion had not been converted under CPLR 3211[c] to a motion for summary judgment; petitioners' counsel argued the court could because the hearing was with respect to the same motion. The issue is academic inasmuch as petitioners' counsel has not advised the court as to what documents or portions of the testimony they consider relevant or material to the statute of fraud and statute of limitations defenses asserted in the CPLR 3211 motion and the court has not relied on that record.

Footnote 2: These letters were received in evidence at the April 17, 2009 hearing. They are also referenced in the petition and copies were provided as part of the motion papers.

Footnote 3: Respondent does not argue that petitioners' putative claim for enforcement of an agreement for the sale of securities is barred by the six-year statute of limitations for contract claims (CPLR 213) despite the 1971 to 1989 date range of the eight memoranda pled by petitioners.

Footnote 4: Former NY UCC § 8-319 provided:Statute of Frauds. A contract for the sale of securities is not enforceable by way of action or defense unless: [a] there is some writing signed by the party against whom enforcement is sought or by his authorized agent or broker, sufficient to indicate that a contract has been made for sale of a stated quantity of described securities at a defined or stated price; [b] delivery of a certificated security or transfer instruction has been accepted, or transfer of an uncertificated security has been registered and the transferee has failed to send written objection to the issuer within 10 days after receipt of the initial transaction statement confirming the registration, or payment has been made, but the contract is enforceable under this provision only to the extent of the delivery, registration, or payment; [c] within a reasonable time a writing in confirmation of the sale or purchase and sufficient against the sender under paragraph (a) has been received by the party against whom enforcement is sought and he has failed to send written objection to its contents within 10 days after its receipt; or [d] the party against whom enforcement is sought admits in his pleading, testimony, or otherwise in court that a contract was made for the sale of a stated quantity of described securities at a defined or stated price.

Footnote 5: The court notes that several of the letters contain language to the effect that decedent had fully paid for the securities.

Footnote 6: UCC 8-319(a) would not apply in that instance (Estate of Purnell v LH Radiologists, PC, 90 NY2d 524, 531 [1997]).

Footnote 7: The court notes that this is not the only possible inference. If, for example, it was either agreed between decedent and Molina that Molina would continue to hold decedent's share of the proceeds as decedent's nominee or agent; or such an agreement is presumed by the nature of the relationship, the triggering event would be deferred to a later date.

Footnote 8: It is plausible that decedent approved the sale and agreed with Molina that he should hold decedent's share of the proceeds as decedent's nominee subject to future instructions. As a director of Pepsi-Gemex, decedent was certainly aware of the sale and there is no evidence at this stage of the proceeding that the decedent demanded the turn over of all or part of his purported share of the proceeds and such request was denied.

Footnote 9: This argument erroneously implies that SCPA 2103 contains a statute of limitations. See discussion, infra.

Footnote 10: Molina has not argued application of NY General Obligations Law § 5-701(a).

Footnote 11: Assuming that the proceeding were one to enforce a contract for the sale of securities it is unclear from the record as to whether New York law would apply (see UCC 1-105) as the only contact between New York State and the putative contract may be the delivery to and storage of the eight letters in the state. Thus, if the case addressed a contract for the sale of securities, UCC 8-319 may not apply at all.

Footnote 12: The court notes that such a contract claim would be subject to a six-year limitation period (CPLR 213[2]).

Footnote 13: Having reached this conclusion, the court does not address the payment exception set forth at UCC 8-319(b) except to note that the eight letters quoted above appear to acknowledge payment in full.

Footnote 14: The court notes that were the court to conclude that petitioners were seeking to enforce a contract under which Molina agreed to sell securities to the decedent and that such contract was unenforceable under UCC 8-319(a), such conclusions would merely reflect that petitioners did not have an adequate remedy at law and would not bar similar causes of action based in equity (Kastle v Steibel, 120 AD2d 868 [3d Dept 1986]).

Footnote 15: In In re Ulrich's Estate, 4 Misc 2d 153 (Sur Ct, New York County1956), an intestate attorney had acknowledged that he was holding securities for the testator, and following that attorney's death, conferences were had with a representative of his estate resulting in an agreement that the securities would be retained by a representative of the attorney's estate until the respective rights of the testator and the attorney's representative had been determined by court, a proceeding instituted to recover the securities slightly more than five years later was not barred by six-year statute of limitations since it was not until the date of the agreement that there was any repudiation of the intestate attorney's obligation to deliver the securities to the testator.

Footnote 16: There are exceptions to this general rule that do not appear to be applicable to the facts set forth in the pleadings and affidavits.

Footnote 17: Molina has not argued that a prior demand was made by or on behalf of the decedent.

Footnote 18: CPLR 210[c], entitled : "Cause of action accruing after death and before grant of letters", provides: "In an action by an executor or administrator to recover personal property wrongfully taken after the death and before the issuance of letters, or to recover damages for taking, detaining or injuring personal property within that period, the time within which the action must be commenced shall be computed from the time the letters are issued or from three years after the death, whichever event first occurs."