Hagerman v Hagerman

[*1] Hagerman v Hagerman 2008 NY Slip Op 52481(U) [21 Misc 3d 1142(A)] Decided on November 12, 2008 Supreme Court, Nassau County Murphy, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 November 12, 2008
Supreme Court, Nassau County

Eric J. Hagerman and PAULA HAGERMAN, his wife, Plaintiff(s),

against

Joan Hagerman, Defendant(s).



10600/08



Attorneys for Plaintiff

McNamara & Zeh, P.C.

560 Broadhollow Rd., Ste. 302

Melville, NY 11747

Attorneys for Defendant

The Law Office of John P. Rosenblatt, Esq.

Mark E. Nadjar, Esq., of counsel

100 Broadhollow Rd., Ste. 205

Farmingdale, NY 11735

Karen V. Murphy, J.

Motion by defendant Joan Hagerman to dismiss the complaint pursuant to CPLR 3211(a)(7), (1), (5), and the dead man's statute (CPLR §4519), and for sanctions pursuant to CPLR 6514(c) is denied in its entirety. Cross-motion by plaintiffs Eric M. Hagerman and Paula Hagerman for an order pursuant to CPLR 602(b) removing and consolidating a proceeding pending in the Nassau District Court entitled Joan Hagerman v. Eric J. Hagerman and Paula Hagerman, Index No. SP003627/08 is granted on consent, and plaintiffs are directed to continue to pay defendant the sum of $800 biweekly as agreed pending resolution of this proceeding or other order of the court.

Plaintiffs' complaint seeks to impose a constructive trust upon premises owned by defendant Joan Hagerman and occupied by plaintiffs Eric and Paula Hagerman. The premises were titled in Joan and Walter Hagerman III, Eric's father, prior to his death. According to the complaint, the premises, located at 2014 Franklin Avenue, East Meadow, New York, were formerly owned by Paula Hagerman's mother and in 1999 were in foreclosure. Eric and Paula resided there since 1990 and could not prevent the foreclosure as they did not have the necessary credit to secure a mortgage.

Plaintiffs allege that Eric's father Walter and his wife Joan agreed to purchase the premises and hold same in trust for Walter's son and daughter-in-law, to allow them to reside at the premises and maintain the property and allow them to make improvements as necessary. Walter and Joan purchased the subject property from Rose Altrui, Paula's mother, by deed dated October 29, 1999. Paula acting as her attorney-in-fact, signed the deed.

Plaintiffs allege that rental payments were to be paid to Walter and Joan and applied to the outstanding mortgage. Eventually when Eric and Paula were able to obtain a mortgage themselves, Walter and Joan would transfer the premises for the amount remaining due on the mortgage.

At all times since the purchase Eric and Paula have made the required payments, and maintained the property, and their affidavit indicates that they have made substantial improvements. Plaintiffs state that they constructed a new kitchen, installed tile throughout the house, installed new cabinets, installed granite countertops, replaced windows, replaced aluminum siding, converted the garage into a living space, added two bedrooms and constructed a deck in the back yard, in essence treated the property as their own.

On July 14, 2006 Walter Hagerman III died. By letter dated April 28, 2008 Joan Hagerman, who had taken sole title to the subject premises pursuant to a general bequeath in her husband's simple will, served her step-son and his wife with a notice to quit pursuant to Real Property Law § 232-b, which permits termination of a month to month tenancy.

In determining this motion to dismiss the claim for a constructive trust, the court has reviewed the complaint, affidavits and other documentary submissions to determine whether plaintiffs have a cause of action under modern pleading rules, rather than whether the complaint states one (see, Rovello v. Orofino Realty Co., 40 NY2d 633, 636, 357 NE2d 970, 389 NYS2d 314 [1976]).

A constructive trust is "the formula through which the conscience of equity finds expression" when the holder of the legal title may not "in good conscience retain the

beneficial interest" based upon the circumstances surrounding acquisition of the property (Goodman v. Goodman, 84 AD2d 344, 346, 446 NYS2d 270 [1st Dept., 1982]). A trust is recognized "to prevent the abuse of a confidential relationship" (Williams v. Williams, 4 AD2d 793, 165 NYS2d 620 (2d Dept.,1957), affd 5 NY2d 895 [1959]), and four required elements that have developed over time. There must be a "confidential or fiduciary relationship", an express or implied promise, a "transfer of property in reliance" on the promise and "unjust enrichment" (Goodman v. Goodman, supra ). [*2]

The Statute of Frauds does not constitute a defense to a constructive trust. It simply "does not obstruct the recognition of a constructive trust affecting an interest in land where a confidential relation would be abused if there were repudiation, without redress, of a trust orally declared" (Williams v. Williams, supra ). The prevention of unjust enrichment "under cover of the relationship of confidence" sets a court of equity in motion (Williams v. Williams, supra ), notwithstanding that the promise is oral and not in writing.

It is clear that the elements of a cause of action are stated here. The property owned by Paula Hagerman's mother was transferred to the parents of her daughter's husband, upon an alleged oral promise to transfer same to the children once they were credit worthy and for a price remaining owing on the purchase money mortgage. The parental relation of the parties is one of trust and satisfies the requirement for a fiduciary relation (Djamoos v. Djamoos, 153 AD2d 871, 545 NYS2d 596 [2d Dept., 1989]).

Moreover, a trust, which is originally dependent upon an oral promise "may be confirmed by part performance thereunder" for proof of its existence (Djamoos v. Djamoos, supra at p 872). The extensive improvements to the premises can only be understood with relation to an ownership interest and thus are unequivocally referable to such interest (Spirt v. Spirt, 209 AD2d 688, 689, 619 NYS2d 316 [2d Dept., 1994]). General Obligations Law § 5-703(4) explicitly provides for an exception to the requirement of a writing under such circumstances.

Notwithstanding the foregoing, defendant avers that plaintiffs cannot show unjust enrichment. The Court disagrees, and finds the allegations sufficient. Eric and Paula Hagerman have been living at the premises since 1999 when Joan and Walter Hagerman took title. They have made extensive improvements, presumably increasing the value of the premises. Joan and Walter purchased the premises for $225,000. While both parties are silent with regard to sums paid by plaintiffs Eric and Paula, defendant Joan Hagerman seeks continued payments in the amount of $800 bi-weekly. At such sum, payment over ten years to Walter and Joan would total approximately $208,000 towards the purchase price.

A conclusion that one has been unjustly enriched "is essentially a legal inference drawn from the circumstances surrounding the transfer of property and the relationship of the parties" (In re First Central Financial Corp., 377 F.3d 209, 213, [2d Cir. 2004], quoting Brand v. Brand, 811 F.2d 74, 81 [2d Cir.1987]). To permit Joan to retain the property under the circumstances alleged, i.e. the transfer in reliance upon the promise to reconvey, the sums paid toward the mortgage and the improvements to the property by Eric and Paula, satisfies any requirement to show unjust enrichment (Hendrick v. Tellier, 274 AD2d 944, 710 NYS2d 750 [4th Dept., 2000] [improvements to real property support claim for unjust enrichment and constructive trust]).

In any event, there is no "unyielding formula" regarding a constructive trust. With regard to "basic equitable principles long established in Anglo-American law and in this State and especially relevant when family transactions are involved" (Simonds v. Simonds, 45 NY2d 233, 243, 380 NE2d 189, 408 NYS2d 359 [1978]), the Court of Appeals has stated that a "court of equity in decreeing a constructive trust is bound by no unyield -ing formula. The equity of the transaction must shape the measure of relief" (Simonds v. Simonds, supra , quoting Beatty v. Guggenheim [*3]Exploration Co., 225 NY 380, 389, 122 N.E. 378 [1919]). Thus, even were there no unjust enrichment, the "equity of the transaction" would be the measure to determine whether plaintiffs state a cause of action.

Defendant also argues that the Statute of Limitations has run. Two rules govern when a cause of action for a constructive trust accrues. If the wrongful act was in the acquiring of the property "the property would be held adversely from the date of acquisition" which would be the accrual date (Jakacic v. Jakacic, 279 AD2d 551, 552, 719 NYS2d 675 [2d Dept., 2001]). However, if the property was "acquired lawfully . . . the property would be held adversely from the date the trustee breaches or repudiates the agreement to transfer the property". (id.) Under the second scenario, the cause of action accrues upon the refusal to honor the agreement. Here the cause of action accrued upon Joan's alleged wrongful act in seeking to evict plaintiffs and abrogate her and her husband's promise to reconvey the subject premises, i.e., April 28, 2008, the date of her notice to quit.

Insofar as defendant relies upon the dead man's statute, plaintiffs are not the only source of evidence regarding the oral promise made by defendant Joan Hagerman and her husband. Independent witnesses with nothing to gain have provided sworn statements. Moreover, defendant's raising of the dead man's statute is premature at this time, as its bar is not operative until trial (Phillips v. Joseph Kantor & Co., 31 NY2d 307, 291 NE2d 129, 338 NYS2d 882 [1972]). Accordingly, defendant's motion to dismiss and for sanctions is denied in its entirety.

The foregoing constitutes the Order of this Court.

Dated: November 12, 2008

Mineola, NY

J. S. C.