Passionist Communications, Inc. v Arnold

[*1] Passionist Communications, Inc. v Arnold 2009 NY Slip Op 51012(U) [23 Misc 3d 1130(A)] Decided on May 26, 2009 Supreme Court, Westchester County Scheinkman, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 May 26, 2009
Supreme Court, Westchester County

Passionist Communications, Inc. and ST. PAUL'S BENEVOLENT EDUCATIONAL AND MISSIONARY INSTITUTE, INC., Plaintiffs,

against

Kathleen Arnold, EDWARD LYONS, ELLEN GUNCHEON, RICHARD LANDERS, THE JAYEFF REVOCABLE TRUST, THE ESTATE OF LEO JOSEPH GORMAN, and JOHN/JANE DOES and/or ABC COMPANIES ONE (1) THROUGH TEN (10), Defendants.



14339/07



APPEARANCES:

LOWENSTEIN SANDLER PC

Attorneys for Plaintiffs

By: Karim G. Kaspar, Esq. (Pro Hac Vice)

Cindy Tzvi Sonenblick, Esq.

1251 Avenue of the Americas — 18th Floor

New York, New York 10020

LAW OFFICES OF FRANK N. PELUSO, P.C.

Attorneys for Defendants

By: Timothy C. Quinn, Jr., Esq.

210 Wolf's Lane

Pelham, New York 10803

Alan D. Scheinkman, J.

Plaintiffs Passionist Communications, Inc. and St. Paul's Benevolent Educational and Missionary Institute, Inc. ("Plaintiffs") move for judgment notwithstanding the jury's verdict or, alternatively, for a new trial. The motion is opposed by Defendants.

RELEVANT BACKGROUND[*2]

This action seeks the imposition of a constructive trust and other relief with respect to funds that Plaintiffs contend are rightfully theirs but which are believed to be in the possession, custody or control of Defendants. More specifically, the funds for which Plaintiffs seek recovery are funds that were amassed and maintained by the late Father Leo Joseph Gorman, who was a member of the Passionist, St Paul of the Cross Province, and which were distributed, mostly to his relatives, after his death.

Trial of this action commenced before this Court and a jury on February 23, 2009. On February 27, 2009, the jury reported a unanimous verdict in favor of Defendants.

The gist of Plaintiffs' evidence was that Father Gorman had, upon entry into the Passionist Order, taken a vow of poverty and had, subject to certain limited exceptions, renounced his rights to worldly goods and possessions (see JE-2, JE-3). Under the principles that govern the Passionist Order, whatever monies or goods that are acquired by members of the Order are to be the property of the religious community; the members are supported in their missions by funds provided by the Order (see JE-19).

The evidence at trial showed that, following Father Gorman's final acceptance into the Order in 1953, the Order supplied Father Gorman's worldly needs, including shelter food, and transportation; during his last illness, members of the Order ministered to him; and upon his death, in 2004, members of the Order officiated at funeral services and he was buried, at his request, in the Order's burial ground (Tr. 67-77, 90-91, 161-162,167, 177-178; see also Ct. Ex. 1-A at ¶¶ 6, 10, 21).

The evidence also showed that, during his lifetime, Father Gorman became involved in television productions, consisting of a Sunday Mass program and a discussion show titled That's the Spirit. (Tr. 65; Ct. Ex. 1-A at ¶¶ 14, 17). The Sunday Mass program was a production of Plaintiff Passionist Communications, Inc.; That's the Spirit was produced by Clemons Productions, Inc. which was also known as That's the Spirit Productions, Inc. (Ct. Ex. 1-A at ¶¶ 16,17). The two companies shared office space in Pelham, New York and ran their shows sequentially (id. at ¶19).

Originally, beginning in 1974, Father Gorman was an assistant to Father Mark Connolly (Tr. 92-93; JE-20A at 1). Father Connolly left the Order in the early 1990s and became a diocesan priest (Tr. 95). Father Gorman replaced Father Connolly as the person in charge of the television ministry (JE-20A at 2; Tr. 153). Father Gorman remained in that position until October 2003 when he was succeeded by Father Michael Sulvania (JE-20A at 3). Father Gorman thereafter served as a chaplain at a shrine in Florida (Ct. Ex. 1-A at ¶ 20).

The television programs were very successful. The Sunday Mass program started on WOR in New York, then went to the Fox channel and then to cable stations [*3]throughout the country (Tr. 311). The Sunday Mass program was shown throughout the country and in other parts of the world, providing a religious experience to persons who were too ill or otherwise unable to attend church in person (Tr. 202). The Order also publishes, four times a year, a prayer guide (Tr. 63-64). Despite the fact that the Order could not directly solicit funds on television (Tr. 63), viewers sent donations to the Order by mail. As a result, the television Mass was very profitable (Tr. 154). Father Gorman was in charge of handling the receipt of donations (Tr. 154).

In 1988, Father Gorman entered into an Incentive Deferred Compensation Agreement with That's the Spirit Productions, Inc. (JE-10) and, thereafter, he acquired substantial assets. Of some moment, the Agreement was signed by Father Connolly, apparently on behalf of That's the Spirit Productions, Inc. (JE-10 at 5). While the precise date that Father Connolly left the Order was not established, the date of his departure was placed as being in the early 1990s by Father Joseph Jones, the present Provincial of the Order (Tr. 95), and that would mean that Father Connolly was still in charge of the television production at the time that the Deferred Compensation Agreement was made. A 1992 amendment to the Agreement was executed by John B. Lowe, Jr. as Executive Vice President and Director of That's the Spirit Productions, Inc. (JE-10 at 4). Mr. Lowe's role was never explained at trial.

In 2002, Father Gorman established two trusts: (a) the Leo J. Gorman Irrevocable Trust (JE-15); and (b) the Jayeff Inter-Vivos Trust (JE-16). The account of the Jayeff Inter-Vivos Trust reflects that assets in excess of $1.18 million were received by the trustees (JE-8); the final estate accounting reflects the receipt of over $545,000 in principal (JE-9). The documents reflect that over $1.6 million was distributed to beneficiaries of Father Gorman's designation, mostly his nieces and nephews (JE-8; JE-9; Plaintiffs' Ex. 5). Most of the property, and the distributions, passed through the Jayeff Inter-Vivos Trust; the principal assets of the Leo J. Gorman Irrevocable Trust consisted of a bequest to Father Gorman, proceeds of a life insurance policy, and some $500,000 from the Deferred Compensation Agreement (JE-9).

All of the testimony offered at trial was to the effect that Father Gorman was regarded as an exemplary member of the Passionist Order and an especially gifted preacher (see, e.g., Tr. 65). His fellow Passionists testified that they were, to say the least, surprised that their well-regarded and trusted colleague had, notwithstanding his vow of poverty, accumulated assets of over $1.6 million. Father Joseph Jones, the current Provincial of the Order, testified that the accumulation of money and wealth by Father Gorman was a scandal and he would have rather seen the money go to the missions sponsored by the Passionists (Tr. 91).

The origins of the monies acquired by Father Gorman were never really established. It was agreed that during his lifetime Father Gorman received 146 monthly annuity payments, totaling $783,996.64 (Ct. Ex. 1-A at ¶ 32). After his death, another $504,764.96 was paid to his estate (id. at ¶ 33). While it was agreed that these sums (totaling $1,288,761) were paid under the Agreement (id. at ¶ 34), there is no evidence [*4]as to who paid these funds and from what source. The Agreement states that it is unfunded but that the Corporation may purchase a life insurance or annuity policy on the life of Father Gorman (JE-10 at 4). While it appears that an annuity police was purchased (see JE-9 at Schedule A), there is no evidence as to who paid the premiums on it. There was some evidence to the effect that the That's the Spirit show had sponsors or, at least one sponsor, a family named Clemons (Tr. 254-255; JE-20A at 2). However, there was no testimony as to whether the monies were derived from donations from viewers, from profits of television operations, or from gifts, such as from the Clemons family, or whether any gifts were intended by the donors for the benefit of the Passionists or for the benefit of Father Gorman, personally.

It is readily apparent that the annuity payments were not the exclusive sources of all funds that eventually were distributed. It was agreed that a total of $1,834,963.88 was distributed from the two trusts after Father Gorman's death (Ct. Ex. 1-A at ¶ 36). This sum is obviously greater than the $1,288,761 in total annuity payments. Thus, even if Father Gorman did not spend any of the annuity payments he received during his lifetime, there is roughly $550,000 unaccounted for. Among other things, Father Gorman had a condominium in Florida worth some $116,000 and a Merrill Lynch mutual fund account of $383,131, as well as AIG and Guardian policies (see Ct. Ex 1-A at ¶¶ 37-38). On the other hand, no evidence was presented as to whether Father Gorman actually used any of the money, during his lifetime for any personal benefit. For example, while it was shown that Father Gorman had a condominium in Florida, there was no evidence that he actually lived there. There was no evidence as to what, if any, use was made of the condominium and by whom. Likewise, there was no evidence that he actually used any of the money during his lifetime to enhance or improve his lifestyle.

Although Father Gorman turned the television operation over to Father Sulvania in October 2003 (JE-20A at 3; see Ct Ex. 1-A at ¶ 20), there was no evidence offered as to the financial arrangements that underlay the television operations; no production contracts, books of account, checkbooks, or other documents were offered. The television shows were taped once or twice each month; as many as seven or eight mass were taped on a weekday for showing later on successive Sundays (Tr. 155-156; Tr. 202; Tr. 274-276). The tapes were shown throughout the country as well as internationally (Tr. 202). But there was no testimony as to whether the video equipment was owned by the Passionists or provided (whether by loan or by rental agreement) by a third party; there was no testimony as to whether the television crew personnel were volunteers or paid workers; there was no testimony as to whether the television air time was donated or purchased; there was no testimony as to whether the television or cable stations paid royalties for the use of the program. Likewise, there was no evidence that documents and information regarding the financial aspects of the television operation were not kept or could not be found. Father Sulvania did not testify and there was no testimony at all as to what records, if any, he reviewed when he took over the operation in 2003. There was no testimony from anyone from the Clemons family or from Father Connolly, who signed the Deferred Compensation Agreement on behalf of That's the [*5]Spirit Productions, Inc., or from Mr. Lowe who signed the amendment to the Agreement on behalf of that corporation. Indeed, there was no testimony as to who established That's the Spirit Productions, Inc., who owned its stock, and who selected the board and the officers. All that is known is that the corporation was formed under Delaware law and had an office at 117 Harmon Avenue, Pelham, New York [FN1] and that the office was shared by Plaintiff Passionist Communications, Inc. There was no testimony as to the relationship, if any, between Plaintiff Passionist Communications, Inc. and That's the Spirit Productions, Inc. and none as to the sources from which the production company paid any monies to or for Father Gorman or what, if any, duties Father Gorman performed for the production company, as distinguished from the television ministry operations generally.

In contrast, the Passionists offered testimony from Elizabeth Cichella, the controller for the Order for the past 11 years (a period that would encompass some of the time that Father Gorman was in control of the television ministry) (Tr. 175). Through Ms. Cichella, the Passionists offered into the Small Local Communities Operating Budget for 1997-1998, which sets for the budgeted revenue and expenses for each of the various locations maintained by the Passionists (Plaintiffs' Ex. 1; Tr. 181-182), that budget makes no mention of any television ministry revenue or expenses.[FN2]

The lack of clarity as to the sources of Father Gorman's substantial assets was highlighted by testimony concerning the amount of cash in a "black bag." Father Jerome Vereb, a Passionist priest who attended Father Gorman in his last illness, testified (by video-taped deposition) that, the day before Father Gorman died, Father Gorman gave him a written statement of his final instructions (see JE-24), which Father Vereb placed, together with an envelope containing $7,000 in cash and a pile of securities, in a black bag (see JE-20A at 5-8). After Father Gorman died, Father Vereb, who was leaving town, passed the black bag over to Father Xavier Hayes (see id. and see JE-21A at 17). Father Hayes testified (also by video-taped deposition) that he and Father Vereb counted out the cash to verify the amount and that he subsequently turned the black bag over to Kathleen Arnold, Father Gorman's niece (JE-21A at 3). Father Hayes testified that he understood the bag to contain Father Gorman's financial [*6]papers, though he was unaware of the precise nature of the contents, except for an envelope with $7,000 in cash (id. at 2-4). For her part, Arnold testified that Father Vereb gave her a black bag with $1,200 in cash and denied receipt of $7,000 in cash and as well as receipt of securities (Tr. 282-293). There was no evidence as to the source of the cash (irrespective of amount), though there was testimony that donations were received from the television ministry and Father Gorman was in charge of handling those receipts (Tr. 154).

Further, there was a life insurance policy for the benefit of the Passionists. Father Gorman obtained a life insurance policy with Hartford Life Insurance Company which benefitted a Passionist fund — $546,066.48 was paid upon Father Gorman's death, out of which grants of $53,000 will be paid to the Passionists each year for ten years (Ct. Ex 1-A at ¶¶ 41-43, Tr. 388-389). There was, however, no evidence as to how much Father Gorman paid for this policy and the source from which the payments were made.

The defendants in this case are Ms. Arnold, Edward Lyons, Ellen

Guncheon, Richard Landers, the Jayeff Revocable Trust, the Leo J. Gorman Irrevocable Trust [FN3] and the Estate of Leo Joseph Gorman.

Arnold is an attorney who is employed in the Appeals and Opinions Bureau of the New York State Attorney General's Office (Tr. 227). She was the oldest niece of Father Gorman and is the sister of co-defendant Richard Landers, Father Gorman's nephew. Arnold has two other siblings — Bernard Landers and Joanne Elston — who are not named defendants, though they received distributions from the Jayeff Revocable Trust equal to the distributions received by Arnold and Richard Landers (see Tr. 228-229; Plaintiffs' Ex. 8 at Schedule D). Defendant Ellen Hoagland Guncheon was also a niece of Father Gorman's (see Plaintiffs' Ex. 15 at 4-5).

Arnold was a trustee of the Leo J. Gorman Irrevocable Trust (Plaintiffs' Ex.15) and of the Jayeff Inter-Vivos Trust (Plaintiffs' Ex. 16). The other trustee of these two trusts was co-defendant Edward Lyons, who is the son of a close and dear friend of Father Gorman (Tr. 232). Arnold was the named executrix under a Last Will and Testament of Father Gorman (Plaintiffs' Ex.12).[FN4] [*7]

Father Gorman executed a Last Will and Testament on August 7, 2002 (id.). This document revoked all prior Wills (id. at 1). In fact, there was a prior Last Will and Testament, executed in 1950 when Father Gorman first entered the Passionist Order on a temporal basis. That Last Will, which was in the possession of the Passionist's Provincial (Tr. 78-80), provided that Father Gorman's estate, net of debts and funeral expenses, be paid to his mother; if she died before Father Gorman, the Father's estate would go to his father; if both Father Gorman's mother and father pre-deceased him, his estate would pass to his sister; and if all of these relatives died before Father Gorman, then his estate would be inherited by the Passionists. Under the tenets followed by the Passionists, a member of the Order may retain ownership (but not custody or use) of property obtained from relatives and may direct how that property is to be distributed upon death (Tr. 144; see JE-19 at 110-111; Tr. 75-76).[FN5]

There was no evidence that the Passionists ever attempted to offer the 1950 Last Will and Testament for probate. Rather, Father Terrence Kristofak, who was the Provincial at the time of Father Gorman's death (see Tr. 150-151), testified that he had no idea of whether he offered the Will for probate, though Father Kristofak acknowledged that the Provincial would have the responsibility for probating the will of a member of the Order (Tr. 170). Father Kristofak also had no recollection of the Passionists' collecting $546,000 from the Hartford life policy on Father Gorman's life (Tr. 171).

Father Kristofak testified that he had heard from Father Vereb that there "was some money for the community" so, about a month or two after Father Gorman's death, Father Kristofak called Arnold and asked her "if there was any money for the Passionists". Father Kristofak testified that Arnold said "there was no money there for the Passionists that [he] could ask for" (Tr. 164). Arnold confirmed that Father Kristofak called her, seeking to find out whether there was anything in the Will for the Passionists, and confirmed that she responded in the negative. She added, though, that she did try to get information regarding the Hartford life policy proceeds but was not [*8]able to because the estate was not a beneficiary; however, she stated that she did tell Father Kristofak that she get him the contact information and called him back with that information.

Arnold was the only one of the Defendants to testify. She testified that, while she knew that her uncle, Father Gorman was a priest and that he was a Passionist, she did not know that he had taken a vow of poverty (Tr. 271-272, 279, 315-316). She stated that she perceived her uncle to be a "savvy business person," though she did "question" where the money in the estate came from (Tr. 278-279). She stated that she did not believe that she had any obligation to tell the Passionists about the substantial assets in the trusts and estate (Tr. 281).

On November 12, 2004 (about two and one-half months after Father Gorman's death), Letters Testamentary were issued to Gorman by the Surrogate of Westchester County (JE-9). A final account was submitted to the Surrogate's Court, Westchester County, dated June 30, 2006 (Tr. 9). A large number of checks were written by Arnold, as Executrix, to various beneficiaries in December, 2005 (Plaintiffs' Ex. 5). As of the date of the estate accounting, there was only $11,820 left in the estate (JE-9). Accounts of the Leo J. Gorman Irrevocable Trust and Jayeff Inter-Vivos Revocable Trust were prepared in 2006 and shows that there nothing left in those trusts (Plaintiffs' Exs. 7 and 8).

This litigation was commenced in August, 2007. No evidence was offered at trial as to when, and under what circumstances, the Passionists actually learned of the magnitude of the assets accumulated by Father Gorman during his lifetime.

THE TRIAL OF THIS ACTION

By Note of Issue dated September 24, 2008, Plaintiffs demanded a trial by jury. Defendants did not move to strike the jury demand and all parties effectively consented to a jury trial. In accordance with the Commercial Division Rules (Rule 41[c]), counsel submitted proposed jury instructions to the Court in advance of trial and, on the trial date, selected the jury [FN6].

Plaintiffs presented an opening statement (Tr. 38-54). Defense counsel elected to reserve making his opening statement until the time of presentation of the defense case (Tr. 54). Plaintiffs called six witnesses to testify in person: Father Joseph [*9]Jones; Sister Elisa Rinere, Father Terrence Kristofak, Elizabeth Cichella, Father Robert Joerger and Defendant Arnold. Plaintiffs also played excerpts from the video-taped depositions of two witnesses: Father Jerone Vereb and Father Xavier Hayes. The sole theory upon which the trial of this action proceeded was that of constructive trust.

Defendant Arnold was the last of witnesses called by Plaintiffs. At the conclusion of the direct examination, defense counsel indicated that he had no cross-examination (Tr. 286). With Plaintiffs' case closed, defense counsel moved for a directed verdict of dismissal (Tr. 288-292). The Court denied that motion on the ground that Plaintiffs had offered sufficient evidence to make out a prima facie case (Tr. 294-295). Defense counsel declined to make an opening statement (Tr. 298-299) and re-called Arnold and briefly questioned her regarding her mother's estate, about the "black bag," about her uncle's character and reputation as a priest, and a few other matters (Tr.308-312). After some cross-examination, the witness was excused. The defense then rested (Tr. 317-318).

At that juncture, the Court indicated to counsel that it was reviewing their proposed requests to charge and that, because of the opening statement from Plaintiffs' counsel, it had an understanding of the nature of Plaintiffs' case (Tr. 321-322). However, in order to assure that it made a fair and balanced statement as to the parties' contentions, the Court requested that defense counsel provide guidance as to the principal contentions he intended to argue to the jury (Tr. 322). The Court also asked counsel to comment as to whether a general verdict would be appropriate as to liability and damages (Tr. 322). Counsel for both sides agreed that a general verdict was appropriate (Tr. 322-323). Defense counsel then proceeded to report that he intended to argue that the Deferred Compensation Agreement was approved by Plaintiffs, acting through Father Connolly, and that they could not disavow it (Tr. 323-324). Counsel also stated that he intended to argue that the elements of constructive trust were not supported by the facts (Tr. 324). Court was adjourned until the following morning.

On Friday, February 27, 2009, the Court distributed written copies of its proposed charge to counsel and then proceeded to hear its regular conference calendar. Following the completion of the calendar, the Court invited comments from counsel on the proposed charge. Plaintiffs reported that the charge was acceptable to them; defense counsel pointed out a typographical error, argued for a limitation on the definition of constructive trust, and then requested a charge on laches:

MR. QUINN:So I would ask one thing, and that is to add the regular PJI instruction on laches. Since we are dealing with an equitable claim here and I think the facts about the knowledge of the Plaintiffs, about the probate of the estate and the failure to make a claim in that support an argument of laches (Tr. 335).

While the Court indicated that there was no "standard instruction" on laches, the Court agreed that the point about adding laches to the charge was valid (Tr. 335). Plaintiffs' counsel stated that they had no objection "as long as we can see the [*10]language" (Tr. 336). A recess was taken during which the Court prepared language on the issue of laches. The proposed charge was revised and the proposed revisions were distributed to counsel for their review and comment.

When afforded the opportunity to comment, Plaintiffs' counsel objected to the charge on laches, arguing that there was no evidence as to what Plaintiffs knew, when the lawsuit was filed, or as to prejudice (Tr. 338). While Plaintiffs' counsel acknowledged that laches had been asserted as an affirmative defense in the answer, he asserted, essentially, that there was no evidence in support of that affirmative defense (Tr. 338). Defense counsel countered that there was testimony to the effect that Father Kristofak had spoken with Arnold about the existence of an estate and inquired as to whether there was any provision for the Passionists (Tr. 339). Defense counsel also pointed out that Father Kristofak was told that there was an insurance policy for him to look into (Tr. 339). He also pointed out that the estate proceeding concluded in July 2006, and that this lawsuit was filed "a year after that" (Tr. 339). As to prejudice, he argued that the beneficiaries had no opportunity to preserve the funds and had no idea that a claim was going to be made (Tr. 339-340).

The Court observed that "you can take — we can take judicial notice of when this lawsuit was filed. I don't think there is any dispute about that" (Tr. 340). Plaintiffs' counsel agreed that such was fair (id.), though neither side requested that the Court revise the charge so as to have the Court explicitly state the date of commencement.

The Court stated that there was at least some evidence to support a defense of laches; it also pointed out that no motion was made to strike the defense (Tr. 340). Accordingly, the Court determined to give the issue of laches to the jury. The Court then turned to whether the charge on laches was legally correct:

THE COURT:Now, as to the issue of whether or not the charge is legally correct, I did not take, Mr. Kaspar [Plaintiffs' counsel], to mean that you disagree with any of the principles of law articulated in the charge.

MR. KASPAR:That's correct, your Honor.

MR. QUINN:That's correct (Tr. 340-341).

After the Court commented that it believed that charge to be legally correct, counsel proceeded to point out certain typographical and grammatical errors, which the Court proceeded to rectify to the satisfaction of counsel (Tr. 342-344). No further objections were made after the charge was given (Tr. 409-411). Further, as discussed infra, the Court repeated its laches charge to the jury upon its request and gave the jury a complete copy of the written charge. No objection was taken and no request was made for the Court to state the date of commencement. [*11]

In his closing statement, defense counsel contended that there was a relationship between Plaintiff Passionist Communications, Inc. and That's the Spirit Productions, Inc. and that it was fair to assume that the relationship was close because both operated out of the same office and Father Connolly, a Passionist priest, was in charge (Tr. 348-349). He urged that the jury assume that Plaintiffs knew about the deferred compensation payment agreement and that Father Connolly told his brothers about it (Tr. 351). He pointed out that Plaintiffs had presented a detailed budget for 1998 for the Passionist organization and that the data was available "someplace" for Plaintiffs to show what happened to the monies from the That's the Spirit operation (Tr. 351). Defense counsel urged that the jury infer that Father Gorman believed that he had a right to the monies; he argued that the monies were not hidden and that, perhaps, Father Gorman perceived it was permissible for him to do what he did with the money during his lifetime and dispose of the funds in his will because he had made a "gesture" towards the Passionists through the $546,000 in life insurance proceeds he had provided for them (Tr. 353).

Defense counsel argued that Plaintiffs should have made a claim in "Probate Court," pointing out that the estate was "wound up" on July 21, 2006 and that "this suit" was started on August 7, 2007 (Tr. 355). "That's more than a year went by after all of the distributees were paid, after taxes were paid, after the Court wound everything up and put its imprimatur on where these funds went, saying to each one of the defendants these funds are yours, they are legally yours. You do with them what you will" (Tr. 356). Defense counsel asserted that the facts supported the laches defense in that they constituted "strong and irrefutable evidence ... that there was delay and it hurt defendants" (Tr. 356).

Defense counsel urged the jury that the vow of poverty was not inflexible and that the evidence showed that Father Gorman was "one terrific person" and "not the kind of guy you would think would steal from his brothers" (Tr. 358). Defense counsel asserted that it was more likely that Father Gorman did what he did because he believed that he had a right to act that way (Tr. 358-359). He concluded by urging that the jury find that Plaintiffs did not meet their burden of proof (Tr. 362).

Plaintiffs' closing statement focused entirely on the evidence that counsel asserted supported a finding that all of the elements of a constructive trust had been met (Tr. 363-373). Plaintiffs' counsel did not make any specific rebuttal to the arguments of defense counsel and did not address the defense of laches.

After the Court gave its charge to the jury, the jury retired to deliberate. It sent a note which was unclear as to what it desired but was thereafter clarified by the jury as indicating a request for instructions on the criteria governing laches (Tr. 412-413, Ct. Exs. 6, 7). At the suggestion of Plaintiffs' counsel, to which defense counsel agreed, the Court repeated its instructions on laches (Tr. 414-418). Further, the Court provided the jury with a written copy of its charge, with the concurrence of counsel (Tr. 419-422). Thereafter ,the jury returned a unanimous verdict in favor of Defendants (Tr. [*12]423).

PLAINTIFF'S POST-TRIAL MOTION

Plaintiffs contend that they are entitled to judgment as a matter of law, notwithstanding the verdict, as there is no valid line of reasoning and permissible inferences to support the jury's verdict for Defendants. Alternatively, Plaintiffs argue for a new trial, asserting that the verdict is against the weight of the evidence and that defense counsel made improper closing remarks, that the Court's charge as to Defendants' laches defense was confusing, and that Plaintiffs did not have sufficient notice of Defendants' laches defense.

A.Defense Counsel's Summation

Plaintiffs contend that defense counsel presented false or misleading arguments in his summation. Examination of the comments cited by Plaintiffs shows that Plaintiffs have misstated the arguments made and that defense counsel's arguments were fair comment on the evidence.

For example, Plaintiffs claim that defense counsel stated that the Deferred Compensation Agreement was signed by the Passionists and the Passionists were paying the monies earned under the Agreement (Plf. Mem. in Support at 8, citing Tr. 349-352; 358). In fact, defense counsel stated that the Agreement was negotiated and signed by That's the Spirit production company and argued that there was a close relationship between Plaintiff Passionist Communications and That's the Spirit, citing the fact that both companies operated out of the same office and the fact that Father Connolly was in control of the television operation.

Plaintiffs state that defense counsel argued that the Passionists could have provided in the Agreement that the monies be paid to the community and not to Father Gorman but failed to do so (Plf. Mem. in Support at 8, citing Tr. 350-351). However, what defense counsel argued was that the Agreement did not provide for the money to be paid to the Passionist Community (which is true) but to Father Leo (also true) and that the Passionists knew about the arrangement (which is fair comment on the evidence) and could have required that the money be paid to them under the by-laws (which is also fair comment).

Contrary to Plaintiffs' assertion (Plf. Mem. in Support at 8, citing Tr. 350-351), the record does not support their claim that defense counsel asserted that the Passionists controlled the books and records of That's the Spirit. All that counsel argued was that the Passionists did have a detailed budget and that the data was available "someplace" for Plaintiffs to show what happened to the monies from the That's the Spirit operation (Tr. 351). [*13]

In any event, Plaintiffs did not make any objections to any of defense counsel's statements at the time such statements were made. Nor did Plaintiffs make any objection to the statements at the conclusion of defense counsel's argument. Plaintiffs never asked for a mistrial. Tellingly, Plaintiffs' counsel, in her own closing statement, never referred to the disputed statements of defense counsel, much less attempted to offer a rebuttal to them.

The Court gave the jury an opening charge in which it instructed them that the arguments of attorneys are not evidence (Tr. 16). Again, in the final charge, the Court instructed the jury that the "arguments, remarks and summation of attorneys is not evidence" and that the verdict must be based solely upon the evidence presented during trial (Tr. 403). Indeed, even defense counsel preceded his summation with the comment that it was the jury's recollection of the facts, not his, that is controlling (Tr. 347).

The summation of defense counsel, on the whole, was within the range of fair argumentation and no objection or other protest was ever made to anything in defense counsel's summation. Had timely objection been made and any comments found inappropriate comment, the Court could have remedied any issue, at least by giving an appropriate cautionary instruction. Indeed, it gave an instruction to the jury to base the verdict on the evidence and that summations are not evidence. Most important, as Plaintiffs had the last word, they had every opportunity to respond to any arguments made by defense counsel and they did not take advantage of that opportunity. The Court does not perceive anything in defense counsel's unobjected to summation that deprived Plaintiffs of a fair trial (see, e.g., Califano v City of New York, 212 AD2d 146, 152-154 [Sullivan, J.]; accord, Binder v Miller, 39 AD3d 387 [1st Dept 2007]; Ladson v New York City Housing Authority, 31 AD2d 611 [1st Dept 1968]; Goldstein v City of New York, 281 App Div 712 [2d Dept 1952]). Freeman v. Manhattan Cab Corp. (1 Misc 2d 601 [Sup Ct NY County 1956]), the only authority cited by Plaintiffs (Plf Mem. in Support at 13) actually supports denial of their application on this ground as the Freeman court held that the argument of plaintiff's counsel therein, to which defense counsel had no opportunity to respond, was not so egregious as to warrant overturning a verdict rendered at the end of a fair trial.

B.The Laches Charge

Plaintiffs object, as they did at trial, that Defendants failed to offer evidence sufficient to warrant the Court instructing the jury, as it did, as to Defendants' affirmative defense of laches (see Plf. Mem. In Support at 7). The Court, as it did during trial, disagrees and believes that there was sufficient evidence before the jury that would warrant a finding of unreasonable delay in bringing the action and prejudice to Defendants.

Plaintiffs contend that the jury never had in evidence the date that this [*14]lawsuit was filed (Plf. Mem. in Support at 10). This is not quite correct. Upon review of the Court's proposed laches charge, Plaintiffs pointed out that the charge did not state the date that the lawsuit was filed. In response, the Court observed that the date of filing of the lawsuit could be judicially noticed and Plaintiffs' counsel concurred. Counsel did not request that the date of commencement of the action be specifically stated by the Court in its charge. Defense counsel in his closing stated that Father Gorman's estate proceeding was concluded on July 21, 2006 and that a lawsuit was filed a year after that on August 7, 2007 (Tr. 355). No objection was taken to the statement by defense counsel, which was accurate. After the Court gave its charge, including the instructions on laches, no objections were made and no request was made for the Court to specifically state the date of commencement of the action. Nor did Plaintiffs make such a request in connection with the Court's subsequent repetition of the laches charge to the jury or in connection with the Court's submission of a written version of the entire charge to the jury. Thus, while the Court said it could take judicial notice of the date of commencement, it never stated that it would do so; defense counsel stated the approximate date of commencement in his summation and Plaintiffs' counsel never requested that the Court state the date of commencement in its reiteration of the laches charge or in the written version given the jury. Accordingly, the Court finds that Plaintiffs have no complaint in this regard and that any objection was waived.

Moreover, the real thrust of Defendants' argument was not so much that the delay of one year between the closing of the estate and the commencement of the action was unreasonable but that Plaintiffs long knew of Father Gorman's activities and unreasonably delayed bringing any claim through, and not later than, the time of the estate proceeding.

The Deferred Compensation Agreement was initially made in 1988 and that Father Connolly, still the Passionist in charge of the television operation, signed the Agreement. Consequently, the trier of fact could infer that the Passionists had knowledge of the Agreement and its terms. Moreover, the production company that made the Agreement with Father Gorman had its offices in the same location as Plaintiff Passionist Communications, Inc. Further, Father Sulvania took over the television operation in October 2003 and it is fairly inferrable that Father Sulvania had access to the relevant records. Thus, the trier of fact could reasonably find that Plaintiffs knew or should have known of the payments to Father Gorman within a reasonable time of October 2003. Father Gorman did not pass away until July 29, 2004. Consequently, the trier of fact could reasonably conclude that the Passionists knew of a potential issue with Father Gorman during Father Gorman's lifetime when he was available to provide evidence relating to the issue, and that Defendants were prejudiced because Father Gorman was no longer available to provide an explanation for his conduct.

Further, even after Father Gorman died, Plaintiffs knew of a claim [*15]involving the estate. Within hours of Father Gorman's death, Fathers Vereb and Hayes had knowledge of a black bag, which according to them, contained an envelope with $7,000 in cash and a pile of securities, the contents of which had been the property of Father Gorman and which they were delivering to his niece, Defendant Arnold. Even though Arnold placed the amount of cash as being considerably less, the fact remains that, according to the Fathers, they well knew, within hours of Father Gorman's death, that he had been in possession of substantial cash. Since, according to Plaintiffs' evidence and Plaintiffs' theory of the case, it would not be proper for a Passionist priest to be in possession of property (beyond what the community provided), the fact that Father Gorman was in possession of what they believed was $7,000 in cash surely could be found to have given Plaintiffs knowledge that something was amiss. Further, the actions of Fathers Vereb and Hayes, though honorable in following Father Gorman's desires, could be found to have communicated to Arnold that the Passionists did not have any questions or claims with respect to Father Gorman's property — since they turned it over to her without question.

The evidence showed that Father Jones, as the current Provincial, was in possession of a Last Will and Testament of Father Gorman, one that had been executed in 1950 in accordance with Passionist theology. However, the evidence also showed that the Passionists did nothing to offer the 1950 Will (admittedly in their possession for over 50 years) to probate. This is quite significant in that the 1950 Will provided that, in the event that Father Gorman's mother, father and sister, predeceased him, Father Gorman's entire estate would go to the Passionists. Accordingly, even assuming that the Passionists did not know anything about Father Gorman's assets, it seems clear that, by taking possession of the Will, the Passionists had an obligation to seek to locate any surviving relatives and probate the estate. Had they done so, the issues now being raised could have been litigated in an estate proceeding, prior to the distribution of any assets to any beneficiaries.

Further, the evidence is undisputed that Father Kristofak, then the Provincial, within one month or so after Father Gorman's death, specifically inquired of Arnold as to whether there was any money in the estate for the Passionists. Father Kristofak testified that he made this inquiry because he had heard from Father Vereb that there "was some money for the community." That Father Kristofak made this inquiry reflects both: (a) knowledge on the part of the Passionists that there was an estate with some money in that (regardless of who was to get it); and (b) knowledge on the part of the Passionists that Arnold was the person in charge of the estate. The jury could find that Arnold told Father Kristofak about the life insurance policy (providing the contact information), that the Passionists did pursue a claim on the life insurance policy, and that, therefore, the Passionists knew, if they did not already, that Father Gorman had access to significant funds (at least enough to procure a life insurance policy that [*16]will yield over $540,000 in proceeds).[FN7]

Plaintiffs contend that the Court's instructions on laches was "highly technical" and used legal concepts such as "unreasonable and inexcusable delay", "prejudice" and "injury" and that the jury was not given sufficient instruction on the "individual factual considerations for a finding of laches" (Plf. Mem. in Support at 13).

The Court observes that Plaintiffs' counsel, though objecting to the giving of the laches charge per se, did not object to the language of the charge. Rather, counsel agreed that the principles of law stated in the charge were correct (Tr. 340-341). Thereafter, the jury sent a note (at 2:10 p.m.) as follows:

16 mo from death to distribution

NY Community Trust 546K

546K Hartford Ins — Beneficiary Passionist with NY Community Trust

Latekey [sic] definition

Instructions (Ct. Ex. 6).

Plaintiffs now read this note as indicating that the jury was considering the date from Father Gorman's death (July 29, 2004) until the distribution of specific bequests (December 5, 2005) — a period of 16 months — in their deliberations as to laches. From this, Plaintiffs argue that the "jury was confused as to the relevant time period under which it should have measured the alleged delay by the Plaintiffs," contending that the proper time frame was the time that elapsed between Plaintiffs' knowledge of the existence of the assets and the date of the filing of the litigation (Plf. Mem. in Support at 14). The Court disagrees. The jury note obviously does not reflect all matters discussed or considered by the jury members. Thus, there is no reason to infer that the jury did not consider when Plaintiffs acquired knowledge of their claim and it may be inferred that the jury considered that Plaintiffs had knowledge of their claim at the time of Father Gorman's death.

Moreover, following review of the note by the Court and counsel, the Court asked the jury to clarify its request (Tr. 412-413). This produced a note (Ct. Ex. 7) in which the jury clarified that it desired the Court's instructions on the law and in particular "criteria/testing to satisfy laches." In response, the Court, with the consent of counsel, re-read the portion of the charge pertaining to laches (Tr. 414-418). Additionally, the Court, with the consent of counsel, gave the jurors a written version of the entire charge (Tr. 420-422). Thereafter, the jury reported (at 3:20 p.m.) that it had reached a verdict (Ct. Ex. 8; Tr. 422). [*17]

Consequently, Plaintiffs did not object to the terminology of the charge on laches before or after it was given and, thereafter, despite two jury notes seeking guides on laches, Plaintiffs did not propose any new or different language. Since Plaintiffs did not raise any objection to the verbiage of the laches charge during trial, their argument as to the language employed is not preserved and may not be raised for the first time on a motion for a new trial (Martin v Board of Educ. of Wappingers Cent. School Dist., 201 AD2d 711 [2d Dept 1994], citing Brown v Du Frey, 1 NY2d 190, 195-196 [1956]).

C.Surprise

Plaintiffs contend that they were unfairly surprised by Defendants invocation of laches as they did not argue laches in their pre-trial brief, did not make any opening statement, did not elicit testimony from witnesses on that issue, and did not raise the issue until they requested that laches be added to the Court's proposed charge. While all of this is essentially accurate, the fact of the matter is that, when defense counsel requested the laches charge, Plaintiffs' counsel initially responded that they had no issues with the giving of a laches charge, subject to review of the language ("Not as long as we can see the language") (Tr. 336). After the Court provided counsel with the proposed language, counsel argued, not that he was surprised by the insertion of the issue, but that there was no evidence to support the laches defense (Tr. 336). Further, Plaintiffs' counsel conceded that laches had been pleaded in the answer as an affirmative defense (Tr. 338). As the Court ruled, no application had been made by Plaintiffs to strike the laches defense and, therefore, as long as there was evidence to support it (which there was), the Court would let it go to the jury (Tr. 340).

In short, Plaintiffs never complained about surprise, never requested the opportunity to call additional witnesses or offer additional evidence, and never requested that a special verdict be utilized. Thus, as in Altman v Deepdale Gen. Hosp. (124 AD2d 768 [2d Dept 1986], lv denied 70 NY2d 611 [1987]), Plaintiffs have failed to show that they were prejudiced by Defendants' trial tactics and, therefore, a new trial is not appropriate on this ground.

D.Legal Sufficiency

Plaintiffs contend that they established all of the elements for the imposition of a constructive trust as a matter of law, that Defendants failed to establish a laches defense as a matter of law, and Plaintiffs should be awarded judgment, notwithstanding the verdict.

For a court to conclude that as a matter of law a jury verdict is not supported by sufficient evidence requires a determination that "there is simply no valid line of reasoning and permissible inferences which could possibly lead rational [people] to the conclusion reached by the jury on the basis of the evidence presented at trial" (Cohen v Hallmark Cards, Inc., 45 NY2d 493, 499 [1978]). Stated somewhat differently, [*18]if the evidence is such that it would not be "utterly irrational for a jury to reach the result it has determined upon", and thus a question of fact exists, the court may not conclude that the verdict is as a matter of law not supported by the evidence (id.; accord Soto v New York City Tr. Auth., 6 NY3d 487, 492 [2006]).

In approaching this aspect of Plaintiffs' motion, the Court has given consideration to the fact that, while this case was tried to a jury, there was no right to a jury trial on the equitable claim of constructive trust and the equitable defense of laches (see, e.g., Greenfield v Philles Record, Inc., 243 AD2d 353 [1st Dept 1997]; Matter of Estate of Ruggiero, 19 Misc 3d 334 [Sur Ct. Richmond County 2008]). Be that as it may, Plaintiffs demanded a jury trial and Defendants did not move to strike the jury demand. Rather, both parties acquiesced in a jury trial, without objection, by submitting proposed charges, selecting a jury, and trying the case to a jury. Consequently, Plaintiffs cannot now be heard to assert that the case should not have been heard by the jury (see Will of Schwartz v Greenfield, 124 Misc 2d 1017 [Sup Ct NY County 1984]) and the Court will analyze the evidence as if the case was properly jury triable.

The Court's charge on the issue of constructive trust was not objected to by Plaintiffs and, with one exception not relevant here, was not objected to by defense counsel either (Tr. 333-335). As a result, the law stated in the charge is the law applicable to the determination of the parties' rights in this case and sets the legal standard by which the sufficiency of the evidence to support the verdict must be judged (Harris v Armstrong, 64 NY2d 700, 702 [1984]); see Kroupova v Hill, 242 AD2d 218, 221 [1st Dept 1997], lv dismissed in part, denied in part, 92 NY2d 1013 [1998]). The charge of the Trial Judge, to the extent not objected to, becomes the "law of the case", binding on the parties, even if it is erroneous (Brown v DuFrey, 1 NY2d 190, 195 [1956]).

Plaintiffs contend that they established each of the four elements of a constructive trust: (1) existence of a confidential or fiduciary relation; (2) a promise; (3) a transfer in reliance on the promise; and (4) unjust enrichment. However, while the Court charged the jury that these are four elements that must be met by clear and convincing evidence, the Court also charged that these elements are to be applied flexibly (Tr. 395). Indeed, the Court charged the jury that a constructive trust is "a formula through which the conscience of equity finds expression" and that the doctrine is "broad in scope" and trusts will be erected "wherever necessary to satisfy the demands of justice" (Tr. 394-395).

The Court does not believe that it was utterly irrational for the jury to conclude that Plaintiffs had failed to establish their entitlement to a constructive trust by clear and convincing evidence. In particular, the Court focuses on the issue of unjust enrichment. The Court charged the jury that unjust enrichment occurs "when retention of the benefit received would be unjust considering the circumstances of the transfer and the relationship of the parties" (Tr. 398). Further, the Court instructed the jury that [*19]the following facts had to be proven by Plaintiffs: (1) that Defendants received property "belonging to or provided by the Plaintiffs"; (2) that Defendants benefitted from the receipt of the property; and (3) Defendants had not returned the property and "in good conscience defendants should not be permitted to retain the money" (Tr. 398-399).

The only Defendants who had substantial monies, after the Gorman Estate and the Trusts were settled, were Defendants Arnold, Lyons, Guncheon and Richard Landers. Arnold, Guncheon and Richard Landers each received $137,069 from the Leo J. Gorman Irrevocable Trust but so did Bernard Landers and Joanne Elston, who were not parties to this case (Plaintiffs' Ex. 7 at Schedule D). Arnold, Guncheon and Richard Landers each received $209,922.84 from the Jayeff Trust, but so did Bernard Landers and Joanne Elston (Plaintiffs' 8 at Schedule D). Moreover, 14 people received bequests varying from $10,000 to $1,000, for a total of $100,000, of whom only 1 was a defendant in this case — Richard Landers (id). Thus, it is readily apparent that even if Plaintiffs had been successful in this case, they would not have recovered all of the funds that were controlled or in the possession of Father Gorman.

It would not have been irrational for the jury to conclude that the money in question was not money that belonged to, or was provided by, Plaintiffs (Tr. 395). To the extent that the evidence showed that the money emanated from That's the Spirit Productions, Inc., and was ostensibly "deferred compensation," the jury may have concluded that funds of That's the Spirit Productions, Inc. were not monies that belonged to or provided by Plaintiffs.

Perhaps, more important, Defendant Arnold denied being aware of her uncle's vow of poverty. It would not have been irrational for the jury to credit her testimony and then conclude that, since there was no credible evidence that Arnold or any of the other beneficiaries were aware of Father Gorman's poverty vow, Plaintiffs had not established that "in good conscience defendants should not be permitted to retain the money" (Tr. 398-399).

Even more significantly, Plaintiffs' witnesses testified to Father Gorman's outstanding qualities as a priest. Father Kristofak described Father Gorman as "a great Passionist priest"; "people came to him. He was a great preacher, great organizer. People loved him" (Tr. 169). The evidence supports a finding that Father Gorman remained a committed Passionist priest through the date he died. In his handwritten final instructions, addressed to Father Kristofak, he made clear his desire for funeral services, to be presided over by named priests, and his desire to be buried with his "Brother Passionists." He addressed Father Kristofak in conclusion: Terry I thank you for your kindness in this matter and in all things. I embrace you my very true brother in the Passion of Christ (JE-24).

Given the unanimity of the opinion as to Father Gorman's exemplary [*20]priestly qualities, it is inexplicable that he, as Plaintiffs contend, grossly violated his vow of poverty and enriched himself and his relatives, to the detriment of the good work of the Passionist community, to the extent of nearly $2 million. There was no evidence that Father Gorman lived a secret life of wealth or a secret life of disbelief or disrespect for his publicly professed and communicated religion — a faith which he devoted many years to communicating to others around the world. A beloved priest, so committed to his faith and his brothers, surely believed that his conduct was permissible or, at the very least, a jury could rationally conclude that Plaintiffs failed to prove, by clear and convincing evidence, that a respected and beloved priest flagrantly violated his long-standing vows. Several of Plaintiffs' witnesses visibly expressed their disbelief, and shock, at the evidence of Father Gorman's conduct. Plaintiffs, institutionally, may have concluded that Father Gorman secretly and intentionally plotted a gross deviation from the values and ideals to which he had devoted his entire adult life, which he had dedicated years of service to communicating and teaching to others. The jury would not be irrational in looking to the better angels and, even if it involved some inference of faith, concluding that Father Gorman, as loyal the Passionist priest that he was, did have a valid reason for his conduct.

In this regard, it is not irrational, and is entirely rational, for the jury to have concluded that Plaintiffs knew of their claim prior to Father Gorman's death and that Defendants were prejudiced by the belated institution of a lawsuit at a time when Father Gorman was no longer available to defend himself or his reputation. Similarly, it is not irrational, and entirely rational, for the jury to have concluded that Plaintiffs knew of their claim within a short time of Father Gorman's death and caused prejudice to Defendants by failing to bring a claim in an estate proceeding. The jury could also rationally conclude that Father Gorman's relatives were unaware of Father Gorman's vow of poverty, accepted their bequests innocently, and did not acquire the bequests under such circumstances that equity should require them to pay the funds over to the Passionists.

E.Weight of the Evidence

Plaintiffs also assert that the verdict is against the weight of the evidence. This involves a discretionary assessment as to whether the jury could have reached its verdict on a fair interpretation of the evidence, that is, whether the conclusion is a fair reflection of the evidence, giving great deference to the fact-finding function of the jury (Nicastro v Park, 113 AD2d 129, 133-137 [2d Dept 1985]; accord Kaplan v Miranda, 37 AD3d 762 [2d Dept 2007]).

The Court finds that the jury, upon a fair assessment of the evidence, could have properly concluded that Plaintiffs failed to meet their burden of proof in establishing a proper equitable basis for the imposition of a constructive trust — a burden that they were required to meet by clear and convincing evidence. Likewise, the Court finds that the jury, upon a fair assessment of the evidence, could have properly concluded that Defendants established that Plaintiffs' claims were barred by the [*21]equitable doctrine of laches.

Accordingly, the Court does not believe that this is an appropriate case to intervene in order to thwart the awarding of a defense verdict.

CONCLUSION

The Court has considered the following papers:

(1)Notice of Motion, dated March 12, 2009;

(2)Affirmation of Cindy Tzvi Sonenblick, Esq., dated March 12, 2009, together with the exhibits annexed thereto;

(3)Plaintiffs' Brief in Support of Motion, dated March 12, 2009;

(4)Affidavit of Service of Mary Knodel, sworn to March 12, 2009;

(5)Affirmation of Timothy C. Quinn, Jr., Esq., dated March 25, 2009, submitted with proof of service, in opposition to motion;

(6)Memorandum of Law of Defendants, dated March 25, 2009, submitted with proof of service, in opposition to motion;

(7)Affirmation of Cindy Tzvi Sonenblick, Esq., dated April 1, 2009, together with the exhibit annexed thereto;

(8)Plaintiffs' Reply Brief, dated April 1, 2009;

(9)Affidavit of Service of Mary Knodel, sworn to April 1, 2009;

(10)Trial Transcript and Trial Exhibits.

For the reasons stated and based upon the papers aforesaid, it is hereby

ORDERED that the motion by Plaintiffs Passionist Communications, Inc. and St. Paul's Benevolent Educational and Missionary Institute, Inc. for an order entering judgment notwithstanding the verdict or for a new trial is denied in all respects; and it is further

ORDERED that judgment, if not already entered, shall be entered upon the verdict of the jury by the Clerk (see CPLR 5016[b]).

The foregoing constitutes the Decision and Order of this Court. [*22]

Dated: White Plains, New York

May, 2009

E N T E R :

ALAN D. SCHEINKMAN

Justice of the Supreme Court

APPEARANCES:

LOWENSTEIN SANDLER PC

Attorneys for Plaintiffs

By: Karim G. Kaspar, Esq. (Pro Hac Vice)

Cindy Tzvi Sonenblick, Esq.

1251 Avenue of the Americas — 18th Floor

New York, New York 10020

LAW OFFICES OF FRANK N. PELUSO, P.C.

Attorneys for Defendants

By: Timothy C. Quinn, Jr., Esq.

210 Wolf's Lane

Pelham, New York 10803 Footnotes

Footnote 1:This is a different address than the 190 Mt. Tom Road, Pelham Manor, address given on Father Gorman's Last Will and Testament (Plaintiffs' Ex.12). While the Jayeff Trust instrument uses the Mt. Tom Road address, the Leo J. Gorman Irrevocable Trust instrument uses a post office box in Pelham as Father Gorman's address (Plaintiffs' Exs. 15 and 16).

Footnote 2:Father Gorman lived in the St. Vincent Strambi House in Pelham (Tr. 182). The revenue attributed to that location in 1997-98 was $133,700, of which $80,000 was from "Retreats/Missions." The only reference to "Cable TV" is as an expense (apparently the cost of a cable subscription) and, ironically, no cable television expense was reported for the Strambi House (Plaintiffs' Ex. 1).

Footnote 3:While this entity was not party as of the commencement of the case, Plaintiffs applied to "conform the pleadings to the evidence" by adding the Leo J. Gorman Irrevocable Trust as a party. Defense counsel did not object and therefore the Court granted the request (Tr. 295-297). In this regard, the Court notes that the Trustees of the Leo J. Gorman Irrevocable Trust are the same persons who are the Trustees of the Jayeff Revocable Trust (see Tr. 296-297).

Footnote 4:While the cited documents refer to Arnold as Kathleen M. Resnick, Arnold testified that her last name was Resnick until she changed it to Arnold, substantially after the documents were executed (Tr. 233).

Footnote 5:Such property would be placed in a patrimony account and would be available to a member only if he left the community or, upon permission from the Provinical, if the member had a dire need (Tr. 75-76). Of the 160 current members of the Order, only about ten had patrimony accounts; Father Gorman had no such account (Tr. 76). While Father Gorman was the beneficiary of a bequest from the estate of Madeline Kruger, Ms. Kruger died after Father Gorman but before Father Gorman's estate was settled and, thus the payments went into his estate (Tr. 252-253; JE-9 at Schedule A). Moreover, the amount of the bequest from Ms. Kruger was very modest ($14,363) (JE-9 at Schedule A) in comparison with the total amount that passed through Father Gorman's estate.

Footnote 6:Defendants made a motion in limine to exclude evidence pertaining to the vow of poverty taken by Father Gorman, whether a breach of that vow violates church law and what, if any, impact such a violation would have on the disposition of his property. The Court denied that application by oral decision from the Bench on February 23, 2009 (Tr. 8-36).

Footnote 7:While the first payments under the policy were not made until March 18, 2008 (Tr. 389), there was no evidence as to when the Passionists first made a claim under the policy; only that Arnold told them about it shortly after Father Gorman's death.