Sagtikos Manor Historical Society, Inc. v Robert David Lion Gardiner Found., Inc.

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Sagtikos Manor Historical Society, Inc. v Robert David Lion Gardiner Found., Inc. 2013 NY Slip Op 30598(U) March 20, 2013 Supreme Court, Suffolk County Docket Number: 16632/2012 Judge: William B. Rebolini Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] Short Forni Oi-der SUPREME COURT - STATE OF NEW YORK I.A.S. PART 7 .: .n2 e1 *, - SUFFOLK COUNTY PRESENT: WILLIAM B. REBOLINI Justice Sagtikos Manor Historical Society, Inc., Plaintiff, -against- Index No.: 16632/2012 The Robert David Lion Gardiner Foundation, Inc., Joseph K. Attonito, James H. Mahoney and Robert Watkins, individually and as Trustees of the Robert David Lion Gardiner Foundation, Inc., The County of Suff'olk and The New York State Attorney General, Defendants. Attorney for The County of Suffolk: Dennis M. Coheii Su f fo lk Co Lmty Attorney H . Lee Deiiiiison Building 1 00 Veterans Memorial Highway P.O. Box 6 100 Hauppauge, NY 1 1788 Motion Sequence No.: 001; MD Motion Date: 9/2 1/12 Submitted: 11/14/12 Attorney for Plaintiff: Lawrence Donohue, Esq. 170 Anchorage Drive West Islip, NY 11795 Attorney for Defendants The Robert David Lion Gardiner Foundation, Inc., Joseph R. Attonito, James H. Mahoney and Robert Watkins, individually and as Trustees of the Robert David Lion Gardiner Foundation, h c . : Wilkie F a n & Gallagher, LLP 787 Seventh Avenue New York, NY 10019-6099 Clerk of the Court IJpon Ihc followiiig papers numbered 1 to 63 read upon this motion to dismiss: Notice of Motion d i d supportingpapers, 1 - 21; Answering Affidavits and supportingpapers, 22 - 23; 24 - 29; Replying Affidavits and supportingpapers,30 - 3 1; Other, Memorandum o f l a w , 32 - 33; Affidavits, 34 - 37,Plaintiff's list of exhibits, 38 - 57; Supplemental Affirmation in Opposition and supporfiiij; papci-s, 5 8 - 6 3 , I t 1s [* 2] Sagtikos M a n o n Robert David Lion Gardiner Foundation, et al. Index No.: 16632/2012 Page 2 ORDERED that the motion by defendants for an order pursuant to CPLR 321 1 dismissing the complaint against them is denied; and it is further ORDERED that the parties are directed to appear before this Court on Wednesday, May 8, 2013 at 9:30 a.m. for a traverse hearing. Plaintiff Sagtikos Manor Historical Society, Inc., commenced this action against defendants The Robert David Lion Gardiner Foundation, Inc., Joseph Attonito, James Mahoney and Robert Watkins, individually and as trustees of the Robert David Lion Gardiner Foundation, hc. (hereinafter collectivelyreferred to as The Foundation defendants), seeking ajudgment declaring the intent of the grantor of the Foundation with respect to its charitable purposes and its beneficiaries. Plaintiff also seeks a judgment enjoining the trustees of the Foundation from removing any assets fi-om the jurisdiction of this Court, removing the non-domiciliary trustees and Attonito as trustees of the Foundation, requiring an accounting of the testamentary trust, and a judgment against the Foundation defendants in the amount of $81,293,622. I n 1935 , Robert David Lion Gardiner acquired title to Sagtikos Manor, a 10-acre parcel of real property located in West Bay Shore, New York, which is listed on the federal registry of historic places. In 1985, Gardiner signed a deed conveymg Sagtikos Manor to the Islip Local Traditions Association, Inc. On January 28, 1987, a certificate of amendment ofthe certificate of incorporation of Islip Traditions was filed, changing the name of the corporation to The Robert David Lion Gardiner Foundation, Inc. The certificate of amendment states that the purposes for which tlle corporation is formed are: To educate and inform the general public in the State of New York, particularly in the area of the Town of Islip and more generally in Suffolk County, concerning the culture, art and tradition of the locality; To cull ivate, foster, and promote interest in, and understanding and appreciation of, the societal heritage of areas of the State of New York, especially of the Town of Islip, particularly during the nineteenth century; To enc.ourage and sponsor the creation and perpetuation by existing and future historical societies of collections and repositories for the deposit, collection and examiliation of documents and artifacts ofvarious kinds relevant to such heritage and traditions ; 7c) spo isor and encourage the preservation, restoration and exhibition byexisting and fill lire historical societies of at least one facility appropriate to such purposes. Nothing herein shall authorize the corporation to operate and maintain a library, miiseuiii or historical society. [* 3] Saetikos ManoRobert David Lion Gardiner Foundation, et al. Index No.: 16632/2012 Page 3 The complaint alleges that the Foundation was granted exempted 501(c)(3) status by the Internal Revenue Service (IRS) and real property tax exemption for nonprofit organizations by the Town of Islip, based on applications stating that the Foundation was formed to maintain and preserve Sagtikos Manor and to educate the public about the historical significance of the site. It alleges that i n 2003, Attortito exerted undue influence on Gardiner, who was no longer able to act independently, aiid ordered the sale of Sagtikos Manor by the Foundation to Suffolk County for $1,500,000. The complaint alleges that upon Gardiner's death in August 2004, his last will and testamen1.s included a distribution of two-thirds of his residuary estate to a testamentary trust for the life of his wife, Eunice Gardiner. IJpon the death of his wife, the remainder held in trust was payable to the Foundation. The complaint alleges that plaintiff and Suffolk County are the sole principal beneficiaries (ofthe Foundation as the only organizations providing historical services at Sagtikos Manor, and that the actions of the Foundations' trustees have denied financial support to them. It further alleges that the trustees have violated their fiduciary duties by not seeking a remedy in accordance to Gardiner's plan to preserve Sagtikos Manor. Specifically, the complaint alleges that after the death of Eunice Gardiner in July 201 1, the Foundation defendants failed to distribute from the Gardiner estate to the Foundation the amount of $81,293,622. The Foundation defendants now move pursuant to CPLR 3211 to dismiss plaintiffs complaint, O I L the ground that plaintiff lacks standing to state any claim against them. Mole specifically, the Foundation defendants argue that an action for the enforcement of a charitable trurjt may be maintained only by the Attorney General or other appropriate public officer. They also argue that plaintiff is unable to identify any special interest that would accord it standing to bring clainils against them. In support of their motion, the Foundation defendants submit, among other things, copies of the pleadings, the certificate of Incorporation of Islip Local Traditions Associations, lnc., the certificate of amendment, the last will and testament of Gardiner, R S Form 990-PF Return of' Private Foundation from 2006 to 201 1 and Form 1023 Application for Recognition of Exemption L'iider Section 501(c)(3) of the Internal Revenue Code, and affidavits of Denis McElligott and Joseph A ttoni to. Plaint ff opposes the motion, arguing that it has a unique, special and vested interest in the Fo~indation that entitles i t to sue the Foundation defendants. Plaintiff contends that the charitable purposc: of tht: Foundation is to preserve Sagtikos Manor and to promote its history to the public. I n opposition LOthe motion, plaintiff submits, among other things, copies of its Absolute Charter and amendment, i is custodial agreement with the County of Suffolk, an application for real property tax eucmption for nonprofit organizations submitted by the Robert David Lion Gardiner Foundation, and copies of IRS Form 990-PF Return of Private Foundation. Plaintiff also subinits copies of the Lettcrs o1' Adiiiinistration for Eunice Joyce Gardiner, and the deeds conveying the subject property fi-on1 Gardiner to Islip Local Traditions Association aiid from the foundation to the County or Si t SSo 1k . [* 4] Sagtikos Manor v. Robert David Lion Gardiner Foundation, et al. Index No.: 16632/2012 Page 3 Defendant County of Suffolk also opposes the motion, arguing that plaintiff has a special interest in funds held by the Foundation defendants for a charitable purpose and, thus, has standing to bring this action. In opposition, the County of Suffolk submits, among other things, copies of the deed conveying Sagtikos Manor from the Foundation to the County of Suffolk, the custodial agreement for Sagtikos Manor between plaintiff and the County of Suffolk, IRS Form 1023 Application for Recognition of Exemption, and the Foundation s certificate of amendment. Under CPLR 321 1 (a)(3), a party may move to dismiss claims on the grounds that the party asserting the cause of action has not legal capacity to sue. The standing of a party to seek judicial review of a particular claim or controversy is a threshold matter which, once questioned, should ordinarily be resolved by the court before the merits are reached (Hoston v New York State Department of Health, 203 AD2d 826, 827, 611 NYS2d 61 [3d Dept 19941, ciriizg Society qf Plastics Indiis. v County of Suffolk, 77 NY2d 761, 769, 570 NYS2d 778 [1991]). In determining standing, (tlhe existence of an injury in fact-an actual legal stake in the matter being adjudicated-ensures that the party seeking review has some concrete interest in prosecuting the action which casts the dispute in a form traditionally capable of judicial resolution (Society sf Plctstic liidzis. v County of Suffolk, supru, quoting Schlesinger v Reservists Contiit. to Stop the War, 4 18 US 208, 220-22 1 [ 19741). The general rule is that one who is merely a possible beneficiary of a charitable trust, or a member of a class of possible beneficiaries, is not entitled to sue for enforcement of the trust (Alclo Gravure v Knapp Found., 64 NY2d 458, 465, 490 NYS2d 116 [1985]; see Board of Educ. of Mmiaroneck Union Free Scliool Dist. v Attorney General of State of N. Y., 25 AD3d 637, 8 11 NYS2d 685 [2d Dept 20061; Sinithers v St. Luke s-Roosevelt Hosp. Ctr., 281 AD2d 127, 733 NYS2d 426 [ I st Dept 20011). Instead, the Attorney General has the statutory power and duty to represent the beneficiaries of any disposition for charitable purposes (EPTL 8- 1.1 [t]; 8-1.4.; Leflowit;: vLebeizsfeld, 68 AD2d488,495,417 NYS2d715 [lstDept 19791affc151 NY2d442,43,4 NYS2d 929 [1980]; see Matter of Rosenthal, 99 AD3d 573, 952 NYS2d 194 [ I s t Dept 20121). However. there is an exception to the general rule when a particular group of people has a special interest in funds held for a charitable purpose, as when they are entitled to a preference in the distribution of such funds and the class of potential beneficiaries is sharply defined and limited i n numbcr so(^ Alco Gravure v Knapp Fozind., suprci; Restatement 2d Trusts, $391 Comment c). h hile the Foundation defendants are correct in their assertion that plaintiff is not specil ically listed ;IS ;I bcneficiary in the certificate of incorporation or certificate of amendment, plaintiff has cstablished a special or definite interest in the Foundation, giving it standing to bring the instant ~ Sinithers v St. Luke s-Roosevejt action ( s e Alco Grctvure v Kriupp Found.,sirpm; see gel~e~-cillv Hasp. C tr.., s i { p m ) . Significantly, in the Foundation s application for real property tax exemption h s c d o n its status as ;I nonprofit organization, i t states that its purpose is to educate the public about (lie historical significance of the property consisting of Sagtikos Manor. Similarly, in the Foundation s iqplication to the IRS for recognition of exemption, it states that the Foundation was l ormcdto maintain and preserve the Manor and its surrounding ten acres, and to educate the public [* 5] Sagtikos Manor v. Robert David Lion Gardiner Foundation, et al. Index No.: 16632/2012 Page 5 about the historical significance of this site, one of the few buildings in Suffolk County that is in the Federal Register of historic places. The application further states that the Foundation, in cooperation with The Sagtikos Manor Historical Society. . . educates the public about the historical significance of Sagtikos Manor. The Foundation allows the Historical Society free use of the Manor. The Historical Society conducts guided lecture tours of The Manor In addition, the Foundation s 1999 tax return states in a section entitled Summary of Direct Charitable Activities that its activities consist of educating the public about the historical significance of Sagtikos Manor. Accordingly, the branch of the Foundation s motion to dismiss the complaint for lack of standing is denied. As to the Foundation defendants contention that plaintiff s claims are time barred, ii defendant seeking to dismiss the complaint insofar as asserted against it as time-barred pursuant to CPLR 32 1 l(a)(5) has the initial burden of proving through documentary evidence that the action was untimely commenced after its accrual date (see Lessoff v 26 Court Street ASSOC., LLC, 58 AD3cl 610,872 NYS2d 144 [2d Dept 20091; Savarese v Shatz, 273 AD2d 219,220,708 NYS2d 642 [2cl Dept 20001). In an action for breach of a fiduciary relationship, the applicable statutory period is six years, which period does not begin to run until the fiduciary has openly repudiated his or her obligations or the relationship has been otherwise terminated (see In re Estate of Barabash, 3 1 NY2d 76, 334 NYS2d 890 [1972]; Westchester Religious Znst. v Kamerman, 262 AD2d 13 1,691 NYS2d SO2 [lst Dept 19991). Here, the Foundation defendants did not submit documentary evidence establishing that they repudiated their obligations to plaintiff or that theirrelationship with plaintiff terminated (seeKnobel v Shaw, 90 AD3d 493,936 NYS2d 2 [lst Dept 201 11; In re Estate ofMeyer, 303 AD2d 682,757 NYS2d 98 [2d Dept 20031). Moreover, the complaint alleges that the breach of fiduciary relationship occurred when the Foundation defendants failed to distribute the $81,293,622 after the death of Eunice Gardiner in 201 1. Furthermore, as to the portion of plaintiff s complaint seeking ;I declaratory -judgment, even where a justiciable controversy may already be in existence, the limitation period on commencement should not begin until the right to bring an action for coercive relief accrues (see Vigilant Ins. Co. of h i . v Hous. Autlz., 87 NY2d 36 [ 19951; Clzarney v Nortlt Jersey Truding Corp., 172 AD2d 390, 568 NYS2d 769 [lst Dept 19911). The Foundation defendants have failed to establish that plaintiff did not act with reasonable promptness after i t became clear that a legal dispute had ci-ystalized and judicial resolution would be required. Thus, the Foundation dcfendants motion to dismiss plaintiff s claims as time bared is denied. With regard to the Foundation defendants assertion that plaintiff failed to serve James Mahoney and Robert Watkins as trustees of the Foundation and individually, i t is well established t h a t CPLK 3 0 5 ( 2 ) requires strict compliance and that the plaintiff has the burden of proving, by a prepondcrancc of the credible evidence, that service was properly made (see Samuel v Brooklyn flosp. Ctr., 88 AD3d 979,93 1 NYS2d 675 [2d Dept 201 11; Kearney v Neurosurgeoiis of N. Y . , 3 I AD3cl 390, 3 1 AD3d 390, 817 NYS2d 502. [2d Dept 20061). Although an affidavit of a process server constitutes prima facie evidence of proper service under CPLR 308(2) (see Wells Fargo [* 6] Sagtikos Manor v. Robert David Lion GardirIndex No.: 16632/2012 Page 6 Bank, N A v Clzuplin, 65 AD3d 588, 884 NYS2d 254; Scarano v Scaruno, 63 AD3d 716, 880 NYS2d 682 [?d Dept 20091; NYCTL 1997-1 Trust v Nillas, 288 AD2d 279, 732 NYS2d 872 [2d Dept 200 l ] ) , a defendant s sworn denial of service with detailed facts rebutting the process server s affidavit raises an issue offact as to whether service was properly effected (see Wells Fargo Bank, N A v Chuplin, supra; Delgudo v Velecela, 56 AD3d 515, 867 NYS2d 521 [2d Dept 20081; cf.425 E. 2 6 t h St. Owners Corp. v Beaton, 50 AD3d 845,858 NYS2d 188 [2dDept 20081). The plaintiff, then, must establish personal jurisdiction over the defendant by a preponderance of the evidence adduced at a hearing (see DeStaso v Bottiglieri, 52 AD3d 453, 861 NYS2d 676 [2d Dept 20081; Werri v D Ale,ssandro,219 AD2d 646,631 NYS2d 425 [2d Dept 19951; Frankel v Schilling, 14!9 AD2d 657,540 NYS2d 469 [2d Dept 19891). The Court notes that notice of an action received b:y means other than those authorized by statute cannot serve to bring a defendant within thejurisdiction of the court (Feinstein v Bergner, 48 NY2d 234,241,422 NYS2d 356 [1979]; see Bankers Trust Co. of CaZ. v Tsoukas, 303 AD2d 343,756 NYS2d 92 [2d Dept 20031). Here, affidavits of service submitted by plaintiff s process server state that copies of the summons and complaint were delivered to Attonito, co-trustee, and that a copy of same was mailed to defendants Watkins and Mahoney s last known residence. The affidavit of Watkins states that he has never heen physically present at the Robert David Lion Gardiner Foundation in Hampton Bays, New York, and that, while he received the summons and verified complaint by mail, it was n o t addressed to his residential address. The affidavit of Mahoney states that he did not receive thlsummons and verified complaint, and that he has not lived at the address where the summons and complaint were sent for eight years. Thus, the affidavits of Watkins and Mahoney are sufficient to create a factual issue as to whether the purported service on them by mailing the summons and complaint to their last known address complied with the mandates of CPLR 308 (2) (see Wells Fargo Bunk, N A v Chaplin, mpru;Zion v Peters, 50 AD3d 894,854 NYS2d 670 [2d Dept 2008l). Accordingly, L; traverse hearing shall be held on whether service of process was properly effectuated upon Mahonely and Watkins. 1 ) Dated: - r HON. WILLIAM B. REBOLINI, J.S.C. FINAL DISPOSITION X NON-FINAL DISPOSITION

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