Matter of Thomas
Annotate this CaseDecided on July 22, 2013
Sur Ct, Monroe County
In the Matter of the Estate of Anthony J. Thomas, Deceased.
In the Matter of the Estate of DOROTHY THOMAS Deceased.
2012-1233/B-G
Bond, Schoeneck & King, PLLC, Edward C. Radin, Esq., Of Counsel, attorneys for Joseph M. Thomas and Gloria M. Borrelli, Petitioners herein. Adams Bell Adams, P.C., Anthony J. Adams, Jr., Esq., Lacy Katzen, LLP, Karen Schaefer, Esq., Of Counsel, attorneys for Tom J. Thomas, Executor and Respondent herein.
Edmund A. Calvaruso, J.
BACKGROUND
The decedents, Anthony J. Thomas and Dorothy Thomas, died on April 23, 2012 and August 23, 2012, respectively. They were married and had four children together. The names of their children are: Tom J. Thomas, Gloria M. Borrelli, Joseph M. Thomas and Daniel J. Thomas.Anthony J. Thomas executed a Will dated January 7, 2005. The Fourth Article of his Will provided that his residuary estate be held in a "Family Trust" for the benefit of his spouse, should she survive him. Upon his spouse's death the Will provided that the "Family Trust" be distributed to his children in the following manner: Gloria Borrelli, if then living was to receive the real property located at 2453 Lyell Road in the Town of Gates, New York.. Daniel Thomas, if then living, was to receive real property of approximately 100 acres on West Hollow Road, Naples, New York. The "Joseph Thomas Family Trust", established under Article Seventh of the decedent's Will, was to receive the residence located at 930 North Greece Road, in Greece, New York. The balance of the "Family Trust" was to be distributed as follows: 27% to Daniel Thomas or if not then living to his issue then living per stirpes; 27% to Gloria Borrelli or if not then living to her issue then living per stirpes; 27% to the Joseph Thomas Family Trust or if Joseph Thomas [*2]is not then living to his issue then living per stirpes; 19% to Tom J. Thomas, and if not then living, to his issue per stirpes. The Will also provided that Tom J. Thomas be the Executor of his Estate and Trustee of the Family Trust and the Joseph Thomas Family Trust.
Dorothy Thomas executed a Will dated January 7, 2005. The provisions of her Will mirrored that of her predeceased husband. Accordingly, her estate was devised in exactly the same manner as described above. Her Will also named Tom J. Thomas as Executor of her Estate and Trustee of the Family Trust and the Joseph Thomas Family Trust. The Court granted probate to both Wills on September 17, 2012, and September 20, 2012, respectively. The Petitioners in this matter consented to the probate of both Wills and to the issuance of Letters Testamentary and Letters of Trusteeship of the Joseph Thomas Family Trust under Article "Seventh" of the Will of Dorothy Thomas to Tom J. Thomas.
The Petitioners filed a petition for Relief Against a Fiduciary as to both estate matters on March 7, 2013. Their petition seeks the following relief: (1) to impose a constructive trust over certain monies, real property, insurance proceeds and business interests controlled by the Respondent; (2) to require the fiduciary to deliver devised property deeds pursuant to SCPA §2102(4); (3) to compel a partial distribution pursuant to SCPA §2102(5); (4) to require the fiduciary to supply information pursuant to SCPA §2102(1); (5) to compel an accounting pursuant to SCPA §2205; (6) to revoke letters testamentary and letters of trusteeship granted to the Respondent and grant letters to Daniel J. Thomas, or in the event he is unwilling or unable to serve, Gloria M. Borrelli pursuant to SCPA §711(1) and §711(2).
The Petitioners allege that the Respondent exploited his close relationship with the decedents by inducing them to transfer to him certain properties which they owned with the promise of payment for an/or re-conveyance of the properties to the decedents or the Respondent's siblings. The Petitioners identify three land transfers which they allege unjustly enriched the Respondent at the expense of themselves and their deceased parents. They also allege that the Respondent's ownership interest in the New York State Fence Company, Inc., a business which was founded by Anthony J. Thomas, was acquired in a manner which also unjustly enriched the Respondent.
The Respondent filed his Answer to the petition on April 2, 2013. The Court held a chambers conference with counsel for the parties on April 23, 2013. The Respondent then filed a Notice of Motion on April 30, 2013, citing CPLR §3211(5) and CPLR §3211(7) seeking an order dismissing the petition insofar as it seeks relief pertaining to (1) real property on West Ridge Road, North Greece Road and Manitou Road in the Town of Greece and (2) to the Respondent's ownership of the stock in New York State Fence, Inc. The Court also received memoranda of law and responses from both parties relative to the Respondent's Motion to Dismiss. The Court advised counsel at the last appearance of this matter that the Court would determine the Motion based on the papers submitted.
The decedents resided at 499 Mill Road in the Town of Greece, New York. Prior to his death, Anthony J. Thomas also owned several parcels of real property. The Petitioners allege that on August 31, 1977, Anthony J. Thomas purchased 30 acres of vacant land on West Ridge Road in the Town of Greece, known as 3550 West Ridge Road. The Petitioners also allege that the Respondent entered in to a contract with Talco Contractors, Inc., on May 27, 1987 to acquire 42.7 acres of real property located on North Greece Road, in the Town of Greece, NY. The [*3]Petitioners further allege that on October 30, 1987, Anthony J. Thomas entered into a contract with Talco Contractors, Inc. for the sale of 20 of the 30 acres of the West Ridge Road property.The Petitioners further allege that on December 31, 1987, deeds recorded in the Monroe County Clerk's Office on that date revealed the following transfers of real property: Anthony J. Thomas transferred approximately 20 acres of land at 3550 West Ridge Road to Talco; Anthony J. Thomas transferred 10 acres of land at 3550 West Ridge Road (known as Strollis Road) to Tom Thomas; Talco transferred 42.7 acres of land on North Greece Road to Anthony J. Thomas. Allegedly, these 42.7 acres of vacant land on North Greece Road were transferred from Anthony J. Thomas to the Respondent by deed recorded in the Clerk's office on March 8, 1989. The Petitioners allege, upon information and belief, that the Respondent promised to pay his parents for the North Greece Road property so that his siblings could receive their equitable share of the value of this property or would pay it upon the death of the decedents.
The petition also alleges that the decedents owned approximately 35 acres of real property on Manitou Road in Greece, New York. Allegedly, this property was transferred by the decedents to the Respondent by deed recorded on December 27, 1991. The Petitioners further allege that the Respondent never paid any consideration for the transfer, however they also allege that the decedents did not intend the property to be a gift to the Respondent. They allege that the Respondent was going to subdivide the property and then re-convey it to the decedents. They further allege that a loan obtained by the Respondent and secured by the property was guaranteed by the New York State Fence Company.
Anthony J. Thomas was the founder and owner of a business known as New York State Fence Company. Allegedly, their children Daniel and Tom became owners in this business. The Petitioners allege that the decedent claimed before he died that he was a 51% majority shareholder in the business. The Respondent, who allegedly, over a period of time, became head of the day to day operations of the business allegedly became the sole owner of the business in 1998. The Petitioners want the Court to impose a constructive trust over all of Anthony's shares in the company.
DECISION
The Petitioners base their arguments for relief on the theory that the Respondent's conduct in these commercial matters should lead to the imposition of a constructive trust on these assets. "A constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee." Beatty v. Guggenheim Exploration Co., 225 NY 380, 386 (1919). The Petitioners allege that the transfers would not have occurred but for the promises made to the decedents by the Respondent that he would pay for the value of these properties and/or ensure that the Petitioners would receive their equitable share in the future.
There are four elements that must be established for the Court to impose a constructive trust. First, there must be a confidential relationship. Second, a promise must have been made by one of the parties to the transfer. Third, the transfer was made in reliance on the promise. Fourth, there must be unjust enrichment. Warren's Heaton Surrogate Court Practice, 7th Edition, [*4]§209.06[3] page 209-46, citing In re O'Malley, N.Y.L.J., July 15, 2009 at 44 (Sur. Ct. Queens County).
Clearly, the relationship between a parent and child is likely one of a confidential nature. Assuming arguendo that this relationship was confidential, there is no evidence that a promise was made by the Respondent to the decedents relative to the transfer of the above parcels of real property or in the business dealings of New York Fence, Inc., other than allegations made upon information and belief. Since CPLR §4519 would prohibit the testimony of any statements made by them and there is no evidence of any promises made by the Respondent, that element prerequisite to the establishment of a constructive trust has not been met. Also, the petition contains no alleged promises made by the Respondent to the Petitioners. Since the Petitioners have alleged facts relative to whether the transfer of the property was made in reliance on a promise they cannot prevail on a cause of action to impose a constructive trust. See Moramarco v. Ruggiero, 55 AD3d 694, (2008).
Finally, the imposition of a constructive trust on the assets that are in dispute in this matter, would, Petitioners argue, prevent the unjust enrichment of the Respondent. However, even assuming that everything in the petition is true, the Petitioners have not established that the transfer of the assets resulted in the unjust enrichment of the Respondent to their detriment. There is no evidence that the transferred properties were going to be devised by the decedents to the Petitioners. In fact, the Wills of the decedents do not devise these properties or their cash equivalent to the Respondent's other siblings. The Respondent does receive a lesser percentage of the "Family Trust" than his siblings in both Wills. Accordingly, in this respect, the Petition fails to state a cause of action upon which the relief of the imposition of a constructive trust can be granted.
CPLR §3211(a)(5) and CPLR §3211(a)(7) provide, respectively, that a party may move for a judgment dismissing one or more causes of action asserted against him on the ground that the cause of action may not be maintained because of the statute of limitations or that the pleading fails to state a cause of action.
The real property transactions involved transfers of property from one or both of the decedents to the Respondent. The most recent of the three real property transfers which are referenced in the petition occurred in 1991. CPLR §213(2) provides a six year statute of limitations for causes of action arising out of a contract. All three transactions occurred well after the statute of limitations for contract had expired. Also, there is no cause of action against the Respondent for a transfer of property between the decedent, Anthony J. Thomas and Talco Contractors, Inc., as the Respondent was not a party to that contract.
The Petitioners argue that the statute of limitations does not apply to the establishment of a constructive trust on these properties. Case law is clear, however, that on a proceeding to impose a constructive trust, the statute of limitations is six years. Dombek v. Reiman, 298 AD2d 876, (4th Dept., 2002). "A determination of when the wrongful act triggering the running of the Statute of Limitations occurs depends upon whether the constructive trustee acquired the property wrongfully, in which case the property would be held adversely from the date of acquisition, or whether the constructive trustee wrongfully withholds property acquired lawfully from the beneficiary, in which case the property would be held adversely from the date the trustee breaches or repudiates the agreement to transfer the property." Maric Piping v. Maric, [*5]271 AD2d 507, 508 (2d Dept., 2000), quoting Sitkowski v. Petzing 175 AD2d 801, 802, (2d Dept., 1991). If the Respondent in this case did acquire the property wrongfully, the action is barred by the statute of limitations. Since there is no evidence of an agreement to transfer the property at a later date then a constructive trust cannot be imposed in any event.
Relative to the Respondent's ownership of New York State Fence Company, the Respondent admits in his pleadings that he has been the sole owner of the company since 1998. The same reasoning relative to the statute of limitations applies. There are no allegations that the Respondent's commencement of ownership of the company was not discoverable by the Petitioners. Accordingly, they are well beyond the time limitations imposed by the CPLR to bring any action based on fraud. See CPLR §213(7) and (8).
The Court also finds that, the most recent of the above real estate transactions occurred in 1991. The Respondent allegedly took over the New York State Fence Company in 1998. The equitable doctrine of laches applies to this case. See Estate of Wanda S. Tarka, 1995-4041, NYLJ 1202608540454, at 6, (Surr., NY, Decided June 20, 2013). The Petitioners should have pursued their objections to the real estate transactions shortly after they occurred, not some twenty-two (22) years later.
CONCLUSION
Based on the reasons given above, the Court finds that the petition should be dismissed insofar as it seeks to impose a constructive trust over the real property on West Ridge Road, North Greece Road and Manitou Road in the Town of Greece, NY and to the Respondent's ownership of the stock in New York State Fence Company, Inc.
Enter.
Dated: July 22, 2013
Edmund A. Calvaruso
Hon. Edmund A. Calvaruso, Surrogate
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