Kagan v Ameriprise Fin. Servs., Inc.

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[*1] Kagan v Ameriprise Fin. Servs., Inc. 2018 NY Slip Op 51893(U) Decided on December 21, 2018 Supreme Court, Dutchess County Pagones, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 21, 2018
Supreme Court, Dutchess County

Michelle Kagan, Plaintiff,


Ameriprise Financial Services, Inc., Riversource Life Insurance Company, and Valarie Kagan, Defendants.




Attorneys for Plaintiff


35 Market Street

Poughkeepsie, New York 12601



Attorneys for Defendants



623 Fifth Avenue, 24th Floor

New York, New York 10022



Attorneys for Defendant


P.O. Box 3, 55 Old Post Road North

Red Hook, New York 12571
James D. Pagones, J.

Plaintiff moves for an order, pursuant to CPLR 3212, granting her summary judgment and determining that the plaintiff is the 100% primary beneficiary of four (4) accounts individually held and created by the decedent David Harold Kagan. Defendants Ameriprise Financial Services, Inc. and RiverSource Life Insurance Company (hereinafter "Ameriprise") cross-move for an order, pursuant to CPLR §1006(f), directing them to either deposit with the Clerk of the Court the assets contained in the accounts of the decedent or in the alterative directing said defendants to retain such custody or otherwise dispose of such assets as the Court directs. The cross-movants also seek reasonable attorney's fee, costs, disbursements and dismissal of the complaint and all cross-claims against them.

The following papers were read:

Notice of Motion-Affirmation-Exhibits A-P- 1-21

Affidavit of Service-Memorandum of Law-Affidavit of Service

Notice of Cross-Motion-Affidavit-Exhibits A-C-22-28

Memorandum of Law-Affirmation

Affidavit in Opposition-Exhibit A-Affidavit- 29-37

Exhibit A-Affirmation in Opposition-Exhibits A-C-

Memorandum of Law

Reply Affirmation-Affidavit-Exhibits Q-T-38-44

Affidavit of Service

By way of background, on January 11, 2017, decedent David Harold Kagan died by suicide. Decedent's sister and named executrix petitioned to admit the decedent's last will and testament to probate. Decedent's daughters objected to the probate of the decedent's will. By decision and decree dated March 13, 2018, the undersigned in his role as the Surrogate of Dutchess County admitted the will to probate and dismissed the objections. During the pendency of the probate proceeding, on January 24, 2017, plaintiff received a notification from the defendants Ameriprise that defendant Valarie Kagan disputed decedent's beneficiary designation. On March 29, 2017, defendants Ameriprise ultimately decided that it was unable to transfer the decedent's funds to either the plaintiff or defendant Kagan. Thereafter, on June 21, 2017, the plaintiff commenced this action by filing the summons and verified complaint.

To further understand the complexities of this action, the Court must delve further into the facts. On or about October 21, 2016, defendant Kagan filed an action for divorce against the decedent in the Supreme Court, Westchester County. Decedent was also served with the Notice of Automatic Orders, pursuant to DRL §236(B)(2)(b). Prior to the decedent's death, on January 9, 2017, the decedent sought to remove his estranged wife from the four (4) accounts at issue and designate the plaintiff as his new beneficiary. On January 9, 2017, decedent executed and delivered an updated beneficiary form designating plaintiff as the new beneficiary on his accounts. Defendant Kagan's consent was not required by defendants Ameriprise to complete the request. On January 11, 2017, the date of decedent's death, decedent executed his will at his attorney's office. Decedent made no provision in his will for his estranged wife and added an in terrorem clause, to further disinherit defendant Kagan in the event she challenged the will.

On a motion for summary judgment, the test to be applied is whether triable issues of fact [*2]exist or whether on the proof submitted judgment can be granted to a party as a matter of law (see Andre v. Pomeroy, 35 NY2d 361 [1974]). The movant must set forth a prima facie showing of entitlement to judgment as matter of law, tendering sufficient evidence to demonstrate the absence of any material issue of fact (see Alvarez v. Prospect Hospital, 68 NY2d 320 [1986]). Once the movant sets forth a prima facie case, the burden of going forward shifts to the opponent of the motion to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact (see Zuckerman v. City of New York, 49 NY2d 557 [1980]).

Initially, the Court would note that even if the decedent violated the automatic orders entered in the matrimonial action by changing the named beneficiaries on the four (4) accounts at issue herein, that does not provide a basis for vacating such designation; as when David died, the matrimonial action abated and defendant Kagan cannot obtain equitable distribution of alleged marital assets in this action (see Matter of Alfieri, 203 AD2d 562 [2nd Dept 1994]; A.V.B. v. D.B., 44 Misc 3d 331 [Sup Ct, Westchester County 2014]).

In support of her motion, plaintiff establishes her prima facie entitlement to judgment by submitting the beneficiary update form, annexed as Exhibit "N". This form was sufficient to effect a change of beneficiary pursuant to EPTL §13-3.2(e), which requires that such a designation be made in writing and contemporaneously signed by the person making the designation (see In re Estate of Ajamian, 270 AD2d 724 [3rd Dept 2000] leave to appeal dismissed by 95 NY2d 931). Moreover, the documentary evidence, annexed as Exhibit "E", establishes that defendants Ameriprise accepted and processed this update as was requested by the decedent.

Since plaintiff has made a prima facie showing of entitlement to judgment as a matter of law (see Zuckerman v. City of New York, 49 NY2d 557 [1980]), defendants must show that genuine triable issues of material fact exist in order to defeat plaintiff's motion (id.).

In opposition and in support of her counterclaim, defendant Kagan asserts that the decedent exhibited profound evidence of impaired mental capacity due to a severe but undiagnosed mental illness. This alleged mental impairment, defendant Kagan alleges, affected Mr. Kagan's capacity to contract. A determination of whether or not the change of beneficiary designation should be voided based upon the decedent's alleged lack of mental capacity requires an analysis of facts and law as presented to the Court. In order to determine the mental capacity standard, this Court must first determine whether the documents executed are more comparable to a will; therefore requiring a minimal mental capacity, or whether they are more similar to a contract, therefore requiring a higher mental capacity (see Matter of Donaldson, 38 Misc 3d 841 [Sur Ct, Richmond County 2012]). It is abundantly clear, after reviewing the document executed by the decedent, that it is more comparable to a contract and therefore requires a higher mental capacity than that of a will. The controlling standard in evaluating decedent's capacity is not the lower standard for a testamentary instrument, but is rather the higher contract standard of capacity, which focuses on whether the person was able to understand the nature and consequences of a transaction and make a rational judgment concerning it (id.). The next step in this analysis is to ascertain who bears the burden of proving or disproving whether the decedent had the proper mental capacity to execute the change of beneficiary. Unlike testamentary capacity with respect to wills, where the proponent of a will bears the burden of proving testamentary capacity, with a contract, the burden of proving incapacity is on the one who asserts [*3]it (id.). Finally, the application of the facts to the law will determine whether or not the decedent had the requisite mental capacity to execute the beneficiary update form.

As previously stated, defendant Kagan as the party alleging mental incapacity, has the burden of proving the same (see Boucher v. Regan, 88 AD2d 1066 [3rd Dept 1982]). Competency will otherwise be presumed unless the contrary is shown (id.). In support of her position defendant Kagan offers her own affidavit and that of Rachel Kagan, the daughter of the decedent and defendant Kagan. Defendant Kagan states "I believe, based upon my knowledge of David and the reports that I received about him from our daughter Rachel, that David's mental illness, already in existence at the time he and I separated, worsened substantially while he lived with the Plaintiff. I further believe that either plaintiff was aware that David intended to kill himself and used that opportunity to enrich herself at my and my children's expense, or she used her influence on David as his caretaker to induce him to commit suicide, after enriching her assets that she would not otherwise have any claim to." Rachel Kagan submits the following: "It was my opinion and belief on January 8, 2017 that my father, David Kagan, was not thinking or acting rationally during our telephone conversation. I continue to hold that opinion and belief today. In light of his suicide three days after our conservation, it is my opinion and belief that my father was not in his right mind during the period from January 8, 2017 until he killed himself on January 11, 2017."

Here, defendant Kagan fails to demonstrate by clear and convincing evidence that the decedent lacked mental capacity at the time he changed his beneficiary designation (see Cohen v. Fiene, 38 Misc 3d 1229[A][Sup Ct, Suffolk County 2013]). Contracts of a mentally incompetent person who has not been adjudicated insane are voidable (see Ortelere v. Teachers' Retirement Bd. of City of New York, 25 NY2d 196 [1969]). Nothing less than serious medically classified psychosis should suffice or else few contracts would be invulnerable to some kind of psychological attack (id.). Here, defendant Kagan has not submitted any medical evidence to support her diagnosis of a severe mental illness. Defendant fails to annex an affirmation or affidavit of a physician diagnosing the decedent, nor are any of the decedent's medical records made part of the opposition papers. Simply put, the Court cannot rely on the diagnosis of the defendant and her daughter, as neither are medical professionals and each is interested in the outcome of this action.

Defendant Kagan next asserts that there are disputed issues of material fact as to the alleged undue influence exerted over the decedent. The undersigned would note that I substantially addressed the same allegation in my role as Surrogate in a decision and decree dated March 13, 2018, wherein I held:

"Generally, the burden of proving undue influence rests with the party asserting its existence. To meet this burden, there must be proof of motive, opportunity and the actual exercise of undue influence tantamount to a moral coercion which restrained independent action and destroyed free will (see Matter of Walther, 6 NY2d 49 [1959]). However, if a confidential relationship exists, the burden is shifted to the beneficiary of the transaction to prove the transaction fair and free from undue influence (see Hearst v. Hearst, 50 AD3d 959 [2nd Dept 2008]). In order to demonstrate the existence of a confidential relationship, there must be evidence of circumstances that demonstrate inequality or a controlling influence (see Matter of Albert, 137 AD3d 1266 [2nd Dept 2016] leave to [*4]appeal denied by 27 NY3d 910).Here, the objectants' conclusory statements concerning the decedent's reliance on the proponent for a place to reside, the decedent's use of the proponent's email account and the proponent's alleged provision of a smoking/drinking room to the decedent are insufficient to establish that a confidential relationship existed between the decedent and the designated executrix (id.).Moreover, the allegations of undue influence are unsupported by evidence, circumstantial or otherwise, to demonstrate that the will was a product of undue influence (see Matter of Dubin, 54 AD3d 945 [2nd Dept 2008]).Even assuming arguendo that motive and opportunity were established, objectants offer no direct evidence that the proponent did anything to actually influence decedent's distribution of his assets (see In re Estate of Alibrandi, 104 AD3d 1175 [4th Dept 2013])."

In the current action, the allegations mirror that made in the Surrogate proceeding. Defendant Kagan maintains that the plaintiff's knowledge of the decedent's intent to commit suicide coupled with her actions to assist the decedent in redirecting assets strongly suggest that she exercised undue influence over him.

Defendant Kagan offers no direct evidence that the plaintiff did anything to actually influence decedent's change of beneficiary (see In re Estate of Alibrandi, 104 AD3d 1175 [4th Dept 2013]). Moreover, defendant Kagan offers no evidence to establish that the changes in testamentary intent were anything but freely, voluntarily and intelligently crafted by the decedent (see generally Children's Aid Soc. of New York v. Loveridge, 70 NY 387 [1877]).

The third counterclaim seeks judgment by breach of a fiduciary duty. The defendant/counter-claimant maintains that the plaintiff had a fiduciary duty to the decedent which she breached by causing, promoting, assisting, aiding and abetting and/or procuring from the decedent the change of beneficiary of the subject accounts from her to plaintiff.

The elements of a cause of action to recover damages for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) misconduct by the plaintiff, and (3) damages directly caused by the plaintiff's misconduct (see Litvinoff v. Wright, 150 AD3d 714 [2nd Dept 2017]). As stated above, defendant Kagan simply offers no evidence of misconduct by the plaintiff. Moreover, there is no issue of law or fact as submitted by the opposition papers of defendant Kagan which would preclude the determination of this claim via summary judgment.

To state a claim for unjust enrichment, a party must show that: (1) the other party was enriched, (2) at that party's expense, and, (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered (see Mandarin Trading Ltd. v. Wildenstein, 16 NY3d 173 [2011]). Here, the Court has determined that the decedent validly executed the update of beneficiary form. Accordingly, any claim for unjust enrichment must fail.

The Court would next like to address defendant Kagan's argument concerning the alleged premature nature of the plaintiff's motion for summary judgment, as discovery is sought. The defendant's mere expression of hope that further discovery would be helpful to her position provides no basis for the denial of this motion (see generally Marcel v. Chief Energy Corp., 38 AD3d 502 [2nd Dept 2007]).

Based upon the foregoing, plaintiff's motion for summary judgment is granted in its entirety. The cross-motion by defendants Ameriprise is granted to the extent that the complaint [*5]and all cross-claims against them are hereby dismissed. The branch of the cross-motion seeking attorney's fees and costs is denied, as the cross-movant fails to annex an affirmation of services or bill of costs to their motion. The plaintiff and the cross-moving defendants are directed to execute any documents to effectuate a transfer of the proceeds of the four (4) accounts to the plaintiff without delay. Following transfer of the proceeds of these accounts, cross-movants are discharged from all liability associated therewith.

The foregoing constitutes the decision and order of this Court. This decision and order has been filed electronically.

Dated: December 21, 2018

Poughkeepsie, New York