Matter of Smith ("GF")

[*1] Matter of Smith ("GF") 2020 NY Slip Op 51170(U) Decided on October 5, 2020 Supreme Court, Warren County Muller, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 5, 2020
Supreme Court, Warren County

In the Matter of the Application of Aislinn Smith as Designee for CLR Glens Falls LLC d/b/a Glens Falls Center for Rehabilitation and Nursing, As, PETITIONER pursuant to Article 81 of the Mental Hygiene Law for the Appointment of a Guardian of the Person and Property of "GF", an ALLEGED INCAPACITATED PERSON. (Proceeding No. I)

ANDREW KELLY, in his capacity as Guardian of the Person and Property of "GF", Petitioner-Plaintiff,

against

WILLIAM FELTT, Respondent-Defendant. (Proceeding No. 2)





2018-66246



Whiteman, Osterman & Hanna LLP, Albany (Christopher M. McDonald of counsel), for Andrew Kelly.

John J. Cromie, Ballston Spa, for William Feltt.
Robert J. Muller, J.

On June 22, 2018, GF (hereinafter decedent) — then 71 years of age and suffering from Huntington's Disease with dementia — was admitted to the Glens Falls Center for Rehabilitation and Nursing (hereinafter the Glens Falls Center). He was then discharged on July 27, 2018 to William Feltt (hereinafter respondent) — his nephew and power of attorney —but was returned to the Glens Falls Center by respondent on August 8, 2018. Both prior to his admission and during his 11-day discharge, decedent resided in his home — located at 6073 Dean Lung Road in the Town of Galway, Saratoga County — with respondent.

On December 28, 2018, the Administrator of the Glens Falls Center commenced proceeding No. 1 pursuant to Mental Hygiene Law article 81 (hereinafter the guardianship proceeding), seeking the appointment of a guardian for decedent's person and property. The petition alleged, in pertinent part:

"[Decedent's] gross monthly income from Social Security is $1594.90 and his monthly income from a GE pension is $1228.00. [Decedent] has a bank account with Bank of America that had a balance of $5848.1 1 in August. On information and belief, [decedent] owns stock through GE and IBM and had IRA accounts that were cashed out for $100,000 and $178,000 in recent years. . . ."[Decedent] has expressed to [the] Glens Falls Center staff his concern that [respondent] is taking advantage of him financially."

A hearing was held relative to the petition and, on February 6, 2019, an Order was issued granting the requested relief and appointing Andrew Kelly, Esq. (hereinafter petitioner) as decedent's guardian.[FN1] Following his appointment, petitioner began gathering decedent's financial records in anticipation of completing a Medicaid application on his behalf. In so doing, petitioner discovered that from July 2015 to November 2018 a total of 64 payments were made by respondent from decedent's Bank of America account to an account respondent owned with Capital One Bank, which payments totaled $132,532.85. Petitioner further discovered that, on August 7, 2018 — the day before respondent returned decedent to the Glens Falls Center — decedent executed a deed transferring his home to respondent for $1.00, retaining a life estate for himself.

On May 6, 2019, petitioner sent correspondence to respondent advising that "Medicaid looks for any gifts or fraudulent transfers of the applicant's assets made in the 5 years immediately preceding the application for Medicaid, [and s]uch assets are considered 'available assets' [which] subject [the applicant] to penalties." Petitioner requested that respondent immediately transfer decedent's home — which has an assessed [*2]value of $201 ,698.00 — back to him. Respondent, however, did not respond and continues to reside in the home to date. On October 1, 2019, petitioner — in his capacity as guardian of decedent's person and property — commenced proceeding No. 2 (hereinafter the turnover proceeding), which asserts causes of action for breach of fiduciary duty, conversion of property and unjust enrichment, as well as a claim pursuant to Mental Hygiene Law 81.43 for property withheld. Petitioner simultaneously moved by Order to Show Cause to compel respondent to appear for an examination pursuant to Mental Hygiene Law 81.43, which motion was assigned a return date of October 21, 2019. Decedent then died on October 19, 2019. [FN2] Respondent contacted the Court to advise he would be unable to appear on the return date. Petitioner and his counsel appeared, however, and the motion was adjourned pending an extension of petitioner's powers as guardian.

On November 1 , 2019, petitioner filed a motion in the turnover proceeding seeking to extend his powers as guardian of decedent's person and property and, upon such extension, to grant a default judgment against respondent or, alternatively, to permit the prosecution of his claims to judgment. Respondent thereafter retained counsel and the return date of both this motion and the motion by Order to Show Cause were adjourned to December 20, 2019.

On April 24, 2020, the Court invited petitioner to submit a supplemental memorandum of law on the issue of whether his powers as guardian could be extended in the context of the turnover proceeding — or whether such relief had to be sought in the context of the guardianship itself. Upon consideration of this supplemental memorandum of law and respondent's response to the same, the Court issued a letter Order on May 28, 2020 finding that Mental Hygiene Law § 81.36 required petitioner to make a motion for an extension of his powers as guardian in the context of the guardianship and directing that he proceed with the filing of such motion within thirty (30) days. To that end, on June 29, 2020 petitioner filed a motion in the guardianship proceeding to extend his powers as guardian of decedent's person and property and, upon such extension, consolidate the guardianship proceeding with the turnover proceeding and grant his pending motions in the turnover proceeding.[FN3]

The Court will begin with consideration of petitioner's motion in the guardianship proceeding, which shall hereinafter be referred to as motion No. I. It will then proceed with consideration of petitioner's motions in the turnover proceeding, first addressing his motion for, inter alia, a default judgment — which shall hereinafter be referred to as motion No. 2 — and then considering his motion by Order to Show Cause pursuant to Mental Hygiene Law 81.43 —which shall hereinafter be referred to as motion No. 3. Briefly, in view of the May 28, 2020 letter Order and the filing of motion No. 1 — that aspect of motion No. 2 which sought an extension of the guardian's powers is hereby deemed withdrawn.

Motion No. 1

Mental Hygiene Law 81.36 (a) (2) provides that "[t]he court appointing the guardian shall . . . modify the powers of the guardian where appropriate, if it appears to the satisfaction of the court that the incapacitated person has died." This statute was relied upon in Matter of Rose 13B. (262 AD2d 805 [1999], IV dismissed 93 NY2d 1039 [1999]), where the Appellate Division, Third Department stated that "[t]he death of an incapacitated person does not require a guardian's immediate discharge[,] particularly where . . . a dispute regarding the preservation of the incapacitated person's property [is] pending" (id. at 807; see Matter of Carol S. [Christine T.—Mary AA.], 68 AD3d 1337, 1338 [2009]; see also Matter ofDandridge, 120 AD3d 1411, 1414 [2014]; Acito v Acito, 72 AD3d 493, 494 [2010]). The Third Department then found "that Supreme Court did not abuse its discretion in authorizing the guardian to prosecute [the] matter [regarding preservation of the incapacitated person's property] rather than discharging him" (Matter of Rose BB., 262 AD2d at 807). To the extent that petitioner discovered the alleged conversion of decedent's assets and commenced the turnover proceeding prior to decedent's death, the Court finds it appropriate to extend his powers as guardian of decedent's person and property pending the conclusion of the turnover proceeding.

The Court further finds it appropriate to consolidate the guardianship proceeding with the turnover proceeding. CPLR 602 (a) provides that "[w]hen actions involving a common question of law or fact are pending before a court, the court, upon motion, . . . may order the actions consolidated. Here, the guardianship and turnover proceedings [*3]clearly involve common questions of law and fact and, as such, petitioner is entitled to consolidation. Indeed, respondent does not appear to oppose this aspect of the motion.

Based upon the foregoing, motion No. 1 is granted to the extent that the guardianship and turnover proceedings are consolidated and petitioner's powers as guardian of decedent's person and property extended pending the conclusion of the turnover proceeding.

Motion No. 2

At the outset, the Court finds that petitioner has succeeded in demonstrating his entitlement to a default judgment (see CPLR 3215 [f]). In this regard, petitioner has submitted proof that respondent was personally served with the Order to Show Cause, summons and verified petition and complaint on October 4, 2019 and, as of November 1, 2019 — the date of filing of the motion — no answer had been served. Petitioner has also submitted proof of the facts constituting his claims,

That being said, to successfully oppose the motion, respondent must establish (1) a reasonable excuse for his default; and (2) the existence of a potentially meritorious defense (see McCue v Trifera, LLC, 173 AD3d 1416, 1417-1418 [2019]; Luderowski v Sexton, 152 AD3d 91 8, 919 [2017]; Aaron v Carter, Conboy, Case, Blackmore, Napierski & Maloney, P.C., 12 AD3d 753, 754 [2004]). The question of "[w]hether there is a reasonable excuse for [the] default is a discretionary determination and turns on a number of factors, including whether there has been willful neglect and prejudice to the opposing party, and 'the strong public policy in favor of resolving cases on the merits"' (Matter of Santander Consumer USA, Inc. v Kobi Auto Collision & Paint Center, Inc., 166 AD3d 1365, 1365-1366 [2018], quoting Rickert v Chestara, 56 AD3d 941, 942 [2008] [internal quotation marks and citation omitted]; see Aaron v Carter, Conboy, Case, Blackmore, Napierski & Maloney, P. C, 12 AD3d at 754).

Here, respondent had until October 24, 2019 to serve an answer to the verified petition and complaint.[FN4] He failed to do so, however, stating in his opposing affidavit that [*4]upon being served with the summons and verified petition and complaint he immediately "contacted John Cromie to represent [him], but was unable to provide an initial retainer." He further states as follows:

"I intended to show up at the Warren County Supreme Court on Monday, October 21, but my uncle died two days before and my attention [was] focused on necessary arrangements[. I]n text messages with [petitioner I was] informed he anticipated the hearing to not occur and to contact the Court. I called the Court and informed a person that I would not be able to make the hearing."

Indeed, respondent has submitted a copy of his text message exchange with petitioner, who advised as follows: "As for [C]ourt, I don't know what is going to happen. [Decedent's] death changes everything. I do not believe the hearing will go forward. You could call the [C]ourt in the morning and ask to appear by telephone."

Finally, respondent states that after being served with the motion for a default judgment on November I, 2019, he "contacted [his] Aunt and [decedent's] sister . . . and asked her to send a $1,000[.00] retainer to John Cromie, Esq., which . . . was received by him on November 14." As set forth above, Cromie contacted the Court shortly after being retained and requested an adjournment of the motion return date, which was granted. Opposition papers — including a verified answer and counterclaim — were then submitted on or about December 11, 2019. Under the circumstances, the Court finds that respondent has established a reasonable excuse for his default (see Santander Consumer USA, Inc. v Kobi Auto Collision & Paint Ctr., Inc., 166 Al)3d at 1366; Puchner v Nastke, 91 AD3d 1261, 1262 [2012]). Given the timing of decedent's death and respondent's contact with both petitioner and the Court, it is evident that he did not willfully neglect to appear in the action. It must also be noted that this brief delay did not result in any prejudice to petitioner, who could not proceed with the turnover proceeding in any event until his powers as guardian were extended by the Court.

Turning now to the second aspect of the inquiry, "[t]o establish the existence of a potentially meritorious defense, [respondent] need[s] only to make a prima facie showing of legal merit, as the quantum of proof needed to prevail . . . is less than that required when opposing a summary judgment motion" (Lai v Montes, 182 AD3d 646, 649 [2020], quoting Luderowski v Sexton, 152 AD3d 918, 920 [internal quotation marks and citations omitted]; see Passeri v Tomlins, 141 AD3d 816, 819 [2016]; Baptist Health Nursing & Rehabilitation Ctr., Inc. v Baxter, 140 AD3d 1386, 1388 [2016]; Puchner v Nastke, 91 AD3d at 1262 [2012]).

Here, respondent contends that his Capital One account is a credit card account which he used solely for purchases and repairs related to the joint household he shared with decedent. Specifically, respondent states as follows:

"[None of the money transferred from my uncle's account to my Capital One account went to me."In actuality, the payments went to my credit card company for purchases made for my uncle's and my household and repair work as a result of fires set in his house prior to my moving in with him. These payments date back to when I first began living with my uncle to care for him . . . ."From the time I began to live with my uncle, I did not have regular employment, and he supported me so I would be available to help him live at home."

Respondent further contends that — notwithstanding the timing of the August 7, 2018 deed — decedent had always planned to convey his home to respondent while retaining a life estate for himself. In support of this contention, respondent has submitted a copy of decedent's will, executed on September 4, 2014, which names respondent as executor and the sole beneficiary of his estate — including his home. Respondent has also submitted the affidavit of John W. Sutton, Esq., who prepared and notarized both the will and the August 7, 2018 deed. [FN5] Sutton states, in pertinent part:

"[Decedent] was one of my clients, who I represented for various matters over the years."In August of 2014, I was contacted by [respondent], who advised me that [decedent] was a patient in Albany Medical Center and that he wished to have [respondent] be his power of attorney. . . . On August 18, 2014 1 met with [respondent], [decedent] and [respondent' s] friend Samantha (for health care proxy witnessing) at Albany Medical Center and brought a Power of Attorney form for [decedent] to sign. At that time, I talked to [decedent] about his condition, his family, and his wishes as to his future. He was communicating in a much better [*5]manner than in the years which followed. [Decedent] shared with me that he had no other members of his family who could help him in this manner. He was very interested in staying at home and [respondent] promised to help him do that. [Decedent] asked me to make sure that [respondent] received his house. We talked a bit about a life estate deed then; but [decedent] decided on a will which would give his estate including his residence to [respondent]. . . ."In 2017 and after a very difficult two years when [decedent] was accused of [a]rson for starting a fire in his home, both he and [respondent] discussed with me the possibility of a life estate deed to [respondent] which was an idea we first discussed in 2014. [Decedent] did ask me to go forward and prepare the document but he refrained from signing the deed the first time I brought itto him for signature. Thereafter and on August 7, 2018, I again visited [decedent] and he went forward and signed the life estate deed to [respondent.]"During my interaction with [decedent] concerning the deed, although his communication skills had deteriorated, my conclusion was that he was communicating well with me, understood that [respondent' s] name was going on the residence and wished that be so. I had no reason to suspect that he was under any inappropriate duress. The estate plan we discussed in 2014 was consistent with this decision as well."

In his reply in further support of the motion, petitioner contends that respondent failed to establish a potentially meritorious defense because he did not submit credit card statements or any other proof that the funds transferred to his Capital One account were in fact used to support the joint household he shared with decedent. Petitioner further contends that decedent's refusal to sign a deed conveying his home to respondent in both 2014 and 2017 supports the argument that the August 7, 2018 deed is invalid, having been executed at a time when decedent lacked capacity. In this regard, petitioner points out that the guardianship proceeding was commenced only four months after the deed was signed.

While petitioner's points are well taken, the Court — mindful of the quantum of proof necessary under the circumstances and the policy in favor of resolving cases on their merits — nonetheless finds that respondent has succeeded in establishing a potentially meritorious defense (see Baptist Health Nursing & Rehabilitation Ctr., Inc. v Baxter, 140 AD3d at 1388). To the extent that respondent resided with decedent from July 2015 to June 2018, there exists at least the possibility that the funds transferred during this time period from decedent's Bank of America account to respondent's Capital One account were in fact used for purchases and repairs related to their joint household. [*6]Likewise, given the directives in decedent's September 2014 will and the wishes he allegedly expressed to respondent and Sutton over the years, there exists the possibility that the August 7, 2018 deed was valid.

Based upon the foregoing, that aspect of motion No. 2 which seeks a default judgment is denied. The motion is otherwise granted with petitioner permitted to proceed with the prosecution of his claims. Respondent is hereby directed to serve his verified answer with counterclaims on petitioner within twenty (20) days of the date of this Decision and Order.

Counsel for the parties are hereby directed to appear for a preliminary conference on November 13, 2020 at 10:00 A.M., with the conference to be conducted virtually. Further instruction in this regard will be sent by the Court under separate cover.

Motion No. 3

Petitioner's motion by Order to Show Cause seeking to compel respondent to appear for an examination pursuant to Mental Hygiene Law 81.43 is granted, with a date certain for the examination to be established at the preliminary conference on November 13, 2020.

The parties' remaining contentions, to the extent not specifically addressed, have been considered and found to be lacking in merit.

Therefore, having considered — with respect to motion (1) — the Notice of Motion, dated June 25, 2020; Affidavit of Andrew Kelly, Esq. with exhibits attached thereto, sworn to June 24, 2020, submitted in support of the motion; Memorandum of Law of Christopher M. McDonald, Esq., dated June 25, 2019, submitted in support of the motion; Affidavit of William Feltt with exhibits attached thereto, sworn to July 14, 2020, submitted in opposition to the motion,.[FN6] Memorandum of Law of John J. Cromie, Esq., dated July 13, 2020, submitted in opposition to the motion; Affidavit of Andrew Kelly, Esq. with exhibits attached thereto, sworn to July 21, 2020, submitted in further support of the motion; Affidavit of Christopher M. McDonald, Esq. with exhibit attached thereto, sworn to July 21, 2020, submitted in further support of the motion; and Memorandum of Law of Christopher M. McDonald, Esq., dated July 21, 2020, submitted in further support of the motion;

And having considered — with respect to motion (2) — the Order to Show Cause, dated October 2, 2019, and Verified Petition and Complaint with exhibits attached thereto, dated October I, 2019, submitted in support of the motion; And having considered — with respect to motion (3) — the Notice of Motion, dated November I, 2019; Affidavit of Andrew Kelly, Esq. with exhibits attached thereto, sworn to November I, 2019, submitted in support of the motion; Affirmation of Christopher M. McDonald, Esq. with exhibits attached thereto, dated November I, 2019, submitted in support of the motion; Memorandum of Law of Christopher M. McDonald, Esq., dated November I, 2019, submitted in support of the motion; Affidavit of William Feltt with exhibits attached thereto, sworn to December 11, 2019, submitted in opposition to the motion; Memorandum of Law of John J. Cromie, Esq., undated, submitted in opposition to the motion; Affidavit of Christopher M. McDonald, Esq., sworn to December 19, 2019, submitted in further support of the motion; Affidavit of Andrew Kelly, Esq. with exhibits attached thereto, sworn to December 19, 2019, submitted in further support of the motion; and Memorandum of Law of Christopher M. McDonald, Esq., dated December 19, 2019, submitted in further support of the motion, it is hereby

ORDERED that motion No. 1 is granted to the extent that the guardianship and turnover proceedings are consolidated under Index No. EF2019-67313 and petitioner's powers as guardian of decedent's person and property are extended pending the conclusion of the turnover proceeding, with all remaining issues raised in said motion decided as set forth hereinbelow; and it is further

ORDERED that the aspect of motion No. 2 which seeks a default judgment is denied; and it is further

ORDERED that motion No. 2 is otherwise granted with petitioner permitted to proceed with the prosecution of his claims; and it is further

ORDERED that respondent shall serve his verified answer with counterclaims on petitioner within twenty (20) days of the date of this Decision and Order; and it is further

ORDERED that counsel for the parties shall appear for a preliminary conference on November 13, 2020 at 10:00 A.M., with the conference to be conducted virtually; and it is further

ORDERED that motion No. 3 is granted in its entirety, with a date certain for the examination pursuant to Mental Hygiene Law 8 1.43 to be established at the preliminary conference.

The above constitutes the Decision and Order of this Court.

The original of this Decision and Order — together with the submissions enumerated hereinabove — has been filed by the Court in proceeding No. 1 and e-filed by the Court in proceeding No. 2. Counsel for respondent is hereby directed to promptly obtain a filed copy of the Decision and Order for service with notice of entry upon petitioner in accordance with CPLR 5513.

Dated: October 5, 2020

Lake George, New York

ENTER: Footnotes

Footnote 1:This Order also revoked the power of attorney held by respondent.

Footnote 2:At the time of his death, decedent resided at the Charles T. Sitrin Health Care Center in the Town of New Hartford, Oneida County. It is unclear from the record when he was transferred from the Glens Falls Center to this facility.

Footnote 3:The Court notes that the May 28, 2020 letter Order directed that the motion be served on the "Chief Executive Officer of the facility wherein decedent resided at the time of his death" — i.e., the Administrator of the Charles T. Sitrin Health Care Center in accordance with Mental Hygiene Law 81.6 (c) (3) and the directives contained within the February 6, 2019 Order appointing guardian. This notwithstanding, petitioner served the motion on the Administrator of the Glens Falls Center. That being said, it appears that decedent was only a resident of the Charles T. Sitrin Health Care Center for a very brief period prior to his death and, as such, the facility is unlikely to take a position relative to the motion. The error will therefore be disregarded as a mere irregularity (see CPLR 2001).

Footnote 4:Petitioner contends that respondent had until October 16, 2019 to submit an answer, as the Order to Show Cause issued relative to his motion to compel an examination pursuant to Mental Hygiene Law 81.43 stated that "[i]n the event [respondent] wishes to submit an answer, he shall do so on or before October 16, 2019." The Court is not persuaded, however, as this directive pertained only to respondent's answer to the Order to Show Cause — not his answer to the summons and verified petition and complaint.

Footnote 5:Although this affidavit was submitted in opposition to motion No. 1, to the extent that motion No. I seeks a default judgment in the turnover proceeding upon the extension of petitioner's powers as guardian — and thus incorporates the relief requested in motion No. 2 — it is relevant to motion No. 2 and has been considered in this regard.

Footnote 6:The Affidavit of John W. Sutton, Esq. with exhibits attached thereto, sworn to June 30, 2020, is attached as exhibit "B" to this affidavit.