Opinion
Index No. 53922 RJI No. 56-1-2017-0511
05-22-2023
County of Warren, acting for and on behalf of the WESTMOUNT HEALTH FACILITY, Plaintiff, v. Michael R. Swan as Administrator of the ESTATE OF JOSEPH GARRY, JR. and JEFFREY GARRY, Defendants. COUNTY OF WARREN, acting for and on behalf of the WESTMOUNT HEALTH FACILITY, Plaintiff, v. v. ESTATE OF JOSEPH GARRY, JR., JEFFREY GARRY, MICHAEL GARRY, as Trustee, THE GARRY FAMILY TRUST DATED NOVEMBER 13, 1997, JUANITA MASWICK, JOANNE BALLINI and ALEXANDRA J. GARRY, Defendants.
The Clements Firm, Glens Falls (Thomas G. Clements of counsel) for plaintiff. Baynes Law Firm, PLLC, Ravena, (Brendan F. Baynes of counsel) for defendants Jeffrey Garry, Michael Garry, as Trustee, The Garry Family Trust dated November 13, 1997, Juanita Maswick, Joanne Ballini and Alexandra J. Garry.
Unpublished Opinion
The Clements Firm, Glens Falls (Thomas G. Clements of counsel) for plaintiff.
Baynes Law Firm, PLLC, Ravena, (Brendan F. Baynes of counsel) for defendants Jeffrey Garry, Michael Garry, as Trustee, The Garry Family Trust dated November 13, 1997, Juanita Maswick, Joanne Ballini and Alexandra J. Garry.
ROBERT J. MULLER, J.S.C.
On April 6, 2009, Joseph Garry, Jr. (hereinafter decedent) was admitted to the Westmount Health Facility, a nursing home owned and operated by plaintiff. Upon decedent's admission his son, defendant Jeffrey Garry, executed a Responsible Party Agreement wherein he "agree[d] to pay [Westmount] its basic monthly private rate for nursing home services rendered to [decedent] and any and all ancillary charges incurred by [decedent] from [decedent's] income and/or resources." Decedent thereafter suffered a stroke and was hospitalized on April 30, 2009. Following this hospitalization and subsequent rehabilitation, decedent was re-admitted to Westmount on June 19, 2009 and remained there until his death on July 5, 2010. A Responsible Party Agreement was sent to Jeffrey Garry relative to this second admission, but he refused to sign it.
On April 8, 2010, plaintiff commenced action No. 1 against decedent and Jeffrey Garry alleging (1) a cause of action against decedent for breach of the Admission Agreement as a result of his failure to pay for the care given at Westmount; (2) a cause of action against decedent for unjust enrichment; (3) a cause of action against Jeffrey Garry for breach of the Responsible Party Agreement; and (4) a cause of action against decedent for the payment of counsel fees. The action was then stayed as a result of decedent's death. On October 15, 2015, Michael Swan, plaintiff's Treasurer, filed a petition with the Warren County Surrogate's Court to administer decedent's estate. Swan was thereafter appointed as administrator on February 17, 2016. On April 25, 2016, plaintiff filed a motion seeking to substitute Swan, as administrator of decedent's estate, as defendant in the place and stead of decedent, as well as to add Juanita Maswick, Joanne Ballini, Michael Garry and The Garry Family Trust (hereinafter the Trust) as additional defendants in action No. 1. By Order dated August 23, 2016, the motion was granted to the extent that Swan was substituted in the place and stead of decedent, but it was otherwise denied.
Juanita Maswick and Joanne Ballini are decedent's other children. Michael Garry is decedent's nephew.
On September 9, 2016, plaintiff commenced action No. 2 against decedent's estate, Jeffrey Garry, Maswick, Ballini, Michael Garry and the Trust alleging (1) that the Trust is void as against creditors under EPTL 7-3.1; and (2) that any conveyances made from the Trust since April 6, 2009 are fraudulent. An amended complaint was then filed on October 5, 2016 adding Jeffrey Garry's daughter - Alexandra Garry - as an additional defendant and alleging that Jeffrey Garry fraudulently conveyed a parcel of property to her for no consideration. Plaintiff filed a notice of pendency relative to this parcel of property on October 24, 2016, which notice of pendency was extended by Order dated October 22, 2019. Issue has been joined in action Nos. 1 and 2 with respect to all defendants except decedent's estate (hereinafter referred to collectively as defendants), which has not appeared. The parties have further stipulated to joinder of the actions for purposes of discovery and trial.
While the complaint in action No. 2 alleges five causes of action, the last four causes of action - all of which allege fraudulent conveyances - have been treated as one for purposes of this decision.
Again, while the amended complaint alleges five causes of action against Alexandra Garry, all pertain to the same fraudulent conveyance and have thus been treated as one cause of action for purposes of this decision.
This stipulation is reflected in the scheduling Order dated December 15, 2017.
On February 20, 2018, plaintiff served discovery demands seeking, inter alia, state and federal tax returns of decedent, the Trust and certain corporate entities in which decedent and the Trust held an interest, as well as accountings, balance sheets and income and expense statements for the Trust, records of asset transfers between the Trust and its beneficiaries, and records of asset transfers by Jeffrey Garry. Defendants complied with certain of the requests but objected to the production of most of the financial documents and all of the requested tax returns. Plaintiff thereafter served a discovery demand upon Michael Garry, seeking copies of various financial documents including the tax returns of decedent and the Trust. Plaintiff also served interrogatories on Jeffrey Garry and Michael Garry requesting certain financial information regarding decedent's assets. Defendants either objected to these requests or refused to answer them.
On November 14, 2018, plaintiff moved to compel responses to its various discovery demands and defendants cross-moved for summary judgment. By letter Order dated May 17, 2019, the Court denied the motion to compel as premature on the grounds that decedent's tax returns were allegedly forthcoming from the Internal Revenue Service (IRS) and an analysis thereof would have a direct bearing on the issue of whether the other financial documents sought were material and relevant. The cross motion for summary judgment was denied without prejudice pending the completion of discovery.
Plaintiff was then unable to obtain decedent's tax returns from the IRS and, on July 21, 2020, filed a second motion to compel. Defendants cross-moved for a protective Order, claiming that the documents sought were neither material nor relevant to a determination in the actions. The motion and cross motion were referred to a referee (see CPLR 3104 [a]), who issued an Order denying the motion to compel and granting the cross motion for a protective Order. Plaintiff then moved for review and reversal of the referee's Order, which motion was denied by Decision and Order dated August 28, 2020. Plaintiff appealed both the May 17, 2019 and August 28, 2020 Orders, with the May 2019 Order affirmed and the August 2020 Order modified by Memorandum and Order dated March 31, 2022 (203 A.D.3d 1504 [3d Dept 2022]). Insofar as the August 2020 Order is concerned, the Third Department stated as follows:
"Although tax returns are generally not discoverable unless the party seeking them shows that they are relevant to issues in the case, indispensable to the claim and unavailable from other sources, we are satisfied that plaintiff made the requisite showing here, particularly given defendants' reluctance to produce responsive documents or interrogatory responses that may have otherwise provided information contained in decedent's tax returns. That said, we find that the scope of the disclosure should be limited. Plaintiff sought decedent's tax returns from 2004 to 2010, but the obligation to utilize decedent's available assets and/or resources to pay for his care did not arise until decedent's initial admission to Westmount in April 2009. Defendants must therefore disclose any tax returns of decedent for the years 2008 - one year prior to execution of the agreement - through and including 2010 - the year of decedent's death - which are in their possession, custody or control.
"We further find that plaintiff is entitled to disclosure of any accountings, balance sheets and income and expense statements of the trust for this same time period. The record reveals that the trust owned substantial assets, including shares of stock in two closely-held corporations, and it is undisputed that Jeffrey Garry, as decedent's attorney-in-fact, had access to this resource during the time period surrounding decedent's admission to Westmount" (id. at 1508-1509 [citations and internal quotation marks omitted]).
The Third Department further found that the "Court properly exercised its discretion in declining to compel disclosure of the remaining financial information sought by plaintiff, as those demands were overly broad and burdensome" (id. at 1509).
Defendants subsequently complied with the Third Department's directives and served the requisite discovery upon plaintiff. On August 20, 2021, action No. 2 was discontinued as against Michael Garry. On May 13, 2022, plaintiff served defendants with a notice to take the deposition of Jeffrey Garry and a subpoena directing Michael Garry to appear for a deposition, which subpoena further directed that he produce certain financial documentation at the time of his deposition. Presently before the Court is (1) defendants' motion in action Nos. 1 and 2 for a protective Order preventing plaintiff from deposing Jeffrey Garry and, further, quashing the subpoena with respect to Michael Garry; (2) plaintiff's cross motion in action Nos. 1 and 2 to vacate the August 2020 Order to the extent that it conflicts with the Third Department's Memorandum and Order; (3) plaintiff's motion by Order to Show Cause in action No. 2 to extend the notice of pendency; and (4) defendants' cross motion in action Nos. 1 and 2 for summary judgment.
Beginning with defendants' motion in action Nos. 1 and 2 for a protective Order, defendants contend that plaintiff previously deposed Jeffrey Garry on February 14, 2018 and there exists no justification for a second deposition. Defendants further contend that, because plaintiff has discontinued action No. 2 as against Michael Garry, plaintiff is no longer entitled to depose him. Finally, defendants contend that the financial information sought in the subpoena has either previously been provided or has been deemed "overly broad and burdensome" by the Third Department (id. at 1509).
In opposition, plaintiff contends that when Jeffrey Garry was previously deposed in 2018, it did not yet have any of the requested discovery - namely, decedent's tax returns from 2008 to 2010 and the accountings, balance sheets and income and expense statements of the Trust from 2008 to 2010 - and a review of this discovery has resulted in additional questions for Jeffrey Garry. According to plaintiff, a review of this discovery has likewise resulted in questions for Michael Garry, who has not yet been deposed. Finally, plaintiff contends that the financial information sought in the subpoena is in all respects proper and in conformance with the Third Department's decision.
The Court finds that plaintiff is entitled to depose Jeffrey Garry a second time. It is understandable that a review of the discovery provided raised additional questions material and relevant to the prosecution of these actions (see Bravo v Vargas, 113 A.D.3d 577, 579 [2d Dept 2014]; Donald v Ahern, 96 A.D.3d 1608, 1611 [4th Dept 2012]; compare Czechowski v Buffalo Niagara Med. Campus, Inc., 175 A.D.3d 1817, 1818 [4th Dept 2019]). Plaintiff is also entitled to depose Michael Garry, who became a co-trustee of the Trust - together with Jeffrey Garry - upon decedent's death. Indeed, plaintiff submitted an October 7, 2010 letter written by Michael Garry to the Warren County Department of Social Services (hereinafter DSS) relative to valuation of the Trust. In this regard, he may have material knowledge with respect to how the Trust assets were used during the relevant time period (see CPLR 3101 [a]).
The Court further finds, however, that plaintiff is not entitled to disclosure of the financial information sought in the subpoena. Defendants are correct that much of what is requested has previously been provided and, insofar as the remaining requests are concerned, these requests are identical to those previously considered by the Third Department. Indeed, defendants submitted copies of these earlier demands and the similarities are indisputable. Plaintiff's contentions notwithstanding, the Third Department expressly found these demands to be "overly broad and burdensome" (id. at 1509).
Based upon the foregoing defendants' motion in action Nos. 1 and 2 for a protective Order is granted to the extent that the aspect of the subpoena directing Michael Garry to produce certain financial information is quashed, and the motion is otherwise denied.
Turning now to plaintiff's motion in action Nos. 1 and 2 to partially vacate the August 2020 Order, this motion is dismissed as moot. Plaintiff is seeking to vacate this Order to the extent that it conflicts with the Third Department's Memorandum and Order - but this has already been accomplished by the Memorandum and Order itself. Indeed, the final paragraph states as follows:
"Ordered that the order entered August 28, 2020 is modified, on the law,... by reversing so much thereof as (1) denied plaintiff's motion to compel disclosure of the state and federal tax returns of Joseph Garry Jr. for the years 2008 through 2010, and any accountings, balance sheets and income and expense statements of defendant The Garry Family Trust for the years 2008 through 2010, and (2) granted the cross motion by certain defendants for a protective order as to the demands for said disclosure; motion granted and cross motion denied to said extent; and, as so modified, affirmed" (203 A.D.3d at 1509).
Insofar as defendants' cross motion for summary judgment is concerned, "'[s]ummary judgment is a drastic remedy, to be granted only where the moving party has tendered sufficient evidence to demonstrate the absence of any material issues of fact and then only if, upon the moving party's meeting of this burden, the non-moving party fails to establish the existence of material issues of fact which require a trial of the action. The moving party's failure to make a prima facie showing of entitlement to summary judgment requires a denial of the motion, regardless of the sufficiency of the opposing papers'" (Taylor v Appleberry, 214 A.D.3d 1142, 1144 [3d Dept 2023], quoting Vega v Restani Constr. Corp., 18 N.Y.3d 499 [2012] [internal quotation marks, brackets, emphasis and citations omitted]; accord Davis v Zeh, 200 A.D.3d 1275, 1278 [3d Dept 2021]; see CPLR 3212 [b]). "'When considering a motion for summary judgment, courts must view the evidence in a light most favorable to the nonmoving party and accord that party the benefit of every reasonable inference from the record proof, without making any credibility determinations'" (Taylor v Appleberry, 214 A.D.3d at 1144, quoting Carpenter v Nigro Cos., Inc., 203 A.D.3d 1419, 1420-1421 [3d Dept 2022] [internal quotation marks and citation omitted]; see Vega v Restani Constr. Corp., 18 N.Y.3d at 503, 505; Facteau v Mediquest Corp., 162 A.D.3d 1386, 1388 [3d Dept 2018]).
Here, defendants first contend that Jeffrey Garry is entitled to summary judgment because (1) plaintiff has been paid in full for decedent's first admission from April 6, 2009 to April 30, 2009; and (2) he did not sign a Responsible Party Agreement for decedent's second admission from June 19, 2009 to July 5, 2010. In support of this contention, defendants have submitted a copy of an invoice dated March 18, 2011 that was apparently sent to Jeffrey Garry. According to defendants, this invoice demonstrates that payments were made from April 6, 2009 to April 30, 2009. This is puzzling, however, as a review of the invoice makes abundantly clear that, as of April 30, 2009, no payments had been made and decedent had an outstanding balance of $3,337.00. This balance then continued accruing throughout his stay, with $94,880.60 due and owing when he died. On these submissions defendants have failed entirely to demonstrate that plaintiff has been paid in full for decedent's first admission.
With regard to decedent's second admission, decedent was in the hospital and rehabilitation center for so long that he lost his bed at Westmount, with his return on June 19, 2009 deemed a separate admission. To that end, Westmount staff sent Jeffrey Garry a second Responsible Party Agreement and Admission Agreement - which he refused to complete. He did, however, accept the care and treatment provided to decedent for the entirety of this second admission. Further, the Responsible Party Agreement he signed on April 6, 2009 does not include any language to suggest that it pertains to only one admission. Under these circumstances, the Court finds that defendants have failed to make a prima facie showing that Jeffrey Garry is entitled to summary judgment dismissing action Nos. 1 and 2 as against him.
Defendants next contend that the Trust is entitled to summary judgment dismissing action No. 2 as against it. In this regard, on May 17, 2011, DSS issued a determination finding that the Trust was an available resource for decedent and worth approximately $450,000.00. This notwithstanding, defendants contend that "[u]nder no circumstances were the assets of the Trust an available resource/asset from which payment could be compelled - while [decedent] was living; or since his death on 07/05/2010." The Court finds this contention to be without merit.
It is undisputed that, from the time of decedent's initial admission to Westmount to the date of his death, Jeffrey Garry served as decedent's attorney-in-fact pursuant to a durable power of attorney. That being said, decedent and Juanita Garry, his wife, were grantors of the Trust, with each retaining certain separate property. Specifically, exhibit "A" to the Trust lists 45 shares of G & G Lands and Buildings, Ltd. (hereinafter G & G) stock and 15 shares of Roaring Brook Ranch and Conference Center (hereinafter Roaring Brook) stock as decedent's separate property and 15 shares of Roaring Brook stock as Juanita Garry's separate property. Article 11 of the Trust - entitled "Grantor's Right to Revoke or Amend" - then states as follows:
"As long as either Grantor(s) is alive, either Grantor, while competent, reserves the right to revoke or amend this Trust in whole or in part, with respect to the income or principal of the Separate Property of the of said Grantor.... At any time that either Grantor(s) has the right to revoke or amend any of the Trusts created hereunder, then that Grantor, or both of them, may make such use of funds or properties of those Trusts as they, in their sole discretion, deem advisable. Any such use shall be deemed to have been made with the consent and approval of the Trustees as though a formal writing were submitted in accordance with the provisions above."
According to defendants, decedent could not revoke the Trust without the unanimous consent of both grantors - and Juanita Garry, who died on December 8, 2012 - refused to consent. Article 11 of the Trust, however, plainly demonstrates that either decedent or Jeffrey Garry - acting as decedent's power of attorney - could have revoked the Trust insofar as decedent's separate property was concerned, with this separate property having a substantial value. While defendants contend that decedent was not competent prior to his death, there was no legal determination of his incompetency and the record does not contain the opinion of any medical expert in this regard. Accordingly, defendants have failed to make a prima facie showing that the Trust is entitled to summary judgment dismissing action No. 2 as against it. Indeed, insofar as there remain questions with respect to whether Jeffrey Garry could and should have revoked the Trust to pay for decedent's care at Westmount, the Trust remains a necessary party (see CPLR 1001 [a]).
Roaring Brook is a resort located in the Town of Lake George, Warren County. According to Swan, G & G Lands and Buildings owns the real property upon which the resort is situated and, in 2019, the resort business and real property were sold for $2,750,000.00.
Defendants next contend that Maswick, Ballini and Alexandra Garry are entitled to summary judgment dismissing action No. 2 as against them. That being said, to the extent that Maswick and Ballini are both beneficiaries of the Trust, they too are necessary parties "who might be inequitably affected by a judgment" in action No. 2 (CPLR 1001 [a]). Alexandra Garry's alleged connection is more remote, with plaintiff contending that Jeffrey Garry conveyed his property fraudulently to ensure it could not be used as an asset to satisfy any judgments rendered against him in these actions. Jeffrey Garry, on the other hand, has submitted an affidavit contending that he conveyed the property while battling cancer and the conveyance was "an estate planning measure... to get [his] personal affairs in order."There remain material issues insofar as this conveyance is concerned. To that end, Alexandra Garry should also remain as a necessary party (see CPLR 1001 [a]). The Court thus finds that defendants have failed to make a prima facie showing that Maswick, Ballini and Alexandra Garry are entitled to summary judgment dismissing action No. 2 as against them.
Finally, defendants contend that action No. 2 must be dismissed as barred by the statute of limitations. In this regard, a "'fraud-based action must be commenced within six years of the fraud or within two years from the time the plaintiff discovered the fraud or could with reasonable diligence have discovered it, whichever is later'" (Beizer v Hirsch, 116 A.D.3d 725, 725 [2d Dept 2014], quoting Vilsack v Meyer, 96 A.D.3d 827, 828 [2d Dept 2012] [internal quotation marks and citation omitted]; see CPLR 213 [8]). Turning first to the fraudulent conveyance cause of action relative to the Trust, with action No. 2 commenced on September 9, 2016, plaintiff must have learned of the fraud prior to September 9, 2010 for the action to be barred by the statute of limitations. While this is a distinct possibility - as DSS was considering decedent's Medicaid application in and around September 2010 and Jeffrey Garry disclosed the Trust during the application process - defendants have failed to submit anything definitive in this regard. Insofar as the fraudulent conveyance cause of action against Alexandra Garry is concerned, this was clearly brought within the relevant time frame. Under the circumstances, the Court finds that defendants have failed to make a prima facie showing that they are entitled to summary judgment dismissing action No. 2 based upon expiration of the statute of limitations.
To the extent that defendants have failed to make prima facie showing of their entitlement to summary judgment dismissing action Nos. 1 and 2, plaintiff's opposition papers need not be considered (see Beizer v Hirsch, 116 A.D.3d at 725; Vilsack v Meyer, 96 A.D.3d at 828).
Briefly, were the opposition to be considered, it should be noted that plaintiff raised several questions of fact. With respect to Jeffrey Garry specifically, plaintiff submitted proof that decedent received a monthly pension of over $1,000.00 during his admission to Westmount and it was deposited into a joint account with Jeffrey Garry - but it was never used to pay Westmount.
Based upon the foregoing, defendants' cross motion in action Nos. 1 and 2 for summary judgment is denied in its entirety.
Lastly, plaintiff's motion in action No. 2 to extend the notice of pendency for an additional three years is granted (see CPLR 6513).
Counsel for the parties are hereby directed to appear for a status conference on June 20, 2023 at 10:30 A.M. at the Warren County Courthouse.
Therefore, having considered the Affirmation of Brendan F. Baynes, Esq. with exhibits attached thereto, dated July 29, 2022, submitted in support of the motion in action Nos. 1 and 2 for a protective Order; Affidavit of Thomas G. Clements, Esq. with exhibits attached thereto, sworn to September 16, 2022, submitted in opposition to the motion in action Nos. 1 and 2 for a protective Order and in support of the motion in action No. 1 and 2 to partially vacate an Order; Affidavit of Brendan F. Baynes, Esq. with exhibits attached thereto, dated September 22, 2022, submitted in further support of the motion in action Nos. 1 and 2 for a protective Order and in opposition to the motion in action Nos. 1 and 2 to partially vacate an Order; Affidavit of Thomas G. Clements, Esq., sworn to August 31, 2022, submitted in support of the motion in action No. 2 to extend the notice of pendency; Affidavit of Brendan F. Baynes, Esq. with exhibits attached thereto, sworn to September 28, 2022, submitted in opposition to the motion in action No. 2 to extend the notice of pendency and in support of the motion in action Nos. 1 and 2 for summary judgment; Affidavit of Jeffrey Garry with exhibits attached thereto, sworn to September 28, 2022, submitted in opposition to the motion in action No. 2 to extend the notice of pendency and in support of the motion in action Nos. 1 and 2 for summary judgment; Affidavit of Michael Swan with exhibits attached thereto, sworn to November 1, 2022, submitted in further support of the motion in action No. 2 to extend the notice of pendency and in opposition to the motion in action Nos. 1 and 2 for summary judgment; Memorandum of Law of Thomas G. Clements, Esq., dated November 1, 2022, submitted in further support of the motion in action No. 2 to extend the notice of pendency and in opposition to the motion in action Nos. 1 and 2 for summary judgment; Reply Affidavit of Brendan F. Baynes, Esq. with exhibit attached thereto, sworn to November 18, 2022, submitted in further support of the motion in action Nos. 1 and 2 for summary judgment; correspondence of Thomas G. Clements, Esq., dated December 16, 2022; correspondence of Brendan F. Baynes, Esq., dated December 19, 2022; and correspondence of Thomas G. Clements, Esq., dated December 20, 2022; and oral argument having been heard on May 15, 2023 with Thomas G. Clements, Esq. appearing on behalf of plaintiff and Brendan F. Baynes, Esq. appearing on behalf of defendants Jeffrey Garry, Michael Garry, as Trustee, The Garry Family Trust dated November 13, 1997, Juanita Maswick, Joanne Ballini and Alexandra J. Garry, it is hereby
ORDERED that defendants' motion in action Nos. 1 and 2 for a protective Order is granted to the extent that the aspect of the subpoena directing Michael Garry to produce certain financial information is quashed, and the motion is otherwise denied; and it is further
ORDERED that plaintiff's motion in action Nos. 1 and 2 to partially vacate the August 28, 2020 Order is dismissed as moot; and it is further
ORDERED that plaintiff's motion in action No. 2 to extend the notice of pendency for an additional three years is granted; and it is further
ORDERED that defendants' cross motion in action Nos. 1 and 2 for summary judgment is denied.
ORDERED that the parties shall appear for a status conference on June 20, 2023 at 10:30 A.M. at the Warren County Courthouse in Lake George, New York.
The original of this Decision and Order has been filed by the Court together with the Notice of Motion dated July 29, 2022, Notice of Cross Motion dated September 16, 2022, Notice of Cross Motion dated September 28, 2022, and the above-referenced submissions. Counsel for plaintiff is hereby directed to promptly obtain a filed copy of the Decision and Order for service with notice of entry upon counsel for defendants in accordance with CPLR 5513.