Opinion
25093/02.
Decided October 5, 2006.
Michele Kahn, Esq. (atty for plaintiff), Kahn Goldberg, New York, NY.
Anna Stern, Esq. (atty for defendant), New York, NY.
In this matter, the court is called upon to divide the assets acquired by plaintiff Sara Cytron and defendant Harriet Malinowitz, during their 13-year relationship as domestic partners. The action was tried without a jury on March 1, 2, 3, 6, 7 and 8 and summations were heard on June 16, 2006.
Procedural Background
Plaintiff commenced this action seeking the partition or sale of the co-operative apartment that the parties owned, located at 103 Berkeley Place in Brooklyn (Berkeley Place), and the return of $12,200 which she alleges is due to her for money loaned to defendant's uncle, Fred Pauker, to allow him to purchase a cooperative apartment (the Pauker loan). Defendant counter claims for the partition of Berkeley Place and for reimbursement and credit for her proportionate monetary contribution, plus reasonable compensation for the services that she allegedly rendered in renovating the apartment and performing the obligations required of the shareholders; a one-half interest in the pension benefits earned by plaintiff during the course of the relationship, based upon the theories of unjust enrichment, constructive trust and fraud in the inducement; and for compensation for her contributions to the parties' comedy team and to plaintiff's law school competitions.
In 2003, while the action was pending, Berkeley Place was sold for $575,000, netting the parties approximately $400,000. The money was placed in an escrow account, from which each party withdrew $90,000, leaving approximately $220,000 in the account. It is the distribution of this money that remains at issue.
Defendant 103 Berkeley Place Housing Corporation never appeared in the action and its role as a party was rendered unnecessary by the sale of the parties' shares.
Although defendant refers to a stipulation executed in May 2003 that allegedly distributed the funds "without prejudice to each of the parties to pursue all of her rights and remedies in the Court," neither party introduced the stipulation into evidence, the court file does not contain a copy and the County Clerk's records do not indicate that it was filed. Similarly, neither party makes any argument with regard how the court should treat the disbursements. Accordingly, this decision shall address the issue of the distribution of the full $400,000 in proceeds, taking into account the release of $90,000 to each party in ordering the final distribution of the funds.
As is also relevant, by decision dated, December 22, 2003, the Honorable Herbert Kramer denied plaintiff's motion for summary judgment dividing the proceeds of the sale and dismissing defendant's second, third and fourth counterclaims, finding that issues of fact precluded the award of judgment (the 2003 Decision).
In her post trial memorandum of law, defendant withdraws her claim for reimbursement with regard to work performed on plaintiff's law school projects and she does not contest the return to plaintiff of $12,200 for the Pauker loan. Accordingly, this decision shall not address these issues.
Facts
The Relationship
It is not disputed that the parties were involved in an intimate relationship that began in approximately 1986. Plaintiff moved from the Washington, D.C., area to reside with defendant in New York City in April, 1987. On June 10, 1993, the parties executed and registered an Affidavit of Domestic Partnership with the City of New York pursuant to Administrative Code § 3-241. The relationship ended in March 2000.
The Parties' Financial Circumstances
Throughout the relationship, plaintiff was employed by the federal government and defendant worked as an educator. It is undisputed that during the early years that they resided together, plaintiff earned a greater salary. In 1987, plaintiff earned approximately $48,500 per year, while defendant earned approximately $20,000. Thereafter, when defendant procured a tenured position as a college professor in 1993, their salaries were more equal. Because plaintiff earned more money, she paid for many things that defendant would not be able to afford, such as shows, restaurants, vacations and gifts, although defendant testified that she did not want many of the things that plaintiff did. Both admit, however, that they enjoyed a better quality of life because of the monetary contributions made by the other.Plaintiff testified that she came into the relationship with the remains of the proceeds of approximately $42,000 that she received from a life insurance policy when her previous partner died, along with her salary and her pension plan.
Defendant testified that she inherited money when her father died in 1974, when her mother died in 1982, and when the house in which she grew up was sold in 1985.
More specifically, defendant explained that when the relationship began, she had a Franklin New York Tax Free Income Fund (Franklin Fund) valued at $80,000, that generated approximately $500 per month in interest income, and a Rapid Transit Railroad bond with a face value of $5,000, that generated interest income of $190 twice a year. In 1985, defendant invested $20,000 in Balcor Realty and $5,000 in Balcor Film; both were limited partnerships recommended by her financial adviser. Defendant also invested $20,000 in a Metropolitan Life annuity that was due the end of 1990 and generated interest at the rate of 9.9%. Plaintiff does not refute the existence of any of these investments.
During the course of the relationship, the parties purchased three properties: a cooperative apartment located at 23 Waverly Place, New York City (Waverly Place), a home located in Heath, Massachusetts (Heath) and Berkeley Place. Title to all of the properties was taken by the parties as joint tenants with the right of survivorship.
Although the court recognizes that the parties' interest in the cooperative apartments is not real property, for the remainder of the decision, the three properties shall be collectively referred to as the parties' real property interests.
Throughout the relationship, the parties jointly shared their living expenses, keeping a notebook which indicated money spent by one and owed to the other, recording amounts spent of as little as $5. They also maintained both joint and separate bank and investment accounts; they did not open a joint checking account until 1987. Further, it is undisputed that each named the other as the beneficiary on life insurance policies, pension plans, and employee benefit programs. Each also gave the other a power of attorney and had a living will naming the other. Both testified that they did so for the purpose of protecting each other, particularly in the event of death.
The parties did not execute any written agreements with regard to the assets and property that they acquired during the relationship. Defendant also testified that plaintiff did not like to talk about what would happen if the relationship ended. The first discussion that they had with regard to how their assets would be divided if they broke up was after Jack Bernstein, the lawyer who represented them when they purchased Waverly Place, suggested that the parties memorialize their agreement in writing. Plaintiff's brother-in-law so advised her as well. Defendant contends that both parties believed, however, that a written agreement was not necessary and that they would treat each other fairly if their relationship ended. Defendant's therapist also suggested that the parties enter into a written agreement, and again, the parties decided that an agreement was not necessary.
Waverly Place
On May 18, 1987, the parties purchased Waverly Place for $138,000, taking a mortgage in the amount of $78,500. Plaintiff claims that she contributed $38,000 in cash, money that remained from what she received when her former partner died in March 1986. To support this contention, plaintiff relies upon a statement dated August 31, 1986 from Perpetual American Bank, which indicates that the account had a balance of $34,869.41, along with a deposit slip receipt dated September 10, 1986, which reveals a balance of $36,621.41 Defendant refutes this claim, alleging that plaintiff only contributed $20,000 to the purchase price, while she contributed $40,000, which she obtained by liquidating a portion of her Franklin Fund. To support her contention, defendant introduced into evidence a confirmation statement from Shearson Lehman Brothers (Shearson Lehman) that established that she purchased 6,684 shares in the Franklin Fund, valued at $80,007.48, on April 30, 1986. After reviewing a letter dated April 24, 1987 from Allen D. Bloom, her financial advisor at Shearson Lehman, and a confirmation of sale dated March 17, 1987, which documents refreshed her recollection, defendant testified that she liquidated $40,044.55 from the Franklin Fund to use as her share of the down payment on Waverly Place. That defendant contributed $40,000 to the down payment is also corroborated by a letter that she wrote to the Board of Directors of Waverly Mews Corp., which explained that she was contributing $40,000 to the down payment by liquidating a portion of her Franklin Fund, while plaintiff had contributed $13,850 from her account at Perpetual Savings Bank for the down payment and would contribute $6,150 from the sale of her Shearson Lehman Fund.
Defendant further testified that for about five years after they purchased Waverly Place, plaintiff paid $200 more per month toward the mortgage and maintenance because defendant's income was reduced by approximately $500 per month when she liquidated her investments for the down payment. This ended when defendant began working at Long Island University in September 1992.
After the parties purchased the apartment, renovations were made. Plaintiff testified that they equally shared the cost of the work, and that defendant worked with the people who made the renovations. Defendant testified that she paid approximately $4,000 for the work performed.
Waverly Place was sold in November 1997 for $141,000. The parties agree that a portion of the proceeds of the sale were used to pay back the money borrowed from Stanley Malinowitz, defendant's brother (Mr. Malinowitz), as is more fully discussed hereinafter, and for the purchase of Berkeley Place. Defendant testified that the $63,000 that the parties netted from the sale was deposited into their joint account at Astoria Federal Savings Bank. A copy of a statement introduced into evidence established that $61,454.32 was deposited into the account on November 26, 1997. Defendant further testified that $7,200 of the proceeds were probably used for renovations at Berkeley Place, though she could not be sure.
Heath
On March 18, 1988, the parties purchased Heath for $90,900. They agree that to finance the purchase, they borrowed $55,000 from Mr. Malinowitz. Plaintiff testified that she put down a small amount of money, "possibly as much as $5,000." Defendant testified that she contributed $40,000 to the down payment for Heath, obtaining $35,000 by further liquidating the Franklin Fund and withdrawing $9,000 from a financial management account maintained with Franklin. Defendant substantiated this claim by producing copies of a statements from her Shearson Lehman account for the period from February 1, 1998 to March 27, 1988, which indicated that her balance was reduced from $45,703 to $1,341. Defendant thus claims that her $44,000, plus the $55,000 borrowed from her brother, paid all the costs associated with acquiring and moving into the house in Heath. Defendant denies that plaintiff contributed any cash to the purchase; she asserts that at most, plaintiff may have contributed $1,000 to $2,000.
When the parties moved to Heath, defendant made the arrangements for the move and decorated the house. After the house was purchased, the carrying costs were shared equally.
Heath was sold in July 1997 for $89,000. The parties used the proceeds of that sale to purchase Berkeley Place and to repay Mr. Malinowitz. Defendant testified that the net profits were approximately $82,000, half of which was deposited into each party's separate account, allegedly because the parties the parties did not then have a joint checking account.
Berkeley Place
Berkeley Place was purchased for $254,000 on September 23, 1997. The parties financed the purchase with a mortgage in the amount of $175,000 and a bridge loan in the amount of $55,000 from Mr. Malinowitz (the bridge loan).
Defendant testified that she wrote a check for the deposit of $25,400 on July 15, 1997, using the money that Mr. Malinowitz lent the parties. The Republic National Bank passbook for the parties' joint account indicated that a deposit of $85,000 was made on June 13, 1997; defendant explained that the money came from Mr. Malinowitz.
Plaintiff testified that when the parties purchased Berkeley Place, they contemplated making renovations. Plaintiff further testified that defendant was actively involved in getting the renovations done. Defendant testified that she paid for most of the expenses incurred in purchasing and renovating Berkeley Place, which totaled approximately $27,000. Defendant further testified that an additional $7,210.90 was spent on renovations; she does not know the source of the these funds. Defendant was able to oversee this work because she had research release time that she donated to the apartment.
In addition, since Berkeley Place was a small four-unit, self-managed building, defendant testified that she actively participated in managing the building. Defendant further alleges that she served as the president of the board for a time and when the treasurer was away 12 or 14 weeks a year, she would handle the check book and pay the bills. Plaintiff never assisted with any of these responsibilities.
As noted above, Berkeley Place was sold in 2003 for $575,000, netting the $400,000 at issue herein.
Repayment of the Loans Made by Mr. Malinowitz
Plaintiff testified that she and defendant equally paid interest to Mr. Malinowitz on the money that they borrowed from him and that she paid down principal when she got money from a tax refund or a comedy booking. Plaintiff introduced a series of 13 checks into evidence, which she alleged represented, in the part, money paid to Mr. Malinowitz for interest on the loan and $25,000 that was paid towards the principal.
Defendant testified that it was primarily her funds that were used to repay the loans to her brother. More specifically, when her Metropolitan Life annuity was due on December 5, 1990, defendant paid the proceeds of $31,626.01 to Mr. Malinowitz; defendant refreshed her recollection with regard to the exact amount paid by reviewing the 1099 Statement for the distribution. Defendant further testified that she paid a 10% penalty on her income taxes as the result of liquidating the annuity; although the parties needed this money to repay the loan, plaintiff did not contribute to this expense. Defendant also testified that she paid her brother $8,000 that she earned from Balcor Realty and $2,000 from Balcor Film, along with the $5,000 that she received when she redeemed the Rapid Transit Railroad bond.
Defendant further claims that in April 1998, she paid Mr. Malinowitz $15,000 towards the loan, which claim she substantiated with a copy of a bank transfer of $20,000 to him from her account at Republic National Bank. Defendant also produced checks dated August 8, 1997 and made payable to Mr. Malinowitz in the amount of $15,000, $10,000 and $103, which represented the payment of $25,000 in principal, plus interest, that she and plaintiff both paid him from the proceeds of the sale of Heath. The remainder of the loan, or approximately $10,000, was paid from the proceeds when Waverly Place was sold.
Defendant and Mr. Malinowitz testified that because he lived in Bogota, defendant helped him manage his finances. Defendant explained that $5,000 of this transfer to Mr. Malinowitz included $5,000 of his money.
Mr. Malinowitz essentially corroborated defendant's version of the facts, testifying that he lent the parties $55,000 to buy Waverly Place; when he lent them another $55,000 to purchase Berkeley Place, probably in March 1997, there was still about $10,000 outstanding from the first loan. Mr. Malinowitz further testified that defendant repaid him approximately $31,000 in 1990; that over the next several years, she paid him approximately $9,000 from her investments in a movie company and a real estate company that had the same name; and that she paid him $5,000 from a municipal bond. Mr. Malinowitz further testified that in August 1997, he was repaid $50,000, $25,000 from each plaintiff and defendant; he testified that the money came from the sale of Heath. Defendant subsequently transferred the remaining $15,000 owing to him. Mr. Malinowitz also stated that while plaintiff paid him interest towards this loan, she never repaid any of the principal; he did not recall any payments of principal having been made when the parties received tax refunds or earned money from the comedy routine.
The Parties' Pensions
Plaintiff testified that she was proud of her pension and spoke about it often, even before her relationship with defendant. She explained that it was comprised of three components: a basic annuity, for which there is a mandatory deduction from salary, with the amount of the annuity based on an employee's highest three years of earnings; a Thrift Savings Plan, which is like a 401-K account, where the employer matches contributions up to three percent of salary and 50 cents on the dollar for the next two percent; and social security. During the parties' relationship, defendant amassed approximately $78,000 in her TIAA CREF retirement plan, which was started in 1993, and approximately $9,000 in IRA accounts.
Defendant first acquired a pension plan when she began working for Long Island University, in 1992 or 1993.
Defendant testified that plaintiff told everyone that defendant would share in her annuity. She further asserted that plaintiff repeatedly told her that "what's yours is mine and what's mine is yours." In claiming entitlement to share in plaintiff's pension, defendant also relies upon the envelope of a Valentine's Day card given to her in 1990 on which plaintiff wrote "To the one who'll share my annuity." Plaintiff explained that the notation was "a jocular way for me to say, I hope we're together when we're old, and if we are, we'll share a lot of things including my annuity." Defendant also testified that after the parties purchased Heath, plaintiff acknowledged that defendant made a larger capital contribution to the purchase of the real properties, but said that her greater salary and annuity would balance it out and that her annuity and Thrift Plan were for both of them.
Plaintiff also introduced a copy of a letter that she sent to Francis Cavanaugh, the Executive Director of the Federal Retirement Thrift Investment Fund on March 7, 1989, in which she sought "a more detailed explanation of what is meant by a person having an insurable interest' and to clarify my rights as someone in a committed, long-term lesbian relationship." As is relevant herein, plaintiff further stated that "[m]y partner and I can easily obtain affidavits from close friends and family members attesting to the fact that we essentially combine our incomes to support our lifestyle and jointly own property." By letter dated May 2, 1989, Mr. Cavanaugh advised plaintiff that to establish an insurable interest on the part of her partner, she would have to submit "one or more affidavits establishing the extent of financial dependence on the participant and the reasons why the joint annuitant may reasonably expect to derive financial benefit from the continued life of the participant." Mr. Cavanaugh further advised plaintiff that "no affidavits should be provided until you separate from Federal service and seek to purchase an annuity. The information provided in the affidavits must be based upon your financial situation at that time."
Defendant introduced the testimony of Cindy Lanane, a friend of hers, who met plaintiff during the mid 1980's. Ms. Lanane testified that she heard plaintiff tell defendant that they have her annuity. Ms. Lanane did not hear plaintiff say that defendant would get a certain percentage or dollar amount. Ms. Lanane also did not hear plaintiff say that she would share her annuity with defendant if they stayed together, since plaintiff, defendant, Ms. Lanane and Ms. Lanane's partner were talking about retiring together. Mr. Malinowitz also testified that plaintiff spoke about her pension often. More specifically, plaintiff always talked about the annuity being for both her and defendant, saying that they were going to retire on the money. Mr. Malinowitz also heard plaintiff tell defendant not to worry, because the annuity was coming. He never heard plaintiff talk about the couple breaking up until the process actually started.
Robert Guarnera, an actuary specializing in retirement plans and the evaluation of pensions, testified on defendant's behalf that plaintiff's pension is valued at $237,875 for the period of the partnership, March 1987 through March 2000, with the date of retirement being May 2002. Guarnera further testified that if a person had a private agreement with regard to the distribution of his or her pension, such agreement could be enforced during the retiree's lifetime, but could not be enforced against the pension plan. He further opined that the Federal Employment Retirement System forbids a person from distributing any portion of his or her pension to anyone except his or her legal spouse.
After the parties separated, plaintiff retired from the position that she held during the relationship and is currently collecting her pension.
Defendant also sought to introduce the testimony of Constance Cohrt, who was defendant's financial advisor. Ms. Cohrt met with plaintiff and defendant on April 10, 2001, after the parties were no longer a couple, to discuss how their assets could be divided. During the meeting, the parties identified the above discussed parcels of property, along with "claims against pension rights" as the assets to be divided; there was no discussion of dividing the accounts that defendant held in her name. Plaintiff's pension plan was considered an asset to be divided because plaintiff had put significant amounts of money into her pension plans, while defendant put significant amounts of her money into joint property. Ms. Cohrt's testimony was taken, subject to being stricken. Defendant also testified that when the parties met with Ms. Cohrt, they had decided between themselves that their assets would be divided according to the "marital paradigm."
Comedy Routine
From 1987 to 1998, the parties were involved in a comedy routine performed by plaintiff and written, in large part, by defendant. When defendant so requested, plaintiff began to pay her $15 per hour for her work; when plaintiff began to make more money, plaintiff acquiesced in defendant's request that she be paid one-half of the income.
During the summer of 1991, plaintiff took a leave of absence from her job to perform the routine in Provincetown, Massachusetts and defendant accompanied her. Plaintiff claims that she and defendant agreed that plaintiff would first be paid the amount of her salary, so that she could continue to pay her expenses, and that the remaining earnings would be equally divided. Defendant contends that she never agreed that plaintiff's salary should be deducted before dividing the earnings. Hence, she now seeks to recover the amount of money that she would have earned had she taught over that summer, or $8,000.
Evidentiary Issues
As a threshold issue, the court finds that the settlement agreement that defendant prepared and sought to introduce into evidence, as well as the testimony of Ms. Cohrt, are inadmissible as settlement negotiations to the extent that defendant sought to rely upon them to establish any agreement to divide the parties' assets. In so holding, it must be noted that the agreement is titled "Proposed Financial Agreement" and clearly contains the notation that "[t]his is just a proposal! It's not binding." Moreover, the agreement was never executed. Hence, both the agreement and the testimony is inadmissable to establish that such an agreement was reached ( see generally White v. Old Dominion S.S. Co., 102 NY 660; Bevilacqua v. Gilbert, 143 AD2d 213).
To the extent that defendant relies upon the proposed settlement agreement and the testimony of Ms. Cohrt, both are admissible, however, as admissions of fact made in connection with settlement negotiations ( see White, 102 NY 661; Reid Priest v. Realty Asset Group, 250 AD2d 380; Central Petroleum v. Kyriakoudes, 121 AD2d 165, appeal dismissed 68 NY2d 807; Bellino v. Bellino Constr. Co., 75 AD2d 630). The court further notes, however, that inasmuch as the other evidence introduced at trial clearly identifies the parties' assets, and the court is not looking to agreement or the testimony to support the conclusion that the parties agreed to a division of their assets, the evidence is cumulative.
Division of the Proceeds of the Sale of Berkeley Place The Parties' Contentions
Based upon the above adduced facts, plaintiff argues that the proceeds of the sale of Berkeley Place should be equally divided. In so arguing, plaintiff denies that she and defendant were partners in the purchase. Plaintiff further argues that even if the court determines that a partnership did exist, the purchase and sale of Berkeley Place should be analyzed as a separate and independent transaction, without any reference to Waverly Place or Heath. Plaintiff also emphasizes that when each of the properties were purchased, she and defendant did not have any written or oral agreements with regard to how the properties would be divided in the event that their relationship ended; that they took title to each of the properties as joint tenants with the right of survivorship; that for the most part, they equally shared the expenses incurred in maintaining the properties; and that when Waverly Place and Heath were sold, the proceeds were equally divided, allegedly for income tax purposes, as is evidenced by a document prepared by Joe Soldano, the parties' accountant, which she introduced into evidence.
In contrast, defendant argues that she and plaintiff agreed that defendant would be entitled to recover her proportionate share of the money that she contributed to the purchase of the real properties, i.e., 80% of the proceeds of the sale of Berkeley Place. In the alternative, defendant argues that Partnership Law § 40 should control, so that each party should be compensated for the contributions made to the partnership properties before the proceeds of the sale of Berkeley Place are divided.
The Law
Both parties claim entitlement to a portion of the proceeds of the sale of Berkeley Place in reliance upon the law governing the partition of property. In this regard, it is axiomatic that:
"A partition action, although statutory (see RPAPL art 9), is equitable in nature and an accounting of the income and expenses of the property sought to be partitioned is a necessary incident thereof (24 NY Jur 2d, Cotenancy and Partition, § 242). A court may compel the parties to do equity as between themselves (14 Carmody-Wait 2d, NY Prac, § 91:242) and may adjust the equities of the parties in determining the distribution of the proceeds of sale ( Doyle v. Hamm, 52 AD2d 899, 900; Sirianni v. Sirianni, 14 AD2d 432, 438)."
( Worthing v. Cossar, 93 AD2d 515, 517). Hence, "[a]n accounting is a necessary incident' of a partition action ( id. at 517), and may be had as a matter of right before entry of an interlocutory or final judgment to ensure that the parties' rights are fixed in such manner that a decree may work full and complete justice between [them]'" ( Grossman v. Baker, 182 AD2d 1119, quoting Grody v. Silverman, 222 App Div 526, 530; accord Laney v. Siewert, 26 AD3d 194, 195 [although defendant's evidence that he paid virtually all of the purchase price and carrying costs on an apartment to which the parties equally allocated the shares as tenants in common was sufficient to rebut the presumption that the parties were entitled to an equal number of shares on partition, such evidence did not resolve what, if anything, plaintiff's share should be, since that issue must be resolved considering the various equities, including the nature of the parties' relationship and whether defendant intended his disparate contributions to be a gift]; MacCasland v. Mandara, 259 AD2d 993 [each party's share of jointly owned property depended on the respective contributions of the parties toward the acquisition of the property and the improvements made by each which contributed to the sale price]; McVicker v. Sarma, 163 AD2d 721, 722 [since it is axiomatic that in an action for partition the court may adjust the equities of the parties in determining the distribution of the sale proceeds, the judgment must be modified and the matter remitted for a hearing to determine the respective contributions of the parties toward the acquisition of the property and the improvements made by each which contributed to the sale price]).
As is also relevant to the issues to be determined herein, it has been held that "[e]xpenditures made by a tenant in excess of his obligations may be a charge against the interest of a cotenant and the court may adjust the equities of the parties in determining the distribution of the proceeds of any sale of the subject premises" ( Tenzer v. Tucker, 154 Misc 2d 468, 471, citing Worthing, 93 AD2d at 517; Sirianni, 14 AD2d at 438; Hosford v. Hosford, 273 App Div 659, 662). It is also well settled, however, that "a co-tenant is not entitled to an allowance for improvements which are not in the nature of repairs or restoration and are made for the co-tenant's own purposes without the agreement or consent of the other co-tenants" ( Wawrzusin v. Wawrzusin, 212 AD2d 779, 780, citing Cosgriff v. Foss, 152 NY 104; Scott v. Guernsey, 48 NY 106; Peerless Candy v. Kessler, 123 Misc 735).
Similarly, as a general proposition, absent an agreement to the contrary, partners, joint venturers, and tenants in common look solely to the appreciation of their interest in the endeavor for their financial rewards, and are not entitled to separate compensation for services rendered ( see Partnership Law § 40 (6); see generally Birnbaum v. Birnbaum, 73 NY2d 461, 466, recons denied 74 NY2d 843, citing Levy v. Leavitt, 257 NY 461, 467; Myers v. Bolton, 157 NY 393, 399; accord Posner v. Posner, 280 AD2d 318). "[T]he mere fact that such services [rendered] were extraordinary, in that they were above and beyond any service envisioned by the parties, does not automatically justify compensation" ( Rosen Trust v. Rosen, 53 AD2d 342, 350, affd 43 NY2d 693).
In disposing of the proceeds of the sale, the court must also be cognizant of the fact that defendant claims that the parties acquired the subject property while engaged in a partnership. If the court so concludes, it is also necessary to look to Partnership Law § 40 (1), which provides, in pertinent part that:
"The rights and duties of the partners in relation to the partnership shall be determined, subject to any agreement between them, by the following rules:
"Each partner shall be repaid his contributions, whether by way of capital or advances to the partnership property and share equally in the profits and surplus remaining after all liabilities, including those to partners, are satisfied . . ."Discussion
The court rejects plaintiff's assertion that the proceeds of the sale of Berkeley Place should be equally divided. In so holding, plaintiff's assertion that the parties' relationship should not be characterized as a partnership is found to be disingenuous, since the evidence establishes that the parties pooled their income and assets to satisfy their living expenses and to purchase the real properties. In addition, the parties contributed fairly equally to the maintenance costs of the properties from 1987, when they purchased Waverly Place and began residing together, until 2000, when their relationship ended. Moreover, it is beyond dispute that the parties executed and filed an Affidavit of Domestic Partnership. Plaintiff's attempt to disavow this affidavit at this point in time, and hence the partnership that it was intended to create, can only be viewed as a transparent attempt to gain financial advantage.
The court also finds plaintiff's assertion that the purchase and sale Berkeley Place should be viewed as a transaction separate and independent from the purchase and sale of Waverly Place and Heath to be unpersuasive. The testimony of both parties clearly establishes that the money for the purchase of Berkeley Place came from the sales of Waverly Place and Heath, along with the loan from Mr. Malinowitz. The parties' economic partnership must therefore be viewed as one that began with the purchase of Waverly Place in 1987. As such, it is necessary to trace the contribution of funds each party made to each of the purchases in order to equitably divide the proceeds of the sale of Berkeley Place.
Similarly, the court rejects plaintiff's contention that the equity in the partnership should be divided equally because the proceeds of the sale of Heath and Waverly Place were so divided. Until such time as the partnership was dissolved, the proceeds of the sales of Waverly Place and Heath could properly be viewed as income of the partnership. In this regard, it has been held that the division of income along certain lines does not establish conclusively that the equity in the partnership is divided in the same proportion ( see generally 220-52 Assocs. v. Edelman, 253 AD2d 352, appeal dismissed 92 NY2d 1026, citing Christal v. Petry, 275 App Div 550, 557, affd 301 NY 5).
The court also rejects plaintiff's argument that the proceeds of the sale of Berkeley Place must be equally divided because title to the property was held by the parties as joint tenants. In this regard, the above discussed principles of law clearly establish that the fact that parties hold property jointly does not compel the conclusion that they are entitled to share in the proceeds equally when the property is sold.
The court also finds that defendant's claim that the parties agreed that the real properties would be shared in proportion to the contribution made by each in the event that they ended their relationship is not supported by the evidence. In this regard, plaintiff vehemently denies that there was any such agreement. More significantly, defendant herself testified that plaintiff would not discuss the possibility that the relationship might end and does not support her claim with any testimony concerning the details of such an agreement.The court also notes that this holding is consistent with the 2003 Decision rendered by Judge Kramer. As is relevant herein, Judge Kramer's decision stated that:
"Partnership Law § 40 provides guidelines with respect to the determination of the rights and duties of the partners and presumes an equal equity interest in the partnership assets subject to any agreement between them. The party seeking to establish such agreement spelling out a different division of the assets shall bear the burden of proof as to the financial intent of the parties."
Since neither party appealed that decision, and since this court has determined that the parties did, in fact, enter into a partnership, the 2003 Decision is binding on this court on the issue of the proportionate share of the distribution of the proceeds of Berkeley Place pursuant to the doctrine of law of the case ( see Messenger v. Messenger, 16 AD3d 562 [the decision of the judge who first rules in a case binds all courts of co-ordinate jurisdiction]; see generally Martin v. Cohoes, 37 NY2d 162, 165).
A review of the evidence establishes that defendant sustained her burden of demonstrating that she contributed the majority of the money used to purchase Waverly Place by contributing $40,000 from her Franklin Fund. Plaintiff's assertion that she contributed $38,000 is found to be lacking in credibility, since the bank statement and deposit slip upon which she relies establishes that she had only $36,621.41 in her bank account approximately one year before the purchase. Hence, the evidence does not support her assertion that she had $38,000 to invest in the purchase and she offers no explanation with regard to the origin of the additional funds. This lack of credibility is further supported by the fact that plaintiff incurred the expenses of selling her apartment in the Washington, D.C., area and moving to New York after the date of the bank statement and deposit slip relied upon and by her testimony that she may have made "a few hundred dollars" on the sale of the apartment. Thus, the court finds defendant's testimony that she contributed $40,000 of her separate funds and that plaintiff contributed $20,000 to the purchase of Waverly Place to be credible.
Although both parties testified that plaintiff contributed approximately $200 more per month to the costs of maintaining Waverly Place for approximately five years, the court declines to grant her a credit for these contributions. Most significantly, plaintiff fails to establish that defendant agreed to compensate her for her added contribution. Further, defendant's testimony that plaintiff's additional contribution was intended to reimburse defendant, to an extent, for the $500 per month in income that she lost when she liquidated her Franklin Fund, and to take into account the fact that plaintiff had significantly more earnings, also supports a finding that they parties did not agree to any reimbursement. Finally, the court also notes that plaintiff does not submit any evidence to establish that she did, in fact, make these greater contributions, and that if she did, the additional money went to increase the parties' equity in the property, and not to pay interest on the mortgage or to pay maintenance on the apartment.
The court also finds that defendant satisfied her burden of proving that she contributed $44,000 to the down payment for Heath, as is supported by her statements from Shearson Lehman, which establish a redemption of $44,000 on March 4, 1988. This $44,000, plus the $55,000 loan from Mr. Malinowitz, was sufficient to cover the purchase price of $90,900. Hence, plaintiff's unsubstantiated recollection that she may have contributed $5,000 is also found to be lacking in credibility ( see generally Frater v. Lavine, 229 AD2d 564, 565 [plaintiff failed to put forth any evidence, other than conclusory allegations, to substantiate her claim that she is entitled to reimbursement for money she allegedly gave the defendant toward the down payment and purchase of the property]).
Both parties testified that Berkeley Place was paid for using the proceeds from the sale of Heath and the $55,000 bridge loan from Mr. Malinowitz. Hence, neither party claims to have contributed any separate funds towards the purchase. The court declines to award defendant a credit for money spent for renovations for the apartment. In this regard, although plaintiff was undeniably aware of the renovations being made, defendant does not establish that the work done was necessary, or that plaintiff consented to and/or agreed to share in the cost ( see generally Donati v. Marinelli Constr., 247 AD2d 423). Moreover, the cost of the renovations appears to have been paid using the proceeds of the sale of Waverly Place, so that defendant fails to establish that the expenses were paid using her separate funds. Nor is defendant entitled to reimbursement for services rendered in overseeing the renovations or participating with the board to manage the building ( see Partnership Law § 40 (6); see generally Birnbaum, 73 NY2d at 466; Posner, 280 AD2d 318).
The evidence with regard to the repayment of the loans from Mr. Malinowitz is not as clear. In her post trial memorandum, plaintiff concedes that defendant contributed $31,000 from her Metropolitan Life annuity and $5,000 from the Railroad bond, so that the credit of this $36,000 is no longer in issue. The court further determines, however, that defendant is also entitled to an additional credit in the amount of $25,000, finding her testimony that she repaid Mr. Malinowitz $15,000 from her account at Republic National Bank and an additional $10,000 from Balcor Realty and Balcor Film is credible, as supported by copies of the documents that she reviewed to refresh her recollection during trial. Similarly, the court finds that plaintiff's uncorroborated claim that she repaid unspecified amounts of money to Mr. Malinowitz at unspecified times when she got money from her comedy bookings and from income tax refunds to be without probative value. The remaining balance of the loans, however, appears to have been repaid with money generated from the sales of Waverly Place and Heath, including the $25,000 checks that each plaintiff and defendant gave to Mr. Malinowitz. The court declines to credit either party with the repayment of the loans from the proceeds of the sales of jointly held properties.
Accordingly, the court finds that each party is entitled to be repaid for the contribution that she made to the real property, as is required pursuant to Partnership Law § 40. Hence, plaintiff is entitled to be repaid her contribution of $20,000 for the purchase of Waverly Place and defendant is entitled to be repaid a total of $145,626, representing her contribution of $40,000 to Waverly Place, $44,000 to Heath, and $61,626 to repay the loans obtained from Mr. Malinowitz. After deducting the combined contributions of $165,626, the parties shall share the remaining proceeds equally, so that each will receive $117,187 ($145,626 + $20,000 = $165,626; $400,000 — $165,626 = $234,374; $234,374 × ½ = $117,187). From this it follows that plaintiff is entitled to receive a total of $137,187 ($20,000 + $117,187), while defendant is entitled to receive $262,813 ($145,626 + $117,187).
Although plaintiff concedes the payment to Mr. Malinowitz of $31,000, the court awards defendant a credit of $31,626, the amount of the payment as testified to by defendant.
Compensation for the Comedy Work
The court rejects defendant's claim that she is entitled to recover the salary that she claims that she would have earned had she worked the summer that the parties were in Provincetown, performing their comedy routine, since plaintiff paid herself her salary before dividing the earnings with defendant. Most importantly, defendant fails to establish that such an agreement was ever made. In so holding, it must also be noted that although these performances took place during the summer of 1991, defendant made no demand for additional payment until years later, after this action was commenced. Further, although her counterclaim seeks the recovery of $4,000, defendant increased her demand to $8,000 during trial, now claiming that had she not been in Massachusetts, she would have taught two courses, not one.
Finally, defendant offers no evidentiary support for her claim that she would have taught two courses that summer if she had not gone to Provincetown, or that she would have earned $8,000. Hence, defendant is not entitled to any recovery based upon her conclusionary, unsupported assertion that she would have earned $8,000 if she had taught that summer, since an award of damages cannot be premised upon speculation or conjecture ( see generally Berley Indus. v. New York, 45 NY2d 683; Diversified Fuel Carriers v. Coastal Oil NY, 280 AD2d 448).
Apportionment of Pensions
The Parties' Contentions
In her counterclaim, defendant argues that the court should impose a constructive trust on an amount of money equal to one-half the value of plaintiff's pension that accrued during the relationship. In her post trial memorandum of law, defendant reduces her demand and argues that a constructive trust should be imposed upon the sum of $64,934, which would equalize the parties contributions to the real property. In support of her position, defendant alleges that plaintiff represented that plaintiff's contributions to her pension plan would benefit both parties when they retired and that she relied upon these representations when she contributed most of her separate funds to the purchase of the real properties, instead of depositing money into her own savings and/or retirement plan, while plaintiff put all of her savings into her pension. Defendant further avers that although plaintiff earned more money than her, plaintiff did not save much, apart from her contributions to her pension plan, despite defendant's request that she do so. Defendant also testified that whenever she asked plaintiff to contribute money to the parties' joint savings account, plaintiff told her that her Thrift Plan is a much better savings plan for them.
Plaintiff denies ever having agreed that defendant would share in her pension benefits. Plaintiff further argues that since the parties were never legally married, such a distribution of her pension is contrary to law.
The Law
As a threshold issue, it is axiomatic that partners in same-sex relationships are not afforded the same rights enjoyed by married couples ( see e.g. Langan v. St. Vincent's Hosp., 25 AD3d 90, appeal dismissed 6 NY3d 890 [a same-sex partner, as executor, had no standing to sue in wrongful death on the partner's own behalf because such a person was not a "distributee" under the relevant sections of the Estates, Powers and Trusts Law]). That same-sex couples would not be afforded the same rights as heterosexual, married couples was further underscored by the recent case of Hernandez v. Robles (___ NY3d ___, 2006 NY Slip Op 5239 [2006]), in which the Court of Appeals held that the prohibition of same-sex marriage by the Domestic Relations Law did not violate New York Constitution's Due Process or Equal Protection Clauses. This court is sympathetic to the rights of same-sex couples, and indeed believes that the time has come that they should be afforded the full rights and protection of the law, and echoes Chief Justice Kaye's dissent calling the Hernandez decision "an unfortunate misstep." Nonetheless, in dividing the parties' assets herein, it is compelled to uphold the law of this state as interpreted by the Court of Appeals.
Hence, as an unmarried couple who failed to reduce their alleged agreements with regard to their finances and assets to writing, the parties'
"dispute typifies the legal difficulties in relation to property which lesbian and gay couples face. Because New York State does not afford them a legal right to marry, they must use contractual, statutory, common law, and equitable vehicles to protect their interests in property. Here, the failure of plaintiff and defendant to have executed any documents specifying any changes that would occur in their respective rights to the properties at issue in the event of a dissolution of the relationship of plaintiff and defendant (admittedly anti-romantic, akin to a prenuptial agreement) leaves them in the position of needing to have a court determine their rights at law and in equity."
( Minieri v. Knittel, 188 Misc 2d 298, 300). The imposition of a constructive trust is one means by which the court may effectuate the agreement entered into between partners sharing an intimate relationship, whether they are heterosexual or of the same sex ( see e.g. Minieri, id.; DeRicco v. Sackrider, 2006 NY Slip Op 50554U, 4 [2006]).
Defendant appears to have abandoned her claim of fraud, since her memorandum of law does not address that issue. The court notes, however, that defendant would not be able to succeed in recovering damages on such claim, since the general rule is that fraud cannot be predicated upon statements that are promissory in nature at the time they are made and which relate to future actions or conduct ( see e.g. Cerabono v. Price, 7 AD3d 479, 480 [2004], appeal dismissed 3 NY3d 737 [2004], appeal denied 4 NY3d 704 [2005]; Rand v. Laico, 282 AD2d 444 [2001]; Satler v. Merlis, 252 AD2d 551, 552 [1998]).
"A constructive trust has been defined as the formula through which the conscience of equity finds expression'" ( Beatty v. Guggenheim Exploration Co., 225 NY 380, 386). "[T]he constructive trust doctrine is broad in scope and such trusts will be erected whenever necessary to satisfy the demands of justice'" ( Levy v. Moran, 270 AD2d 314, 315, quoting Latham v. Father Divine, 299 NY 22, 26-27, reh denied 299 NY 599). "A constructive trust may be imposed in favor of one who transfers property in reliance on a promise originating in a confidential relationship where the transfer results in the unjust enrichment of the holder" ( Rogers v. Rogers, 63 NY2d 582, 585-586, citing Sharp v. Kosmalski, 40 NY2d 119). To establish a constructive trust, a party must prove: (1) a confidential or fiduciary relation, (2) a promise, express or implied, (3) a transfer made in reliance on that promise, and (4) unjust enrichment ( see Simonds v. Simonds, 45 NY2d 233, 241-242; Sharp, 40 NY2d at 121).
Discussion
The evidence adduced at trial clearly establishes that the parties agreed to cohabit, to purchase real property together and to share household expenses. Hence, it is beyond dispute that they were involved in a relationship of trust and confidence, since the record supports a finding that the parties' relationship was, in many respects, analogous to that of a husband and wife, and that as a result, defendant reasonably trusted plaintiff and relied on her to protect her interests ( see Williams v. Lynch, 245 AD2d 715, 716, appeal dismissed 91 NY2d 957; see generally Sharp, 40 NY2d at 121). Alternatively, the court has already determined that the parties entered into a partnership when they began living together, pooling their assets and purchasing real property together. Proof of the partnership is further provided by the Certificate of Domestic Partnership that they executed. It is well settled that partners owe a fiduciary duty to other partners ( see e.g. Birnbaum, 73 NY2d at 465, citing Meinhard v. Salmon, 249 NY 458, 468; accord Drucker v. Mige Assocs., 225 AD2d 427, 428, appeal denied 88 NY2d 807 [1996)] [a partner has a fiduciary obligation to the other partners]; Alizio v. Perpignano, 176 AD2d 279, 281 [all partners are fiduciaries of one another and, as such, they owe a duty of undivided loyalty to the partnership's interests]).
The court declines to find, however, that defendant establishes a promise on plaintiff's part to share her pension with defendant. In this regard, as was discussed above, defendant fails to establish that the parties had any agreement with regard to how their assets would be divided if they separated. Moreover, defendant fails to offer any evidence, apart from her own subjective perception that such an agreement existed, that plaintiff promised to share her pension with defendant if they were no longer together when plaintiff retired. In this regard, plaintiff vehemently denies that she made any such promise. Further, the testimony of both Ms. Lanane and Mr. Malinowitz establishes that neither of them ever heard plaintiff so state. Moreover, after having been advised by the attorney who represented them in the purchase of Waverly Place, and being warned of the dangers of not having a written agreement providing for the distribution of assets in the event that the parties separated by defendant's therapist and by plaintiff's brother-in-law, the parties did not memorialize their alleged agreement.
Similarly, defendant fails to present evidence sufficient to support her claim that she transferred the money that she inherited into the real properties owned by her and plaintiff in reliance upon plaintiff's assurances that the two had plaintiff's pension to rely upon when they retired. In fact, defendant fails to offer any evidence that the parties ever discussed plaintiff's pension being an asset in which they would both share when defendant contributed her inheritance to the purchase of the parties' real property. Also relevant in this regard is the fact that defendant did not have a pension plan of her own into which she could contribute when Waverly Place and Heath were purchased. The court further notes that denying defendant's demand to share in plaintiff's pension is equitable under the circumstances of this case, where defendant amassed approximately $86,000 in her pension and IRA accounts during the relationship, but neither party argues that it was agreed that defendant's retirement funds should be shared now that they are no longer together.
Accordingly, in the absence of a promise by plaintiff or the transfer of assets in reliance upon such promise, the court finds that defendant is not entitled to impose a constructive trust upon any portion of the proceeds of the sale of Berkeley Place to compensate her for the money that plaintiff contributed into her pension.
Conclusion
For the above stated reasons, plaintiff is entitled to the repayment of $20,000 that she contributed to the parties' real property and defendant is entitled to the repayment of $145,626 for her contributions. The remainder of the proceeds of the sale of Berkeley Place, or $234,374, shall be equally divided between the parties, with each party being entitled to receive $117,187, so that plaintiff shall receive $137,187 and defendant shall receive $262,813.
Further, plaintiff also shall be credited with the amount of $12,200, representing repayment for the Pauker loan.
Inasmuch as each party has already received $90,000 from the proceeds of the sale of Berkeley Place, plaintiff is entitled to receive an additional $59,387 ($137,187 + $12,200 — $90,000) and defendant is entitled to receive an additional $160,613 ($262,813 — $90,000 — $12,200). In addition, the judgment to be settled herein shall adjust these amounts so that any interest earned on the funds held in escrow and/or any costs incurred in maintaining the escrow account shall be equally shared by the parties.
It is noted that neither party submitted any evidence with regard to the current value of the escrow account.
All other relief requested is denied. Settle judgment.