Opinion
No. 2014–355/A.
08-02-2016
In the Matter of the Application of Thomas PALMA to Compel Delivery of Property by a Fiduciary for the Estate of Mario Attanasio, Deceased.
Parisi, Coan & Saccocio, PLLC, Gerard F. Parisi, Esq., CPA, of Counsel, Schenectady, New York, for Petitioner, Thomas Palma. Englert, Coffey, McHugh & Fantauzzi, LLP, Peter V. Coffey, Esq., of Counsel, Schenectady, New York, for Respondent, Dean Attanasio, Executor.
Parisi, Coan & Saccocio, PLLC, Gerard F. Parisi, Esq., CPA, of Counsel, Schenectady, New York, for Petitioner, Thomas Palma.
Englert, Coffey, McHugh & Fantauzzi, LLP, Peter V. Coffey, Esq., of Counsel, Schenectady, New York, for Respondent, Dean Attanasio, Executor.
VINCENT W. VERSACI, S.
In this SCPA § 2105 proceeding to compel the delivery of property held by a fiduciary, the Petitioner, Thomas Palma ("Petitioner"), moves pursuant to CPLR Rule 3212 for an Order directing the Respondent and Executor, Dean Attanasio ("Respondent"), to deliver to the Petitioner all real and personal property that is the subject of a written Agreement entered into between the Petitioner and the Decedent on October 13, 2009. This Agreement provided that upon the Decedent's death, the Petitioner, who was a longtime friend and business colleague of the Decedent's, would assume the management of certain parcels of real estate owned by the Decedent for a period of twenty-five (25) years. As compensation for his services, the Petitioner would be allowed to keep as his fee all of the net rental proceeds during that time period. The Decedent died on April 8, 2014, roughly 4½ years after the execution of this Agreement. Following the Decedent's death, the Petitioner sought to enforce the Agreement against the Estate, but the Respondent refused to turn the management of the properties over to the Petitioner and indicated that he would not honor the Agreement. This discovery proceeding ensued, which seeks the delivery of the subject properties. Alternatively, the Petitioner seeks money damages for the Respondent's breach of the Agreement in refusing to allow the Petitioner to perform under the terms of the Agreement, in the amount of the net rental proceeds from the management of the properties for a twenty-five (25) year period following the Decedent's date of death. In response to the Petitioner's motion for summary judgment, the Respondent has cross-moved for summary judgment to dismiss all claims of the Petitioner.
The disposition of the Petitioner's claims in this proceeding pivots solely on the answer to one question of law: What is the nature of the written instrument signed by the Decedent and the Petitioner on October 13, 2009? While there are certain underlying facts that remain in dispute, those factual disputes are not material to reaching an answer to this question. Thus, this case can be decided as a matter of law making it ripe for summary judgment. See, Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 508 N.Y.S.2d 923, 501 N.E.2d 572 ; Winegrad v. New York Univ. Med. Center, 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642.
The material facts that are not in dispute are as follows: The Decedent's attorney, Dennis M. Englert, Esq., drafted a written instrument at the request of the Decedent which embodied an agreement between the Decedent and the Petitioner concerning the management of certain properties owned by the Decedent following his death. This writing, which was titled an "Agreement", was signed by the Decedent and the Petitioner on October 13, 2009. It provided that upon the Decedent's death, and for a period of twenty-five (25) years, the Petitioner would manage and preserve the properties and as a fee for his services, he would be allowed to keep the net rental proceeds. This document has been produced by the parties, and there is no dispute as to its existence, its execution by the Decedent and the Petitioner, or its terms. In fact, the parties both state that the terms of the Agreement are clear and unambiguous and therefore, any resort to extrinsic or parol evidence when reviewing the Agreement is prohibited.
It is also undisputed that roughly two (2) years after the Agreement was executed, the Decedent on November 8, 2011, unilaterally signed a document titled, "Revocation of an Agreement dated October 13, 2009". While the legal effect of this document, although not fully briefed by the parties in their respective memoranda of law, is in dispute, the contents of this document and its existence, as relevant herein, is not in dispute.
Subsequently, on February 3, 2012, the Decedent duly executed a Last Will and Testament leaving his entire residuary estate to the Respondent. The Will appoints the Respondent as Executor, and grants broad powers to the Executor, including, but not limited to, the "power to exercise all powers of an absolute owner of property, [and] to compromise and release claims with or without consideration". On September 24, 2014, this Court admitted the Decedent's Will to probate and granted Letters Testamentary to the Respondent.
While the existence and terms of the Agreement executed by the Decedent and the Petitioner on October 13, 2009 are undisputed, they disagree as to its nature and legal import. The Petitioner contends that the Agreement constitutes a binding, bilateral contract that is based on the mutual promises exchanged between he and the Decedent that transferred a present interest to the Petitioner which took effect immediately upon the signing of the Agreement. The Petitioner argues that this contract is valid and enforceable against the Decedent's Estate, and that the Respondent's refusal to allow the Petitioner to perform under the terms of the contract constitutes a breach of the Agreement. The Petitioner recites the elements that are required for a valid contract to exist, and asserts that the Agreement contains all of these elements: 1) an offer; 2) acceptance of the offer; 3) consideration; 4) mutual assent; and 5) intent of the parties to be bound. Kowalchuk v. Stroup, 61 A.D.3d 118, 121, 873 N.Y.S.2d 43. The Petitioner further argues that the fact that the performance of the obligations under the contract was not to commence until a future date, i.e., upon the Decedent's death, does not render the contract invalid or unenforceable simply because it was not executed in compliance with the strict requirements of EPTL § 3–2.1 pertaining to the due execution of wills. The Petitioner cites to the provisions of EPTL § 13–2.1 which only requires that "a contract to make a testamentary provision of any kind" must be "in writing and subscribed by the party to be charged therewith" in order for it to be enforceable. EPTL § 13–2.1(a)(2). The Petitioner contends that the Estate is therefore bound by the terms of the Agreement and must perform its obligations under the contract or else be liable for damages caused by its breach.
EPTL § 3–2.1(a) sets forth four (4) requirements for the proper execution of a Will, one of which is that it must be signed in the presence of at least two witnesses.
The Respondent views the Agreement differently. He takes the position that it is in the nature of a testamentary disposition given the clear and unambiguous language contained therein that the Agreement is to take effect "upon the death of Mario Attanasio". The Respondent argues that this language clearly shows that the Decedent was not making a present, irrevocable inter vivos gift that vested with the Petitioner immediately upon execution of the Agreement. Since there was no delivery of any property to the Petitioner upon the execution of the Agreement or at any time prior to the Decedent's death, there was no transfer of a present interest to the Petitioner. Rather, the Respondent claims that the Decedent was making a testamentary disposition effective only after his death in which case it needed to be made by Will in order to be valid. See, McCarthy v. Pieret, 281 N.Y. 407, 24 N.E.2d 102. The Respondent argues that since the Agreement does not comply with the strict requirements of EPTL § 3–2.1, it is ineffective as a testamentary disposition and is unenforceable. See, Matter of Monks, 171 Misc.2d 514, 655 N.Y.S.2d 296.
While the Court agrees with both parties that the terms set forth in the Agreement are clear and unambiguous, what is unclear is how the Decedent viewed the nature of the Agreement and what he intended as to its legal effect. The question is whether the Decedent, like the Petitioner, intended the Agreement to be a valid contract that would be binding on and enforceable against his Estate, or whether he intended the Agreement to merely express his testamentary plan at that time, subject to his revocation or change at any time prior to his death. Given that this question is left unanswered by a mere reading of the Agreement itself, the Court finds that its review is not restricted to the four corners of the Agreement, but rather can include a consideration of the extrinsic evidence presented in this case in order to answer this question.
The Court will, however, begin its review with the plain language contained in the Agreement. The prefatory clauses of the Agreement contain such language as "Mario Attanasio is desirous of preserving these properties during his life and after he passes away "; that he "seeks to engage Thomas Palma as his agent ... commencing upon [his] death "; that "Thomas Palma is willing to accept this responsibility ..."; and that "Mario Attanasio wishes Thomas Palma to receive ..." [Emphasis supplied]. The use of these precatory words, as chosen and drafted by the Decedent and his counsel, manifests the Decedent's intent to make a testamentary provision, and not to transfer a present, indefeasibly vested interest to the Petitioner upon the signing of the Agreement. The Agreement merely gave to the Petitioner an expectation that when the Decedent died at some point in the future, he would be allowed to perform property management services in exchange for being allowed to keep the net rental proceeds as his fee. In addition, since the performance of the obligations under the Agreement was not triggered or required until the Decedent's death, the Agreement is clearly in the nature of a testamentary disposition subject to EPTL § 13–2.1. See, Matter of Watson, 11 A.D.3d 943, 782 N.Y.S.2d 316.
Although this Agreement represents a testamentary disposition, it need not be executed in a manner consistent with the due execution of a will as required by EPTL § 3–2.1 in order to be valid. There are many types of testamentary dispositions relating to non-probate assets, such as beneficiary designations on a life insurance policy or on a retirement account, or an In Trust For account payable on death. These testamentary dispositions pass outside of probate, and need not be contained in a Will or any other type of document executed in compliance with the strict requirements of EPTL § 3–2.1 in order to be valid. Nor do contracts to make a testamentary provision need to be executed under the same formalities required under EPTL § 3–2.1.
EPTL § 13–2.1 governs contracts to make a testamentary provision and only requires that they be in writing and subscribed by the party to be charged therewith. See, EPTL § 13–2.1(a)(2). However, it is well settled that in order for a contract to make a testamentary provision to be enforceable, it must not only be in writing and subscribed by the party to be charged with its performance as required by EPTL § 13–2.1(a)(2), but that it "must further evince a clear and unambiguous manifestation of the testator's intention to renounce the future power of testamentary disposition" '. Aaron v. Aaron, 64 A.D.3d 1103, 1104, 882 N.Y.S.2d 776 [Internal citations omitted]. In other words, a contract to make a testamentary disposition must include a clear and unambiguous agreement not to revoke it in order for it to be enforceable. See, The American Committee for the Weizmann Institute of Science v. Dunn, 10 N.Y.3d 82, 854 N.Y.S.2d 89, 883 N.E.2d 996 ; Matter of Argondizza, 2015 N.Y. Misc. LEXIS 613.
A party seeking to enforce a contract to make a testamentary provision has a high burden to establish by clear and convincing evidence that the decedent "unequivocally" and "indisputably" renounced or surrendered his rights to freely revoke the agreement and later change his testamentary plan. Id. See also, Hamlin v. Stevens, 177 N.Y. 39, 48, 69 N.E. 118 ("contracts to make testamentary bequests should only be enforced when they have been established by evidence so strong and clear as to leave no doubt" '); Rubenstein v. Mueller, 19 N.Y.2d 228, 232, 278 N.Y.S.2d 845, 225 N.E.2d 540 ("intention to not revoke must be manifested clearly and unambiguously" ').
Applying this strict evidentiary standard to the Agreement in this case, the Court finds that the Petitioner has failed to present indisputable evidence that the Decedent unequivocally intended to renounce his right to revoke the Agreement. The Agreement does not contain clear and unambiguous language that the Decedent was agreeing to give up his right to freely change his Will. See, Matter of Camac, 2 Misc.3d 894, 896, 772 N.Y.S.2d 792. The Agreement contains no provision stating that it is irrevocable. Nor is there any provision in the Agreement prohibiting the Decedent from selling the properties outright prior to his death or otherwise transferring ownership or disposing of the properties to someone other than the Petitioner.
Moreover, the extrinsic evidence in this case lends further support for the Court's finding that the Decedent did not intend for the Agreement to be irrevocable. The Revocation signed by the Decedent in November, 2011, while it may not have had the legal effect of actually revoking the Agreement, which the Court need not pass on, the mere execution of this document, which is undisputed, demonstrates that the Decedent believed that the Agreement was revocable, that he wanted to revoke the Agreement, and that he no longer wanted to be bound by its terms.
Further evidence of the Decedent's intent to no longer be bound by the Agreement is the execution of his Will which makes no reference to the Agreement, leaves his entire residuary estate including the properties that were the subject of the Agreement to the Respondent, and also grants to the Respondent unlimited powers of absolute ownership of the properties. It is clear that the Decedent did not mention the Agreement in his Will because he thought that he had already revoked the Agreement.
The Court finds that the Agreement executed by the Decedent and the Petitioner on October 13, 2009 was a contract to make a testamentary provision and, therefore, must evince "a clear and unambiguous manifestation of the testator's intention to renounce the future power of testamentary disposition" in order for it to be enforceable. Aaron v. Aaron, supra. The Court concludes that the Petitioner failed to satisfy his clear and convincing burden of establishing that the Decedent unequivocably intended to surrender his rights to alter his testamentary plan in regard to the properties that were the subject of the Agreement. Accordingly, the Court finds that as a matter of law, the Agreement is unenforceable against the Respondent and the Petitioner is not entitled to the relief sought in his Petition.
For the above reasons, the Petitioner's Motion for Summary Judgment is hereby denied, and the Respondent's Cross–Motion for Summary Judgment is hereby granted. The Petition, and all claims asserted therein, is hereby dismissed.
The parties' remaining arguments, to the extent not specifically addressed herein, have been considered and found to be unavailing.
The foregoing shall constitute the Decision and Order of this Court.