Opinion
No. 314990/C.
2013-03-29
In the Matter of the ACCOUNTING by Donald R. PRITCHETT, as Co–Executor of the Estate of Ray G. Pritchett, Deceased. In the Matter of the Accounting by JoAnn Jergensen, as Co–Executor of the Estate of Ray G. Pritchett, Deceased. JoAnn Jergensen, Plaintiff, Donald R. Pritchett, Defendant. In the Matter of the Accounting by JoAnn Jergensen, as Co–Executor of the Estate of Ray G. Pritchett, Deceased. JoAnn Jergensen, Plaintiff, v. Donald R. Pritchett, Defendant.
EDWARD W. McCARTY III, J.
In these related proceedings, decedent Ray Pritchett died on July 17, 2000, survived by his son, Donald, and his daughter, JoAnn. The decedent's wife, Eunice, predeceased him and letters testamentary in her estate issued to decedent. Letters testamentary with respect to Ray's estate issued to Donald and Joann on August 16, 2000. JoAnn died on October 4, 2008 and her husband, Robert Jergensen, is the fiduciary of her estate.
Currently pending before the court are proceedings to settle the accounts of each of the executors and an action between the co-executors, individually, which was transferred from the Supreme Court. Co-executor JoAnn Jergensen died during the course of these proceedings and her husband, Robert, as administrator of her estate, was substituted in her place. Donald R. Pritchett has moved to dismiss the complaint of Joann Jergensen in the transferred Supreme Court action. Robert Jergensen has now moved for partial summary judgment on certain objections raised by JoAnn with respect to the account of Donald R. Pritchett, as co-executor of the estate.
BACKGROUND
In 2006, JoAnn, in her individual capacity, commenced a proceeding against Donald, in his individual capacity, alleging damages essentially for conversion of their parents' estates. After joinder of issue in that action, by order dated June 8, 2006, the action was transferred to this court. That action was commenced on March 2, 2006, with the filing of a Summons and Complaint. Thereafter, the complaint was amended on May 18, 2006 (hereinafter “the Amended Complaint”). In response to the Supreme Court action, Donald filed an answer, which raised a number of defenses including that “[t]he instant claims are barred as they were not commenced within the statutory period of limitations.”
The parties stipulated that Donald and JoAnn would file separate judicial accounting proceedings, which they did. JoAnn filed objections dated February 26, 2008 to the accounting filed by Donald. Donald did not file objections to JoAnn's accounting. SCPA 2211 examinations were conducted in 2009 of Donald R. Pritchett and Robert Jergensen (JoAnn having passed away).
MOTION TO DISMISS THE AMENDED COMPLAINT
Donald has now moved to dismiss the complaint in the transferred Supreme Court action on the basis that the claims asserted by JoAnn were made not as a personal representative of Ray's estate, but rather as a beneficiary against Donald individually. He argues that a beneficiary does not have an independent cause of action to seek to recover assets withheld from an estate (McQuaide v. Perot, 223 N.Y. 75 [1918] ), and thus, JoAnn did not have standing individually to proceed on behalf of the estate.
Robert's counsel has submitted an affirmation opposing dismissal of the Amended Complaint for lack of standing. Counsel argues that the three proceedings have been carried under the “same triple caption” and discovery in the three proceedings has been conducted by the parties jointly. Counsel asserts that “for all practical purposes” the court has treated the three proceedings “as three proceedings pertaining to the same estate-The Estate of Ray G. Pritchett.” He argues that the relief should be denied because it “cuts against the grain of the manner in which these three proceedings have been managed and treated by the Court since 2006.” Counsel claims that many of the allegations in the Amended Complaint do not relate solely to the recovery of assets withheld from an estate but rather accuse Donald of several forms of tortious activity against JoAnn. Counsel, however, does acknowledge that the Supreme Court action was brought by JoAnn against Donald individually and that JoAnn's objections to Donald's account “modify and recast much of the relief prayed for in the action's complaint.”
The Amended Complaint sets forth nine causes of actions. The causes of action are summarized as follows:
1. The First Cause of Action states that as a result of fraudulent concealment by Donald, JoAnn was denied and deprived of assets to which she was entitled from the estates of Eunice and Ray.
2. The Second Cause of Action states that as a result of fraudulent concealment by Donald, JoAnn was denied and deprived of assets to which she was entitled from the estate of Eunice.
3. The Third Cause of Action states that as a result of Donald's fraudulent concealment of assets belonging to the estates of Eunice and Ray to which JoAnn was entitled, Joann is entitled to recover punitive damages in the amount of $10,000,000.00.
4. The Fourth Cause of Action states that Donald concealed and converted assets to which JoAnn was entitled from Ray's estate and Eunice's estate, including conversion by use of a Power of Attorney from Ray to Donald.
5. The Fifth Cause of Action states that Donald converted assets to which JoAnn was lawfully entitled, with reckless disregard of her rights.
6. The Sixth Cause of Action states that Donald converted assets to which JoAnn was entitled from the estates of Ray and Eunice and that Donald used the Power of Attorney to manipulate assets belonging to Ray and assets of Eunice's estate. The Sixth Cause of Action is for an accounting of the assets of Eunice's estate under Ray's control prior to his death, an accounting of the assets of Ray over which Donald exercised dominion and control prior to Ray's death and an accounting of the assets of the estate of Ray.
7. The Seventh Cause of Action states that JoAnn is entitled to payment from Donald of an amount to be established upon the rendering of an accounting.
8. The Eighth Cause of Action is for special damages in the form of counsel fees.
9. The Ninth Cause of Action is for the revocation of Donald's letters testamentary.
The crux of the Amended Complaint is that JoAnn was deprived of assets to which she was entitled from Eunice's and Ray's estates by virtue of Donald's conversion. Robert's counsel's assertion that the allegations in the Amended Complaint do not relate solely to the recovery of assets withheld from her parents' estates is belied by the causes of action set forth in the Amended Complaint. A beneficiary does not have an independent cause of action to seek to recover assets withheld from an estate (McQuaide v. Perot, 223 N.Y. 75 [1918] ). An individual must obtain letters before suing on behalf of a decedent's estate (Brandon v. Columbian Mutual Life Insurance Co., 264 A.D.2d 436, 694 N.Y.S.2d 134 [2d Dept 1999] ). Here, by virtue of being a co-executor of Ray's estate, JoAnn had the authority to commence an action against Donald for assets belonging to her father's estate as early as August 16, 2000, the date letters issued to her as co-executor. In addition, she could have obtained letters for Eunice's estate in order to proceed against Donald for the alleged conversion of assets. She did neither despite being represented by separate counsel in connection with her father's estate. The motion to dismiss the Amended Complaint is, therefore, granted on the basis that JoAnn lacked standing in her individual capacity to commence a proceeding against Donald for the conversion of assets in her parents' estates.
MOTION FOR PARTIAL SUMMARY JUDGMENT
Robert, as administrator of JoAnn's estate, has moved for partial summary judgment with respect to certain of the objections filed by JoAnn with respect to Donald's account as co-executor of Ray's estate. The following objections are the subject of Robert's motion for partial summary judgment:
“1. Objects to Schedule A' of the account, Statement of Principal Received,' upon the following grounds:
(a) It fails to include all assets that were received by co-executor, Donald R. Pritchett, as a result of the death of his father, Ray G. Pritchett, comprising the assets of the estate ...
(i) It fails to account for and list as funds belonging to the estate or to which the estate is entitled, the sum of $250,000.00 withdrawn from Ray G. Pritchett's Bank of New York checking account No. 690–2825211 on July 14, 2000 and made payable to RaLine Food, Inc., by check No. 731 signed by Donald R. Pritchett as attorney-in-fact under a power of attorney from Ray G. Pritchett ...
9. Objects to Schedule D' of the account to the extent that it states that there are no creditors' claims, since JoAnn Jergensen, the objectant herein, has repeatedly asserted a claim against the Estate of Ray G. Pritchett in the sum of $316,464.00, representing monies received by the estate from the Estate of Eunice Pritchett, which should have instead been paid directly to JoAnn Jergensen in the aforesaid amount by virtue of the Renunciation duly executed by Ray G. Pritchett of all his entitlements from the estate of his predeceased spouse, Eunice Pritchett, which by its legal operation caused JoAnn Jergensen to be entitled to the aforesaid sum of $316,464.00.”
SUMMARY JUDGMENT
Summary judgment may be granted only when it is clear that no triable issue of fact exists ( see e.g. Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 [1986];Phillips v. Joseph Kantor & Co., 31 N.Y.2d 307, 311 [1972] ). The court's function on a motion for summary judgment is “issue finding” rather than issue determination (Sillman v. Twentieth Century–Fox Film Corp., 3 N.Y.2d 395, 404 [1957] ), because issues of fact require a hearing for determination (Esteve v. Abad, 271 App.Div. 725, 727, 68 N.Y.S.2d 322 [1st Dept 1947] ). Consequently, it is incumbent upon the moving party to make a prima facie showing that he is entitled to summary judgment as a matter of law (CPLR 3212[b]; Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980];Friends of Animals v. Associated Fur Mfrs., 46 N.Y.2d 1065, 1067 [1979];Zarr v. Riccio, 180 A.D.2d 734, 735, 580 N.Y.S.2d 73 [2d Dept 1992] ). If there is any doubt as to the existence of a triable issue, the motion must be denied (Hantz v. Fishman, 155 A.D.2d 415, 416, 547 N.Y.S.2d 350 [2d Dept 1989] ). The court should view the evidence in the light most favorable to the non-moving party and give the non-moving party the benefit of all reasonable inferences which can be drawn from the evidence (Fundamental Portfolio Advisors, Inc., v. Tocqueville Asset Mgt. L.P., 7 N.Y.3d 96, 105–106 [2006] ).
If the moving party meets his or her burden, the party opposing the motion must produce evidentiary proof in admissible form sufficient to establish the existence of a material issue of fact that would require a trial ( see Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980] ). In doing so, the party opposing the motion must lay bare his or her proof ( see Towner v. Towner, 225 A.D.2d 614, 615, 639 N.Y.S.2d 133 [2d Dept 1996] ). “[M]ere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient” to overcome a motion for summary judgment (Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980];see Prudential Home Mtge. Co., Inc. v. Cermele, 226 A.D.2d 357, 357–358, 640 N.Y.S.2d 254 [2d Dept 1996] ).
CPLR 3213(b) explicitly authorizes the court to grant summary judgment in favor of a non-moving party without the necessity of a cross-motion ( see Federal Natl. Mtge. Assn. v. Kab, 33 A.D.3d 755, 822 N.Y.S.2d 759 [2d Dept 2006] ). Summary judgment by any party authorizes the court to “search the record” and determine whether any party is entitled to judgment as a matter of law (Wende C v. United Methodist Church, 4 N.Y.3d 293 [2005] ). Thus, even when not requested, summary judgment may be granted to the non-movant by the court (Merritt Hill Vineyards, Inc. v. Windy Heights Vineyard, Inc., 61 N.Y.2d 106 [1984] ).
$250,000.00 CHECK TO RALINE FOODS, INC.
Donald, as attorney-in fact, wrote a check in the amount of $250,000.00 made payable to RaLine Foods, Inc. from Ray's account. The check was drawn three days before Ray's death. On July 18, 2000, one day after Ray's death, Donald transferred $70,000.00 from one of Ray's other accounts to Ray's checking account to cover the check to RaLine Foods, Inc. Robert argues that the $250,000.00 check dated July 14, 2000 made out to RaLine Foods, Inc. constituted “a conversion of funds from the estate of Ray Pritchett for the benefit of Donald.” Robert claims that the only evidence of a power of attorney is Donald's recollection of a conversation about a power of attorney with Ray. Moreover, Robert argues that even if it is assumed that Donald had a valid of power of attorney, the power of attorney ceased upon Ray's death. Accordingly, Donald had no legal authority to make the $70,000.00 transfer, in order to prevent the check from being returned for insufficient funds.
Robert also claims that Ray was “physically weakened” and died three days after the $250,000.00 check was written by Donald. In addition, he contends that one month prior to the drafting of the check, it was determined by Ray's attending physician and by a concurring physician that Ray lacked the capacity to understand and appreciate the consequences of a DNR order. Robert claims that “[t]he said DNR order is conclusive proof of Ray's total lack of mental capacity.”
In response to the motion for partial summary judgment, Donald has submitted a copy of the Statutory Short Form of General Power of Attorney dated December 16, 1996, which was executed by Ray naming Donald as attorney-in-fact and which he claims was provided to JoAnn's counsel during discovery. Donald argues that the objection is based on “rank speculation and conclusory allegation.” Donald also states the $250,000.00 check represented his “father's share of what ... [they] anticipated to remodel the Westbury store....” According to Donald the check represented the decedent's contribution to their jointly held corporation, RaLine Foods, Inc. for the Westbury McDonalds they had operated for years. Donald states that the remodeling of the Westbury McDonalds was “long anticipated and in fact required by the Franchiser in order to continue to enjoy rights, as a McDonalds franchise.” The remodeling was completed and cost in excess of $500,000.00. Donald claims that all invoices and company documents were provided to JoAnn's counsel. Donald also argues that the testimony of the doctor is misrepresented by Robert and that the doctor who was deposed, in fact, testified that his signature was not one of the signatures on the DNR form.
The statute of limitations for replevin and conversion actions is the three-year period provided under CPLR 214(3) (Matter of Kraus, 208 A.D.2d 728, 617 N.Y.S.2d 817 [2d Dept 1994]; Matter of Laflin, 128 Misc.2d 348, 490, 490 N.Y.S.2d 102 [Sur Ct, Nassau County 1985]; Matte of Reich, 49 A.D.2d 858, 373 N.Y.S.2d 875 [1st Dept 1975] ). The accrual date of a conversion cause of action is the date the conversion of the property took place (Matter of Rausman, 50 A.D.3d 909, 855 N.Y.S.2d 263 [2d Dept 2008] ), and not the date of discovery or the exercise of diligence to discovery ( Matter of Chung Li., 32 Misc.3d 1225A [Sur Ct, Queens County 2011] ). Similarly, where replevin is sought against a person who allegedly converted the property, the statute of limitations also begins to run on the date the property was converted. In general, a conversion occurs when there is an unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights ( Matter of Chung Li, 32 Misc.3d 1225A [Sur Ct, Queens County 2011] ).
The statute of limitations is dependent upon when the cause of action begins to run. In Matter of Madris (N.Y.LJ, Mar. 13, 2000, at 25 [Sur Ct, New York County] ), the court held that accrual of the cause of action depends on whether a demand and refusal are necessary to establish conversion. When a person in possession acquires the property lawfully, in order for the possession to become unlawful, a demand by the rightful owner is required and the person in possession must refuse to return the property (Matter of King, 305 A.D.2d 683, 759 N.Y.S.2d 895 [2d Dept 2003] ). No demand, however, is necessary if the person in possession commits an overt and positive act of conversion or wrongfully exercises ownership and dominion over the property such as by selling it (Matter of King, 305 A.D.2d 683, 759 N.Y.S.2d 895 [2d Dept 2003). In addition, the statue of limitations where actual fraud is alleged is the later of six years from the commission of the wrong, or two years from the discovery of the fraud or the date on which it could reasonably have been discovered (CPLR 203[g]; CPLR 213(8); Matter of Kraus, 208 A.D.2d 728, 617 N.Y.S.2d 817 [2d Dept 1994] ). The fraud must be pleaded with particularity (CPLR 3016[b] ). To state a cause of action in fraud, the complaint must allege the representation that was made, falsity and materiality, that the representation was known to be false and was relied upon by the other parties (Weinstein–Korn–Miller, N.Y. Civ Prac ¶ 3016.05).
Here, the alleged conversion took place on July 14, 2000. JoAnn commenced a proceeding for conversion of Donald's assets in March of 2006, which was beyond the three-year statute of limitations for conversion. JoAnn received letters testamentary on August 16, 2000, but did not take any efforts on behalf of the estate to recover the $250,000.00 allegedly converted by Donald. In March of 2006, JoAnn improperly commenced an action in her individual capacity. Even if JoAnn had commenced the proceeding in March 2006 in her representative capacity, the action would still have been untimely under the three-year limitations period for conversion or even the six-year limitations period for fraud since fraud was not pled with the necessary particularity in the Amended Complaint.
Robert's motion for summary judgment as to the $250,000.00 transfer is denied. Summary judgment is granted to Donald on the basis of his defense of statute of limitations.
1992 LOAN
Robert, as administrator of JoAnn's estate, alleges that on or about February 15, 1992, Donald and Ray entered into an “oral contract” whereby Ray was to loan Donald the sum of money equal to one-half their initial investment in Eurado Management Co., Inc. consisting of the start-up costs for the McDonalds franchise that Eurado was about to open on Stewart Avenue in Garden City, New York. The repayment terms agreed upon by Ray and Donald were that the percentage of the profits that would have gone to Donald each year from Eurado, as a result of Donald's being a subchapter “S” stockholder, would instead be distributed to Ray each year until and to the extent that the loan was paid back in full. Robert's counsel argues that no part of the loan was repaid and contends that the accountant's testimony confirms that the loan was never repaid. Counsel claims that the amount of the loan was $371,394.00 (one-half of the start-up costs of Eurado combined with the 2004 Depreciation and Amortization Report of Eurado Management Co., Inc.).
Donald argues that the accountant's testimony does not make any reference to an unpaid loan and that the accountant testified that he did not know whether there was such a loan from Ray to Donald. Donald also argues that the calculation for the loan is based on rank speculation. In addition, Donald argues that the loan was, in fact, repaid many years before Ray's death. It also appears that a $250,00.00 loan to JoAnn was included as an asset on the Federal Estate Tax Return (Form 706) for Ray's estate, which JoAnn signed, but no reference was made of a loan to Donald.
A claim for recovery of funds as a loan is subject to a six-year statute of limitations ( Matter of Appleby (N.Y.LJ, Sept. 12, 2011, at 32, col 5 [Sur Ct, New York County] ). Here, the alleged loan was made in 1992. JoAnn claims that no payments were made on the loan and that the full amount was due. Robert's counsel argues the statute of limitations has not run because a demand for repayment could not have been made until letters issued on August 16, 2000. Since the Supreme Court action was commenced prior to six years from the issuance of letters, counsel argues the action to recover the loan was timely. It is noteworthy that counsel seeks to use the date letters issued as the date the statute began to run, but asks the court to simultaneously disregard JoAnn's lack of standing to proceed as a beneficiary. Such conflicting positions are disingenuous. Counsel cannot have it both ways. If the statute began to run the date letters issued and not from the actual date of the loan in 1992, then counsel acknowledges that JoAnn had to proceed to recover the loan in her representative, not individual capacity. JoAnn failed to seek to recover the loan in her representative capacity although she had the requisite authority to do so from August 16, 2000. Despite having the authority and right to obtain copies of Ray's financial records, she made no effort to recover the loan until 2006. Since the Supreme Court action was not commenced by JoAnn in her capacity as co-executor, recovery of the loan is beyond the limitations period.
The motion for summary judgment is denied as to the objection on the loan. Summary judgment is granted to Donald with respect to the loan on the basis of the statute of limitations.
INHERITANCE FROM EUNICE'S ESTATE
JoAnn claims that Ray converted funds belonging to her from her mother's estate pursuant to a renunciation by Ray of a part of Eunice's estate. JoAnn is listed on the Federal Estate Tax Return (Form 706) for Eunice's estate under individuals “who receive benefits from the estate.” The amount listed for JoAnn is $316,464.00.
Jo Ann alleges in the Amended Complaint that “upon information and belief,” she only received a “part of the inheritance” from her mother's estate.
JoAnn's husband Robert testified in respect to the claim as follows:
“Q. According to the Complaint, she was to receive an inheritance from the estate from Eunice in the approximate sum of $316,464.64. Was that your understanding”
A. I'm not certain. I don't know.
Q. When you say you're not certain, do you have any idea what the inheritance was to be?
A. No, sir.
Q. Were you made aware that she only received a part of her inheritance from her mother's estate.
A. She said something like that, but she never mentioned numbers.
Q. What did she say?
A. She just said, I didn't get what I was entitled to.
Q. From her mother's estate?
A. Correct.
Q. Mr. Jergensen, are you aware as to whether or not your wife received what she believed was her full inheritance from her mother's estate?
A. She did tell me that she didn't believe that she had.
Q. Did she give you any further detail?
A. No.
Q. Are there any documents that contain any further detail, that you're aware of?
A. I don't know. No, I don't have a clue whether there are any documents to that effect.
Q. You said she called her during the day?
A. My wife called her father during the day.
Q. Then what happened. You got home or did she call you at work?
A. No, she didn't call me at work. She told me that evening.
Q. What did she tell you?
A. She said that he had not given her what she was entitled to and didn't agree to give her what she was entitled to. She was upset and didn't want to talk about it anymore.
Q. Her dad didn't agree to give her what she believed she was entitled to?
A. That's my understanding.
Q. Do you know what she was supposed to get from her mother's estate?
A. No, all I know is that she said she was entitled to more than she got.
Q. Do you know whether or not that's based on documents?
A. No.
Q. Is it based on any promises somebody made to her?
A. Yes, her mother promised her more.
Q. You testified before that her mother promised her more money from the will, correct?
A. Right.
Q. Did she say how much more?
A. No, she did not.
Q. Was it more money she was supposed to get more of or other assets?
A. Money.
Q. It was the amount of cash that she received that was supposed to be more, correct?
A. Correct.”
Robert has not offered any proof in support of this claim other than JoAnn's conclusory statement.
In addition, curiously, JoAnn did not file a Notice of Claim against Ray's estate for the inheritance she claims he converted nor did she as a co-executor file an Estate Tax Return for Ray's estate identifying the amount of the inheritance as a “debt” of Ray's estate. JoAnn's own accounting as co-executor does not identify her as a creditor of Ray's estate on Schedule D. Jo Ann did not commence a reverse discovery proceeding under SCPA 2105 to require Donald, as co-executor of Ray's estate, to deliver her inheritance from Eunice's estate, property she claims Ray's estate was in possession of. JoAnn's claim for conversion by Ray of her inheritance was governed by a three-year statute of limitations. Even assuming that the statute had not run prior to Ray's death, at best, JoAnn had three years from Ray's date of death to commence an action against Ray's estate for the recovery of her inheritance under SCPA 2105 (Matter of Thomas, 28 Misc.3d 300, 901 N.Y.S.2d 493 [Sur Ct, Broome County 2010] ). JoAnn, as a co-executor, had the authority and right to obtain Ray's financial records. She was represented by counsel, yet it appears she failed to avail herself of any legal means to obtain such records.
Accordingly, the motion for summary judgment is denied. Summary judgment is granted to Donald with respect to JoAnn's objection relating to her inheritance from Eunice's estate.
The matter is scheduled for a conference on May 10, 2012, at 9:30 a.m. to schedule a trial date with respect to the remaining objections.
This constitutes the decision and order of the court.