Opinion
29966/05.
Decided January 11, 2008.
Leonard Lorin, Esq., Brooklyn, NY, Attorney for Defendant.
Robert Rosenberg, Esq., Genser, Dubow, Genser Cona, LLP, Melville, NY, Attorney for Plaintiff.
Defendant Elvia Vidal moves pursuant to CPLR 3211[a] [1], [7], [10] and 3212 to dismiss the plaintiff's amended complaint. Plaintiff Ruby Weston Manor moves pursuant to CPLR 3212 for summary judgment as a matter of law as to plaintiff's fourth, fifth, sixth and seventh causes of action, apparently abandoning the first three causes of action which do not state a cause of action against the defendant.
BACKGROUND
This action arises out of residential nursing home care provided to defendant's 87 year old aunt, Margaret Carmichael ("Resident") by the plaintiff between August 30, 2002 and September 5, 2003. Plaintiff commenced the instant action against the defendant, seeking the Resident's alleged outstanding balance of $110,066.04 for such care based upon the Resident's conveyance to defendant on July 12, 2002 of her home, which had been severely damaged by fire in March 2002. On March 17, 2002, Resident gave defendant a Power of Attorney authorizing her to act upon her behalf in all business matters, including real estate transactions.
The complaint alleges that Resident agreed to pay plaintiff for her care and that the Resident failed to make the payments to the plaintiff. Plaintiff stated in its response to interrogatories that it did not have any written contract or agreement with the Resident or the defendant and the only written demand for payment sent to either the Resident or the defendant was the claim letter sent to the defendant by plaintiff's counsel on June 23, 2004, after the Resident's death on February 24, 2004. Defendant contends that she expected, based upon a conversation with an unidentified employee of plaintiff, that the plaintiff had agreed to accept the Resident's social security and pension in full payment for the services. In deposition testimony, the defendant denied that she had discussed payment directly with plaintiff. However, plaintiff admits that the Resident's monthly social security and pension were paid directly to plaintiff on three occasions. Plaintiff has declined to provide any documentation regarding the sums claimed.
On July 12, 2002, the 87 year old Resident transferred her uninhabitable real property to the defendant, for no consideration, prior to entering the plaintiff's nursing home. It is plaintiff's contention that this was done in order to prevent the plaintiff from recovering monies due it for services rendered to the Resident. Plaintiff alleges this conveyance rendered the Resident insolvent at a time when the Resident intended or believed she would incur debts beyond her ability to pay as they matured and the defendant accepted the conveyance with the knowledge of the Resident's fraudulent intent. According to the defendant, at the time, her aunt was receiving approximately $815 per month through her pension and social security benefits and maintained a bank account from which various expenses were paid.
On February 26, 2003, while Resident was residing at the plaintiff's facility, the defendant sold the real property for $180,500.00. According to the defendant, the Resident orally instructed her regarding the disposition of the proceeds. The defendant distributed approximately $70,000 from the sale of the property to her brother and used the rest of the proceeds for an apartment, furniture and supplies for the Resident, family funeral expenses, including those of the Resident, a personal land investment and legal fees in this matter. A small portion of the proceeds remain. The Resident died on February 24, 2004, before this action was commenced, and the plaintiff did not join the Resident's estate as a defendant in this matter.
DISCUSSION
Defendant moves for summary judgment pursuant to CPLR 3212 on the grounds that the plaintiff has failed to show the existence of an agreement between the plaintiff and the Resident or between the plaintiff and the defendant. The plaintiff alleges the Resident "agreed to pay Plaintiff at the daily rate for care and services rendered to the Resident," "received residential health care services," "failed and neglected to remit payment to Plaintiff," and the "Plaintiff has been damaged in the sum of $110,066.04" as a result of the Resident "fail[ing] and neglect[ing] to remit payment to the Plaintiff."
Where a plaintiff has no contractual relationship with the defendant, and is not in privity with the defendant, the plaintiff may not maintain a cause of action for breach of contract ( M. Paladino, Inc. v J. Lucchese Son Contracting Corp., 247 AD2d 515 [2nd Dept 1998]). In the present matter, the plaintiff has failed to demonstrate, or even allege, any agreement or privity between the plaintiff and the defendant. Therefore the defendant's motion for summary judgment as to the first cause of action must be granted.
Plaintiff alleges, "as Power of Attorney, the Defendant had a fiduciary duty to remit payment from the Resident's assets to the Plaintiff for services rendered." However, "[a] fiduciary relationship arises between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation" ( Pergament v Roach , 41 AD3d 569 , 571 [2nd Dept 2007]). While a fiduciary relationship existed between Resident and the defendant, defendant was under no duty to act for the benefit of the plaintiff. Therefore, the defendant's motion for summary judgment as to the second cause of action must be granted.
Plaintiff alleges that the "Plaintiff rendered residential nursing care and services to the Resident and has not been paid and therefore, Defendant has been unjustly enriched in the sum of $110,066.04." While unjust enrichment does not require the performance of a wrongful act by the unjustly enriched party, the plaintiff "must show that (1) the [defendant] was enriched, (2) at [the plaintiff's] expense, and (3) that it is against equity and good conscience to permit the [defendant] to retain what is sought to be recovered" ( Cruz v McAneney , 31 AD3d 54 , 59 [2nd Dept 2006]; see also Citibank v Walker , 12 AD3d 480 , 481 [2nd Dept 2004]). "A conclusion that one has been unjustly enriched is essentially a legal inference drawn from the circumstances surrounding the transfer of property and the relationship of the parties. It is a conclusion reached through the application of principles of equity" ( Sharp v Kosmalski, 40 NY2d 119, 123; see also Valente v Valente, 191 Misc 2d 119, 123 [2nd Dept 2002]).
In order for the plaintiff to prevail on a claim of unjust enrichment here, the benefit conferred upon the Resident must have been for the defendant ( Clark v Daby, 300 AD2d 732 [3rd Dept 2002]) at the defendant's request or behest ( Hamlet on Olde Oyster Bay Home Owners Assn. v Holiday Organization, 12 Misc 3d 1182 A [Sup Ct, Nassau County 2006]). There is no evidence adduced that defendant contracted for plaintiff's services, requested plaintiff's services, or was otherwise obligated to provide such care to Resident and relied upon plaintiff to perform such obligation. Therefore, the plaintiff has failed to substantiate its allegation that defendant was unjustly enriched by the provision of care to defendant's aunt and the defendant's motion for summary judgment as to the third cause of action must be granted.
In its fourth cause of action, Plaintiff alleges "the Resident wrongfully conveyed her assets, income and/or real property to the Defendant without fair consideration" and "the Resident was insolvent or rendered insolvent as a result thereof and therefore prevented Plaintiff from recovering monies due it for services rendered to the Resident." Pursuant to Debtor and Creditor Law § 273, "[e]very conveyance made and every obligation incurred by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made or the obligation is incurred without a fair consideration." The Resident gratuitously conveyed the property at issue to the defendant on July 12, 2002, approximately six weeks prior to moving to the plaintiff's facilities on August 30, 2002. The plaintiff has not provided any evidence indicating a debt prior to the conveyance of the property. Under the plain language of Debtor and Creditor Law § 273, the conveyance may only be fraudulent as to "creditors" and the plaintiff failed to even allege that the Resident was a debtor to the plaintiff at the time of the conveyance ( see Grace Plaza of Great Neck, Inc. v Heitzler , 2 AD3d 780 [2nd Dept 2003]) (finding no fraudulent conveyance under Debtor and Creditor Law § 273 where the resident of a nursing home did not have any outstanding debt to the plaintiff's nursing home at the time of the transfer.). Accordingly, as the Plaintiff has not alleged or established any debt at the time of the conveyance, defendant's motion for summary judgment dismissing the fourth cause of action must be granted.
The plaintiff also alleges the "conveyances by the Resident to the Defendant were made at a time when the Resident intended or believed she would incur debts beyond her ability to pay as they matured." Pursuant to Debtor and Creditor Law § 275, "[e]very conveyance made and every obligation incurred without fair consideration when the person making the conveyance or entering into the obligation intends or believes that he will incur debts beyond his ability to pay as they mature, is fraudulent as to both present and future creditors." While the defendant's affidavit and memorandum of law suggest that the conveyance was in title and form only for the purposes of carrying out the Resident's instructions as an agent of the Resident, defendant acknowledged at her deposition that at the time of the transfer, she considered the conveyance to be a "gift" and did not provide the Resident with any compensation for the transfer of the property.
Under the Debtor and Creditor Law, a heavier burden is placed on the defendant to demonstrate fair consideration when the transaction involves family members and was made without any tangible consideration ( see Kittay v Flutie, 310 BR 31, 52-53 [Bankr SDNY 2004]; Wall Street Assocs. v Brodsky, 257 AD2d 526, 528 [1st Dept 1999]) (holding that "[f]airness of consideration is a question of fact and an intra-family transaction places a heavier burden on defendant to demonstrate fairness."). The burden to demonstrate the giving of fair consideration shifts to the intra-family transferee where there is no tangible consideration and an oral promise of future support is insufficient to constitute fair consideration ( Gavenda v Orleans County, 2002 US Dist LEXIS 25515, *4 — *6 [WDNY 2002]). "Courts view intrafamily transfers made without any signs of tangible consideration as presumptively fraudulent" ( United States v Alfano, 34 F Supp 2d 827, 845 [EDNY 1999]).
Moreover, "the element of insolvency is presumed when a conveyance is made without fair consideration and the burden of overcoming such presumption is on the transferee." ( Gavenda at *5, citing Alfano at 845; see also Capital Distrib. Servs. v Ducor Express Airlines, Inc., 440 F Supp 2d 195, 203 [EDNY 2006]) (holding "[i]n cases of intra-family transfers, where facts concerning the nature of the consideration are within the exclusive control of the transferee, . . . the burden shifts to the transferee to prove the adequacy of consideration. If the conveyance is found lacking in consideration, the burden also shifts to the transferee to prove continued solvency after the transaction.").
Defendant does not claim that any tangible consideration was given in this intrafamily transfer. Even if the defendant orally agreed to use the proceeds from the conveyed property to support the Resident, this is insufficient to demonstrate fair consideration ( see Gavenda at * 6; see also Schmitt v Morgan, 98 AD2d 934, 936 [3rd Dept 1983]) (holding "promises of future support . . . are insufficient as a matter of law to be considered a fair equivalent of the property transferred."). Therefore, the element of insolvency is presumed here where the conveyance was made without fair consideration unless the defendant can overcome such presumption with evidence that the conveyor was not thereby rendered insolvent ( see Gavenda at * 5, Capital Distrib at 203).
Pursuant to Debtor and Creditor Law § 271, "[a] person is insolvent when the present fair salable value of his assets is less than the amount that will be required to pay his probable liability on his existing debts as they become absolute and matured." It is undisputed that the Resident received a pension and social security benefits totaling approximately $815 per month at the time the plaintiff's services were rendered and defendant has stated that she paid other bills from Resident's bank account. Defendant testified at her deposition that prior to Resident's admission to plaintiff's facility following the fire that destroyed her home, Resident was paying for the services of an aid out of her own funds. Plaintiff admits that the Resident did actually pay for the plaintiff's services through the Resident's social security and pension on three separate occasions after conveying the property to the defendant. Thus, it is possible that Resident was not rendered insolvent by the transfer of her real property to defendant. However, the evidence is not unequivocal and is insufficient to establish this fact upon the record before the Court. But, since the Resident is now deceased and her estate has not been joined, it is not probable that any additional evidence of solvency would be adduced upon trial. Moreover, the instant action must be dismissed based upon other grounds ( see infra) and the denial of summary judgment to defendant based upon the presence of a factual issue concerning Resident's insolvency is unwarranted.
The defendant's motion for summary judgment dismissing the complaint must be granted pursuant to CPLR 3212 [b] because the plaintiff has relied exclusively on speculative allegations of the Resident's debt without providing any admissible evidence demonstrating that the plaintiff was in fact a creditor to the Resident ( see Wilbur v Wilbur, 266 AD2d 535, 536 [2nd Dept 1999]). The plaintiff has not provided any contract, accounting or statement, itemization of debts incurred by the Resident, or even a copy of an invoice sent to the Resident or the defendant. No affidavit has been proffered from an individual that had direct responsibility for the account or any knowledge of Resident's care as required by CPLR 3212[b]. The only support for plaintiff's motion is contained in an attorney's affirmation. Even the complaint is verified only by counsel. The affirmation of the plaintiff's attorney is without evidentiary value and is insufficient to support or defeat a motion for summary judgment ( Zuckerman v New York, 49 NY2d 557, 562-563; Marinelli v Shifrin, 260 AD2d 227, 229-230 [1st Dept 1999]; Cugini v System Lumber Co., 111 AD2d 114, 115-116 [1st Dept 1985]). The complaint is not verified by a person with knowledge of the facts and defendant's deposition does not establish the debt sued upon. In fact, plaintiff has failed to supply any documentation to support its claim for services rendered to Resident. Therefore, as the plaintiff failed to meet its burden of demonstrating the existence of a debt through admissible evidence, defendant's motion for summary judgment as to the fifth, sixth and seventh causes of action must also be granted.
Alternatively, defendant also moves pursuant to CPLR 3211(a)(10) to dismiss the complaint on the grounds that the court should not proceed without including the Resident's estate as a party to this action. The defendant claims the plaintiff is seeking to hold the defendant responsible for services alleged to have been rendered to the Resident and the estate would have defenses to plaintiff's claims. The plaintiff argues that the estate is not a necessary party to the action because the defendant is independently accused of fraudulently accepting a conveyance which rendered the estate insolvent and relief could not be apportioned between the estate and the defendant even if the estate were a party to the action.
Dismissal of a cause of action pursuant to Debtor and Creditor Law § 273 has been granted where the plaintiff failed to join the alleged debtor because it is a necessary party to the action ( Riback v Margulis , 43 AD3d 1023 [2nd Dept 2007], citing Ranno v Ranno, 2 Misc 2d 940, 941 [Westchester County 1956]) (holding "[a] creditor may not maintain an action to establish a debt against his alleged debtor, to annul the debtor's conveyances, and appropriate his property to the payment of the creditor's alleged debt without making the debtor a party to the action wherein the relief is sought."). Only where the conveyance is absolute and the plaintiff has obtained a money judgment against the debtor or the debtor's estate is the debtor's estate no longer a necessary party to an action against the transferee. See Braun Farms, Inc. v Goldman, 296 AD2d 472 [2nd Dept 2002], holding that "[non-defendant debtor], a defunct corporation, is not a necessary party to this action since the plaintiffs obtained a money judgment against it, and the challenged conveyance was absolute," citing Ranno at 940, in which it was held that "[s]uch an action may be maintained by a creditor solely against a transferee, where the claim has been reduced to judgment and it appears that the conveyance is absolute on the face thereof.".
Here, while the conveyance of the property to the defendant was absolute as the deed solely lists the defendant's name and does not contain any restrictions on its use by the defendant, the plaintiff failed to join the Resident's estate as a party to the present action or obtain a monetary judgment against the Resident or the Resident's estate prior to bringing this action against the defendant. Therefore, the defendant's motion to dismiss the fourth cause of action must also be granted for failure to join the Resident's estate as a necessary party in the absence of a monetary judgment against the Resident or the Resident's estate obtained prior to bringing this action ( see Riback at 1023).
Moreover, the logic of the Riback decision is equally applicable to causes of action five, six and seven, premised upon Debtor and Creditor Law §§ 275, 276, 276-a respectively, which are also predicated upon an alleged debt of the Resident, and seek to annul the conveyance to the defendant and appropriate the property in satisfaction of the Resident's alleged debt. Accordingly, the defendant's motion to dismiss the fifth, sixth and seventh causes of action must also be granted for failure to join the Resident's estate in this action or obtain a monetary judgment against the Resident or the Resident's estate.
CONCLUSION
Accordingly, the defendant's motions for summary judgment pursuant to CPLR 3212 and for dismissal pursuant to CPLR 3211(10) for failure to join a necessary party are granted as to all causes of action and the action is dismissed with prejudice. Plaintiff's motion for summary judgment is denied.
The foregoing constitutes the decision and order of the Court.