Opinion
CV-304/2017
04-19-2017
Goldberg, Sager & Associates, Plaintiff, v. Robert Gilewski & HEATHER M. BROWN-OLSEN, Defendants.
Attorney for Plaintiff: Marcel A. Sager Esq. from Goldberg Sager & Associates Attorney for Defendant Heather M. Brown-Osen: Matthew T. Worner from the Law Office of Matthew T. Worner
Attorney for Plaintiff: Marcel A. Sager Esq. from Goldberg Sager & Associates Attorney for Defendant Heather M. Brown-Osen: Matthew T. Worner from the Law Office of Matthew T. Worner Mary V. Rosado, J.
The court has considered the following listed submissions of the parties, pursuant to CPLR 2219(a):
Title Number Defendant Heather M. Brown's Notice of Pre-Answer Motion to Dismiss dated February 3, 2017; Defendant's Affirmation in Support dated February 3, 2017 and Supporting Exhibits A-D; Defendant's Memorandum of Law in Support dated February 3, 2017; Affidavit of Heather M. Brown-Olsen sworn to February 1, 2017; 1, 2, 3, 4 Plaintiff's Affirmation in Opposition to Defendant's Pre-Answer Motion to Dismiss dated February 21, 2017 and Supporting Exhibits A-G 5 Defendant's Affirmation in Reply dated March 6, 2017 6 Upon the foregoing papers, the Decision and Order of the Court is as follows:
In this action for legal fees, fraud and conversion by Plaintiff, Goldberg, Sager & Associates (hereinafter "Plaintiff GSA Firm"), Defendant Heather M. Brown, (hereinafter "Defendant Brown"), moves for dismissal of the action as to the claims against her pursuant to CPLR 3211(a)(1) and (7).
Background
This case involves a dispute between Co-Defendant Robert Gilewski (hereinafter "Co-Defendant Gilewski") and Plaintiff GSA Firm over $7,486.25 in legal fees. Plaintiff GSA Firm alleges that the fees were owed to them for providing legal services to Co-Defendant Gilewski in relation to his father's estate. Co-Defendant Gilewski had a fractional share of real property owned by his late father. By the time of the closing on that real property, Plaintiff GSA Firm no longer represented Co-Defendant Gilewski. Co-Defendant Gilewski instead hired Defendant Brown to assist with the estate by, amongst other things, acting as escrow agent for the proceeds of the sale of the home. On October 9, 2013, Defendant Brown emailed Plaintiff GSA Firm (see Defendant's Affirmation in Support, Exhibit B). Her email included the following:
I have agreed to act as escrow agent in order to facilitate the anticipated sale of a partial interest in real estate. I am licensed as stated below. However, I will have to have clear escrow instructions in order to properly and faithfully see that the transaction is concluded and that funds are disbursed or held as agreed by the Seller.Thirty minutes later, Plaintiff GSA Firm responded by email: "I am not consenting to your acting as an escrow agent" (id.). The house Co-Defendant Gilewski had a fractional interest in was sold and shortly thereafter, Defendant Brown received the proceeds from the sale. Defendant Brown placed the proceeds in her Interest on Lawyer Trust Account (hereinafter "IOLTA"). Thereafter, she disbursed funds to the persons designated on the settlement statement and she kept the disputed amount for the legal fees inside the account. On May 29, 2014, after months of no instructions, Co-Defendant Gilewski instructed Defendant Brown to release the funds remaining in her IOLTA to him (see Defendant's Affirmation in Support, Exhibit D) and she did. Plaintiff GSA Firm claims that they have not received the $7,486.25 they are owed.
If this transaction is closing in escrow (and I believe that the escrow closing by mail is fine- once again upon clear instructions), I will need statements from everyone claiming an interest in the proceeds of sale and an anticipated closing statement which specifically authorizes release of funds to specific individuals before assuming this undertaking.
Parties' Contentions
Defendant Brown moves for dismissal of the claims against her and argues that, while she had a fiduciary duty to Co-Defendant Gilewski, she did not owe a duty as escrow agent to Plaintiff GSA Firm, because they rejected her in their October 9, 2013 email. Plaintiff GSA Firm opposes dismissal of the claims against Defendant Brown and argue that, although they rejected her as escrow agent, Defendant Brown agreed to hold the disputed monies in her IOLTA and acted as escrow agent. Therefore, as an escrow agent, Defendant Brown owed a duty to all the parties involved in the dispute. Plaintiff GSA Firm claims that testimony of non-party Ridgely Brown will be critical to settle issues of fact regarding Defendant Brown's duties in this case because he was the one who recommended that Co-Defendant Gilewski retain Defendant Brown to act as escrow agent. Plaintiff GSA Firm also claims that Defendant Brown did not disclose that she held the legal fees in dispute in escrow until May 2014. Further, Plaintiff GSA Firm claims conversion because Defendant Brown disbursed escrow monies inconsistent with the terms of the agreement. She unilaterally disbursed the disputed funds from her IOLTA to Co-Defendant Gilewski. Discussion
Pursuant to CPLR 3211(a)(1) a dismissal is warranted when documentary evidence "resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim" (Yenrab, Inc. v 794 Linden Realty, LLC, 68 AD3d 755, 756-757 [2d Dept 2007]). Pursuant to CPLR 3211(a)(7), dismissal is warranted where the complaint fails to state a cause of action.
Plaintiff GSA Firm has correctly set forth that "[a]n escrow agent not only has a contractual duty to follow the escrow agreement, but additionally becomes a trustee of anyone with a beneficial interest in the trust" (Takayama v Schaefer, 240 AD2d 21, 25 [2d Dept1998]. However, there are generally four elements which make an instrument operate as an escrow:
(a) An agreement as to the subject matter and delivery of the instrument;(55 NY Jur 2d Escrow § 3; George A Fuller v Alexander & Reed, Esqs.,760 F. Supp 381 [SDNY 1991]).
(b) a third-party depositary;
(c) delivery of the instrument to a third party conditioned upon performance of some act or the happening of this event; and
(d) relinquishment by the grantor.
In addressing the first element, New York case law is clear that "[w]hether the holding of a document be under an escrow agreement depends on that agreement" (Farago v Burke, 262 NY 229, 233 [1933]). There must be a valid contract between the parties, and, absent such a contract, "delivery of the instrument to a third person does not constitute a transaction in escrow" (55 NY Jur 2d Escrow § 4). However, an escrow agreement does not have to be written and there are no precise words necessary to constitute an escrow (see Russell v Demandville Mtge Corp., 11 Misc 3d 1056[A][Civil Ct, Kings County 2006]). "The question whether an instrument placed with a third person is to be escrow depends on the intention of the parties" (55 NY Jur. 2d Escrow § 4). Further, "[c]alling an act an escrow does not necessarily make it such" (Farago v Burke, supra at 233).
Plaintiff GSA Firm hopes that, by calling Defendant Brown's action "escrow", this court will hold Defendant Brown liable as an escrow agent. However, applying the above legal principles to this matter, Plaintiff GSA Firm's clear and blunt rejection of Defendant Brown as escrow agent through electronic mail provides documentary evidence that there was no shared intention or "meeting of the minds" that Defendant Brown would act as escrow in relation to the disputed legal fees (id. at 231; cf. MHR Capital Partners LP v Presstek, Inc., 12 NY3d 640, 646 [2009]). In her email to Plaintiff GSA Firm, Defendant Brown asked for "everyone claiming an interest in the proceeds of sale and an anticipated closing statement which specifically authorizes release of funds to specific individuals before assuming this undertaking." She requested clear escrow instructions, which are generally within the contents of an escrow agreement (see 55 NY Jur 2d Escrow § 5). Here, instead of providing any guidance as to how Defendant Brown could acceptably perform her duties as escrow agent with regards to the disputed monies, Plaintiff GSA Firm rejected the prospect of Defendant Brown serving as escrow agent outright.
Conclusion
In accordance with the foregoing, Defendant Brown's motion to dismiss is granted. As such, Plaintiff's claims as to Defendant Brown are dismissed. This constitutes the Decision and Order of the Court. Dated: April 19, 2017 Kings, New York ____________________ Mary V. Rosado, J.C.C.
Note: this decision dismisses the charges as to Defendant Brown, but not as to Co-Defendant Gilewski.