Opinion
2008-850/B
09-08-2011
In the Matter of the Application of Kathy Liosis, as Administrator of the Estate of Ioannis Hiletzaris a/k/a John Hiletzaris, Deceased, for a Compulsory Accounting by Nicholas Hiletzaris as Attorney-in-Fact.
, J.
The Respondent Nicholas Hiletzaris ("Nicholas") moves, pursuant to CPLR §3211 and §3212, to dismiss the petition to compel him to account as attorney-in-fact for John Hiletzaris ("John") on the grounds that the statute of limitations has run (See, CPLR §3211[a][5]) and the application of the doctrine of laches.
In this proceeding, the Petitioner, Kathy Liosis, the Administrator of the Estate of John Hiletzaris is seeking to compel the Respondent, Nicholas, to account for his transactions and dealings conducted under a power of attorney granted to him by John. Specifically, on November 16, 1998, John granted a General Durable Power of Attorney to his brother Nicholas. The Respondent claims that he also executed a power of attorney that, in turn, authorized John to act on his behalf in Greece. Nicholas states in his moving papers that the powers of attorney were executed to effectuate an agreement between John and himself concerning the division of the assets of the estate of their father, Christos Hiletzaris ("Christos"), who died on October 30, 1998, which were located in the United States and Greece.
In April of 1999, Nicholas, using the power of attorney from his brother, established Strathmore Group, LLC, with the Respondent named as 51% owner and John as 49% owner. Less than one month later, Nicholas, again using the power of attorney, transferred John's 49% share of Strathmore Group, LLC to himself (48%) and to his wife, Maria (1%).
On November 17, 1999, a little more than a year after Christos Hiletzaris died, the Respondent, as administrator of his father's estate, deeded that estate's largest asset, a 54 unit apartment building, to Strathmore Group, LLC. In the course of obtaining a mortgage to refinance the property, Nicholas had also represented to the Queens County Savings Bank that he and John each owned 50% of Strathmore Group, LLC.
More than four years following John's death on April 17, 2004, the Petitioner obtained Letters of Administration for John's estate and commenced a proceeding to compel Nicholas to account as administrator of the Estate of Christos Hiletzaris. Nicholas rendered an accounting to which the Petitioner filed objections. The Petitioner thereafter commenced the instant proceeding, on September 7, 2010, to compel Nicholas to account for his tenure as attorney-in-fact for John.
In support of the motion to dismiss, Nicholas contends that the pursuit of damages in the form of an account is equivalent to determining money damages and, thus, this proceeding is governed by a three year statute of limitations. The Respondent further asserts that since a power of attorney is revoked upon the death of the party who executed it, the three year statute of limitations accrued with John's death on April 17, 2004.
To dismiss a cause of action pursuant to CPLR § 3211(a)(5) on the ground that it is barred by the statute of limitations, the respondent bears the initial burden of establishing prima facie that the time in which to sue has expired (See e.g., Savarese v Shatz, 273 AD2d 219). To satisfy this burden, the respondent must establish, inter alia, when the petitioner's causes of action accrued (See, Matter of Schwartz, 44 AD3d 779). In addition, when deciding a motion under CPLR §3211, including one based upon the statue of limitations, "'a court must take the allegations in the complaint as true and resolve all inferences in favor of the [petitioner]'" (Cimino v Dembeck, 61 AD3d 802, 803, quoting Sabadie v Burke, 47 AD3d 913, 914). Where the movant demonstrates preliminarily that a claim is barred by the statute of limitations, the petitioner must establish that a toll or stay is applicable or that an issue of fact exists (See, Matter of Schwartz, supra).
Nicholas' attempt to equate a demand for an accounting to an action for money damages is misplaced. An attorney-in-fact is a fiduciary and has a duty to account (See, GOL §5-1505[3]). Therefore, "[a] proceeding to compel an accounting by a fiduciary is governed by a six-year statute of limitations" (In re Estate of Meyer, 303 AD2d 682, 683; see also, CPLR § 213[1]; Matter of Barabash, 31 NY2d 76; Matter of Gershenoff, 2 Misc 3d 847, affd 17 AD3d 243).
Addressing the issue of when the Petitioner's cause of action accrued, the court is persuaded that Nicholas' argument on this point is correct. Where a fiduciary relationship is ongoing, the six year period does not commence running until there is an open repudiation of the confidential relationship by the fiduciary or judicial settlement of the fiduciary's account (See, Matter of Barabash, 31 NY2d 76; In re Estate of Behr,191 AD2d 431; Matter of Ashhein's Estate, 111 AD 176, affd 185 NY 609). Where, however, the fiduciary relationship has clearly been terminated and, thus, there are no longer any duties for the fiduciary to perform, the statue begins to run at the time the trust relationship came to its end (See, Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195; Spallholz v Sheldon, 216 NY 205; Westchester Religious Inst. v Kamerman, 262 AD2d 131).
The Petitioner's argument, based upon on Matter of Barabash, supra, that the limitations period has not accrued since the Respondent never openly repudiated the fiduciary relationship in question nor judicially settled his account is unavailing under the present circumstances. The reason why the Court of Appeals required a "watershed" event like an open repudiation to start the statute of limitations running was because principals in a subsisting trust relationship are "entitled to assume that the [fiduciary will] perform his trust responsibilities" (Tydings v Greenfield, Stein & Senior, LLP, supra at 202). In other words, the principal is entitled to repose in an existing confidential relationship and should not be required to sacrifice it by commencing litigation except upon the occurrence of certain exceptional events.
The facts in the case at the bar are clearly distinguishable from those in Matter of Barabash, supra. The fiduciary relationship created between John and the Respondent with the execution of the power of attorney terminated by operation of law when John died (GOL § 5-1511[1][a]) and Nicholas no longer had any authority to act on John's behalf (See, Ferrentino v The Dime Savings Bank, 159 Misc 2d 690). Here, the trust relationship between Nicholas and John and the duties of the Respondent as attorney-in-fact having clearly concluded, the running of the limitations period commenced on the date of John's death, April 17, 2004 (See, Westchester Religious Inst. v Kamerman, supra).
The foregoing notwithstanding, the moving papers demonstrate that issues of fact exist that preclude dismissal of this proceeding as time barred. In Spallholz v Sheldon, supra at 209, which was recently reaffirmed in Tydings v Greenfield, Stein & Senior, LLP, supra, the Court of Appeals held that while the termination of a trust relationship starts the statute of limitations running, "actual or intentional fraud will be effective to suspend it". In this case, there is indicia of not only fraud during the fiduciary relationship, but also after its termination. In particular, it is undisputed that Nicholas transferred John's interest in Strathmore Group, LLC to himself using the power of attorney. This transference via the power of attorney carried with it a presumption of impropriety and self-dealing, which can be overcome only with "the clearest showing of intent" on the part of the principal to make a gift (See, Matter of Ferrara, 7 NY3d 244, 254; In re Audrey Carlson Revokable Trust, 59 AD3d 538, 540; Mantella v. Mantella, 268 AD2d 852 Semmler v Naples, 166 AD2d 751, 752). Such a showing was not made on these papers.
As to matters after John died, schedule H of Nicholas' accounting as Administrator of Christos' estate for the period of October 31, 1998 to March 31, 2009, that was filed with this court on April 29, 2009, contained a representation by Nicholas that he had "no knowledge" of any power of attorney "made and executed by any of the persons interested in or entitled to share in the estate". That statement, made before the statute of limitations putatively expired on April 17, 2010, appears in direct contradiction with the facts represented by Nicholas himself in the moving papers. He alleges that the power of attorney executed by John was done to effectuate the parties' agreement concerning the distribution of the assets of their father's estate, in which they were purportedly the only distributees.
Accordingly, as there are issues of fact concerning whether any fraudulent acts of the Respondent suspended the running of the statute of limitations, the motion for dismissal and/or summary judgment based upon the expiration of the statute of limitations is denied.
Insofar as the argument of laches is concerned, the essential element of prejudice as a result of the lapse of time has not been established. While it may be difficult to locate the necessary documents to support an account and memories may have faded as alleged, it has not been demonstrated that Respondent has suffered a significant change in position prejudicial to him due to the delay in commencing this proceeding.
The Respondent's argument concerning John's supposed ratification of the transference of a parcel of real property in Queens County is irrelevant to whether this proceeding to compel an accounting is timely. As the court noted supra, a fiduciary is duty bound to account and the Respondent has not cited any authority to support the proposition that a principal's acquiescence in the transactions of their fiduciary absolves the duty to account.
This is the decision and order of the Court.
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SURROGATE