Opinion
File No. 2021-1908/B
07-31-2023
IN RE ESTATE OF Rita RITZ, Deceased In a proceeding for the imposition of a constructive trust
For Petitioner Philip Ritz: KROLL and PROKOU, LLP, Marcus Kroll, Esq., of counsel For Respondent Michael Ritz : BOND, SCHOENECK & KING, PLLC, Michael R. Wolford, Esq. and Travis R. Talerico, Esq., of counsel.
For Petitioner Philip Ritz: KROLL and PROKOU, LLP, Marcus Kroll, Esq., of counsel
For Respondent Michael Ritz : BOND, SCHOENECK & KING, PLLC, Michael R. Wolford, Esq. and Travis R. Talerico, Esq., of counsel.
Christopher S. Ciaccio, S. INTRODUCTION
Philip Ritz, one of three children of the decedent Rita Ritz, commenced a proceeding for "constructive trust" and "unjust enrichment," claiming that his brother Michael Ritz, the executor of their mother's estate, exercised "undue influence" over their mother and took advantage of her "lack of capacity" to induce her to name him as beneficiary on two accounts, one a Franklin Templeton fund and the other a John Hancock annuity.
Thus, Philip says, his brother Michael has been "unjustly enriched."
Michael has denied the allegations in his Answer, and following discovery, now moves for summary judgment dismissing the Petition. Philip cross-moves for summary judgment as well.
For the reasons set forth below, the motion for summary judgment dismissing the Petition is granted, and the cross-motion for judgment is denied.
FACTS
The following facts are not disputed.
Rita Ritz died in 2021, survived by three children, Michael, Philip, and Joann Bastian.
She had a financial adviser, Michael Tabinsky. In 2006 he opened an account for her at John Hancock Investments, an annuity. In 2010 he opened for her an account with Franklin Templeton Investments.
In 2014 he met with Rita alone and she made Michael 100% beneficiary on the John Hancock account and 50% beneficiary of the Franklin account, with the remaining 50% to her granddaughter. Neither designation required a notary. Per Tabinsky’ s unrebutted testimony, she had explained several times in the previous years that she had not seen or spoken to her son Philip and did not want him to inherit any of her money. In 2018 Tabinsky met with Rita to update the beneficiary designations on the Franklin Templeton account. She allotted 34% to Michael, 33% to Philip, and 33% to her granddaughter. She had stated a few months earlier that she "had begun seeing and speaking" with Philip.
On March 5, 2020, Tabinsky met with Rita at her apartment. Michael was present. She informed him that she wanted to make Michael the 100% beneficiary of the Franklin Templeton account. Although she looked to Michael during the conversation, he apparently said (again per Tabinsky’ s testimony and affidavit) I am "staying out of it." Rita explained that Philip and her granddaughter would be receiving a portion of the proceeds of her house sale, and that she wanted Michael to receive all her investment proceeds, as he had been "the one who had been taking care of her."
In 2016 she was diagnosed with a "mild cognitive impairment."
Rita's Last Will and Testament has a testamentary scheme that deviates from her beneficiary designations.
She moved into assisted living in 2019. Patricia Freeson was a caretaker at the facility Fleming Point, from 2019-2021.
DISCUSSION
Standing
A preliminary question is whether Philip Ritz has standing to bring this proceeding.
A paragraph in his Petition entitled "Jurisdiction and Venue" refers to SCPA 203 and 301, however, those sections refer to the generalized jurisdiction of Surrogate's Court and the statute of limitations and have nothing to do with standing.
Although not mentioned in the Petition (but to give the pleadings a liberal reading), the sections that come closest to conferring standing for the proceeding commenced by Philip are SCPA 2102 and 2105. SCPA 2102 ("proceedings for relief against a fiduciary") is a discovery proceeding that enables a claimant to bring a proceeding to compel the fiduciary to "supply information concerning the assets or affairs of an estate relevant to the interest of the petitioner ..." ( SCPA 2102[1] ).
SCPA 2105 provides the process "to compel" the return of the property "alleged to be in the possession of or under control of a fiduciary." ( SCPA 2105[1] ). Here, however, Philip is not seeking to discover and have turned over property that belongs to him. He is seeking property that, if he is successful in showing that the beneficiary designations were wrongfully procured, will go back into the estate because the designations, past and present, will be nullities. Thus, it is the estate who is the interested party, and Philip does not represent the estate.
To be certain, Philip was never a beneficiary of the John Hancock funds. He became a 33% beneficiary of the Franklin Templeton fund, but whether the 2020 designation reverts to the 2018 designation is a matter dictated by the terms of the investment agreement, which has not been put before the court. Moreover, Philip has argued that Rita has lacked capacity "for several years," predating even the 2018 designations, which means he is arguing that all of the designations are invalid. Thus, his "wherefore" clause asks that the court direct "the Respondent to return the funds to the estate."
Moreover, SCPA 2105 is a means of recapturing property "alleged to be in the possession of or under the control of a fiduciary ," (emphasis added). Philip is seeking property being held by Michael in an individual capacity, not as fiduciary of the estate.
Thus, Philip cannot use SCPA 2105 as a means of setting aside the beneficiary designations.
As Philip has no standing to bring the action, summary judgment in favor of Michael is granted, and the Petition is dismissed on that basis alone. Philip's issue is with the entities that validated the beneficiary designations and transferred the assets to Michael.
He is not without a remedy — he could have petitioned for limited letters of administration; his proceeding then would have been on behalf of the estate.
This court has held in a case involving the beneficiary designation of an insurance policy that was allegedly procured through undue influence, that where the funds have been disbursed to the named beneficiary, "the court can assume that the company's internal review process was satisfied regarding the designation." ( Matter of Walls , 77 Misc.3d 1208(A), *4, 2022 WL 17333523 [Sur. Ct., Monroe County 2022] ), citing and quoting McCarthy v. Aetna Life Ins. Co. , 92 N.Y.2d 436, 681 N.Y.S.2d 790, 704 N.E.2d 557 (1998) : "As a general rule, under ... New York law, the method prescribed by the insurance contract must be followed in order to effect a change of beneficiary. Such a rule serves the paramount goals of ensuring that life insurance proceeds are disbursed consistently with an insured's stated intent and of preventing the courts and parties from engaging in rank speculation regarding the wishes of the deceased." Summary Judgment Motions
But even if Philip had standing, the motion for summary judgment dismissing the Petition would be granted. Michael's submissions make out a prima facie showing of entitlement to judgment as a matter of law ( Winegrad v. New York Univ. Med. Ctr. , 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 [1985] ; Zuckerman v. City of New York , 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ; Sillman v. Twentieth Century-Fox Film Corp. , 3 N.Y.2d 395, 404, 165 N.Y.S.2d 498, 144 N.E.2d 387 [1957] ) and are unrebutted by Philip's submissions, which fail to establish by the admissible evidence the existence of a material issue of fact, even when scrutinized "in the light most favorable to the party opposing the motion" ( Goldstein v. County of Monroe , 77 A.D.2d 232, 236, 432 N.Y.S.2d 966 [4th Dept. 1980] ; Nojaim Bros., Inc. v. CNA Ins. Cos. , 113 A.D.2d 109, 496 N.Y.S.2d 113 [4th Dept. 1985] ) and notwithstanding that it is "the earmark of summary judgment that the court is confined to determining whether an issue of fact exists as a matter of law" ( Phillips v. Kantor & Co. , 31 N.Y.2d 307, 315, 338 N.Y.S.2d 882, 291 N.E.2d 129 [1972] ).
Lack of Capacity
The burden is on the proponent — here, Philip - to show that Rita lacked capacity to make the designation changes.
In the context of a beneficiary designation on a financial instrument, "A party's competence is presumed and the party asserting incapacity bears the burden of proving incompetence (see Feiden v. Feiden , 151 A.D.2d 889, 890, 542 N.Y.S.2d 860 [3d Dept. 1989], citing Matter of Gebauer , 79 Misc.2d 715, 719, 361 N.Y.S.2d 539 [Sur. Ct., Cattaraugus County 1974], affd 51 A.D.2d 643, 378 N.Y.S.2d 653 [4th Dept. 1976] ).
"Persons suffering from a disease such as Alzheimer's are not presumed incompetent and may execute a valid deed" ( Feiden at 890, 542 N.Y.S.2d 860 ; see , 43 NY Jur 2d, Deeds, § 23, at 208 ; see also, Matter of Betz , 63 A.D.2d 769, 404 N.Y.S.2d 737 [3d Dept. 1978] ).
"Furthermore, it must be shown that, because of the affliction, the person was incompetent at the time of the transaction" ( Feiden at 890, 542 N.Y.S.2d 860, citing Matter of Bush , 85 A.D.2d 887, 888, 446 N.Y.S.2d 759 [4th Dept. 1981] ).
The inquiry is whether the person's mind was "so affected as to render him wholly and absolutely incompetent to comprehend and understand the nature of the transaction" ( Feiden at 890, 542 N.Y.S.2d 860 , citing Aldrich v. Bailey , 132 N.Y. 85, 89, 30 N.E. 264 [1892] ; see Ortelere v. Teachers’ Retirement Bd. of City of N.Y. , 25 N.Y.2d 196, 202, 303 N.Y.S.2d 362, 250 N.E.2d 460 [1969] ).
Here, nothing in the record suggests that Rita was incompetent at the time she made the changes in the beneficiary designations. Michael's entitlement to judgment on the issue of lack of capacity is premised on the financial adviser's testimony as well as that of the caretaker, both of whom assert that Rita was of "sound mind." A letter from a physician was submitted, attesting to the diagnosis of "mild cognitive impairment," which while ordinarily inadmissible because it is not affirmed under penalty of perjury, is acknowledged by Philip as being credible and not objectionable.
Philip's submissions - entirely consisting of his affidavit and deposition testimony - fall far short of carrying his burden to show incompetence.
In a section in his affidavit entitled "Facts Before the Court," he asserts that his mother "suffered long decline of her physical and mental health, with impairments becoming obvious as early as 2014." He does not say what impairments were obvious, let alone the times and occasions he observed them.
In his deposition he repeats the assertion that his mother Rita Ritz suffered both mental and physical functional limitations, but again does not say during what period, nor does he state, to any degree except conclusory, the basis for his knowledge. He believes that she suffered from dementia because "she was like forgetting things.. stuff like that," but never spoke to her doctor. He recalls that in April 2020, he would visit, and she would ask him how he was, then repeat the question five minutes later.
Acknowledging that his mother had been diagnosed with a "mild cognitive impairment," and asked what that means, he replied, "It would be like Joe Biden, I mean he has that's what they say"
Such evidence falls far short of creating a factual issue as to whether Rita was incompetent when she made the changes in the beneficiary designations.
Undue Influence
As to undue influence, the burden is similarly on Philip to show that Rita's beneficiary designations were the product of the "exercise of a moral coercion, which restrained independent action and destroyed free agency, or which, by importunity which could not be resisted, constrained the [decedent] to do that which was against [his] free will" Matter of Burrows , 203 A.D.3d 1699, 1702, 166 N.Y.S.3d 71 [4th Dept. 2022], lv denied, 207 A.D.3d 1092, 168 N.Y.S.3d 926 [4th Dept. 2022], and lv denied, 39 N.Y.3d 903, 2022 WL 16984432 [2022] ).
The acts alleged must be of a "substantial nature ...," and the evidence must identify the motive, opportunity and acts allegedly constituting the influence, as well as when and where such acts occurred Mere speculation and conclusory allegations, without specificity as to precisely where and when the influence was actually exerted, are insufficient to raise an issue of fact" ( Burrows at 1702, 166 N.Y.S.3d 71 [internal quotation marks and citation omitted]).
Philip states that his brother Michael:
-"began a pattern of alienating myself and my family from my mother," citing as examples (without any evidentiary foundation) that Michael would schedule family events and then "make sure" my mother would miss them, and that Michael would move Rita's phone "out of her reach" to ensure we had to go through him before "connecting with my mother."
-That Michael began arranging appointments with financial advisers.
-That by 2020 Rita was "completely reliant" upon Michael to manage her affairs.
Elaborating on Michael's alleged manipulation, he testified that Michael never prevented him from meeting with or visiting their mother, but one Thanksgiving changed the time for dinner, so it was over when they arrived. One time for Rita's birthday, Michael took her to dinner at 3:30 p.m., and Philip showed up at 5:00 p.m.
He testified that after the father died, Michael "manipulated her in her time of need" and when Rita was "weak and vulnerable he kinda went in there."
Such evidence is conclusory and cannot create a question of fact. "Unsubstantiated and conclusory allegations are also insufficient to raise a triable issue of fact" ( Matter of Coniglio , 242 A.D.2d 901, 902, 663 N.Y.S.2d 456 [4th Dept. 1997] ). "[C]onclusory allegations and speculation without specificity as to times, dates, and places are insufficient to raise an issue of fact as to undue influence ( Matter of Malone , 46 A.D.3d 975, 977-78, 846 N.Y.S.2d 782 [3d Dept. 2007] [internal quotation marks omitted]).
Philip's submissions provide no recitation of the times and dates of the alleged influence, no detailed acts, no required actual exercise or utilization of influence (see Matter of Bush , 85 A.D.2d 887, 888-89, 446 N.Y.S.2d 759 [4th Dept. 1981] ), and no evidence of a confidential relationship that existed over and above the family relationship, which by itself does not create a presumption of a "confidential relationship" ( Matter of Walther , 6 N.Y.2d 49, 56, 188 N.Y.S.2d 168, 159 N.E.2d 665 [1959] : "[t]he sense of family duty is inexplicably intertwined in this relationship which, under the circumstances, counterbalances any contrary legal presumption"; see also Matter of Swain , 125 A.D.2d 574, 575, 509 N.Y.S.2d 643 [2d Dept. 1986] ).
Philip attached to his submission (unnecessarily, since it is part of the filed record) the Last Will and Testament, which demonstrates a testamentary scheme that deviates from her beneficiary designations. That by itself does not create a question of fact, especially since it is undisputed that Rita expressed the intent behind her change of beneficiary, which was to leave Philip the house and other assets, but not the investments, through the Will, because of his lack of attention to her over the years (see Matter of Malone , 46 A.D.3d 975, 978, 846 N.Y.S.2d 782 [3d Dept. 2007] ).
Constructive Trust
Although not raised as an argument by Michael, summary judgment is appropriate because the elements of a constructive trust and unjust enrichment are utterly lacking, factually and even on the face of the pleadings.
"In general, a constructive trust may be imposed where there is "(1) a confidential or fiduciary relation, (2) a promise, express or implied, (3) a transfer made in reliance on that promise, and (4) unjust enrichment" ( Rossi v. Morse , 153 A.D.3d 1637, 1638, 61 N.Y.S.3d 438 [4th Dept. 2017] ; citing Matter of Thomas, 124 A.D.3d 1235, 1237, 1 N.Y.S.3d 598 [4th Dept. 2015] ).
Recognizing that "Inasmuch as a constructive trust is an equitable remedy ... and that " ‘courts do not rigidly apply the elements but use them as flexible guidelines’ " ( Rossi v. Morse , 153 A.D.3d 1637, 1638, 61 N.Y.S.3d 438 [4th Dept. 2017], quoting Beason v. Kleine, 96 A.D.3d 1611, 1613, 947 N.Y.S.2d 275 [4th Dept. 2012] ), here the action must be dismissed because there are no facts or even allegations that Michael promised to use the money in any fashion other than for his own benefit. To the contrary, it is undisputed that Rita told her financial adviser that she wanted Michael to have her investment proceeds for his own use, with Philip to inherit a portion of the house. It Is not necessary under these circumstances to "give expression to the conscience of equity and to satisfy the demands of justice" ( Sanxhaku v. Margetis , 151 A.D.3d 778, 779, 56 N.Y.S.3d 238 [2d Dept. 2017] ).
CONCLUSION
The petition for "constructive trust" and "unjust enrichment" is dismissed in its entirety. The cross-motion for summary judgment is denied, as Philip has failed to come forward with evidence establishing his entitlement to judgment.
SO ORDERED.