Opinion
2008-947/A.
Decided June 3, 2011.
Sweeney, Gallo, Reich Bolz, LLP, (Gerald J. Sweeney, Esq., of counsel) for David Gould, petitioner.
Bleakley, Platt Schmidt, LLP, (Vincent W. Crowe, Esq., of counsel) for Alan Bronstein and Aurora Gems, Inc., respondents.
The petitioning co-executor moves for leave to amend his first amended petition in this proceeding seeking a decree directing the respondents, the decedent's step-son and Aurora Gems, Inc., a diamond-dealing corporation, to turn over to the estate five shares of the corporate respondent representing a 50% interest in the corporation. Prior to the decedent's alleged transfer of those shares to his step-son, the decedent and step-son each had a 50% interest in the corporation. The respondents cross-move for summary judgment
The petitioner would like to serve and file a second amended petition to specifically plead fraud and add a cause of action voiding the transfer of the decedent's 50% interest in the corporation to the step-son on public policy grounds. The petitioner contends that the requested amendment is warranted as disclosure is now complete and although the facts giving rise to the requested amendment were always known to the respondents, the petitioner first became aware of these facts during the deposition of several witnesses, including an accountant and the attorney-draftsman of the decedent's will, who also drafted the buy-sell agreement for the decedent's shares in the corporation.
The respondents in lieu of specifically objecting to the proposed amendment, contend that they are entitled to summary judgment dismissing the petition based on the documents and depositions. According to the respondents, all of the evidence establishes that the decedent had the capacity to make the stock transfer, and the transfer was a product of the love and affection he harbored for his step-son, as reflected in prior testamentary instruments prepared for the decedent.
The petitioner replies that there are material issues of fact regarding the decedent's capacity to understand all of the ramifications of the alleged transfer. Moreover, as there was a confidential relationship between the decedent and his step-son stemming from their family and business relationships, the burden is on the step-son to establish that he did not abuse this confidential relationship in connection with the alleged transfer. The petitioner further contends that the agreement upon which the respondents rely significantly departs from the decedent's prior testamentary plans in that, under all of the prior testamentary plans, the terms of an approximate $1.8 million dollar promissory note were much more favorable to the decedent's estate and it was clear that the step-son, rather than the estate, would pay the estate taxes based on the value of the transfer of the decedent's interest in the corporation. The value of this interest depends, at least to a significant extent, upon the value of the diamonds owned by the corporation at the time of the transfer at issue. The parties disagree as to the value of the diamonds held by the corporation. The petitioner, relying upon insurance appraisals obtained by the step-son in connection with showing the diamonds at museums, contends that the diamonds have a value in the neighborhood of $48 million, while the respondents contend the value is a small fraction of that amount.
Summary judgment must be denied where there are material issues of fact warranting a trial of those issues (see Zuckerman v City of New York, 49 NY2d 557; Glick Dolleck, Inc. v Tri-Pac Export Corp., 22 NY2d 439; Phillips v Joseph Kantor Co., 31 NY2d 307). Based on this state of the record, the cross motion for summary judgment is denied as clearly there are issues of fact that need to be determined at trial including, inter alia, questions concerning the decedent's capacity; whether a confidential relationship existed between the decedent and his step-son, and if so, whether the step-son wrongfully acquired the decedent's shares in the corporation; and, whether the attorney, who was purportedly representing the decedent in the transaction, breached his obligations to the decedent.
With regard to the petitioner's motion to amend the petition, both sides appear to agree that amending the petition will not create any hardship to the respondent, as no party requires additional disclosure if the motion is granted. In light of the fact that leave to amend a pleading is "freely given" (CPLR 3025 [b]) and the absence of any prejudice to the respondents, there is no basis to deny the petitioner's motion.
Accordingly, this decision constitutes the order of the court granting the motion to amend in its entirety and denying the cross motion. The petitioner is directed to serve and file the second amended petition within 20 days of the date that this decision and order is mailed. The respondents are directed to serve and file their amended answer within 20 days of the service of the amended petition upon them. The Chief Clerk is to mail a copy of this decision and order to respective counsel for the petitioner and the respondent.
Proceed accordingly.