Opinion
No. 200602010.
05-15-2017
David NOWITZ, as Trustee of the Nowitz Family Trust, Plaintiff, v. Ellen FAGAN, Individually and as Administrator of the Estate of Estelle Nowitz, a/k/a Estelle B. Nowitz, Nicholas V. Dimola, Jennie Dimola, World Savings Bank, FSB, Wachovia Bank, N.A., and Wells Fargo Bank, N.A., Defendants.
Greenfield Stein & Senior, LLP, Jeffery H. Sheetz, Esq., New York, Attorneys for David Nowitz, as Trustee of the Nowitz Family Trust. Keith S. Barnett, Esq., New York, Attorney for Defendant Ellen Fagan, Individually and as Administrator Of the Estate of Estelle Nowitz.
Greenfield Stein & Senior, LLP, Jeffery H. Sheetz, Esq., New York, Attorneys for David Nowitz, as Trustee of the Nowitz Family Trust.
Keith S. Barnett, Esq., New York, Attorney for Defendant Ellen Fagan, Individually and as Administrator Of the Estate of Estelle Nowitz.
ERNEST F. HART, J.
The following papers read on this motion by Plaintiff David Nowitz, as Trustee of The Nowitz Family Trust for an order granting summary judgment against Defendant Ellen Fagan, individually and as Administrator of the Estate of Estelle Nowitz, a/k/a Estelle B. Nowitz on the causes of action for restitution and money had and received; and directing that a judgment be entered in Plaintiff's favor against Defendant Ellen Fagan, individually and as Administrator of the Estate of Estelle Nowitz, a/k/a Estelle B. Nowitz in the sum of $700,000.00, together with interest, at the legal rate, from September 22, 2009. Defendant cross moves for an order granting summary judgment in favor of Defendant Ellen Fagan, individually and as Administrator of the Estate of Estelle Nowitz, and dismissing the complaint.
| Papers/Numbered | |
|---|---|
| Notice of Motion–Affidavit–Exhibits | 1–6 |
| Memorandum of Law Notice of Cross Motion–Affirmation–Affidavits–Exhibits | 7–13 |
| Reply Affidavit–Exhibit | 14–16 |
| Reply Affidavit–Exhibits | 17–19 |
| Memorandum of Law | |
| Memorandum of Law | |
| Reply Memorandum of Law |
Upon the foregoing papers the motion and cross motion are determined as follows:
Plaintiff David Nowitz, and Defendant Ellen Fagan are siblings, and are the children of Estelle Nowitz. The Nowitz Family Trust (Trust), an irrevocable inter vivos trust was created by Estelle Nowitz, pursuant to a trust agreement, dated December 23, 1996, and amended on February 9, 1999, which named David Nowitz as the sole Trustee. The principal asset of the Trust was the real property known as 197 Beach 138th Street, Belle Harbor, New York, which was transferred to the Trust by Estelle Nowitz pursuant to a deed, dated December 23, 1996.
Pursuant to the terms of the amendment to the Trust, upon the death of the grantor, Estelle Nowitz, charitable bequests in the sum of $1,000.00 each were made to Hadassah, Boy Scouts of America and the Jewish Association for Services for the Aged (JASA); a bequest was made to David Nowitz, or his issue if he did not survive the grantor in the sum of $100,000.00; and the remainder of the Trust's assets were to be divided in four equal shares amongst the grantor's four grandchildren, per stirpes, Traci DiMola, Michael Shachtman, Mari Nowitz and Jonathan Nowitz. Traci (Tracy) DiMola and Michael Shachtman are the children of Ellen Fagan and Mari Nowitz and Jonathan Nowitz are the children of David Nowitz. The Trust agreement stated that in regard to Ellen Fagan, the grantor and her late husband had made substantial gifts to their daughter during their lifetime, and therefore no provision was made for her in the Trust.
Estelle Nowitz continued to reside in the Belle Harbor property until some time in 2004 when she moved to Ellen's home in New Hope, Pennsylvania. Estelle resided with Ellen for approximately 6 months and then moved to her granddaughter Tracy DiMola's home in Pennsylvania, where she continued to reside until some 6 to 7 weeks prior to her death on July 8, 2008, at the age of 96. During said 6 to7 week period, Estelle was a resident of a nursing home and was transferred to a hospital a few days prior to her death.
On November 3, 2003, Estelle Nowitz, then aged 91, commenced an action against David Nowitz, individually and as Trustee of the Nowitz Family Trust (Index No. 25831/2003) to vacate the deed transferring the Belle Harbor property to the Trust, terminate the Trust, or in the alternative, remove David as the trustee and substitute his sister Ellen as trustee, and recover attorney's fees. The complaint alleged that the deed and trust should be vacated and terminated due to fraud, duress, material misrepresentation and/or undue influence, as well as mismanagement of the Trust's assets. The defendant served an answer, and following a jury trial, a judgment dated January 12, 2005 was entered on January 19, 2005, against David Nowitz and in favor of Estelle Nowitz, which among other things, rescinded the trust agreement and the deed.
David Nowitz filed a timely notice of appeal of the January 12, 2005 judgment with the Appellate Division, Second Department, and sought to vacate said judgment on the grounds, among other things, that the plaintiff therein, Estelle Nowitz, had failed to join the remainder persons and beneficiaries, who constituted necessary parties, and that the statute of limitations applicable to the action had expired. Notice of said appeal was served on Estelle Nowitz's counsel on April 7, 2005. In connection with said appeal, Mr. Nowitz did not seek a stay of the January 12, 2005 judgment, or other injunctive relief.
While said appeal was pending, Estelle Nowitz transferred title to the Belle Harbor real property to her daughter Ellen, pursuant to a deed dated April 18, 2005, and recorded on July 27, 2005. On April 21, 2005, Ellen Fagan entered into a contract to sell the Belle Harbor property for the sum of $700,000.00 to Nicholas V. DiMola, her daughter Tracy's then father-in-law. The closing was held on April 26, 2005, at which time Ellen Fagan transferred the Belle Harbor real property to Nicholas V. DiMola, pursuant to a deed of said date. Ellen Fagan received the sum of $50,000.00 from Mr. DiMola upon the signing of the contract of sale. At the closing, Ellen Fagan received the sum of $100,000.00 from Mr. DiMola, and took back a purchase money mortgage in the sum of $550,000.00.
In December 2006, Mr. DiMola executed a deed whereby he transferred ownership of the Belle Harbor property to himself and his wife, Jennie DiMola, as tenants by the entirety. In late December 2006, the DiMolas obtained a mortgage, and thereafter paid Ellen Fagan the sum of $550,000.00, the full amount owed in connection with the purchase money mortgage.
The Appellate Division, in an order, dated February 27, 2007, ( Nowitz v. Nowitz, 37 AD3d 788 [2d Dept 2007] ) held the appeal in abeyance; stated that remainder persons or beneficiaries of the trust are indispensable parties to the reccission action; and remitted the matter to the trial court to hear and report on certain issues pertaining to the absence of the beneficiaries and remainder persons.
Ellen Fagan, as administrator of the Estate of Estelle Nowitz, a/k/a Estelle B. Nowitz was substituted as respondent in the appeal. The Appellate Division, in a decision and order dated September 22, 2009, ( Nowitz v. Nowitz, 65 AD3d 1184 [2d Dept 2009] ) reversed the January 12, 2005 judgment. Upon consideration of each of the five factors set forth in CPLR 1001(b), which permit a court to excuse the failure to join a necessary party and allow an action to proceed in the interest of justice, the Appellate Division determined that although Plaintiff had no other effective remedy, the remainder persons and beneficiaries would suffer great prejudice if the matter proceeded in their absence and the trust at issue was rescinded. As the Plaintiff Estelle Nowitz had failed to join the Trust's remainder persons and beneficiaries, who constituted necessary parties, and as the applicable statute of limitations had expired, the court therein dismissed the action.
David Nowitz, in a letter dated October 16, 2009, demanded that Ellen Fagan reimburse the Trust for the value of the Belle Harbor real property, in the sum of $920,000.00. Ms. Fagan made no payments to the Trust, and, on November 19, 2009, and in her representative capacity, filed a motion for leave to reargue the Appellate Division's decision and order of September 22, 2009. The Appellate Division, in a decision and order dated December 9, 2009, denied the motion for leave to reargue.
Plaintiff David Nowitz commenced the within action for restitution and other relief on August 6, 2010. Defendant Ellen Fagan, individually and as the Administrator of the Estate of Estelle Nowitz, a/k/a Estelle B. Nowitz, served a verified answer and interposed 12 affirmative defenses.
The Honorable Robert L. Nahman, in an order, dated September 9, 2011, granted defendants Nicholas V. DiMola and Jennie DiMola's motion for an order dismissing the complaint, and denied the plaintiff's cross motion to lift the stay of discovery, as moot. With respect to Estelle Nowitz's transfer of the Belle Harbor property to Ellen Fagan, Justice Nahman stated, "[t]he jury verdict, which resulted [sic] an order rescinding the trust and deed and directing that the property be returned to Estelle Nowitz, was a final judgment and conclusive adjudication of the parties' substantive rights until the decision was overturned on appeal. As there was no stay, Estelle Nowitz, as the property owner, had the unrestricted right to transfer or otherwise dispose of the property as she wished". Justice Nahman determined, based upon the Court of Appeal's holding in Da Silva v. Musso (76 N.Y.2d 436 [1990] ), that as the previously filed notice of pendency had been cancelled pursuant to CPLR 6514(a), the DiMolas' knowledge of the pending appeal was not legally significant. He further determined that the DiMola defendants were bona fide purchasers for value; that the plaintiff had failed to raise triable issues of fact as to whether they were good faith purchasers; and that the plaintiff had failed to present evidence that the $700,000.00 purchase price was less than the fair market value of the property.
Counsel for the Dimolas served a copy of said order and notice of entry on the parties on September 19, 2011. On October 24, 2011, Plaintiff served a notice of appeal but did not perfect the appeal, and said notice of appeal was dismissed by the Appellate Division in June 2012.
In November 2011, Plaintiff entered into a stipulation discontinuing this action with prejudice against Defendants World Savings Bank, FSB, Wachovia Bank, N.A., and Wells Fargo Bank, N.A., and filed said stipulation on November 9, 2011 and November 21, 2011.
CPLR 5523 provides that upon reversal of final judgment, the court "may order restitution of property or rights lost by the judgment or order, except that where the title of a purchaser in good faith and for value would be affected, the court may order the value or the purchase price restored or deposited in court." This power of restitution is given to the appellate court, and CPLR 5015(d) provides the court of original instance with the same powers of restitution (see Gaisi v. Gaisi, 108 AD3d 687, 688 [2d Dept 2013] ). It is within the court's discretion to award restitution ( Dinizio & Cook, Inc. v. Duck Cr. Mar. at Three Mile Harbor, Ltd., 32 AD3d 989, 990 [2d Dept 2006] ; Deli of Latham, Inc. v. Freije, 133 A.D.2d 889, 889 [3d Dept 1987] ). Since CPLR 5523 is permissive, the successful appellant is not required to make a motion and may also commence a common-law action for restitution.
Plaintiff properly commenced a new action for restitution and other relief, as the prior action commenced by Estelle Nowitz was dismissed pursuant to the order of the Appellate Division. This court finds that the delay of some 11 months in commencing the within action following the Appellate Division's order of September 22, 2009, was not prejudicial to Defendant Ellen Fagan, in either her representative or individual capacity. The court notes that although Estelle Nowitz died on July 8, 2008, Ellen Fagan was not substituted as the Administrator of the Estate of Estelle Nowitz in the reccission action until July 13, 2009; that Ellen Fagan failed to respond to the Trustee's October 2009 demand for restitution; and that Ellen Fagan thereafter sought to reargue the Appellate Division's decision and order.
Defendant's assertion that the plaintiff is now seeking relief upon an unpled claim for restitution, based upon an additional claim that Ellen was not a good faith purchaser for value, is rejected. Contrary to Defendant's assertions, the statutory exemption affording a good faith purchaser for value, as set forth in CPLR 5523, is not an element of a cause of action for restitution. Rather, it is a limitation on the court's power to order restitution following the reversal of a final judgment or order.
Defendant's assertion that Plaintiff's claims against Ellen Fagan, in her representative and individual capacity, are barred by the doctrine of collateral estoppel, is without merit. Collateral estoppel is an affirmative defense and must be raised either by a motion to dismiss made before service of a responsive pleading or by the defendant's answer ( CPLR 3211[a][5] and [e] ). The doctrine of collateral estoppel bars a party from "relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party" ( Ryan v. New York Tel. Co., 62 N.Y.2d 494, 500 [1984] ; see Tydings v. Greenfield, Stein & Senior, LLP, 11 NY3d 195, 199 [2008] ). This defense has been waived as it was neither raised in a timely pre-answer motion or preserved in the answer. Moreover, the doctrine of collateral estoppel is inapplicable here, as Defendant seeks to rely upon Justice Nahman's order in the within action, and not upon an issue raised and determined in a prior action.
To the extent that Defendant confused the doctrine of collateral estoppel with the doctrine of the law of the case, the latter "is a rule of practice, an articulation of sound policy that, when an issue is once judicially determined, that should be the end of the matter as far as Judges and courts of coordinate jurisdiction are concerned" ( Martin v. City of Cohoes, 37 N.Y.2d 162, 165 [1975] ). The doctrine of law of the case "applies only to legal determinations that were necessarily resolved on the merits in [a] prior decision" ( Baldasano v. Bank of NY, 199 A.D.2d 184, 185 [1st Dept 1993] ; see Mosby v. Parilla, 140 AD3d 1129, 1130–1131 [2d Dept 2016] Ramanathan v. Aharon, 109 AD3d 529, 530 [2d Dept 2013] ; Gay v. Farella, 5 AD3d 540, 541[2d Dept 2004] ; D'Amato v. Access Mfg., 305 A.D.2d 447, 448 [2d Dept 2003] ), "and to the same questions presented in the same case" ( RPG Consulting, Inc. v. Zormati, 82 AD3d 739, 740 [2d Dept 2011], citing People v. Evans, 94 N.Y.2d 499, 502 [2000] ; see Matter of McGrath v. Gold, 36 N.Y.2d 406, 413 [1975] ; Mosby v. Parilla, 140 AD3d 1129, 1130–1131 [2d Dept 2016] ; see Mosby v. Parilla, 140 AD3d at 1130–1131 ; Ramanathan v. Aharon, 109 AD3d at 530 ). "Like claim preclusion and issue preclusion, preclusion under the law of the case contemplates that the parties had a ‘full and fair’ opportunity to litigate the initial determination" ( People v. Evans, 94 N.Y.2d at 502 ).
Justice Nahman, in his order of September 9, 2011, in determining the DiMolas' motion to dismiss the complaint, made no determination as to Plaintiff's right to restitution against Ellen Fagan in her representative and individual capacities, following the Appellate Division's vacatur of the trial court's judgment. Justice Nahman only determined that Plaintiff could not maintain his claims for restitution against the present property owners, as they were good faith purchasers for value, and that the value of the property at the time of sale was $700,000.00. In addition, regardless of what arguments were raised by the plaintiff in his notice of appeal of Justice Nahman's order, the dismissal of said notice by the Appellate Division on the grounds of failure to perfect said appeal, has no preclusive effect on Plaintiff's claims against Defendant Ellen Fagan in her individual or representative capacity.
The evidence presented herein establishes that Plaintiff David Nowitz, as Trustee of the Nowitz Family Trust, successfully appealed the judgment rescinding said trust agreement and the deed, and that the Belle Harbor property was conveyed to Nicholas V. DiMola, a good faith purchaser for value, pending said appeal. The Appellate Division's reversal of the trial court's judgment placed the parties back in the same position that they were in prior to the commencement of the rescission action. However, as the Belle Harbor property is presently owned by a good faith purchaser for value, said property cannot be restored to the Trust and restitution is the plaintiff's only remedy (see Da Silva v. Musso, 76 N.Y.2d at 444 ; see also 425 E. 26th St. Owners Corp. v. Beaton, 128 AD3d 766, 767–768 [2d Dept 2015] ).
Plaintiff has established, prima facie, that he is entitled to restitution from Ellen Fagan in her individual capacity, in the sum of $700,000.00, plus statutory interest from September 22, 2009. It is undisputed that at the time the appeal was pending, Estelle Nowitz transferred title to the Belle Harbor real property to her daughter Ellen Fagan for no consideration. It is also undisputed that Ellen Fagan regarded said transfer as a gift from her mother, and that she obtained the proceeds of sale of the Belle Harbor property. Ellen Fagan, therefore, is not a good faith purchaser for value, so that the exception provided for in CPLR 5523 is inapplicable here. Defendant Ellen Fagan, in her individual capacity has failed to raise any triable issues of fact that would warrant denial of this branch of the plaintiff's motion.
Plaintiff has also established, prima facie, that he is entitled to restitution from Ellen Fagan, in her capacity as Administrator of the Estate of Estelle Nowitz, in the sum of $700.000.00, plus statutory interest from September 22, 2009. Once the trial court's judgment was reversed on appeal, the terms of the Trust agreement remained in full force and effect. Under the Trust agreement, Estelle Nowitz did not have the power to transfer asserts belonging to the Trust, and as the Belle Harbor property cannot be returned to the Trust, David Nowitz as Trustee for the Nowitz Family Trust is entitled to recover the value of said real property from the Administrator of the Estate of Estelle Nowitz. Ellen Fagan, in her representative capacity, has failed to raise any triable issues of fact that would warrant denial of this branch of the plaintiff's motion.
Since the right to restitution under CPLR 5523 is discretionary and not exclusive, said statute does not abrogate a plaintiff's common law rights to sue in assumpsit, for money had and received or unjust enrichment. Plaintiff, in his third cause of action for money had and received against Ellen Fagan, individually, alleges that she received money for the conveyance of the Belle Harbor property that belongs to David Nowitz as Trustee for the Nowitz Family Trust, which in equity and good conscience she should not be permitted to retain.
A cause of action for money had and received is one of quasi-contract or of contract implied-in-law" ( Board of Educ. of Cold Spring Harbor Cent. School Dist. v. Rettaliata, 78 N.Y.2d 128, 138 [1991] ; see State v. Barclays Bank of NY, N.A., 76 N.Y.2d 533, 540 [1990] ; Parsa v. State of New York, 64 N.Y.2d 143, 148, [1984] ). Although a cause of action for money had and received is an action based on an implied contract, this designation is "a misnomer because it is not an action founded on contract at all; it is an obligation which the law creates in the absence of agreement when one party possesses money that in equity and good conscience he ought not to retain and that belongs to another" ( Parsa v. State of New York, 64 N.Y.2d at 148 [1984 ], citing Miller v. Schloss, 218 N.Y. 400, 406–407, 113 NE 337 [1916] ; see Regional Economic Community Action Program, Inc. v. Enlarged City Sch. Dist. of Middletown, 18 NY3d 474, 479 [2012] ).
The essential elements of a cause of action for money had and received are (1) the defendant received money belonging to the plaintiff, (2) the defendant benefitted from receipt of the money, and (3) under principles of equity and good conscience, the defendant should not be permitted to keep the money (see Goel v. Ramachandran, 111 AD3d 783, 789–790 [2d Dept 2013] ; Matter of Witbeck, 245 A.D.2d 848, 850 [3d Dept1997] ; see also Rocks & Jeans v. Lakeview Auto Sales & Serv., 184 A.D.2d 502, 502 [2d Dept1992] ; see generally 22A N.Y. Jur 2d Contracts § 533 [2013] ). "The action depends upon equitable principles in the sense that broad considerations of right, justice and morality apply to it" ( Goel v. Ramachandran, 111 AD3d at 789–790, quoting Parsa v. State of New York, 64 N.Y.2d at 148 ).
Plaintiff has established, prima facie, his entitlement to summary judgment on the third cause of action for money had and received, in the sum of $700,000.00, plus statutory interest from September 22, 2009. It is undisputed that Ellen Fagan received title to the Belle Harbor property, which she then sold to Nicholas V. DiMola for the sum of $700,000.00 and that she received the proceeds of sale. Plaintiff has demonstrated that it is against good conscience for Ellen Fagan to retain any portion of the proceeds of the sale, following the Appellate Division's reversal of the trial court's judgment, as the proceeds of sale of the property belong to the Trust, and Ellen Fagan is neither a beneficiary nor a remainder person under the terms of the Trust. Defendant has failed to raise any triable issues of fact that would warrant the denial of this branch of Plaintiff's motion.
In view of the foregoing, Plaintiff's motion for summary judgment on the first cause of action for restitution against Ellen Fagan, as Administrator of the Estate of Estelle Nowitz, in the sum of $700,000.00, together with statutory interest from September 22, 2009, on the second cause of action for restitution against Ellen Fagan, individually, in the sum of $700,000.00, together with statutory interest from September 22, 2009, and on the third cause of action against Ellen Fagan for money had and received in the sum of $700,000.00, together with statutory interest from September 22, 2009, is granted. Defendant's cross motion for summary judgment dismissing the complaint is denied in all respects.