Opinion
EF2020-265788
08-18-2020
Julia A. ROUCHES, Petitioner, v. David A. BARR, Respondent.
Burke & Casserly, P.C., Attorneys for Petitioner, James R. Barnes, Esq, of counsel, 255 Washington Avenue Extension, Albany, New York 12205 Arroyo Copland & Associates, PLLC, Attorneys for Respondent, Gloria A. Copland, Esq., of counsel, 12 Corporate Woods Boulevard, Albany, New York 12211
Burke & Casserly, P.C., Attorneys for Petitioner, James R. Barnes, Esq, of counsel, 255 Washington Avenue Extension, Albany, New York 12205
Arroyo Copland & Associates, PLLC, Attorneys for Respondent, Gloria A. Copland, Esq., of counsel, 12 Corporate Woods Boulevard, Albany, New York 12211
Henry F. Zwack, J. The respondent David A. Barr ("Barr") has moved by Order to Show Cause for the dismissal of this action brought by the petitioner Julia A. Rouches ("Rouches") — the maternal aunt of his three infant children, and Barr's former sister-in-law. Rouches alleges that Barr has improperly removed money from custodial accounts set up by Barr for his children pursuant to New York's Uniform Transfers to Minors Act ("UTMA") in violation of his fiduciary duties.
According to the petition, and the attached affidavit of Jacqueline Barr ("Ms. Barr"), Barr's now former wife, Barr established UTMA accounts for each of their children, beginning in 2002 with School Systems Federal Credit Union located in East Greenbush, New York. Barr served as the custodian of the accounts, with Ms. Barr as the successor custodian, and from time to time made deposits in the accounts. On September 18, 2008 Barr deposited $90,000 in each account, bringing the total in each to over $100,000. On or about May 8, 2009, Barr withdrew $75,000 from each of the minor child's accounts. The withdrawal slips indicated that subject withdrawals were "Transfer from share to share" — but upon information and belief, there were no other accounts. Barr made an additional $5,000 withdrawal from each account on or about August 10, 2010. Rouches further alleges that her counsel asked Barr for an accounting of the transactions, and the request was ignored. She further alleges that these actions constitute a breach of Barr's custodial duties to the minor children by failing to observe the requisite standard of care or providing any evidence that the funds were used for the benefit or care of the children. Rouches seeks an immediate accounting of the funds, Barr's removal and his replacement by Ms. Barr, an order directing Barr to deposit $80,000 in each of the UTMAs, and an order directing him to pay her counsel fees.
With names and date of birth redacted, the children are C.J.B., born 2002, D.A.B., born 2003, and C.B., born 2006.
Barr acknowledges that he and Ms. Barr, his then wife, established the UTMA accounts for the benefit of their children. He states that the parties agreed to place their marital assets into the children's UTMA accounts, by depositing $90,000 in each child's account — during the 2008 financial crisis and on the advice of their banker — in order to take advantage of FDIC protection of their marital assets. Contrary to Rouches' allegations, Barr states there was no donative intent or understanding that the funds would remain in the accounts. Following the reversal of the 2008 financial crisis, he and Ms. Barr took the marital funds out of the UTMA accounts, in part, to fund the family's relocation from New York to Texas and pay household expenses. Barr also argues, contrary to Rouches' assertions, Ms. Barr had full knowledge of all the finances of the parties and participated in all the financial decisions. When Barr and Ms. Barr divorced in 2013 in Texas, there was a full accounting of their marital assets, and the issue of the withdrawal of involved monies in 2009 was not raised as a concern. During their divorce proceedings Ms. Barr petitioned to become the guardian of the funds, but her motion was denied in Texas. Also during the divorce, Barr was awarded custody of the accounts and any withdrawals could only be made on consent of both parties. Barr also notes that Rouches does not allege that she was ever involved with the accounts. In sum, Barr asserts that his former wife, Ms. Barr, is now attempting to use her sister to attempt to gain control of the accounts, something she was denied in Texas. Further, on May 19, 2020 — while Rouches' present petition was pending in New York — Ms. Barr again filed a petition in Texas seeking control of the children's 529 accounts, with no mention of any missing money.
There are five 529 accounts listed in Ms. Barr's Texas petition. She does not seek any funds from any UTMA accounts which exist in New York State.
Barr asserts that not only does the petition fail to state a cause of action, he argues that the Court cannot proceed in the absence of a necessary party, and that Ms. Barr, the successor trustee of the accounts, is a necessary party. He also argues, since Ms. Barr also had complete control and full knowledge of the UTMA accounts, that she should be held jointly and severally liable for any funds taken out of the UTMA accounts in derivation of their fiduciary duties. Further, if the Court does not dismiss the petition, Barr requests leave to sue Ms. Barr.
In opposition to the motion to dismiss, the Court has been provided with only an affirmation from petitioner's counsel, who makes the unsupported allegations that Barr "admitted" to violating his role as fiduciary duties, including "admitting" that he withdrew the monies from the UTMA accounts "for his own benefit." Astonishingly, even though Barr advises the Court, under oath, that he acted with the full consent of Ms. Barr and that she had full knowledge of the accounts and the account activity, the petitioner Rouches argues that Ms. Barr is an irrelevant and unnecessary party to these proceedings. Equally stunning, Rouches offers no opposing affidavit by Ms. Barr refuting any of the specific facts asserted by Barr or addressing their children's college accounts in the Texas divorce proceedings.
"An affidavit from a person who has no personal knowledge of the operative facts is without probative value..." (Bronson v. Algonquin Lodge Ass'n Inc. , 295 A.D.2d 681, 682, 744 N.Y.S.2d 220 (3d Dept. 2002).
As a general matter, the standard determination on a motion to dismiss is whether the plaintiff has "a cause of action, not whether they have properly labeled or artfully stated one" ( Chanko v. American Broadcasting Cos. Inc. , 27 N.Y.3d 46, 52, 29 N.Y.S.3d 879, 49 N.E.3d 1171 [2016] ). The pleadings must be liberally construed, and the court must "accept the facts as pled in the complaint as true, give (petitioner) the benefit of every possible favorable inference, and determine whether the facts fit within any cognizable legal theory ( Lewis v. DiMaggio , 115 A.D.3d 1042, 1043, 981 N.Y.S.2d 844 [3d Dept. 2014] ). The Court "may consider affidavits submitted by (petitioner) to remedy any defects in the complaint, because the question is whether (petitioner has) a cause of action, not whether (she has) properly labeled or artfully stated one" ( Rushaid v. Pictet & Cie , 28 N.Y.3d 316, 327, 45 N.Y.S.3d 276, 68 N.E.3d 1 [2016], internal citations and quotations omitted).
Here, the Court is mindful that it dismissed an earlier petition by Rouches seeking the same relief, finding that as Barr and Ms. Barr were divorced in Texas, and their children resided in Texas, that the Texas authorities had control over the disposition of any funds wherever situated. Ms. Barr, not Rouches, thereafter applied and was granted an order from the Texas Courts on December 9, 2019 stating that "it does not have jurisdiction and never obtained jurisdiction over the accounts of the children pursuant to the Uniform Transfer to Minors Act" and that the New York Court "may obtain and exercise jurisdiction over the UTMA accounts of the children."
Fatal to Rouches's petition, the Court notes that she has not provided the Court with either the Barr's 2013 Judgment of Divorce or the Reformed and Amended Final Order in Suit Affecting the Parent-Child Relationship . This said — but with no direct proof — and only reading between the lines, it appears that Rouches is arguing that the New York UTMA accounts were not the subject of the Barr's Divorce Judgment or the Texas Court's order, and, since the accounts were not affected by the Barr's divorce, the Court is now required to exercise jurisdiction over the accounts and rectify a situation that happened in 2009.
In accordance with the Full Faith and Credit Clause, a judgment of another state court should have the same credit, validity, and effect, in every other court of the United States, which it had where it was pronounced ( U.S.C.A. Const. Art. 4, § 1 ). In the Barr's divorce action, Texas had personal jurisdiction over both parties and could have directed Barr to return the $270,000 removed from the UTMA accounts, wherever that money was located ( O'Connell v. Corcoran , 1 N.Y.3d 179, 770 N.Y.S.2d 673, 802 N.E.2d 1071 [2003] ). According to Barr, and not denied by Ms. Barr, he and Ms. Barr engaged in full financial disclosure during their three year divorce proceedings, and also the issue of his withdrawal of funds (whether or not unauthorized) from their children's accounts was never raised in the Texas divorce proceedings. Certainly, the hypothecation of $270,000 is not a small issue, and bank statements clearly exist which show the transfer in and out of monies in those accounts occurred well prior to the divorce. These accounts were certainly discoverable in the divorce proceedings. Albeit Ms. Barr now argues she was advised by her attorney during the divorce proceedings that the accounts themselves were "not marital property," that argument is not persuasive or controlling, and in any event simply cannot be said for any moneys missing from the accounts, used for marital purposes prior to the commencement of their divorce action, and thus surely marital debts subject to "general equitable distribution principles and factors" ( Uttamchandani v. Uttamchandani , 175 A.D.3d 1457, 1458-1459, 109 N.Y.S.3d 325 [2d Dept. 2019], citations omitted; Jonas v. Jonas , 241 A.D.2d 839, 840, 660 N.Y.S.2d 487 [3d Dept. 1997], citations omitted).
However viewed, the Court declines jurisdiction under the doctrine of collateral estoppel. The Court is required to give the Texas divorce decree full faith and credit, which is the functional equivalent of res judicata ( Khallad v. Blanc , 96 A.D.3d 1574, 947 N.Y.S.2d 859 [4th Dept. 2012] ) The Court is not inclined, nor is it appropriate, to re-litigate an issue which the parties had a full and fair opportunity to raise in the divorce proceedings ( Fiore v. Oakwood Plaza Shopping Ctr. , 78 N.Y.2d 572, 578 N.Y.S.2d 115, 585 N.E.2d 364 [1991] ; Feng Li v. Peng , 161 A.D.3d 823, 76 N.Y.S.3d 230 (2d Dept. 2018] ).
The Court's position is also well supported under Texas Law. Res judicata bars not only claims that were litigated but claims that could have been litigated in the original cause of action ( McKnight v. American Mercury Ins. Co. , 268 S.W. 3d 793 [Court of Appeals Texas, Texarkana 2008] ). A Judgment finalizing a divorce and dividing marital property bars re-litigation of the property division, even if the decree incorrectly characterizes or divides the property ( Pearson v. Fillingim , 332 S.W.3d 361 [Sup. Ct. Texas 2011] ). Attempting to obtain an order that alters or modifies a divorce decree's property division is an impermissible collateral attack ( Gaglione v. Rivas , 2018 WL 1415415 [Court of Appeals, Texas, Eastland 2018] ). Nor may parties confer or waive jurisdiction by consent ( In re W.L.W. , 370 S.W.3d 799 [Court of Apeals Texas, Forth Worth 2012] ).
The Court reiterates that it does not know what the Texas Divorce Judgment says with respect to the UTMA accounts, or the College Accounts in general. These documents were not provide by parties, are not available on the Texas court site, and it simply not the Court's responsibility to obtain them (CPLR 2214(c) ; Biscone v. JetBlue Airways Corp. , 103 A.D.3d 158, 957 N.Y.S.2d 361 [2d Dept. 2012] ).
Rouches' petition must also be dismissed because the Court lacks subject matter jurisdiction over the $270,000 she now claims was unlawfully removed by Barr from the UTMA accounts. Here, it can be said that the instant petition fails to state a cause of action upon which relief may be granted. It is of no moment that neither party raised the issue of subject matter jurisdiction in their papers. A court may not waive subject matter jurisdiction, and a defect in subject matter jurisdiction may be raised at any time by the parties or by the court ( Caffrey v. North Arrow Abstract & Settlement Services, Inc. , 160 A.D.3d 121, 73 N.Y.S.3d 70 [4th Dept. 2018] ). To hold otherwise would undermine the finality of the Barr's divorce decrees by opening them up to collateral attacks such as the petitioner Rouches now attempts to do ( Moore v. Moore , 568 S.W.3d 725 [Court of Appeals Texas, Eastland, 2019] ). Accordingly, it is
The Court would be remiss if it failed to note, without deciding, the appearance of forum shopping, in effect arguably by Ms. Barr through her sister bringing an action in New York involving claimed missing UTMA moneys — which if brought by Ms. Barr directly would be barred by collateral estoppel. Were this the case, it would support an award of attorneys fees. As Barr did not raise the issue specifically in his moving papers, no award will be made.
ORDERED , the motion by the respondent David A. Barr for an order dismissing the petition of Julia A. Rouches is granted in its entirety; and it is further
ORDERED , that the petition by Julia A. Rouches is dismissed in its entirety.
The Court makes no direction as to the UTMA accounts which exist(ed) for the children as of December 31, 2018.
This constitutes the Decision and Order of the Court.