|Towbin v A. Robert Towbin|
|2012 NY Slip Op 51666(U) [36 Misc 3d 1236(A)]|
|Decided on August 22, 2012|
|Supreme Court, New York County|
|Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.|
|This opinion is uncorrected and will not be published in the printed Official Reports.|
Zachary Towbin, Plaintiffs,
A. Robert Towbin, LISA TOWBIN, and 1010 TENANTS CORP., Defendants.
In motion sequence 001, the defendants Robert Towbin and his wife Lisa
Towbin (together, the "Towbins") move this Court for an order pursuant to 3211(a)(1) and
3211(a)(7) dismissing the plaintiff Zachary Towbin's ("Zachary") complaint with prejudice.
This case arises from a family dispute over ownership of a co-operative apartment (the "Apartment") located at 1010 Fifth Avenue, New York, New York.[FN1] Defendant 1010 Tenants Corp. ("1010 Tenants") is the cooperative apartment corporation for the apartment building at 1010 Fifth Avenue. Prior to April 23, 1996, Robert Towbin acquired sole ownership of shares of stock (the "Stock") in 1010 Tenants and executed a proprietary lease (the "Lease") that entitled him to occupy the Apartment as his personal residence.
On or about April 23, 1996, Robert Towbin created, as settlor, an irrevocable Grantor Retained Income Trust (the "GRIT") for the purpose of transferring ownership of the Apartment to Minna Towbin Pinger, his daughter. The GRIT designated Robert Towbin and his daughter as trustees. Under the terms of the GRIT and pursuant to the Internal Revenue Code, Robert Towbin was entitled to exclusive use and occupancy of the Apartment for a fixed term of fifteen years. At the expiration of the term, he and his spouse would be required to either vacate the Apartment or to rent it from the trustee of the GRIT at a fair market value. [*2]
In furtherance of the transfer pursuant to the GRIT, Robert Towbin and his daughter, as trustees of the GRIT, also executed a stock power, assignment of the Lease, and acceptance of and assumption of the Lease. After these documents were executed, Robert Towbin's attorney, Christine Beshar, advised his daughter via a letter, that title to the Stock and Robert Towbin's interest in the Lease had been transferred to the trust. Robert Towbin then executed and filed both state and federal gift tax returns for the calendar year 1996 and paid estimated taxes in connection with the gift of the Stock and the Lease to the GRIT.
Under the terms of the Lease, Robert Towbin was required to notify 1010 Tenants of the transfer pursuant to the GRIT and request that 1010 Tenants record the transfer on the books and records of the corporation. He was also required to seek approval of assignment of the Lease.
Pursuant to the Lease, in order to effect an assignment, (1) 1010 Tenants must approve the assignment instrument and the executed assignment must be delivered to 1010 Tenants, (2) the assignee must agree, in a form approved by 1010 Tenants, to be bound by the terms of the lease and then must enter into a new lease with 1010 Tenants, and (3) the board of directors of 1010 Tenants must consent to the assignment, either by resolution of the board or in writing by a majority of its members, and if board consent cannot be obtained, then holders of 65% of the shares of 1010 Tenants must consent.
Robert Towbin did not notify 1010 Tenants of the GRIT nor did he request that the corporation record it on the books and records. He also did not seek approval of the assignment of the Lease.
On April 1, 2011, pursuant to the terms of the GRIT, Robert Towbin ceased to act as trustee of the GRIT. On April 25, 2011, his daughter resigned as trustee of the GRIT and her brother, Zachary, was designated as the successor trustee, pursuant to the terms of the GRIT.
Since acquiring the Stock and Lease, Robert Towbin has, at all times, occupied the
Apartment as his primary residence.
Zachary filed the present action on December 6, 2011. In the complaint, he seeks: a judicial declaration that he, as present trustee of the GRIT, is the legal owner of the Stock and is now the lessee under the Lease; an order from this Court compelling the Elder Towbins to execute all documents and cooperate fully with 1010 Tenants in order to transfer the Stock and assignment of the Lease onto the books and records of the corporation; monetary damages in the amount of $12,000,000, and an order from this Court to eject the Elder Towbins from the apartment and turn over possession to him. On May 17, 2012, Zachary and 1010 Tenants filed a stipulation to discontinue the action against 1010 Tenants without prejudice.
Standard of Review
Dismissal under CPLR 3211 (a)(1) is warranted "only if the documentary evidence
submitted conclusively establishes a defense to the asserted claims as a matter of law" (511
W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 ). Dismissal under
CPLR 3211(a)(7) is warranted where the pleadings fail to state a cause of action upon which
relief may be granted. The motion must be denied if from the pleadings' four corners "factual
allegations are discerned which taken together manifest any cause of action cognizable at
law."(511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 ,
quoting Guggenheimer v Ginzburg, 43 NY2d 268, 275 . The Court must afford the
pleadings a liberal construction, accept as [*3]true the facts
alleged in the complain and any admissions in opposition to the dismissal motion, and afford
Towbin the plaintiff the benefit of every possible favorable inference (id.).
The Elder Towbins move to dismiss on the grounds that transfer of the apartment via the GRIT is an incomplete gift that Robert Towbin cannot, under New York law, be compelled to complete. Zachary counters that execution of the GRIT and other actions taken in furtherance of the transfer constitute a completed gift pursuant to New York law and he is, therefore, the rightful owner of the Apartment pursuant to the terms of the GRIT.
To make a valid inter vivos gift, there must be intent to make the transfer, delivery of the gift, and acceptance by the donee (Gruen v Gruen, 68 NY2d 48, 53 ). Execution of the GRIT and related documents and payment of gift tax on the GRIT evidence that Robert Towbin had the requisite intent to make the transfer. Whether there was delivery of the gift is a question of law. Acceptance is presumed where, as in the present instance, the gift is of value to the donee (id. at 57).
Delivery must be "as perfect as the nature of the property and the circumstances and surroundings of the parties will reasonably permit; there must be a change of dominion and ownership; intention or mere words cannot supply the place of an actual surrender of control and authority over the thing intended to be given" (Matter of Szabo, 10 NY2d 94 ). With a gift of stock, delivery may be physical or constructive (id at 98). Constructive delivery must nonetheless "proceed to the point of no return" where the donor no longer retains an interest in the stock (id. at 98). Where constructive delivery is not practicable under the circumstances, the "point of no return . . . can only be reached where there is a transfer of record on the stock books of the company" (id.).
Robert Towbin had the opportunity and ability to transfer the Stock to the GRIT either physically or constructively by requesting a transfer of record on the books and records of 1010 Tenants, yet he did not do so. Regardless of what actions Robert Towbin took to effectuate the transfer, delivery of the stock was not "as perfect as the nature of the property and circumstances and surroundings of the parties will reasonably permit." To the extent that he purportedly did not comply with relaxant tax laws, that is a matter to be addressed by the Internal Revenue Service and the New York State department of Taxation and Finance.
It is the determination of this Court that the documentary evidence submitted and the facts as
alleged in the complaint demonstrate there was no delivery of the Stock, and the gift is
incomplete. A gift cannot be compelled under New York law (Messiah Home for Children in
the City of New York v Rogers, 212 NY 315 ). Zachary, therefore, has not shown that
he has an ownership interest in the Stock or Lease, and his claims fail as a matter of law.
Accordingly, it is
ORDERED that the defendants Robert Towbin and Lisa Towbin's motion to dismiss is granted and the action is hereby dismissed with prejudice and the clerk is directed to enter judgment accordingly; and it is further
ORDERED and ADJUDGED that the plaintiff Zachary Towbin is not entitled to the
declaration that he seeks.
Dated: August 22, 2012ENTER: [*4]