[*1]
Suissa v Baron
2009 NY Slip Op 51766(U) [24 Misc 3d 1236(A)]
Decided on August 14, 2009
District Court Of Suffolk County, Third District
Hackeling, J.
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This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on August 14, 2009
District Court of Suffolk County, Third District


Ronald Suissa, Petitioner

against

Marcy R. Baron, Respondent




HULT 227-09



Steven G. Legum, Esq.

Attorney for Petitioner

170 Old Country Rd.

Mineola, New York 11501

(516) 873-9300

Ezratty, Ezratty & Levine, LLP

Dan Blumenthal, Esq.

Attorney for Petitioner

80 E. Old Country Rd.

Mineola, New York 11501

Martin K. Lang, P.C.

Attorney for Respondent

595 Stewart Avenue, Suite 400

Garden City, New York 11530

C. Stephen Hackeling, J.



The petitioner has commenced this summary proceeding pursuant to Section 713(7) of the New York R.P.A.P.L, seeking to dispossess the respondent licensee after giving a ten day notice to quit. Respondent's license was terminated by Notice served on April 8, 2009. Respondent has raised an affirmative defense, contending that she is entitled to the impressment of a constructive trust upon her residence, which would constitute an inchoate equitable interest in the property requiring dismissal of this holdover proceeding.

Undisputed Facts


The undisputed relevant facts presented are that Ronald Suissa, the petitioner, is the sole deeded title holder of the real property located at 602A Twin Hills Court, Northport, New York (hereafter "602A"). Until June 2008, the petitioner resided at 602A and co-habited with his ex-girlfriend, Marcy Baron, the respondent. The respondent is an attorney, admitted to practice law in the State of New York. The 602A residence was purchased in July 1999, and the respondent has [*2]continuously lived there since. Prior to the purchase of 602A, the parties lived together in petitioner's house located at 3 Kimberly Court, East Northport, New York.

Petitioner and respondent met in 1992, while Ms. Baron was in the midst of a divorce proceeding pending in Westchester County. In 1998, the respondent's Westchester real property was sold, pursuant to Court Order, and she received approximately $150,000 from the sale proceeds. She transferred this money to her mother in Omaha, Nebraska, which was placed in an account under her mother's name to avoid the reach of her and her ex-husband's creditors. Thereafter, respondent's mother became ill and $112,000 of the subject funds were transferred to her nephew's un-utilized business account in New Jersey, which was under the control of her sister. The stated purpose of this transfer was to avoid potential Medicare obligations for her mother's health care.

In July 1999, a certified check for $100,000 was drawn by respondent's sister payable to the seller of 602A and tendered by the respondent toward the $751,000 purchase price of the 602A residence at closing. The remaining balance on the purchase price was paid via petitioner's funds and a mortgage of $450,000. Petitioner is the sole obligor on the mortgage and has continuously paid $5400 per month towards it for in excess of ten years. The respondent has continually made improvements to 602A acting in concert with the petitioner and utilizing mostly his cash resources. 602A is now valued at approximately 1.6 million dollars.

The respondent has heretofore commenced a Supreme Court proceeding( Suffolk County) in which she claimed an interest in the 602A premises by virtue of being a Pennsylvania "common law wife" and alternatively asserted additional causes of action including constructive trust. The divorce component of this action was dismissed by Justice Blydenburgh when he determined that the respondent could not be a common law wife as she is still presently married to her first husband. The alternative causes of action survived and have been litigated up to the Appellate Division on several occasions. Repeated requests by the respondent for stays of this proceeding or removal to the Supreme Court have been denied by the Supreme and Appellate Courts.

Disputed Facts


Respondent asserts that the $100,000 check represents her contribution to acquiring the 602A property. She claims that her name was not placed on the deed because of her pending matrimonial action with her former husband. It is the respondent's contention that she and petitioner had an agreement that once the matrimonial dispute was resolved, petitioner would place her name on the deed. Respondent has testified, under oath, in her prior Westchester divorce proceeding that she had no interest in 602A, and that the $100,000 was repayment of a loan from the petitioner. This testimony was recanted in this action.

Petitioner argues that the check represents respondent's repayment for a loan (for which promissory notes once allegedly existed) of approximately $250,000 to $300,000 for respondent's legal expenses paid by petitioner during the 1990s. Petitioner has no documentary or corroborative proof of these alleged payments or notes, nor could he remember any of the specifics of these loans [*3]in his testimony. The respondent testified, and produced corroborative documentary proof, that she paid all her own attorneys' fees and that any legal fees paid by petitioner were to his own attorneys, which he employed to monitor her divorce proceeding and to defend his personal civil and criminal proceedings which arose in conjunction therewith.

Issue Presented

Whether a former girlfriend/paramour, asserting the status of a constructive trust beneficiary, is a licensee who may be dispossessed via a summary proceeding pursuant to New York R.P.A.P.L. Sec. 713(7)?

Discussion


Paramour/Licensee/ Constructive Trust Affirmative Defense

The Suffolk County Supreme Court has determined that the respondent is not recognized as a "wife" under New York law. In New York "mere co-habitation without marriage does not give rise to property or financial rights which attend the marriage relationship." Morone v. Morone, 50 NY 481 (NY 1980). Premised thereon, her legal status is that of "paramour/girlfriend/lodger.

New York's definition of "licensee" is not codified by statute and is instead left to the common law. This court has previously opined that a paramour is a Sec. 713 (7) licensee as defined under the common law unless they opt-out of said status by citation to a statutory mechanism granting them greater occupancy protection under the law. See, Drost v. Hookey, No.187-09 NYLJJune 29, 2009, pg. 29, col.3 2009; 2009 NY Slip Op 29257 (Dist. Ct. Suffolk Co. 2009). Sec 743 of the New York R.P.A. P.L. also allows a licensee to defeat a claim seeking summary proceeding dispossession premised upon the establishment of equitable affirmative defenses. See Paladino v. Sotille, 15 Misc 3d 60 (App. Term 9th & 10th Dists. 2nd Dep't. 2007). See generally, Nissequoge Boat Club v. State of New York, 14 AD3d 542 (NY A.D. 2nd Dep't. 2005).

The respondent's answer does not assert a statutory licensee opt-out status but does interpose the common law affirmative defense of "constructive trust". The doctrine of constructive trust is a cause of action which can be brought by a plaintiff seeking to equitably assert an interest in real property. See Foreman v. Foreman, 251 NY 237 (NY 1929); A.G. Homes, LLC v. Gerstein,52 AD3d 546 (NY AD2d Dep't 2008). Scivoletti v. Marsala, 97 AD2d 401 (NY AD2d Dep't 1983). New York Courts cite four specific requirements of a constructive trust: (1) a confidential or fiduciary relationship; (2) a promise; (3) a transfer in reliance of such promise; and (4) unjust enrichment. Sharp v. Kosmalski, 40 NY2d 119 ( NY 1976). These elements are not rigid and should be applied flexibly to satisfy the underlying purpose of preventing unjust enrichment to a transferee. Jane Doe,16 Misc 3d 894, at 897 (Sup. Ct. Kings Co., 2007).

When the claim of a constructive trust is properly interposed by a respondent as an affirmative equitable defense to a summary proceeding, the District Court must entertain that defense. Vita v. Dol-Fan, III, Inc.,18 Misc 3d 30 (NY Sup. App. Term 2007). As for all affirmative defenses, the burden of proving a constructive trust is upon the respondent. See generally, Firemen's [*4]Fund Ins. Co. v. Farrel, 57 AD3d 721 (N.Y.A.D. 2nd Dep't. 2008). Mayer v. Chamberlin,178 A.D. 326 (NY A. D. 3rd Dep't. 1917). The District Court's adjudication of the constructive trust defense, preclusively resolves the issue between the parties in all other proceedings. See Nissequoge Boat Club v. State of New York, 14 AD3d 542 (N.Y.A.D. 2ND Dep't. 2005).

Confidential Relationship


A confidential relationship is shown when there is a relationship of trust and confidence between the parties. This relationship does not have to be marital or familial but rather one in which the party refuting the claim does not abuse the trust and confidence placed in him by the party seeking an imposition of a constructive trust. See Sharp, 40 NY2d at 121-22. Nevertheless this court does not have to determine whether such a confidential relationship existed between petitioner and respondent as it was stipulated by the parties.

Promise

The central disputed factual issue of this case was whether a promise was made by petitioner regarding respondents' interest in the property. An express written promise is not necessary for imposition of a constructive trust; rather, courts have imposed constructive trusts when oral promises have been made and have even found promises implied in law. See McGrath v. Hilding, 41 NY2d 625 ( NY 1977). In the instant proceeding, respondent claims that on multiple occasions, petitioner orally promised her that he would eventually place her name on the deed once her matrimonial issues with her former husband were settled. Petitioner contends that no such promise was ever made and that the equitable theory of "judicial estoppel" now compels this court to disregard the respondent's testimony, even if it were true.

This court finds that a promise and an agreement to convey an interest in 602A existed and adopts the respondent's version of events as true. Her evidence concerning the issue is compelling, consistent with human nature, and is corroborated by other witnesses. Respondents' sister, the maker of the $100,000 check, testified that respondent paid the money to obtain an interest in 602A. Furthermore a mutual attorney that represented both parties in the past testified that it was her understanding that respondents' check toward the purchase of 602a was used in reliance of a promise to have a stake in the property. Petitioners' argument that the money was a repayment for a loan is without merit. He did not introduce a single shred of documentary evidence to support this claim.

The record contains no promissory notes, bills, receipts or bank records that he paid her attorney's fees. The petitioner's convenient lack of testimonial memory as to the details of these alleged loans borders upon perjury. Additionally, the check was made out to the seller of 602A and not petitioner. If the $100,000 was a repayment of a loan to petitioner, then it logically follows that the check should have been made out to the petitioner directly.

The petitioner is correct that the respondent's testimony in her prior Westchester Supreme Court proceedings stating that she maintained no interest in 602A and that she owed him money is [*5]damming. This court believes that she committed perjury in that proceeding to avoid creditors and to enhance her child support and equitable distribution prospects in her pending divorce. Although it impacts her credibility, it does not diminish the other evidence in her favor and it does not change the logical conclusion that the truth was told in one of the two proceedings. It is the court's determination that the truth was told by respondent in this instance. The court notes that the petitioner was a co-conspirator and an indirect beneficiary of the respondent's prior conflicted testimony. As such, his unclean hands bar resort to an equitable defense, such as judicial estoppel. See generally, Lagonegro v. Lagonegro, 187 AD2d 490 (NY A .D. 2D Dep't. 1992); Dry Dock Savings Inst. v. Harriman Realty Corp., 150 Misc. 860 (NY Co. Sup. Ct. 1934) aff'd 244 A. D. 793 (N.Y.A.D. 2ND Dep't. 1935).

Transfer In Reliance Of Such Promise


Although reconveyance of the property occurs in some cases of a constructive trust; it is not a requirement for the transfer in reliance element "The transfer concept has been extended to instances where funds, time and effort are contributed in reliance on a promise to share in the result." Tompkins v. Jackson, 20 Misc 3d 1108(A), 2008 WL 2548732 (Table) (NY Sup. 2008), 2008 NY Slip Op. 51285(U); see Lester v. Zimmer, 147 AD2d 340, 855 (NY AD3d Dep't 1989). The transfer of money, in reliance of a promise to grant title has been held sufficient. The $100,000 certified check from respondents' sister to the seller of 602A and ten years of efforts improving 602A, satisfies the transfer element.

Unjust Enrichment


In the absence of the impressment of a constructive trust; the petitioner would be entitled to sole possession and ownership rights of a $1.6 million home in which $100,000 was originally invested by the respondent. The value of the home has more than doubled since it was purchased in 1999 and that increase has been attributable to improvements orchestrated by the respondent over the last ten years. A constructive trust may be imposed "when property has been acquired in such circumstances that the holder of legal title may not in good conscience retain the beneficial interest." Sharp v. Kosmalski, 40 NY2d 119 (NY 1976). The court could not "in good conscience" allow the petitioner to retain the beneficial interest of respondents' contributions to both the purchase of 602A and the improvements made to it. Such a deprivation of her rights to the property would lead to an unjust enrichment for petitioner and constitute an inequitable result.

Holding/Judgment

Respondent has satisfied her burden of proof by establishing all of the requirements of a constructive trust. Her $100,000 contribution to the $751,000 purchase of the home represents her 1/7.51 (13.33%) interest in the real property. As respondent is an equitable co-owner of the property, petitioner does not have the statutory right to dispossess her via a summary proceeding. Accordingly, the above captioned petition is dismissed. [*6]

______________________

J.D.C.

Dated:_________________________