| Enzien v Enzien |
| 2012 NY Slip Op 04449 [96 AD3d 1136] |
| June 7, 2012 |
| Appellate Division, Third Department |
| Peter John Enzien, Respondent, v Margaret E. Enzien, Appellant.(And a Third-Party Action.) (And Another Related Action.) |
—[*1] Robert A. Becher, Albany, for respondent.
Peters, P.J. Appeal from an order of the Supreme Court (Lynch, J.), entered April 12, 2011 inRensselaer County, which, among other things, partially denied defendant's motion for summaryjudgment dismissing the complaint.
In June 2005, facing imminent eviction from his residence due to a tax foreclosureproceeding, plaintiff executed a contract and deed transferring certain commercial propertylocated on Second Street in the City of Troy, Rensselaer County to defendant, his daughter. The$83,881.28 purchase price for the property consisted of (1) $15,000 in the form of debtforgiveness for a loan that defendant made to plaintiff in 2003, (2) $14,146.78 for payment of atax lien against the property, (3) defendant's assumption of a $32,734.50 mortgage on theproperty, and (4) a cash payment of $22,000 to plaintiff to pay off the tax liens against hispersonal residence.
Thereafter, alleging that he had transferred title of the property to defendant only as securityfor the funds loaned to him, not as an outright sale, plaintiff commenced this action [*2]seeking, among other things, to impose a constructive trust on theproperty.[FN*]Following discovery, defendant moved for summary judgment dismissing the complaint.Supreme Court partially denied the motion, finding that plaintiff raised issues of fact as to eachelement of the cause of action for a constructive trust. Defendant appeals.
"A constructive trust will be imposed where one party holding title to property is under anequitable duty to convey it to another" (Janke v Janke, 47 AD2d 445, 447-448 [1975],affd 39 NY2d 786 [1976] [citation omitted]; see Leire v Anderson-Leire, 22 AD3d 944, 945 [2005]; Terrillev Terrille, 171 AD2d 906, 907 [1991]). The elements needed to establish a constructive trustare a confidential or fiduciary relationship, a promise, a transfer in reliance thereon and unjustenrichment (see Sharp v Kosmalski, 40 NY2d 119, 121 [1976]; Augur v Augur, 90 AD3d 1111,1112 [2011]; Salatino v Salatino, 64AD3d 923, 924 [2009], lv denied 13 NY3d 710 [2009]; Cleland v Thirion,268 AD2d 842, 844 [2000]). These elements, however, "are simply guidelines and are not to beapplied rigidly in pursuing the goal of preventing unjust enrichment" (Henness v Hunt,272 AD2d 756, 757 [2000]; see Matterof Almasy v Ward, 53 AD3d 946, 947 [2008]; Cinquemani v Lazio, 37 AD3d 882, 882 [2007]; Moak v Raynor, 28 AD3d 900,902 [2006]).
As to the first element, "[f]amilial relationships . . . often give rise to at least afactual issue regarding a confidential relationship" (Matter of Almasy v Ward, 53 AD3dat 947; see Sharp v Kosmalski, 40 NY2d at 121; Williams v Lynch, 245 AD2d715, 716 [1997], appeal dismissed 91 NY2d 957 [1998]). While defendant averred thatshe no longer trusted plaintiff with regard to business dealings based upon past transgressions,including plaintiff's failure to repay a prior loan, plaintiff explained that he had the money torepay her on several occasions but that defendant gave him permission not to pay her back so thathe could use the funds in other ways. Plaintiff testified further that, with regard to the transactionat issue here, it was defendant who suggested that he give her the deed to the property as securityand that he acceded to his daughter's requirement out of "total trust." Under these circumstances,a genuine issue of fact remains as to the existence of a confidential relationship between theparties (see Williams v Lynch, 245 AD2d at 716; compare Matter of Almasy vWard, 53 AD3d at 947).
Next, with respect to whether a transfer was made in reliance upon a promise, plaintifftestified that the deed was given to defendant as security for the loan and that defendant expresslypromised to reconvey the property to him upon repayment. Although defendant steadfastlydenied the existence of any agreement other than a direct sale of the property, and neither thedeed nor the contract indicates that the property was being transferred as security for a loan,plaintiff's account of the transaction is supported by the testimony of Jeffrey Francisco,defendant's counsel in the real estate transaction. In that regard, Francisco explained that he anddefendant discussed the options available in order to achieve the immediate goal of providingliquidity to plaintiff, including taking a mortgage on the property. He testified that he adviseddefendant that it would be safer to have plaintiff formally pass title of the property to defendant[*3]because if plaintiff did not pay her back, "she would be in aclear superior status than a mortgagee, she would hold the title." Francisco also testified that itwas his understanding that plaintiff believed that defendant would reconvey the property toplaintiff upon repayment. Moreover, the evidence submitted on the motion revealed that, forapproximately nine months after the transaction, plaintiff continued to receive rental incomefrom the property, which is consistent with his claim that his transfer of the property was not atrue sale. Given this conflicting evidence, it is for a jury to determine whether defendantpromised to hold the property as security for the loan and whether plaintiff transferred theproperty in reliance on such a promise (see Augur v Augur, 90 AD3d at 1113; Moakv Raynor, 28 AD3d at 903).
Finally, regarding the element of unjust enrichment, " 'a person is unjustly enriched whenretention of the benefit received would be unjust considering the circumstances of the transferand the relationship of the parties' " (Cinquemani v Lazio, 37 AD3d at 883, quotingHornett v Leather, 145 AD2d 814, 816 [1988], lv denied 74 NY2d 603 [1989]).In support of her claim that she was not unjustly enriched, defendant proffered a deed indicatingthat plaintiff sold a comparable property for $100,000 just six months prior to the transaction.Defendant also submitted proof that, in addition to the $83,881.28 contract price, the property atissue had approximately $33,000 in structural damage and that she had to assume an additional,previously unrecorded mortgage for approximately $18,000. As plaintiff correctly notes,however, defendant was aware of the structural repair costs prior to the transfer of the property,and Francisco testified that he was aware of the unrecorded mortgage on the property prior to thetransaction. Moreover, the evidence submitted by plaintiff in opposition to the motion establishedthat, in connection with defendant's application for a $140,000 mortgage, the property wasappraised for $300,000. In light of this evidence and the parties' competing versions of thetransaction, a question of fact as to unjust enrichment is clearly presented (see Booth vBooth, 178 AD2d 712, 714 [1991]). Accordingly, Supreme Court properly denieddefendant's motion for summary judgment dismissing the constructive trust claim.
Mercure, Stein, McCarthy and Garry, JJ., concur. Ordered that the order is affirmed, withcosts.
Footnote *: Plaintiff also commenced anaction against his son, Peter G. Enzien, who manages the property and leases the commercialspace located on the ground floor, for engaging in a fraudulent scheme and plan with defendantto procure the deed from plaintiff. The issues with respect to that action are not involved in thisappeal.