| Hearst v Hearst |
| 2008 NY Slip Op 03590 [50 AD3d 959] |
| April 22, 2008 |
| Appellate Division, Second Department |
| John Randolph Hearst, Jr., Appellant, v Barbara Hearst etal., Respondents. |
—[*1] Bracken & Margolin, LLP, Islandia, N.Y. (Linda U. Margolin of counsel), for respondentsBarbara Hearst and Genta Hawkins Holmes. Harvey B. Besunder, P.C., Islandia, N.Y. (Zachary D. Dubey of counsel), for respondentsLeonard Ackerman, Ackerman & Wainwright, LLP, and Ackerman & O'Brien, LLP.
In an action, inter alia, to recover damages for fraud, conversion, and legal malpractice, theplaintiff appeals (1) from an order of the Supreme Court, Suffolk County (Burke, J.), enteredMarch 13, 2007, which, among other things, upon converting the motion of the defendantsBarbara Hearst and Genta Hawkins Holmes pursuant to CPLR 3211 (a) (5), (7), and (10) todismiss the complaint insofar as asserted against them to one for summary judgment dismissingthe complaint insofar as asserted against them, granted the motion, (2) from an order of the samecourt also entered March 13, 2007, which, upon converting the motion of the defendants LeonardAckerman, Ackerman & Wainwright, LLP, and Ackerman & O'Brien, LLP, pursuant to CPLR3211 (a) (7) to dismiss the complaint insofar as asserted against them to one for summaryjudgment dismissing the complaint insofar as asserted against them, granted the motion, (3) froma judgment of the same court entered May 23, 2007, which, upon the first order entered March13, 2007, is in favor of the defendants Barbara Hearst and Genta Hawkins Holmes and againsthim, dismissing the complaint insofar as [*2]asserted againstthose defendants, and is in favor of the defendant John R. Hearst, Jr., Irrevocable Trust andagainst him dismissing the complaint insofar as asserted against that defendant, (4) from ajudgment of the same court entered July 13, 2007, which, upon the second order entered March13, 2007, is in favor of the defendants Leonard Ackerman, Ackerman & Wainwright, LLP, andAckerman & O'Brien, LLP, and against him dismissing the complaint insofar as asserted againstthose defendants, and (5), as limited by his brief, from so much of an order of the same courtdated July 23, 2007, as denied that branch of his motion which was for leave to renew hisopposition to the defendants' prior motions.
Ordered that the appeals from the orders entered March 13, 2007 are dismissed; and it isfurther,
Ordered that the judgment entered May 23, 2007 is reversed, on the law, the convertedmotion of the defendants Barbara Hearst and Genta Hawkins Holmes for summary judgmentdismissing the complaint insofar as asserted against them is denied, the complaint is reinstatedinsofar as asserted against those defendants and the defendant John R. Hearst, Jr., IrrevocableTrust, and the first order entered March 13, 2007 is modified accordingly; and it is further,
Ordered that the judgment entered July 13, 2007 is modified, on the law, by deleting theprovision thereof dismissing the causes of action alleging aiding and abetting fraud and legalmalpractice insofar as asserted against the defendants Leonard Ackerman, Ackerman &Wainwright, LLP, and Ackerman & O'Brien, LLP; as so modified, the judgment entered July 13,2007 is affirmed, that branch of the converted motion which was for summary judgmentdismissing the causes of action alleging aiding and abetting fraud and legal malpractice insofar asasserted against the defendants Leonard Ackerman, Ackerman & Wainwright, LLP, andAckerman & O'Brien, LLP, is denied, those causes of action insofar as asserted against thosedefendants are reinstated, and the second order entered March 13, 2007 is modified accordingly;and it is further,
Ordered that the appeal from the order dated July 23, 2007 is dismissed as academic in lightof our determinations on the appeals from the judgments, and it is further,
Ordered that one bill of costs is awarded to the plaintiff, payable by the respondentsappearing separately and filing separate briefs.
The appeals from the two intermediate orders entered March 13, 2007 must be dismissed, asthe right of direct appeal therefrom terminated with the entry of the judgments in the action(see Matter of Aho, 39 NY2d 241, 248 [1976]). The issues raised on the appeals from thetwo orders entered March 13, 2007 are brought up for review and have been considered on theappeals from the judgments (see CPLR 5501 [a] [1]).
In 1989 the plaintiff suffered a stroke. On June 21, 1990 he and the defendant Barbara Hearst(hereinafter Barbara) were married. In 2004 Barbara commenced a divorce action against theplaintiff. After she filed for divorce, the plaintiff alleged that he discovered that Barbara, with theaid of their attorney, the defendant Leonard Ackerman, fraudulently deprived him of title and useof more than $20 million in real property and other investments that he had acquired withinherited funds during their 14 years of marriage. According to the plaintiff, he was unable toresist the alleged wrongful conduct due to his poor health resulting from the stroke. Thereafter, inJanuary 2006 the plaintiff commenced the instant action against the defendants asserting, amongother [*3]things, causes of action sounding in fraud, aiding andabetting fraud, breach of fiduciary duty, conversion, and legal malpractice. He sought, inter alia,damages and the rescission of certain deeds, trust indentures, and other documents that he wasallegedly induced to execute during the course of the marriage as a consequence of thedefendants' allegedly fraudulent, deceptive, and coercive acts.
Barbara and the defendant Genta Hawkins Holmes, who are trustees of the defendant John R.Hearst, Jr., Irrevocable Trust (hereinafter collectively the Hearst defendants), moved to dismissthe complaint insofar as asserted against them pursuant to CPLR 3211 (a) (5), (7), and (10) and,in a separate motion, the defendants Leonard Ackerman, Ackerman & Wainwright, LLP, andAckerman & O'Brien, LLP (hereinafter collectively the Ackerman defendants), moved to dismissthe complaint insofar as asserted against them pursuant to CPLR (a) (7). In two orders, bothdated November 15, 2006, the Supreme Court converted the separate motions to dismiss thecomplaint into motions for summary judgment dismissing the complaint, and adjourned themotions to allow the parties to submit their evidentiary proof. Subsequently, in two orders bothentered March 13, 2007, the court granted the separate motions for summary judgmentdismissing the complaint. On May 23, 2007 and July 13, 2007 separate judgments were enteredin favor of the Hearst defendants and the Ackerman defendants, respectively.
For transactions to be invalidated on the basis of undue influence, there must be evidencethat a defendant's influence "amounted to a moral coercion, which restrained independent actionand destroyed free agency, or which, by importunity which could not be resisted, constrained the[plaintiff] to do that which was against his [or her] free will and desire, but which he [or she] wasunable to refuse or too weak to resist" (Matter of Walther, 6 NY2d 49, 53, quotingChildren's Aid Socy. of City of N.Y. v Loveridge, 70 NY 387, 394 [1877]). Generally,the burden of proving undue influence rests with the party asserting its existence (see Matterof Connelly, 193 AD2d 602 [1993]). "However, if a confidential relationship exists, theburden is shifted to the beneficiary of the transaction to prove the transaction fair and free fromundue influence" (Matter of Connelly, 193 AD2d at 603; see Matter of Gordon vBialystoker Ctr. & Bikur Cholim, 45 NY2d 692, 699 [1978]).
In the instant matter, the Hearst defendants and the Ackerman defendants established theirprima facie entitlement to judgment as a matter of law by demonstrating that the challengeddocuments effecting the transfers of property were duly executed, that the plaintiff possessed thelegal capacity to contract, that no undue influence had been exercised upon him, and that nofraud had been committed. However, in opposition to the defendants' prima facie showing, theplaintiff raised triable issues of fact as to whether he and Barbara were in a confidentialrelationship and whether the various executed documents and transfers of property were procuredthrough undue influence. In this regard, the plaintiff presented evidence of his severely-weakenedcondition after suffering a major stroke that left him housebound, his dependence upon Barbarato manage their day-to-day finances, and her control over essentially all of his assets (see Matter of Greenberg, 34 AD3d806, 807 [2006]; Alston v Gregory, 281 AD2d 440 [2001]; Matter ofAntoinette, 238 AD2d 762, 763 [1997]). There is also evidence raising a triable issue of factas to whether Barbara exercised undue influence over the plaintiff, since the conveyances duringthe marriage transferred the bulk of his assets to her which, in effect, disinherited his daughterand grandchildren and departed from his established estate planning goal (see Matter of Pellegrino, 30 AD3d522, 523 [2006]; Matter of Itta, 225 AD2d 548, 548-549 [1996]).
Additionally, there is triable issue of fact as to whether Barbara's exercise of control over theplaintiff's finances was in his best interest. In this regard, she was able to transfer assetscontrolled [*4]by the plaintiff to a joint bank account and then toseveral accounts solely controlled by her. Based upon the statement of net worth that she filed inthe divorce action and the plaintiff's affidavit, Barbara held the sum of approximately $8 millionin accounts controlled by her and substantially all of the real estate the plaintiff owned prior tothe marriage, worth more than $10 million, while she left a comparatively small sum of liquidassets in their jointly-owned accounts. Consequently, the causes of action alleging breach offiduciary duty and conversion insofar as asserted against the Hearst defendants should not havebeen dismissed.
The Supreme Court also improperly dismissed the cause of action alleging legal malpracticeinsofar as asserted against the Ackerman defendants. A prima facie case of legal malpracticerequires proof that the attorney failed to exercise the ordinary and reasonable skill and knowledgecommonly possessed by a member of the legal profession, and that the attorney's breach of thatduty proximately caused the plaintiff to sustain actual and ascertainable damages (see Rudolf v Shayne, Dachs, Stanisci,Corker & Sauer, 8 NY3d 438, 442 [2007]; Bauza v Livington, 40 AD3d 791, 792-793 [2007];Magnacoustics, Inc. v Ostrolenk, Faber, Gerb & Soffen, 303 AD2d 561, 562 [2003]).Here, the plaintiff alleges that Ackerman represented both Barbara and himself, and was therebyburdened by a conflict of interest, that Ackerman aided Barbara's misappropriation of his assets,and concealed these activities from him. Consequently, there are triable issues of fact withrespect to the cause of action alleging legal malpractice (see Tabner v Drake, 9 AD3d 606, 610 [2004]), as well as the causeof action alleging the aiding and abetting of fraud, insofar as asserted against the Ackermandefendants.
The parties' remaining contentions either are without merit, or have been rendered academicin light of the foregoing determination. Fisher, J.P., Miller, Carni and Dickerson, JJ., concur.[See 2007 NY Slip Op 30481(U).]