| Becher v Feller |
| 2009 NY Slip Op 05941 [64 AD3d 672] |
| July 21, 2009 |
| Appellate Division, Second Department |
| Razill Cynthia Becher et al., Respondents, v Jacob Felleret al., Appellants, et al., Defendants. |
—[*1] Dollinger, Gonski & Grossman, Carle Place, N.Y. (Michael J. Spithogiannis of counsel), forappellant Julian Frankel. Uziel Frankel, Brooklyn, N.Y., appellant pro se. Solomon E. Antar, Brooklyn, N.Y., for respondents.
In an action, inter alia, to set aside a deed conveying real property, (1) the defendant JacobFeller appeals, as limited by his brief, from stated portions of an order of the Supreme Court,Kings County (Schack, J.), dated May 29, 2008, which, inter alia, granted that branch of theplaintiffs' cross motion which was for summary judgment dismissing his affirmative defenses,(2) the defendant Julian Frankel separately appeals, as limited by his brief, from stated portionsof the same order which, inter alia, denied his motion for summary judgment dismissing theamended complaint insofar as asserted against him, granted those branches of the plaintiffs' crossmotion which were for summary judgment dismissing his affirmative defenses, and, among otherthings, voided and canceled the deed conveying the real property to him, and (3) the defendantUziel Frankel separately appeals, as limited by his brief, from so much of the same order asgranted that branch of the plaintiffs' cross motion which was for summary judgment dismissinghis affirmative defenses.
Ordered that the order is modified, on the law, (1) by deleting the provision thereof denyingthat branch of the motion of the defendant Julian Frankel which was for summary judgmentdismissing the sixth cause of action predicated on the Racketeer Influenced and CorruptOrganizations Act (18 USC § 1961 et seq.) insofar as asserted against him, andsubstituting therefor a provision granting that branch of the motion, and, (2) by adding thereto aprovision, upon searching the record, awarding the defendants Jacob Feller and Uziel Frankelsummary judgment dismissing the sixth cause of action predicated on the Racketeer Influencedand Corrupt Organizations Act (18 USC § 1961 et seq.) insofar as asserted againstthem; as so modified, the order is affirmed insofar as appealed from, with one bill of costs to theplaintiffs.
By declaration of trust (hereinafter the trust declaration) dated August 15, 1997, Jeno Ungarestablished "The Mazel Guaranty Trust" (hereinafter the trust) for the benefit of his children,[*2]their spouses, and their descendants. Article IX of the trustdeclaration appointed Rabbi Meier Weisz as trustee, and provided that if Rabbi Weisz "shallpredecease the termination of any of the trusts created herein, or for any reason, shall cease toserve as such, then Nechama Weisz [Weisz's wife] shall be the successor trustee."
In addition, a resigning trustee was required to give 30 days' written notice to the remainingtrustees. Article VI of the trust declaration authorized the trustee, in pertinent part, to sell orconvey the trust's real property known as 1941 51st Street, Brooklyn, New York, "to a bona fidepurchaser for the Property's fair market value upon the written and acknowledged consent of theGrantor's fourth born child on the condition the entire proceeds of such sale or conveyance isapplied toward the purchase of another property." It is undisputed that the "fourth born child"refers to Martin Ungar. Moreover, according to the plaintiffs, Martin suffers from mentalimpairment.
The plaintiffs allege that the defendant Uziel Frankel persuaded Martin to substitute Uziel'sfriend, the defendant Jacob Feller, as trustee of the trust to succeed Rabbi Weisz. The plaintiffsfurther allege that Uziel, Jacob, and the defendant Julian Frankel made a plan whereby Jacob, astrustee, would sell the real property owned by the trust, in which Martin, his wife Chana Ungar,and their five children resided. The proceeds of this sale were then to be used as a down paymentfor three properties located at 960-964 East 3rd Street in Brooklyn, with Martin to be given apartnership interest in those properties.
In contrast, the defendants contend that Martin was the originator of this real estatetransaction, as evidenced by his admission that he persuaded Rabbi Weisz to resign as trustee sothat Martin could participate in the real estate deal. However, even accepting the defendants'contention, the extent of Martin's initial participation in this scheme has no bearing on thesustainability of the transfer of the subject property in violation of the trust declaration. Notably,the purpose of the trust was to protect the subject property on behalf of Martin and his wife andchildren from irresponsible divestment. As such, it does not matter whether the divestmentoccurred because of Martin's incompetence, greed, or cupidity.
On December 31, 2003 Rabbi Weisz submitted his written resignation as trustee "forpersonal reasons" and appointed Jacob as successor trustee. The record does not demonstrate thatthe conditions set forth in Article IX of the trust declaration with respect to substitution of thetrustee were met, i.e., that Nechama Weisz was given 30 days' notice of her husband'sresignation as trustee and/or whether she declined to serve as successor trustee. Two weeks later,on January 15, 2004, Jacob conveyed, for a purchase price of $370,000, the subject property toJulian, by Uziel as "attorney in fact." There is no evidence in the record before us showing thatthe proceeds of this sale of the subject property by Jacob to Julian was used, as required underArticle VI of the trust declaration, to purchase a home for Martin and his family.
Thereafter, Jacob, on behalf of the trust, commenced an arbitration proceeding in arabbinical court (hereinafter the Beth Din) against Uziel and Julian, seeking to recover the$370,000 proceeds from the sale of the subject property. Neither the plaintiffs herein nor Martinwere parties to the Beth Din proceeding. The Beth Din determined that Julian was the lawfulpurchaser and owner of the real property and directed him to pay the trust the purchase price of$370,000 over 25 years with no interest, with only $50,000 to be treated as secured debt. It isnoted that one week before the Beth Din proceeding, Julian had mortgaged the subject propertywith the defendant Fairmont Funding, Ltd. (hereinafter Fairmont), to secure a loan in the sum of$329,000.
The trust then filed a petition in the Supreme Court, New York County, to confirm the BethDin award. Julian and Frankel did not oppose the petition. The Supreme Court granted thepetition in a judgment dated September 2, 2004. The plaintiffs and Martin were not parties to theproceeding to confirm the Beth Din award.
The reliance by the defendants Julian, Uziel, and Feller on the Beth Din arbitration awardand the judgment of the Supreme Court confirming such award, is misplaced. Julian, Uziel, andFeller committed misconduct, if not fraud, by concealing crucial information from those forums,[*3]including pertinent terms of the trust declaration and theterms of the sale of the subject property to Julian, and there was fraud in the very means bywhich judgment was procured in each of these venues. Accordingly, the judgments and allsubsequent judgments based thereon, are jurisdictionally defective (see Oppenheimer vWestcott, 47 NY2d 595, 604 [1979]; Fuhrmann v Fanroth, 254 NY 479, 482-483[1930]; Yip v Ip, 229 AD2d 979 [1996]).
Meanwhile, Julian had commenced a landlord-tenant holdover proceeding in the Civil Court,Kings County, against, inter alia, Martin and Chana, with the latter the only defendant to appear.By judgment dated September 1, 2004, Julian prevailed and obtained a judgment of evictionagainst Martin, Chana, and their family. The Civil Court noted that Julian's mortgage paymentson the subject premises exceeded $2,000 per month. Execution of the judgment was stayedthrough November 30, 2005, on condition that Chana and Martin pay arrears in the sum of$6,432 within five days. Chana and Martin apparently failed to remit such amount. By orderdated December 1, 2004, the Civil Court denied Chana's request to extend the stay and issued anorder of eviction. Thereafter, Chana and Martin filed for bankruptcy, but their case wasdismissed on April 26, 2005.
Thereafter, upon an application by Chana, the Supreme Court, Kings County, issued an orderdated March 12, 2007, which, after a hearing, held that Martin "is an adult who is incapable ofadequately prosecuting or defending his rights," and appointed Martin's sister, Razill CynthiaBecher (hereinafter Razill), as his guardian ad litem to represent his interests in the instantaction.
In the instant action, commenced in May 2007 the plaintiffs, Razill as guardian ad litem forMartin, along with Chana, individually, and as mother and natural guardian of her and Martin'sfive minor children, all appearing individually and derivatively, as beneficiaries of the trust(hereinafter collectively the plaintiffs), asserted causes of action against, among others, Julian,Uziel, Jacob, and Fairmont seeking to impose a constructive trust over the subject property, toset aside the deed conveying the subject property to Julian, to cancel the mortgage with Fairmontthat Julian had taken on the subject property, and to recover damages for fraud and illegaleviction. The plaintiffs alleged that Feller, Julian, and Uziel conspired together and engaged in apattern of illegal and fraudulent activity to take advantage of Martin, a person with mental andpsychological impediments, to obtain title to and possession of the subject property, which hadbeen held in trust to provide a home for Martin and his family, and convey the subject propertyto Julian. In an amended complaint, the plaintiffs added, inter alia, a cause of action againstFeller, Julian, and Uziel predicated on the Racketeer Influenced and Corrupt Organizations Act(18 USC § 1961 et seq.) (hereinafter RICO).
Julian moved, inter alia, for summary judgment dismissing the amended complaint insofar asasserted against him. The plaintiffs opposed and cross-moved, inter alia, for summary judgmentremoving Jacob as trustee of the trust and appointing a substitute trustee to replace Jacob astrustee, compelling Jacob to render an accounting, and dismissing the affirmative defensesasserted by Julian, Jacob, and Uziel. The Supreme Court denied Julian's motion, finding that hefailed to establish, prima facie, his entitlement to judgment as a matter of law. The court grantedthe plaintiffs' cross motion, finding that they established, prima facie, that Jacob's purportedappointment as Rabbi Weisz's successor trustee violated the trust declaration, and thus, the court"voided and cancelled" all transactions flowing from Jacob's invalid trustee appointment,including the sale of the subject property to Julian, Julian's mortgaging of the subject property toFairmont, and the eviction of Martin and his family from the subject property by Julian. Wemodify.
Preliminarily, the record indicates that the court considered Jacob's motion and the plaintiffs'cross motion before all of the defendants answered the amended complaint. Nevertheless, we donot dismiss their motions as premature and consider them on the merits "since the record isabundantly clear 'that the parties charted their own procedural course and treated [Jacob's]summary judgment motion as if issue had indeed been joined' " (Kline v Town ofGuilderland, 289 AD2d 741, 741 n* [2001], quoting Ryan v Bettiol, 211 AD2d 844,845 [1995]).
Turning to the merits, the Supreme Court correctly denied those branches of Julian's motionwhich were for summary judgment dismissing the first, second, third, fourth, fifth, seventh, [*4]and eighth causes of action insofar as asserted against him. Julian'ssubmissions in support of his motion did not demonstrate the absence of questions of fact as tothose causes of action. Triable issues of fact include Julian's roles in obtaining title to the subjectpremises, allegedly defrauding Martin, and participating in legal proceedings in furtherance ofthe alleged scheme to defraud Martin and take the subject property from him withoutremuneration. Since Julian failed to meet his burden of establishing his prima facie entitlementto judgment as a matter of law on those causes of action, it is unnecessary to consider thesufficiency of the plaintiffs' papers in opposition (see Alvarez v Prospect Hosp., 68NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853[1985]).
Moreover, the affirmative defenses asserted by Feller and Uziel were not substantiated withfactual allegations and were conclusory in nature. Accordingly, the Supreme Court properlygranted those branches of the plaintiffs' cross motion which were for summary judgmentdismissing the affirmative defenses separately asserted by Feller and Uziel (see CPLR3013, 3018 [b]; Cohen Fashion Opt.,Inc. v V & M Opt., Inc., 51 AD3d 619 [2008]; Petracca v Petracca, 305 AD2d566, 567 [2003]).
However, the Supreme Court erred in denying that branch of Julian's motion which was forsummary judgment dismissing the sixth cause of action insofar as asserted against him, whichalleged a civil RICO violation pursuant to 18 USC § 1962 (c). To establish a cause ofaction based on a violation of 18 USC § 1962 (c), a plaintiff must demonstrate conduct ofan enterprise through a pattern of racketeering activity, meaning that the racketeering predicatesare related and amount to or constitute a threat of continued racketeering activity (see H. J.Inc. v Northwestern Bell Telephone Co., 492 US 229, 239-240 [1989]). Julian established,prima facie, that the plaintiffs failed to satisfy the continuity element of a RICO cause of actionbecause the subject matter of the alleged scheme—to steal the subject property fromMartin, Chana, and their family—was limited to one real estate transaction and spannedonly one year, and therefore did not amount to a conspiracy giving rise to a threat of ongoing orfuture racketeering activity (see Vicom, Inc. v Harbridge Merchant Servs., Inc., 20 F3d771 [1994]; Thompson v Paasche, 950 F2d 306, 310-311 [1991]; Feinstein vResolution Trust Corp., 942 F2d 34 [1991]; Continental Realty Corp. v J.C. Penney Co.,Inc., 729 F Supp 1452 [1990]). In opposition, the plaintiffs failed to raise a triable issue offact (see generally Zuckerman v City of New York, 49 NY2d 557, 562-563 [1980]).
Moreover, the Supreme Court should have, upon searching the record, awarded summaryjudgment to Feller and Uziel dismissing the sixth cause of action insofar as asserted against themas well (see CPLR 3212 [b]).
The defendants' remaining contentions are either not properly before this Court or withoutmerit. Spolzino, J.P., Dillon, Florio and Belen, JJ., concur. [See 19 Misc 3d 1138(A),2008 NY Slip Op 51060(U).]