| Loeuis v Grushin |
| 2015 NY Slip Op 01926 [126 AD3d 761] |
| March 11, 2015 |
| Appellate Division, Second Department |
[*1]
| Anthony Loeuis, Respondent, v Denise Grushinet al., Appellants. |
Wayne L. DeSimone, New York, N.Y., for appellants.
Schillinger & Finsterwald, LLP, White Plains, N.Y. (Peter Schillinger ofcounsel), for respondent.
In an action, inter alia, to quiet title pursuant RPAPL article 15, to declare two deedsand a mortgage null and void, to recover damages for fraud, breach of fiduciary duty,conversion, money had and received, and unjust enrichment, and to impose aconstructive trust, the defendants appeal from an order of the Supreme Court, KingsCounty (Bayne, J.), entered January 23, 2014, which denied their motion pursuant toCPLR 3211 (a) to dismiss the amended complaint, and granted the plaintiff's crossmotion to preliminarily enjoin them from transferring, conveying, mortgaging, orotherwise encumbering the subject property.
Ordered that the order is affirmed, with costs.
In his amended complaint, the plaintiff alleges that on May 29, 1992, he and hissister, the defendant Denise Grushin, acquired title to the subject real property where theplaintiff resided using only the plaintiff's funds. According to the plaintiff, in 2003, heneeded money for medical expenses and decided to refinance the mortgage on the subjectproperty to acquire those funds. The defendant Denise Grushin suggested that herhusband, the defendant Corey Grushin, handle the transaction, because he was a "realestate professional." The plaintiff alleges that when he executed the mortgage documentsrefinancing the property, he was not represented by counsel, and the "defendants slippeda quitclaim deed into the stack of numerous papers which defendants asked plaintiff tosign in connection with the 2003 Refinance Transaction." Although that deed, dated May12, 2003, placed the property in the sole name of the defendant Denise Grushin, theplaintiff alleges that his intent was not to convey the property, but rather, to refinance themortgage.
By deed dated July 18, 2006, Denise Grushin conveyed the property to herself andher husband, and placed an additional mortgage on the property for $700,000. Theplaintiff alleges that the defendants retained the mortgage proceeds for themselves. Theplaintiff also alleges that he did not learn that he had transferred his interest in the subjectproperty to his sister, and did not learn of the subsequent transactions, until 2010, whenhe received a notice of default in payments of the $700,000 mortgage, which notice wasmailed to his residence at the subject property. The plaintiff commenced the instantaction on July 1, 2010. His amended verified complaint asserted causes of action to quiettitle pursuant to RPAPL article 15, for a judgment declaring that the 2003 quitclaimdeed, the 2006 deed, and the 2006 mortgage were null and void, a declaration that heowned the subject property, to recover damages for fraud, breach of fiduciary duty,conversion, money had and [*2]received, and unjustenrichment, and to impose a constructive trust on the property.
The defendants moved to dismiss the amended complaint pursuant to CPLR 3211(a), arguing, inter alia, that the action was time-barred. In support of the motion, thedefendant Denise Grushin submitted an affidavit stating that the plaintiff executed thequitclaim deed to avoid foreclosure by a third-party mortgage creditor, and, thereafter,continued to collect $400,000 in rents from the premises, which he kept. The plaintiffopposed the motion based, inter alia, upon his affidavit, and cross-moved to preliminarilyenjoin the defendants from transferring, conveying, mortgaging, or otherwiseencumbering the subject property. The order appealed from denied the motion andgranted the cross motion.
On appeal, the defendants' primary contention is that the causes of action accrued onMay 12, 2003, when the quitclaim deed was executed, and therefore, the commencementof the action on July 1, 2010, over seven years later, was untimely. "On a motion todismiss pursuant to CPLR 3211, the court must take the allegations in the complaint astrue and resolve all reasonable inferences in favor of the pleader. A defendant who seeksdismissal of a complaint on the ground that it is barred by the statute of limitations bearsthe initial burden of demonstrating, prima facie, that the time in which to commence theaction has expired" (6D FarmCorp. v Carr, 63 AD3d 903, 905-906 [2009] [citation omitted]). The defendantsfailed to meet that burden.
The plaintiff alleged both actual and constructive fraud. The elements of a cause ofaction sounding in actual fraud are that the defendant knowingly misrepresented orconcealed a material fact for the purpose of inducing another party to rely upon it, andthe other party justifiably relied upon such misrepresentation or concealment resulting ininjury (see Levin v Kitsis,82 AD3d 1051, 1054 [2011], citing Lama Holding Co. v Smith Barney, 88NY2d 413, 421 [2011]). The statute of limitations for actual fraud is six years from thecommission of the fraud or two years from the time the plaintiff discovered, or couldwith reasonable diligence have discovered, the fraud, whichever is later. Here, the secondand third causes of action are not time-barred insofar as they allege actual fraud, since theaction was commenced almost immediately after the plaintiff allegedly discovered thefraud in 2010.
The second and third causes of action also allege a constructive fraud based on abreach of a fiduciary duty. The defendants, who are the plaintiff's family members, had afiduciary relationship with him (see Loevner v Loevner, 81 AD3d 791 [2011]; Braddock v Braddock, 60AD3d 84, 88 [2009]). The statute of limitations for a cause of action alleging abreach of fiduciary duty does not begin to run until the fiduciary has openly repudiatedhis or her obligation or the relationship has been otherwise terminated (see Incorporated Vil. ofMuttontown v Ryba, 121 AD3d 757, 759 [2014]; Westchester ReligiousInst. v Kamerman, 262 AD2d 131, 131 [1999]). The defendants' repudiation of theirfiduciary obligation occurred, at the earliest, in 2006, when Denise Grushin conveyed theproperty to herself and her husband, and they mortgaged the property for $700,000 andtook those proceeds. Further, the plaintiff did not suffer damages until 2006, when thedefendants encumbered the property with a $700,000 mortgage without his consent (see IDT Corp. v Morgan StanleyDean Witter & Co., 12 NY3d 132, 140 [2009]).
The statute of limitations for a cause of action sounding in breach of fiduciary duty isdependent on the relief sought. The Court of Appeals ruled in IDT Corp. v MorganStanley Dean Witter & Co. (12 NY3d at 139): "New York law does not providea single statute of limitations for breach of fiduciary duty claims. Rather, the choice ofthe applicable limitations period depends on the substantive remedy that the plaintiffseeks. Where the remedy sought is purely monetary in nature, courts construe the suit asalleging 'injury to property' within the meaning of CPLR 214 (4), which has a three-yearlimitations period. Where, however, the relief sought is equitable in nature, the six-yearlimitations period of CPLR 213 (1) applies. Moreover, where an allegation of fraud isessential to a breach of fiduciary duty claim, courts have applied a six-year statute oflimitations under CPLR 213 (8)" (citations omitted). [*3]Since the plaintiff's right to the subject property is in issue,awarding damages would not be adequate. Therefore, the six-year statute of limitationsfor causes of action sounding in equity should be applied (see Loengard v Santa FeIndus., 70 NY2d 262, 267 [1987]). Since the second and third causes of actionaccrued in 2006, when the defendants allegedly acted contrary to their fiduciaryobligations, to the plaintiff's detriment, those causes of action, interposed four years laterin 2010, are not time-barred.
The first cause of action, to quiet title pursuant to RPAPL article 15, is nottime-barred, since the plaintiff was seized or possessed of the premises within 10 yearsbefore the commencement of the action and is in essence seeking a determination that thequitclaim deed which he executed in 2003 was part of a mortgage transaction, and not aconveyance of title (see CPLR 212 [a]; Real Property Law § 320;P.A.C.W.S., Ltd. v Reineke, 175 AD2d 154 [1991]).
The fourth cause of action, alleging conversion based upon fraud, is not time-barred,since it is governed by the statute of limitations set forth in CPLR 213 (8) (see Ingrami v Rovner, 45AD3d 806, 808 [2007], citing Petrou v Ehmer Intl. Foods, 167 AD2d 338,339 [1990]).
The fifth cause of action, seeking damages for money had and received (see Lebovits v Bassman, 120AD3d 1198, 1199 [2014]), is equitable in nature and, therefore, the applicablestatute of limitations is six years (see North Salem Cent. School Dist. v Mahopac Cent. SchoolDist., 1 AD3d 418, 419 [2003]). Since the defendants' receipt of moneyoccurred in 2006, and the action was commenced in 2010, the cause of action is nottime-barred. Similarly, the sixth cause of action, sounding in unjust enrichment, isequitable in nature, and is not time-barred (see Matter of Equitable Life Assur. Socy.of U.S. v Branch, 32 AD2d 959 [1969]).
The seventh cause of action alleging a constructive trust is equitable in nature andgoverned by a six-year statute of limitations (see Butt v Malik, 114 AD3d 716, 717 [2014]). Theelements of a cause of action to impose a constructive trust are (1) a confidential orfiduciary relationship, (2) a promise, (3) a transfer in reliance thereon, and (4) unjustenrichment (see Sharp v Kosmalski, 40 NY2d 119, 121 [1976]). The cause ofaction accrued on the date of the "wrongful transfer" of the subject property (Butt vMalik, 114 AD3d at 717). A determination of when the cause of action accrueddepends upon whether the constructive trustee acquired the propertywrongfully—in which case the cause of action accrued on the date ofacquisition—or whether the constructive trustee wrongfully withheld propertyacquired lawfully from the beneficiary—in which case the cause of action accruedwhen the trustee breached or repudiated the agreement to transfer the property (see Auffermann v Distl, 56AD3d 502, 502 [2008]). The allegations in the instant case indicate that the transferof the property in 2003 from the joint names of the plaintiff and Denise Grushin to thesole name of Denise Grushin was made in reliance upon the parties' fiduciaryrelationship to facilitate a mortgage transaction, rather than as a conveyance of title(see Real Property Law § 320; P.A.C.W.S., Ltd. v Reineke,175 AD2d 154 [1991]). The allegedly wrongful transfer harming the plaintiff occurred in2006, when Denise Grushin transferred the property to herself and her husband, andacting together, they encumbered the entire property—including the plaintiff'sone-half equitable interest. Since the action was commenced in 2010, the cause of actionto impose a constructive trust is not time-barred.
The defendants' remaining contentions are without merit. Skelos, J.P., Hall, Sgroiand Hinds-Radix, JJ., concur.