The real estate market might be bad, but it’s not that bad.
In Matter of Karr, NYLJ 2/5/09 (Surrogate’s Court, Kings County), Surrogate Maria López Torrez canceled a deed by which the executor of an estate attempted to convey to herself, in consideration of $10, a house owned by the estate. You can’t make this stuff up.
The defendant in the action, Joan Melluso, was the executor of her father’s estate. He died in 1977, leaving his house in equal shares to his daughter and son, Joan and Donald. He also granted Joan a life estate in the house, and included a clause in his will providing that “[t]he choice when and if to sell shall be hers.” In 2004, Donald died intestate, leaving a wife and four children. In 2007, Joan, in her capacity as the executor of her father’s estate, conveyed the property outright to herself for $10.
Donald’s wife and children filed an action in Supreme Court seeking, among other things, a declaration that the deed conveying the house to Joan was invalid and that they retained a 50-percent tenancy-in-common interest in the house. They moved for summary judgment. Joan cross-moved to transfer the action to Surrogate’s Court. The court denied the motion for summary judgment without prejudice and granted the cross-motion to transfer. Ultimately, the fully briefed motion for summary judgment was submitted for decision to the Surrogate.
Joan, who was represented by counsel, opposed the motion on numerous grounds. She submitted an affidavit that the court, in its decision and order granting the motion, quoted at length. I do so here as well, mostly in the interest of entertainment:
I believe that the disputed clause in the will allows me to take title to the Property. The clause says that the choice “if or when to sell” shall be mine. There is not time limit, price limit, or other consideration. The interest given to me and my brother is subject to the “condition.” The deed says that there was a consideration of ten dollars. There is no other way to interpret the will than to say that this is a sale allowed under the will. There is no proof that the price is in anyway unfair. The truth is that all parties concede I have a life estate, and that I have to pay to maintain the property. Given my life expectancy, and the money I have already paid, the present value of a remainder interest, even if there is one, is nothing. Certainly, there is no evidence to the contrary on this motion. Furthermore, plaintiff assume in paragraph 8 of the moving affirmation that there is a “tenancy in common” created by the will. If there was, then the will would have said so. It was drafted by a lawyer, and if this was the intended result, it would be there. As I stated above, it was my belief that if I survived my brother the house would be mine. If I sold when we were both alive, then the profits would be divided. Also even though I was “responsible” for expenses, it is my belief that if my brother were alive, I would get my money back that I spent before we divided the profits. If the maintenance costs were some sort of rent, the will would have so stated.
Of course, in interpreting a will, courts are guided, primarily, by the intent of the decedent. “There are many instances wherein the Court is called upon to render its interpretation of will provisions that are ambiguous. Fortunately, this is not one of those instances,” wrote the Surrogate. On the contrary, the court determined that the decedent’s intent was crystal clear from the language of the will; he wanted to make a gift of the house equally to both his children.
Addressing Joan’s reliance on the provision of the Will stating that “[t]he choice if and when to sell shall be hers,” the court noted that “there is nothing to indicate that plaintiffs’ interest in the property would be lost or forfeited should defendant decide to exercise this option.”
The court also rejected self-serving, hearsay evidence offered by Joan — the only evidence offered in opposition to the motion — consisting of her own affidavit stating that Donald had promised her that the house would be hers, that she would be reimbursed for expenses, and that his heirs told her that they wanted to give her the house. (The court noted that this evidence would have been inadmissible at trial under the Dead Man’s Statute, but could be considered for the purpose of opposing a motion for summary judgment. For more on this topic see this article.
Finally, Joan argued that inasmuch as she had sold the house to herself, it was no longer an asset of the decedent’s estate and, therefore, the court lacked jurisdiction to entertain the matter. Talk about chutzpah. The court found this argument “especially egregious” and “untenable.” It noted that it had “rarely encountered such a blatant attempt to subvert a testator’s intent.” Moreover, the court quite appropriately characterized the argument as “baffling” because Joan herself had successfully petitioned the Supreme Court to transfer this matter to Surrogate’s Court in the first place.
Accordingly, the court summary judgment in the plaintiffs’ favor, directed the cancellation of the subject deed, and directed defendant — in her individual capacity– to pay plaintiffs $5,000 as reimbursement for the costs of bringing the litigation. (Curiously, the court — without much explanation — denied that branch of the plaintiff’s motion that sought removal of the defendant as executor of the decedent’s estate.)
There is much to be learned from this case. But perhaps the most important lesson is this: “An executor must discharge his or her fiduciary duties so that all legatees are treated in like manner and without prejudice or discrimination” (quoted from decision). As the court noted, “[d]efendant failed this test.” Another lesson might be, if it sounds too good to be true, it probably is.