Opinion
02-CV-6187P
February 10, 2004
DECISION ORDER
Plaintiff, Norrine Halvorsen, a resident of New York, has filed suit against her sister, Ellen Sheive, a legal resident of Nevada, seeking recovery of the proceeds of an Individual Retirement Account ("IRA") established by their deceased father, Ivar Halvorsen, Pursuant to 28 U.S.C. § 636(c), the parties have consented to have a United States magistrate judge conduct all further proceedings in this case, including the entry of final judgment. (Docket # 9). Currently before this Court is defendant's motion for summary judgment. (Docket # 16), For the reasons discussed below, defendant's motion is granted in part and denied in part.
On April 14, 2003, this case was referred to the undersigned consistent with the terms of the original referral order to former United States Magistrate Judge William G. Bauer and the parties' consent. (Docket # 18). On August 19, 2002, United States District Judge Charles J, Siragusa had referred, this case to former Magistrate Judge Bauer for the purposes designated above. (Docket # 9).
FACTUAL BACKGROUND
Based upon a careful review of the record before this Court, the following facts appear undisputed. Plaintiff and defendant are siblings and the adult daughters of Ivar Halvorsen, who died on December 9, 1999. At the time of his death, Ivar was the owner of three real properties and several investment accounts, including a First Albany Corporation IRA that was worth approximately $240,000. From the date of the IRA's inception until April 1997, plaintiff was named as the sole beneficiary of the IRA. On April 21, 1997, Ivar Halvorsen executed a change of beneficiary form, substituting defendant as beneficiary of the IRA. (Docket ## 1, 16).During the period 1998 through June 1999, plaintiff lived with Ivar in his home. (Docket # 17, Ex. A at 4, 14), She moved in with her father having lived for several years with her mother following the foreclosure of her own home. ( Id. at 4-5, 25-26). Although they lived together during Ivar's later years, plaintiff admittedly had "very little contact" with him and "didn't interact with him routinely," ( Id. at 13, 15). She did act as his power of attorney during his final months in a nursing home. ( Id. at 19-20).
Defendant describes her relationship with her father, variously, as having been "at best, cordial" (Docket # 16, Shelve Aff. at ¶ 8) and a "pleasant adult, friendly relationship." (Docket #17, Ex. B at 5-6). Defendant explained that she had moved out of her father's house in 1964 at the age of eighteen, married her husband and eventually established residence in San Diego, California. (Docket # 17, Ex. B at 5-6; Docket # 16, Shelve Aff. at ¶ 3). For the following thirty years, defendant's contact with her father was infrequent and irregular, consisting of sporadic visits (approximately six in twenty — one years) and infrequent telephone calls and letters. (Docket # 17 at 7-10; Docket # 16, Shelve Aff. at ¶¶ 4-7). Her last visit with her father occurred in June 1999 when she and her husband moved her father into a nursing home following his discharge from a hospitalization in Albany. (Docket # 17, Ex. B at 13-18), Defendant testified that it was during this visit that she first learned from, her father's broker that she was the beneficiary of Ivar's IRA and certain annuities he owned. (Docket # 17 at 18). This testimony directly and disquietingly conflicts with the statement in her attorney's reply affirmation that defendant "did not know at any time prior to her father's death, that she was to be the beneficiary of the IRA funds." (Docket # 26 at ¶ 6).
During her deposition, defendant stated that it "seem[ed] logical" that she might have learned this information at the time of the change but that she had no recollection of learning it then. (Docket # 17, Ex. B at 29-30). Ivar's broker testified that at the time of the beneficiary change, his secretary called defendant to obtain her social security number in order to process the change. (Docket #17, Ex. C at 30-31).
Eleven months before he died, Ivar Halvorsen executed a new will. (Docket # 23, Ex. G). The will named defendant as executor and bequeathed to her all of his real and personal property. ( Id.) In addition, the will provided that 60% of his residuary estate was to be distributed to defendant, with 40% left in trust for the benefit of plaintiff, with defendant named as trustee. ( Id.). The residuary estate trust was Ivar's sole bequest to plaintiff under his will. ( Id. ).
The will specifically defined the residuary estate to "includ[e] [Ivar's] investments at Brighton Securities Corp." (Docket # 23, Ex, G at ¶ 4), At the time of his death, Ivar held various investment accounts through Brighton Securities, which included the IRA, six annuities (as to which defendant and her daughter were the named beneficiaries) and a money market fund. (Decision of Hon. Edmund Calvaruso, Surrogate's Court Judge, dated August 21, 2001 (hereinafter referred to as "Surrogate Court Decision") at 2, submitted herewith by plaintiff), While the record is not entirely clear on this point, it appears that the value of the IRA and other annuities — which passed outside his estate — totaled in excess of $300,000. (Docket # 23, Affidavit of Jeffrey Weiss, Esq. at f 22). The value of the money market fund, by contrast, which constituted the principal asset making up the residuary estate, totaled only approximately $5,000. (Surrogate Court Decision at 2). Defendant subsequently renounced her interest under the will, thus leaving plaintiff to inherit the real properties, the personal property and defendant's interest in the residuary estate, (Docket #17, Ex, B at 28).
Both plaintiff and defendant testified that Ivar's decision, to establish a trust for the benefit of plaintiff grew out of his concern over plaintiff's perceived inability to manage finances. (Docket # 1 at 15-16, 24; Docket # 17, Ex, B at 31-32). According to defendant, Ivar told her that he intended to leave his estate to her because he trusted her to manage it well and to "bail" out plaintiff with the funds "if she needed it." (Docket # 17, Ex. B at 31-32). As defendant testified at her deposition:
[Ivar] felt that to leave [plaintiff] the money was to doom her to eventually being out of money again, and on the street. He felt that she couldn't handle the dealing with principal or being responsible for principal. So he gave it to me. He said also, I have never given you any money, I never helped you with anything in your life. He said, I would like to give it to you, you would be able to manage it well. I trust that,., if your sister needs bailing, this will help you to bail her. That's basically what he wanted, her to be bailed if she needed it. But he didn't feel like she had proven herself capable of handling the inheritance.
Plaintiff admitted in her deposition that her father had purchased an automobile for her to drive in approximately 1997 or 1998 and had loaned her $20,000, which she was unable to repay, in connection with the purchase of her home that was foreclosed. (Docket #17, Ex. A at 9-10, 25-26).
(Docket #17, Ex. B at 31-32). Similarly, the attorney who drafted Ivar's will testified that it had been Ivar's intent to leave plaintiff's share in trust because of his concern that "she was not capable of managing her money." (Docket #17, Ex. D at 7-8).
With respect to the IRA, both plaintiff and defendant stated that they did not discuss the IRA beneficiary change specifically with Ivar, At her deposition, defendant stated that she understood that Ivar's intention was that the IRA proceeds be used "to help take care of [plaintiff]" (Docket #17, Ex. B at 30) — a statement which she argues in no way constitutes an admission that she understood that they were left in trust for the benefit of plaintiff. ( Id. at 32). Indeed, whether Ivar left the IRA funds in trust, as he did with the assets in his residuary estate, is the very essence of the parties* dispute. Plaintiff contends `that he did; defendant disagrees.
In claiming entitlement to the IRA proceeds, plaintiff relies on two legal theories. First, plaintiff contends that Ivar created a constructive trust with respect to the IRA. According to plaintiff, Ivar intended that the proceeds of the ERA be used to "bail" her out, and, to effectuate that intent, he changed the beneficiary upon defendant's assurance that she would use the IRA to take care of and provide for her sister. (Docket # 1). While defendant concedes that such an understanding existed with respect to the residuary estate, she disputes that such an. understanding existed with respect to the IRA.
Second, plaintiff claims that defendant exerted undue influence over her father in order to compel him to change the beneficiary of his IRA. According to the complaint, Ivar's mental capabilities had been diminished as the result of age and illness, making him particularly susceptible to the influence of family members. Defendant preyed on that susceptibility, plaintiff maintains, by promising him that the proceeds from the IRA would be used to benefit plaintiff after his death. Plaintiff contends that defendant's influence was so great as to override Ivar's intentions and decision — making ability, ( Docket #1).
Defendant now moves this court for summary judgment on both of plaintiff s claims.
DISCUSSION
I. This Court's jurisdiction
This Court's jurisdiction over this case is based upon the parties' diversity of citizenship. For this Court to exercise diversity jurisdiction, the plaintiff and defendant must be domiciled in different and the amount in controversy must exceed $75,000. 28 U.S.C. § 1332. In the instant case, plaintiff, Norrine Halvorsen, resides in Rochester, New York. (Docket # 17, Ex, A). Defendant,. Ellen Shelve, is a legal resident of Nevada, but states that she is currently a foil — time traveler and does not own a primary residence. Prior to becoming itinerant, defendant resided in San Diego, California, where she lived from 1975 to 1998. (Docket # 17, Ex, B). Thus, the parties are domiciled in different states. Moreover, the amount in controversy — $240,000, which represents the amount of the IRA at the time of Ivar' s death — exceeds the jurisdictional limit.
While probate matters generally are "excepted from, the scope of federal diversity jurisdiction, " Moser v. Pollin, 294 F.3d 335, 340 (2d Cir. 2002), the probate exception does not apply in the instant matter because claims relating to the IRA, a non — probate asset, lie outside the jurisdiction of the probate court. Counsel for both parties agree that the probate exception is inapplicable in this case. (Letters from Lawrence I. Goldstein and Jeffrey S. Weiss, dated July 28, 2003 and August 4, 2003, respectively).
In cases arising under the Court's diversity jurisdiction, the court must apply federal procedural law and the substantive law of the state in which it sits. Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). Thus, this Court must apply the substantive law of the state of New York. See Schiavone Constr. Co. v. City of New York, 99 F.3d 546 (2d Cir. 1996).
II. Defendant's. Motion for Summary Judgment
Defendant has moved for summary judgment on both plaintiff's constructive trust claim and her undue influence claim. According to defendant, summary judgment is warranted because plaintiff cannot establish, upon the undisputed material facts, the required elements of either claim.
A. Standard for Summary Judgment : Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In reaching this determination, the court must assess whether there exists any disputed material facts and, in so doing, must resolve all ambiguities and draw all reasonable inferences against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986); Coach Leatherware Co. v. AnnTaylor, Inc., 933 F.2d 162, 166-67 (2d Cir. 1991).
A fact is "material" only if it has some effect on the outcome of the suit. Anderson, 477 U.S. at 248; Catanzaro v. Weiden , 140 F.3d 91, 93 (2d Cir. 1998), A dispute regarding a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248; see also Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.), cert. denied, 502 U.S. 849 (1991).
The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact, after which the nonmoving party must come forward with sufficient evidence to support a jury verdict in its favor; the motion will not be defeated based upon conjecture, surmise or the existence of "metaphysical doubt" concerning the facts. Bryant, 923 F.2d at 982 (citing Matsushita Elec. Indus, Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). The party seeking to avoid summary judgment "must do more than make broad factual allegations and invoke the appropriate statute. The [party] must also show, by affidavits or as otherwise provided in Rule 56 . . . that there are specific factual Issues that can only be resolved at trial." Colon v. Coughlin, 58 F.3d 865, 872 (2d Cir. 1995); see also Driscoll v. Townsend, 60 F. Supp.2d 78, 80 (W.D.N.Y. 1999).
As the Second Circuit has. explained:
[T]he trial court's task at `the summary judgment motion stage of the litigation is carefully limited to discerning whether there are any genuine issues of material fact to be tried, not to deciding them. Its duty, In short, is confined at this point to issue — finding; it does not extend to issue — resolution. . . . It must be kept in mind that only by reference to the substantive law can it be determined whether a disputed fact is material to the resolution of the dispute.Gallo v. Prudential Residential Serv. P'ship, 22 F.3d 1219 (2d Cir. 1994).
B. Plaintiff's Constructive Trust Claim: As stated above, plaintiff's first claim, alleges that a constructive trust for her benefit should be imposed on her father's ERA, According to plaintiff, her father intended that the money in the IRA be used for the benefit of plaintiff, and defendant understood and acquiesced in this understanding. Defendant contends that she is entitled to summary judgment on this claim because the undisputed material facts make clear that plaintiff cannot establish the required elements of her claim.
"Generally, a constructive trust may be imposed `when property has been acquired in such circumstances that `the holder of the legal title may not in good conscience retain the beneficial interest.'" Sharp v. Kosmalski, 40 N.Y.2d 119, 121 (1976) (quoting Beatty v, Guggenheim Exploration Co., 225 N.Y. 380, 386 (1919)), In order to establish a constructive trust, the following four elements must be satisfied: "(1) a confidential or fiduciary relation, (2) a promise, (3) a transfer in reliance thereon, and (4) unjust enrichment." Id. (citations omitted). These elements are not rigid requirements, but are flexible considerations for the court in deciding whether to grant such an equitable remedy. Bankers Sec. Life Ins. Soc'y v. Shakerdge, 49 N.Y.2d 939, 940 (1980). While defendant disputes plaintiff's ability to prove each of the elements, the first two elements are most vigorously contested.
1. Confidential Relationship: The first element to be considered when determining whether to impose a constructive trust is the existence of a confidential or fiduciary relationship between the transferor and the transferee. In fact, "[m]ost frequently, it is the existence of a confidential relationship which triggers the equitable considerations leading to the imposition of a constructive trust." Sharp v. Kosmalski, 40 N.Y.2d at 121. A confidential relationship exists where the transferee was "morally bound to act in [the transferor's] best interest and [the transferor] was justified in reposing a special trust and confidence in [the transferee's] fidelity so pregnant with opportunity for abuse and unfairness as. to require equity to intervene and scrutinize the transaction." Mendel v. Hewitt, 555 N.Y.S.2d 899, 900 (N.Y. App. Div. 1990) (internal quotations omitted). In other words, the remedy exists to compel fidelity by the transferee to the trust and confidence reposed in him or her by the transferor. Sharp v. Kosmalski, 40 N.Y.2d at 121-22.
The confidential relationship must exist between the transferor and the transferee. See Farano v. Stephanelli, 183 N.Y.S.2d 707 (N.Y.App.Div. 1959); see also Sharp v. Kosmalski, 40 N.Y.2d at 121-122 (finding confidential relationship existed between transferor and transferee). In this case, the relationship to be examined is that between Ivar and the defendant, not between the defendant and the plaintiff as defendant erroneously contends. (Docket #17 at 8-9).
Here, defendant contends that plaintiff cannot establish the existence of a confidential relationship because defendant had, at best, only a cordial relationship with her father. On this basis, defendant maintains that summary judgment on the constructive trust claim should be granted in her favor. This Court, however, disagrees. To be entitled to summary judgment, defendant must show the absence of any genuine Issues of material fact relating to the alleged constructive trust. Fed, R. Civ. P. 56(c). The existence of a confidential relationship, however, is itself "a factual issue which can only be resolved at trial." Crown Realty Co. v. Crown Heights Jewish Cmty Council, 572 N.Y, S.2d 38, 39 (N.Y.App.Div. 1991); see Mendel v. Hewitt, 555 N.Y.S.2d at 900 (existence of confidential relationship "is a factual issue which can only be resolved upon a plenary trial").
Plaintiff argues that a confidential relationship must be presumed from the fact that Ivar and defendant were parent and child. See Djamoos v. Djamoos, 545 N.Y.S.2d 596, 597 (N.Y.App.Div. 1989) (relationship between parent and child will support the imposition of a constructive trust) (citing Farano v. Stephanelli, 133 N.Y.S.2d at 711). I find that in this case, however, the existence of a biological relationship is relevant but not itself determinative of a confidential relationship. Indeed, plaintiff admitted that she never witnessed a conversation between defendant and their father, (Docket #17, Ex. A at 19). Moreover, as stated above, defendant avers that she had a distant relationship with her father, that her contact with him. was infrequent and that they never discussed financial matters (Docket #16, Shelve Aff. at ¶ 10) — a representation apparently at odds with her deposition testimony that she and her father had discussed his desire that she use the funds bequeathed to her to "bail out" her sister as needed. (Docket# 17, Ex. Bat 10).
While the above — referenced facts appear to support defendant's position that Ivar and she did not enjoy a confidential relationship, sufficient undisputed facts exist supporting the existence of such a relationship as to make judgment as a matter of law inappropriate. For example, defendant concedes that in 1999 Ivar asked her to serve as the executor of his will, and she agreed to do so. (Docket # 17, Ex. B at 11). In addition, when questioned at her deposition, she admitted that Ivar had advised her that he did not believe plaintiff was capable of managing fiancés and told defendant, "if your sister needs bailing, this will help you bail her. That's basically what he wanted, her to be balled out if she needed it," ( Id . at p. 31-32). Even with respect to the IRA, defendant testified that she understood that her father's Intent was for those funds to be used to "help" take care of plaintiff. (Docket # 23, Ex, C at 30). Ivar's request that defendant serve as executor of his will, as well as his discussions with defendant about his intentions concerning the use of his funds following his death, constitutes, at the very least, some evidence that Ivar reposed a "special trust and confidence" in defendant. Mendel v, Hewitt, 555 N.Y.S.2d at 900.
Finally, it is undisputed that Ivar named defendant as the trustee of a trust under Ms will created for the benefit of plaintiff. The apparent existence of a confidential relationship at the time of the will's execution in 1999, coupled with the familial relationship and existence of conversations concerning Ivar's desire that certain of his funds be used by defendant to bail out plaintiff, suffices to create a question of fact as to whether such a relationship existed at the time of the IRA's beneficiary designation change in 1997. Mindful of my responsibility to resolve all ambiguities against the moving party, Anderson v. Liberty Lobby, Inc., 477 U.S. at 248, I find that defendant has failed to establish the absence of a triable issue on this element.
2. Promise: I find that defendant likewise has failed to demonstrate that no triable issue of fact exists as to whether defendant promised her father that she would use the IRA funds for plaintiff's benefit. `While plaintiff admitted during her deposition that she did not personally witness any conversations between defendant and Ivar Halvorsen (Docket # 17, Ex. A at 19), plaintiff need not provide evidence of a direct promise by defendant. Sinclair v. Purdy, 235 N.Y. 245, 254 (1923); Sharp v. Kosmalski, 40 N.Y.2d at 122. Rather, such a promise may be "inferred from the very transaction itself." Sharp, 40 N.Y.2d at 122. In the oft — cited words of Justice Cardozo, "Though a promise in words [may be] lacking, the whole transaction . . .[may be] instinct with an obligation imperfectly expressed." Sinclair v. Purely, 235 N.Y. at 254 (internal quotation omitted). Indeed, such an implied promise may be properly inferred from the circumstances, such, as those presented here, surrounding the transfer of property in reliance upon a confidential relationship of one family member to another. Sharp, 40 N.Y.2d at 122; Sinclair, 235 N.Y, at 254 ("Even if we were to accept . . . that there was no distinct promise . . ., the exaction of such a promise, in view of the relation, might well have seemed to be superfluous").
Here, plaintiff has offered the circumstantial testimony of several family members as evidence that defendant understood her father's intent to establish a trust for the benefit of plaintiff. Arthur Halvorsen, Ivar's brother, affirmed:
In my conversations with Ivar, he did indicate that he needed to find a new way to handle any bequests to Norrine as he was afraid that she would spend the money quickly and irresponsibly. During our conversations, I mentioned to him `that he should consult with an attorney regarding placing assets for Norrine in a trust for her benefit. After some discussions, Ivar agreed this was a good idea. In later conversations when I had asked Ivar what he had done with respect to his estate, he indicated that his goal was to have Norrine' s share placed in trust so someone could assist her in the management of the assets. When I later asked him if he had consulted with an attorney regarding which assets were to be placed in trust, he advised me that he did not believe there was enough time, but had worked it out with Ellen who would manage the money for Norrine's benefit.
(Docket # 23, Ex. D at ¶ 6).
In addition, Arthur Halvorsen also alleged:
In January or February of 2000, after Ivar had died, Ellen Sheive visited my wife Margaret and myself at our winter home in Florida. . . . During our visit with Ellen, I talked with her about her sister Norrine' s needs. On more than one occasion, Ellen told me "I will do right by my sister." She insisted that Norrine would be taken care of from her father's assets. Ellen said that she would carry through on her father's wishes as they were expressed to her that she [would] use the funds she received to take care of Norrine.
(Docket # 23, Ex. D at ¶ 8 (emphasis added)).
Made Halvorsen, Arthur Halvorsen's wife, also attested to conversations she and her husband had with Ivar relating to his concern over plaintiff's financial well — being. (Docket # 23, Ex. E at ¶ 6). According to her, "[o]n more than one occasion, Ivar told my husband and myself that he was going to leave Norrine's of his estate to Ellen, and that Ellen had promised that she would use the funds to take care of Norrine," ( Id. ). Following Ivar's death, Marie Halvorsen and her husband expressed concerns to defendant regarding plaintiff's well — being. In response, defendant assured them "that she had advised her father that she would receive Norrine's share of his assets and that she would manage it for the benefit of Norrine." (Id. at ¶ 8).
Similarly, Eunice McKie, mother of both plaintiff and defendant, states that Ivar advised her that he desired to establish a trust for plaintiff. (Docket # 23, Ex. F at ¶ 7). According to McKie,
Several months after Ivar's death, while speaking to my daughter Ellen concerning Ivar's estate, Ellen stated to me that "I was not to worry as dad had provided for Norrine . . . Norrine will be well taken care of . . ."
( Id. ).
The above affidavits do not, of course, conclusively establish the existence of a promise by defendant to accept the IRA funds in trust for the benefit of her sister. The affidavits must be considered, however, in the context of the following undisputed facts: (a) prior to his death, Ivar was concerned that plaintiff was financially irresponsible; ( b) he communicated his concern, to defendant, among others; (c) he intended that following his death certain of his funds be used for the benefit of plaintiff; (d) defendant was aware of and discussed with Ivar his intention that she would use those funds "to bail out" plaintiff; (e) Ivar created a trust under his will for the benefit of plaintiff; (f) the corpus of the trust was his residuary estate, specifically defined to "includ[e] [his] investments at Brighton Securities Corp.;" (g) his residuary estate consisted principally of one Brighton Securities money market fund amounting to only $5,000. The Incongruity between Ivar's decision to create a trust for the benefit of plaintiff and his failure to fund its corpus in a meaningful way is another factor weighing in favor of plaintiff on this issue.
On these facts, I conclude that there exists a triable issue of fact as to whether Ivar's transfer of the beneficial ownership of his IRA from plaintiff to defendant was conditioned upon her promise, either direct or implied, that she would use those funds for the benefit of plaintiff While defendant admittedly promised her father that she would use funds she received at his death to "bail out" plaintiff, the disputed question is whether those funds were intended by Ivar, and promised by defendant, to include the non — estate IRA proceeds. It is precisely this lack of clarity that necessitates a trial.
Finally, this Court concludes that plaintiff has adduced sufficient evidence to withstand summary judgment on the remaining two Issues — a `transfer in reliance on the promise and unjust enrichment. It is undisputed that on April 21, 1997, Ivar changed the beneficiary designation form, thus transferring the future beneficial ownership of his IRA from plaintiff to defendant. Had Ivar's transfer been conditioned upon defendant's promise to use the IRA for plaintiff's benefit, distribution of those proceeds to defendant plainly would represent an unjust enrichment of defendant.
C. plaintiff's Claim of Undue Influence: plaintiff's second claim alleges that Ivar changed the beneficiary of his IRA account under undue influence and that plaintiff, as the original benefactor, is entitled to the proceeds, Defendant contends that the record is entirely devoid of any evidence that Ivar was unduly influenced to change the beneficiary of his IRA, This Court agrees.
In order to establish a claim of undue influence, plaintiff must show: (1) the existence and exertion of an influence; (2) the effective operation of such influence as to subvert the mind of the testatrix at the time of the execution of the will; and (3) the execution of a will that, but for undue influence, would not have been executed. In re Estate of Bacon , 645 N.Y.S.2d 1016, 1019 (N.Y. Sur. Ct. 1996). "The three essential elements are motive, opportunity and the exercise of the influence." Id. (citing In re Will of Walther , 6 N.Y.2d 49 (1959); In re Estate of Gearin , 517 N.Y.S.2d 339 (N.Y.App.Div. 1987)).
The New York Court of Appeals has long held that for undue influence to be found:
It must be shown that the influence exercised amounted to a moral coercion which restrained independent action and destroyed free agency, or which, by importunity which could not be resisted, constrained the testator to do that which was. against his free will and desire, but which he was unable to refuse or too weak to resist. It must not be the promptings of affection; the desire of gratifying the wishes of another; the ties of attachment arising from consanguinity, or the memory of kind acts and friendly offices, but a coercion produced by importunity, or by a silent resistless power which the strong will often exercise over the weak and infirm, and which could not be resisted, so that the motive was tantamount to force or fear . . . lawful influences which arise from the claims of kindred and family or other intimate personal relations are proper subjects for consideration in the disposition of estates, and if allowed to influence a testator in his last will, cannot be regarded as illegitimate or as furnishing cause for legal condemnation.In re Will of Walther , 6 N.Y.2d at 53-54 (quoting Children's Aid Soc'y of New York v. Loveridge, 70 N.Y, 387, 394-95 (1877)). A claim of undue influence challenges the validity of the instrument, and thus the burden of proof remains on the party asserting its existence. In re Will of Wharton , 62 N.Y.S.2d 169, 172 (N.Y, App. Div. 1946).
In essence, plaintiff contends that the facts which warrant the equitable imposition of a constructive trust also demonstrate that Ivar was subjected to defendant's undue influence. Devoting only four sentences in her memorandum of law to this issue, she argues:
Through her promises to her father that she would use the proceeds of the IRA as he intended, Defendant exerted an influence over Ivar Halvorsen sufficient to subvert his original intention of setting up a trust to benefit his daughter Norrine, and thereby directly caused the execution of a will that would not have been executed but for Ellen's assurances that it would be unnecessary to use the will to create a trust as she would essentially hold the funds in question as a trustee for Norrine's benefit.
In her deposition, plaintiff also contended that her claim was based upon letters she found after her father's death from defendant to Ivar which discussed using a psychic to contact him after death and encouraged him to sue Strong Hospital over Ms medical diagnosis. (Docket # 17, Ex. A at 20-23). Plaintiff appears to have abandoned these contentions in this motion. In any event, there is no evidence that Ivar ever did sue Strong Hospital, thus undermining plaintiff's position that defendant exercised undue influence over him.
(Docket #22 at 14).
This Court rejects plaintiff's efforts to conflate the two claims. See In re Will of Wharton, 62 N.Y.S.2d at 172 (undue influence not established by confidential relationship standing alone). The elements of a constructive trust, as discussed above, contemplate a mutual understanding between the transferor and the transferee. Conversely, a claim for undue influence requires an exertion of influence sufficiently strong to convert the transferee's desires into those of the transferor.
In the instant matter, plaintiff has not offered any evidence to support her claim that Ivar's mind was subverted by defendant's influence. Indeed, when questioned about whether plaintiff ever observed "dominating" or "over — zealous" behavior by defendant towards Ivar, plaintiff stated that she could not answer "any of those questions" because she was unaware of any contact between defendant and Ivar. (Docket # 17, Ex. A at 18-19). Moreover, the record contains no evidence to suggest that it was defendant's idea that Ivar should change the beneficiary of his IRA. His broker testified that "Ivar was Ms own man," that Ivar came to his office alone on the occasion that he completed the beneficiary change forms, just as he had on every other occasion (other than the week before he died), appeared competent and steady and said nothing to that anyone had influenced his decision to effectuate the change. (Docket # 17, Ex. C at 32-34, 39-41). Indeed, as the broker testified, the form could not be completed until his secretary called defendant — who was living in California — to obtain her social security number. ( Id. at 30-31).
While the Complaint alleges that Ivar suffered from a diminished mental capacity as a result of Ms age and illness (Docket # 1 at ¶ 13), the record refutes this claim (at least until shortly before his death), and plaintiff has not pressed it in this motion. During the time period surrounding the IRA change in 1997, all witnesses agree that Ivar was strong — willed, independent and coherent. (See Docket # 17, Ex. A at 13-17; Ex. B at 16; Ex. C at 14-15 39).
On this record, there is simply no evidence to indicate that defendant, who lived thousands of miles away, exerted arty influence over her father to cause him to substitute her as the beneficiary of Ms IRA. At most, there exists evidence — disputed by defendant — that she promised to use the IRA proceeds for plaintiff's benefit. I find that this promise, standing alone, is insufficient to show that an otherwise competent testator or grantor was unduly influenced to make the challenged. IRA beneficiary change. See In re Bogardus' Will, 190 N.Y.S. 535, 538 (N.Y. App, Div. 1921) (even if appellants could establish that testatrix had promised her mother, years before the testatrix's death, that she would use her inheritance from her mother to provide for her sister, such promise does not establish undue influence over testatrix's execution of a will leaving her estate to her sister). See also In re Will of Walther, 6 N.Y.2d at 54 (directed verdict rejecting claim of undue influence was warranted where "record [was] devoid of any direct evidence that the proponent interfered with the making of the will. [She] did not draft the document; she did not dictate it; she was not present when its proposed contents were discussed; she was not present when the will was executed,"); In re Estate of Branovacki , 723 N.Y.S.2d 575, 577 (N.Y. A.D. 2000) (summary judgment was justified dismissing petitioner's undue influence claim where petitioner "failed to submit evidence, circumstantial or otherwise, sufficient to raise issue of fact whether respondent actually wielded undue influence" in changing the beneficiaries of his IRA).
In this regard, it is noteworthy that the Surrogate dismissed plaintiff's objections to Ivar's will and admitted the will to probate, finding that Ivar "possessed the requisite testamentary capacity at the time he signed his will." (Surrogate Court Decision at 4). Indeed, the IRA form was executed over eighteen, months earlier than the will.
Summary judgment is also warranted on the independent grounds that Ivar's decision to change the beneficiary of his MA — even if it could be viewed, as the product of undue influence — is equally consistent with the alternative theory that it reflects his intention not to leave funds directly to plaintiff because of concerns that she was financially irresponsible. See In re Will of Walther, 6 N.Y.2d at 54 ("an inference of undue influence cannot be reasonably drawn from circumstances when they are not inconsistent with a contrary inference") (quotation omitted); In re Estate of Branovacki, 723 N.Y.S.2d at 577 (same). Because defendant has shown that there are no genuine issues as to any material fact regarding plaintiff's claim of undue influence, defendant is entitled to judgment as a matter of law on that claim.
CONCLUSION
For the foregoing reasons, it is my Decision and Order that defendant's motion for summary judgment (Docket # 16) is DENIED as to plaintiff's claim for a constructive trust and GRANTED as to plaintiff's claim of undue influence.
IT IS SO ORDERED.