To be Argued by:
PETER V. COFFEY, ESQ.
(Time Requested: 15 Minutes)
APL-2015-00337
Appellate Division Case No. 518885
Schenectady County Surrogate’s Court File No. 2011-64/D
Court of Appeals
of the
State of New York
In the Matter of the Estate of
EDMUND FELIX HENNEL a/k/a EDMUND HENNEL,
Deceased.
_ _ _ _ _ _ _ _ _ _ _
GREGORY HENNEL, et al.,
Petitioners-Respondents,
HAZEL HENNEL, as Executor of the Estate of
EDMUND FELIX HENNEL, Deceased,
Respondent-Appellant.
REPLY BRIEF FOR RESPONDENT-APPELLANT
ENGLERT, COFEY, MC HUGH &
FANTAUZZI
Peter V. Coffey, Esq.
Attorneys for Respondent-Appellant
224 State Street
P.O. Box 1092
Schenectady, New York 12301
Tel.: (518) 370-4645
Fax: (518) 370-4979
Dated: August 25, 2016
TABLE OF CONTENTS
Page
TABLE OF CASES, STATUTES, AUTHORITIES AND
TREATISES ......................................................................................................... ii
POINT I
The Existence of a Promise .............................................................. 1
POINT II
The Role of Frank Parisi ................................................................. 5
POINT III
The Lack of Unconscionability ......................................................... 6
CONCLUSION ...................................................................................................... 10
TABLE OF CASES, STATUTES, AUTHORITIES AND TREATISES
Cases
Buddman Distributors. v. Labatt Importers, Inc., 91 AD2d
838 (4th Dept. 1982) .............................................................................................. 10
Castellotti v. Free, 138 AD3d 198 (1st Dept. 2016) ................................................ 9
Mandel v. Liebman, 303 NY 88 (1951) .................................................................. 9
Melwani v. Jain, 281 AD2d 276, 277 (1st Dept. 2001) ......................................... 10
Philo Smith & Co., Inc. v. US Life Corp., 554 F2d 34
(2nd Circuit 1977) .................................................................................................... 7
Steele v. Delverde S.R.L., 242 AD2d 414 (1st Dept. 1997) .................................. 10
Swerdloff v. Mobil Oil Corporation, 74 AD2d 258
2nd Dept. 1980); appeals denied 50 NY2d 803, 913 (1980) ......................... 6, 7, 11
WE Transp. V. Suffolk Transp. Serv., 192 AD2d
601, 602 (2nd Dept. 1983); lv to appeal denied
82 NY2d 656 (1993) ............................................................................................. 10
Treatises
General Obligations Law §5-705 ............................................................................ 8
3Williston on Contracts 533A ................................................................................ 7
ii
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STATE OF NEW YORK
COURT OF APPEALS
-----------------------------------------------------------------------------
In the Matter of the Estate of EDMUND FELIX
HENNEL, also known as EDMUND HENNEL,
Deceased. REPLY BRIEF
GREGORY HENNEL et al., Case #518885
Petitioners-Respondents;
HAZEL HENNEL, as Executor of the Estate
of EDMUND FELIX HENNEL, Deceased,
Respondent-Appellant.
-----------------------------------------------------------------------------
1This Reply Brief is in response to specific points made in Petitioners’ Brief.
They are as follows:
POINT I
THE EXISTENCE OF A PROMISE
Begging the question has been defined as follows:
“The fallacy of begging the question occurs
when an argument’s premises assume the
truth of the conclusion, instead of supporting
it. In other words, you assume without proof
the stand/position, or a significant part of the
stand, that is in question. Begging the question
1 This Brief will continue the adoption of the nomenclature established by Petitioner in the
Appellate Division: Petitioners-Respondents, Gregory Hennel, et.al., are referred to as
“Petitioners”; the Respondent-Appellant, Estate of Edmund Felix Hennel, is referred to as the
“Estate” and Mr. Edmund Hennel is referred to as “Decedent”.
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is also called arguing in a circle”.
Department of Philosophy : Texas State University
Internet last examined August 23, 2012.
It is also been explained as:
“Begging the question is a fallacy in which the
premise of an argument presupposes the truth of
its conclusion; in other words, the argument takes
for granted what is supposed to be proved”.
It has been further said:
“An argument that begs the question is not an
argument at all; it’s an assertion disguised to
look like an argument”.
In our case Petitioners consistently conclude that Decedent is bound to them
to pay off the existing mortgage based upon their statement that there is a clear and
unequivocal promise without ever proving the promise.
1. Petitioners state in their Memorandum of Law the following:
a. “Decedent clearly and unequivocally agreed that Respondents would
receive the apartment building free and clear of any debt…” (at page 4).
b. “The court (Schenectady County Surrogate’s Court) then applied the
doctrine of promissory estoppel identifying the reasonable reliance of Respondents
on the express and unequivocal promise of their grandfather to convey the Jackson
Avenue property to them free and clear of the mortgage to be paid upon his death”
(at page 7).
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c. “Respondents and the Decedent reached a clear and complete agreement
that Decedent would transfer the real estate to Respondents while retaining a life
estate…” (at page 9).
d. “The promise by the Decedent was clear an[d] unambiguous and there is
no question…” (at page 11).
e. “Contrary to the express terms of the agreement between Respondents
and their grandfather, the elements of promissory estoppel were nonetheless
established” (at page 12).
f. “And enforcing the promise made by decedent is the only way [to]
prevent an unconscionable result” (at page 17).
g. “That, of course is the exact agreement which was made by the
parties…” (at page 19).
h. “Whereas here, there is a clear and unambiguous agreement…” (at page
20).
All these statements assume that there is a promise by stating there is a
promise. Neither Respondent in their Brief, nor the Appellate Division majority
opinion, nor the Surrogate’s Court’s opinion set forth to any promise made by
Decedent. The transcript contains none and all these statements assume what they
need to prove. As Judge Garry points out “it bears specifically noting that there
was no evidence that Decedent expressed any such promise in any form” (R456).
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Petitioners state in their in Brief at page 14 “the fact of the promise and its terms
were never contested by Appellant”. In fact this issue was briefed to the extreme
and challenged in every submission by the Estate. The fact that the Estate does not
challenge the facts does not mean that the Estate does not assert that the facts
contain no promise. This matter is discussed by the Surrogate’s Court in its
decision (R11) in which the Court states “that while Respondent (Estate) does not
dispute the relevant facts Respondent (Estate) does not concede that a valid
contract or agreement exists”. The decision goes on to state exactly the Estate’s
position “the Respondent argues that even if Decedent made an oral promise to pay
off the mortgage on the property at the time of his death that promise is not binding
or enforceable due to lack of consideration…and by virtue of the fact that such
promise was not in writing and therefore is in violation of the statute of frauds”.
Petitioners mischaracterize the Estate’s position – the Estate is not challenging the
facts. It is stating however that the fact is there is no promise and, again, even
assuming arguendo there were a promise it is oral and would violate the statute of
frauds. Appellant has contested that at every level both that there was no promise
and if there were a promise it was not in writing. Because the Estate also argued
that there was no promise in writing is not to be construed that the Estate did not
consistently challenge the fact there was any promise at all.
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POINT II
THE ROLE OF FRANK PARISI
Petitioners in their Brief refer, as the Surrogate’s Court did extensively, to
the role of Frank Parisi. The scenario put forth by Petitioners is that there were
discussions had among themselves – Decedent and the two Petitioners – regarding
this entire situation and that they all met in the office of Frank Parisi to sign
documentations evidencing their agreement. As was stated by Petitioners in their
Brief at page 4 “this was accomplished by the simultaneously execution of a new
Will (R.95) and a warranty deed (R.85)”. That is it – those are the writings. The
Will was totally ambulatory and the deed contained a power of appointment giving
Decedent the power to remove the Petitioners entirely from title to the property.
This is what Frank Parisi prepared. If Petitioners wanted a binding agreement,
why did they not get one? Petitioners accepted the documents. They never got a
commitment in any of these writings from the Decedent to pay the mortgage off.
Again, reference is continuously made to the role of Frank Parisi. He prepared
documentation. Petitioners have to live with that documentation but they want
much more than what the documentation gave them. Not only is there no evidence
in the record of a clear and unambiguous promise by the Decedent to commit
himself to paying the mortgage off, the very writings the parties signed rejects this
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proposition. Petitioners signed the documents and they should be required to live
with them.
POINT III
THE LACK OF UNCONSCIONABILITY
In discussing the elements of promissory estoppel and the establishment of
unconscionability Petitioners cite to a significant extent the case of Swerdloff v.
Mobil Oil Corp., 74 AD2d 258 (2nd Dept. 1980); appeals denied 50 NY2d 803, 913
(1980). The Court reviews the Restatement of Contracts Second and states, supra
at page 261 “(T)he other category, the one involved herein, is where promissory
estoppel is alleged to bar the assertion of the statute of frauds. It is set forth in
§217A of the Restatement of Contracts Second. That section together with the
initial part of comment a thereon, is as follows:
Enforcement by virtue of action in reliance.
º º º
(2) In determining whether injustice can be
avoided only by enforcement of the promise,
the following circumstances are significant.
(d) The reasonableness of the action or
forbearance.”
The Court sets forth the significant questioning of the application of the
Restatement of Contracts Second to New York law but goes on to state “in any
event, all authorities, including those supporting §217A require that ‘the
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circumstances (be) such as to render it unconscionable to deny’ the oral promise
upon which the promisee has relied (3 Williston Contracts (3rd Edition) s553A
p.801; see Philo Smith & Co. v. US Life Corp., 554 F3d 34, 36 (2nd Circuit)”. The
Court held that the actions of the promisee which were the spending of significant
hours at the gas station, significant dedication, foregoing the opportunity of buying
an interest in an insurance with the hope or expectation that he would be its
ultimate dealer, etc. simply did not constitute unconscionability and the promisee
in that case (Swerdloff) was not reasonable in relying upon these promises.
Petitioners cite this case and it rejects Petitioners claim. It is respectfully
submitted that the actions of Petitioners in this case come nowhere close to the
detrimental actions of Swerdloff. In our case the Petitioners expended no funds,
did not change their position, did not give up any employment and did not spend
significant time away from their regular duties and were given the money by
Decedent to pay the mortgage payment out of the rental income. In other words
the Swerdloff case sides entirely with Decedent’s position. Petitioners in their
Brief state at page 14 “it was reasonable for Respondents to perform their side of
the bargain as to their knowledge, the Decedent fully intended to perform his
obligations”. Again, this statement begs the question because it assumes there
were obligations on the part of the Decedent which are found nowhere in the
record (see Estate’s Brief Point II (C)). Here Respondents state at page 6 of their
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Brief “Respondents had paid $13,238.34 in mortgage payments following the
death of the grandfather…”. That is not exactly true. They physically paid them
but as Respondents also state in their Brief at page 16 “Respondents paid the
mortgage from the rental proceeds with Decedent taking the interest deduction on
his tax returns”. As a life tenant Decedent was entitled to all the rents and profits
during his lifetime. The implication can be discerned that Petitioners
independently assumed the mortgage and had an independent obligation to pay the
mortgage payments which they did. That simply is untrue. Yes, they did
physically make the mortgage payments but they used the rents which belonged to
the Decedent to make these payments. There is nothing wrong with that of course
but Petitioners did not spend a dime out of their pockets regarding this property.
Another claim of unconscionability is that it would be unconscionable for
Petitioners to assume the mortgage and incur the debt thereby paying off an
obligation the proceeds of which were used apparently to make other gifts to other
relatives [the relevancy of that discussion is difficult to comprehend]. Be that as it
may Petitioners never assumed this debt and never had any obligation whatsoever
to pay it off – see General Obligations Law 5-705. The claim in Petitioners’ Brief
at page 12 is “they became liable for an unpaid mortgage which, at the time of the
summary judgment motion had a principal balance due or(f) $82,194.57…”. Not
so. The Petitioners never became liable for the payment of that mortgage and in
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fact they could have simply walked away and suffered no repercussions
whatsoever. The bank would foreclose the mortgage but they would have no
liability. However, they received a gift of tremendous value even though
encumbered by a mortgage. To walk away and simply let the property be
foreclosed would be an act “so strong and manifest as to shock the conscience and
confound the judgment of any man of common sense” quoting Chancellor Kent in
Osgood v. Franklin, 2 Johns Ch1 at page 23 as quoted in Mandel v. Liebmann, 303
NY 88, 94 (1951) at page 94. It is difficult to believe that Petitioners would be so
lacking in common sense as to simply let the bank have the property and lose their
$150,000.00 in equity.
The cases cited by Petitioners support fully Decedent’s position. The case of
Castellotti v. Free, 138 AD3d 198 (1st Dept. 2016) involved a dispute between a
brother and sister. The brother, Peter, was excluded from his mother, Madeline’s,
Will. Lisa made “an unambiguous promise”, supra at page 204, to Peter that if he
would pay the estate taxes she would give him the inheritance that he was denied
by his mother. In reliance of that promise Peter paid $2,000,000.00 and if the
promise is not sustained Peter would receive nothing in return for his payment of
$2,000,000.00. That is unconscionability. As they say, it does not get much
clearer than that. In our case Petitioners expended nothing of their own and
received property having equity of $150,000.00. In Castellotti Peter pays
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$2,000,000.00 and gets nothing. In our case Petitioners pay nothing and get
$150,000.00. Then Petitioners cite Buddman Distributors v. Labatt Importers,
Inc., 91 AD2d 838 (4th Dept. 1982), supra at pp. 838-839 “bearing on the issue of
estoppel, the complaint states that, relying upon the defendant’s promises, the
plaintiff expended substantial sums in connection with the contract which had
otherwise would not have had to expend”. Again, here Petitioners expended
nothing and received a great deal. The other cases cited by Petitioners at page 12,
Melwani v. Jain, 281 AD2d 276, 277 (1st Dept. 2001), Steele v. Delverde S.R.L.,
242 AD2d 414, 415 (1st Dept. 1997) and WE Transp. v. Suffolk Transp. Serv., 192
AD2d 601, 602 (2nd Dept. 1993); lv to appeal denied 82 NY2d 656 (1993), all
reject that the facts of those cases constituted unconscionability giving the
promisee the right to rely upon collateral estoppel in avoidance of the restrictions
of the statute of frauds.
CONCLUSION
There is simply nothing in this record which evidences a promise made by
the Decedent to commit himself to paying off the mortgage. In fact as was stated
by the dissent in the Appellate Division there is no promise of any kind whatsoever
and the statements made by Petitioners, by the lower Court and by the majority
opinion below simply assume what needs to be proven. Saying it is so does not
make it so.
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Petitioners and Decedent went to Frank Parisi which Petitioners maintain
consistently to prepare the documentation to effectuate the agreement. Frank
Parisi prepared the documentation. It gave Petitioners a conditional gift of the
property and a conditional provision to pay off the mortgage. On the other side no
provision bound Decedent to commit himself to anything and the documentation
prepared by Frank Parisi is totally void of any such promise or commitment.
Finally, Petitioners spend a good deal of time examining the Swerdloff case,
supra. Swerdloff was attempting to enforce an oral promise (in our case there was
an actual promise). He expended a great deal of effort, turned down other jobs,
worked very hard and in the end received nothing. The Court found that did not
establish unconscionability. In our case Petitioners expended much less effort than
did Swerdloff and received a property with $150,000.00 in equity – a great deal
less effort and a great deal more return. If the facts in Swerdloff do not establish
unconscionability, the facts in this case certainly do not.
Dated: August 25, 2016
TO: Robert L. Adams, Esq.
Attorneys for Appellant
224 State Street
Schenectady, New York 12305
(518) 370-4645
MARTIN, SHUDT, WALLACE, DILORENZO & JOHNSON
Atton1eys for Respondents
258 Hoosick Street, Ste. 201
Troy, New York 12180
(518) 272-6565
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