Surrogate López TorresESTATE OF 72634552 CORP., plf v. JOSEPH OKON, YVETTE APPLEBAUM, ET AL., def (10/2817/B) — This action, commenced on October 7, 2011, was transferred to this Court by order dated February 8, 2016 of Hon. Richard Velasquez, Supreme Court, Kings County. Plaintiff 72634552 Corp. commenced this action in Supreme Court against defendants Joseph Okon and Yvette Applebaum for partition and sale of a parcel of real property that is an asset of the estate of defendants’ mother, Mildred Applebaum (decedent). Defendants now move to nullify and invalidate the deed purporting to convey the share in real property beneficially held by the defendants’ sister, Pamela McKenzie, who post-deceased the decedent. Plaintiff cross-moves for summary judgment for an order to determine plaintiff’s and defendants’ respective interests in the real property, and for an order of partition and sale of the property.BACKGROUND / FACTUAL ALLEGATIONSThe decedent died on July 26, 2010, leaving a Last Will and Testament (Will) that devised her residuary estate to her three children, Joseph Okon (Okon), Yvette Applebaum (Applebaum), and Pamela Mckenzie (Mckenzie), in equal shares, and nominated Okon as executor. The Will was admitted to probate and letters testamentary were issued to Okon on January 25, 2012. The decedent’s estate includes a one-family home located at 258 Fenimore St., Brooklyn, NY (real property), which was not specifically devised, but rather is part of the residuary estate. The decedent’s Will provides, in pertinent part, as follows:FIRST: I direct my [Executor] to pay all of my just debts and funeral expenses as soon as practicable after my death.SECOND: I give, devise and bequeath my entire residuary estate, whether real, personal or mixed, of whatsoever kind and nature and wheresoever situated, which I may own or be entitled to at the time of my death, to my children [Okon, Applebaum and Mckenzie] to share and share alike.FIFTH: I give my [Executor] the fullest power and authority in all matters and questions, and to do all acts which I might or could do if living, including without limitation, complete power and authority to retain any and all property, whether real, personal or mixed, and to sell, mortgage, lease, dispose of and distribute in kind, any and all said property, at such times and upon such terms and conditions as [he] may deem advisable.According to plaintiff, almost 6 months prior to the letters testamentary being issued, Mckenzie allegedly conveyed her interest in the real property to plaintiff by deed dated August 17, 2011. McKenzie has since died.1 The alleged “bargain and sale deed with convenant against grantor’s acts,” recorded with the NYC Department of Finance on or about September 29, 2011 (deed), states that McKenzie, conveyed a 33.33 percent interest in the real property to plaintiff “in consideration for Ten Dollars and other valuable consideration paid by” plaintiff. The “recording and endorsement cover page” (cover page) for the deed identifies Yuval Golan as its presenter. The cover page states that no NYC Real Property Transfer Tax was paid and $40.00 was paid in NYS Real Estate Transfer Tax. Plaintiff also submits a copy of an untitled document allegedly signed by McKenzie on August 17, 2011 and bearing the signature of “witness” Aubrey Marquez. The document states in pertinent part as follows:Pamela L. McKenzie… hereby acknowledges that she met with or spoke with the purchaser and negotiated with the purchaser the terms of an agreement to sell and convey her interest in real property known as 258 Fenimore Street, Brooklyn, New York. Pamela L. McKenzie acknowledges that Robert D. Gelman, Esq. did not participate in these negotiations.Pamela L. McKenzie acknowledges and understands that Robert D. Gelman, Esq. reviewed with her the death certificate of her mother, the title report, and contract of sale, a deed, and transfer tax returns, and advised her that Robert D. Gelman, Esq. represented only the purchaser in this transaction, and that Robert D. Gelman, Esq. did not represent Pamela L. McKenzie. Pamela L. McKenzie acknowledges that she affirmatively advised Robert D. Gelman, Esq. that she did not wish to review the contract of sale, deed, or transfer tax returns with her own attorney, and that she knowingly and willingly entered into the agreement with the purchaser, and that she understands she is knowingly and voluntarily executing a contract that will bind her to transfer ownership to 72634552 Corp., and she is knowingly and voluntarily executing a deed that will IMMEDIATELY and IRREVOCABLY transfer to 72634552 Corp. of all of her right, title, and interest in real property known as 258 Fenimore Street, Brooklyn, New York. Accordingly, Pamela L. McKenzie hereby releases Robert D. Gelman, Esq. and holds Robert D. Gelman, Esq., harmless for any actions concerning the conveyance of Pamela L. McKenzie’s interest in real property known as 258 Fenimore Street, Brooklyn, New York to 72634552 Corp.Pamela L. McKenzie requested that the purchaser’s attorney, Robert D. Gelman, Esq. prepare a contract of sale, a deed, and transfer tax returns on her behalf to bind her and the purchaser in a transaction to sell and to purchase all of the right, title and interest of Pamela L. McKenzie in real property known as 258 Fenimore Street, Brooklyn, New York, to 72634552 Corp. or its assignee. Pamela L. McKenzie acknowledges… that Robert D. Gelman, Esq. did not represent her or her interests.While the document states that plaintiff’s attorney was to prepare a “contract of sale” and “transfer tax returns,” no copies of any such documents have been submitted, nor is there any indication that such documents were ever prepared. There is no document before the court to show that McKenzie signed an agreement specifying any sale price or consideration other than the “Ten Dollars” noted on the deed. Rather, plaintiff submits a copy of a cashed check in the amount of $10,000 dated April 17, 2011, made out to McKenzie. Plaintiff claims that amount was the full consideration given for McKenzie’s one-third interest in the real property. Further, in support of the claim that McKenzie knowingly and voluntarily agreed to the transaction and accepted $10,000 in full consideration thereof, plaintiff submits the affidavits of Samiel Hanasab (Hanasab), purportedly the President of 72634552 Corp., and Aubrey Marquez (Marquez), purportedly a witness to the transaction.Hanasab states in his affidavit that on August 17, 2011, McKenzie and his company “came to an agreement” that his company would purchase her interest in the real property. Hanasab denies that McKenzie was coerced, under duress, or “not in her right frame of mind” when entering into the agreement. Hanasab further states that McKenzie brought her “friend” Marquez to Hanasab’s office to witness McKenzie sign the “disclosure agreement” (ostensibly the untitled document referenced above) and deed. Hanasab does not provide any details as to how he and McKenzie first met and “came to an agreement;” how long McKenzie was given to consider the agreement and retain her own counsel; why no contract was prepared and signed by the parties; and whether anyone advised McKenzie about the fair market value of the real property.Marquez states in his affidavit that he was a neighbor of McKenzie and knew her for five years prior to her death. Marquez further states that on an unspecified date, McKenzie informed him that she had inherited an interest in the real property and that she wished to sell her interest to plaintiff. McKenzie further informed him that the closing of the sale was to take place on August 17, 2011 and asked Marquez to attend “for support.” Accordingly, Marquez went to plaintiff’s office that day where the “disclosure statement” and deed were presented to McKenzie. Marquez also states that he saw McKenzie read and sign the documents and accept a check in the amount of $10,000. Marquez also read the “disclosure statement” and signed as a witness. He then accompanied McKenzie to the bank where he witnessed her cash the check. Marquez contends that based upon his observations, McKenzie was fully aware of what she was doing and not under any duress, or the influence of medications, drugs, or pain.2Defendants assert that the value of the real property, located in the Crown Heights neighborhood of Brooklyn, is worth in excess of $1,800,000 and that plaintiff’s alleged purchase of McKenzie’s one-third share in the real property for merely $10,000 is a product of fraud, and otherwise unconscionable as a matter of law. Okon also submits an affidavit in support of defendants’ motion stating that at the time of the transaction, McKenzie had been diagnosed with a number of chronic and terminal illnesses; been in and out of many drug rehabilitation centers; and was addicted to pain medications and on Tramadol and Oxycontin, which affected her mental capacity and ability to understand the nature of the “complex real estate transaction at the time of the alleged conveyance.” Accordingly, defendants assert that the transaction was a product of plaintiff’s principal Yuval Golan’s “immoral coercion” over McKenzie, who was compromised due to her weakness, addictions, poor health, and inability to think independently.3THE INSTANT MOTION AND CROSS-MOTIONDefendants’ Motion to Nullify and Invalidate DeedDefendants move for an order (a) nullifying and invalidating the deed as having been conveyed without authority from this court or the executor of the estate, and in violation of the terms of the decedent’s Will; (b) forever barring plaintiff and all other persons claiming an interest in the estate or the real property under the deed; and (c) assessing punitive damages against plaintiff for “fraudulent, outrageous and unlawful” acts.4 The grounds for defendants’ motion are, inter alia, that (a) McKenzie lacked legal capacity to convey her interest in the real property since the Will had yet to be probated and an executor yet to be appointed; (b) McKenzie lacked mental capacity to convey her interest in the real property due to her addictions and poor health; (c) the authority to sell the real property rested solely with the executor pursuant to the Will and by law; (d) there was no contract of sale detailing the terms and conditions of the transaction, including the sales price, as required by General Obligations Law 5-703(2); (e) McKenzie was unrepresented by counsel, indicating that the transaction was not at arms length; and (f) Yuval Golan, the principal of the plaintiff corporation, has a history of perpetrating fraud and using predatory tactics against vulnerable homeowners and heirs of estates.Plaintiff’s Cross-Motion for Summary JudgmentPlaintiff cross-moves for summary judgment, pursuant to RPAPL 1515, for an order (a) determining the interests of the plaintiff and defendants in the real property; (b) for partition and sale; and (c) cancelling and discharging a mortgage in the sum of $15,000 against Lincoln Savings Bank.5 Plaintiff argues that by operation of law, title to real property devised under a will vests in the beneficiary at the moment of the testator’s death, and regardless of a will’s direction giving the executor the power to sell, title to real property does not rest with the executor. Therefore, plaintiff argues, it obtained legal and valid title to McKenzie’s one-third share in the real property, despite the fact that the Will had yet to be probated and an executor yet to be appointed at the time of McKenzie’s alleged conveyance of her interest in the real property.SUMMARY JUDGMENT STANDARDSSummary judgment is a drastic remedy that may be granted only where there is an absence of any material issues of fact requiring a trial. See CPLR §3212(b); Vega v. Restani Const. Corp., 18 N.Y.3d 499, 503 (2012). The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law by tendering evidence to demonstrate the absence of any material issues of fact. Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 (1986). Failure to make this initial showing requires a denial of the motion, “regardless of the sufficiency of the opposing papers.” Winegrad v. New York Univ. Med. Center, 64 N.Y.2d 851, 853 (1985). In reviewing the sufficiency of the proponent’s submissions, the facts must be carefully viewed “in the light most favorable to the non-moving party.” Ortiz v. Varsity Holdings, LLC, 18 N.Y.3d 335, 339 (2011). The court’s function in deciding a summary judgment motion is issue finding rather than issue determination. Sillman v. Twentieth Century-Fox Film Corp., 3 N.Y.2d 395, 404 (1957).DISCUSSIONCourts have held that “title to real property devised under the will of a decedent vests in the beneficiary at the moment of the testator’s death.” Matter of Seviroli, 31 A.D.3d 452, 454-455 (2d Dep’t 2006); Matter of Katz, 55 A.D.3d 836, 836 (2d Dep’t 2008); Waxson Realty Corp. v. Rothschild, 255 N.Y. 332, 336-337 (1931). Further, an executor’s “power to sell the property, without the existence of a valid trust over the proceeds, vests no title in the executor.” Matter of Seviroli, 31 A.D.3d at 454-455. Plaintiff contends that these axioms stand for the proposition that a beneficiary to a will, having title to an estate’s real property at the moment of the testator’s death, has legal authority to convey his or her share of real property by deed at any time, even before the will is probated and an executor is appointed. That contention is overly simplistic and does not comport with the universe of caselaw and statutes that apply to the facts at issue, nor with the testator’s intent herein. Moreover, the argument is at odds with the fundamental necessity of allowing an executor to exercise her/his fiduciary duties and powers over the estate without impediment, for the purposes of fostering the orderly administration of estates. Accordingly, for the reasons discussed below, this court finds that McKenzie did not have the legal authority to convey her share in the real property by deed at the time when she allegedly did so.While it is true that title to an estate’s real property vests in beneficiaries at the moment of a testator’s death, their title is qualified and subject to the executor’s power to sell the property to satisfy the debts and obligations of the estate. Matter of Ballesteros, 20 A.D.3d 414, 415 (2d Dep’t 2005); Matter of Katz, 55 A.D.3d 836, 836 (2 Dep’t 2008). Accordingly, “title does not fully vest in the legatee until a fiduciary gives an assent to its release.” Estate of Coe Kerr, Jr., NYLJ Mar. 16, 1983, at 6, col. 3 (Sur. Ct. NY County 1983); see also Estate of Edwards, NYLJ Feb. 18, 2000, at 30, col. 2 (Sur. Ct. Kings County 2000) (“Even where a real property is specifically devised, title to the property remains in the decedent’s name and remains an estate asset available for the payment of administration expenses and taxes, until the fiduciary gives assent to its release.”) Further, property in an estate “is always, by definition, held in the testator’s name at the time of death (else the testator would not be able to bequeath or devise it).” Estate of Mendelson, NYLJ July 19, 2017, at 27, col. 3 (Sur. Ct., NY Cty. 2017). “Accordingly, an executor must always take at least some action with respect to such property, even if only to cooperate in its record transfer.” Id. “Moreover, an executor is often as a practical matter called upon to perform various functions with respect to the property prior to its transfer, at whatever point the transfer may occur.” Id. As the Mendelson Court wisely further explained:“The decisions commonly say that title to specifically bequeathed or devised property passes automatically to the beneficiary or devisee. However, these decisions cannot be taken to mean that literally, since it is an incontrovertible fact that, where property is subject of formal title, the executor is unavoidably going to have to be involved in formal transfer of title to the beneficiary. What the decisions mean in this respect is that beneficial entitlement passes automatically to specific beneficiaries or specific devisees, with only a ‘qualified legal title’ passing to the fiduciaries… to enable them to deal with the property to the extent that they, as fiduciaries, must do so either: (a) to protect the estate as a whole (as opposed to protecting the specific property), when circumstances require, or (b) to satisfy a duty imposed on the fiduciaries by the terms of the will regarding the particular property.” Estate of Mendelson, NYLJ July 19, 2017, at 27, col. 3, fn. 4 (Sur. Ct., NY County 2017)There is an indispensable reason why testators nominate fiduciaries and the Surrogate’s Courts appoint fiduciaries who duly qualify under the law to administer estates. A competent person must be designated to execute the important duties of carrying out the testator’s wishes, protecting the estate’s assets, and satisfying the estate’s debts and obligations. Further, a capable person must be chosen to exercise the powers that a fiduciary has under the law and as may be provided in the will. These principles are at the root of why laws and procedures were enacted to foster the orderly and equitable administration of estate. Accordingly, the law requires that a fiduciary be allowed the opportunity to first, be appointed, and to then marshal the assets of the estate, pay its debts and obligations, distribute the proceeds of the estates, and, in the case of real property, to sell under terms that the fiduciary deems most advisable.6Here, McKenzie’s alleged conveyance by deed, of a partial interest in the estate’s real property, even before the Will was probated and the executor appointed, was premature and without legal authority. A fiduciary’s powers over an estate’s real property are comprehensive and include the authority to sell the property “at public or private sale, and on such terms as in the opinion of the fiduciary will be most advantageous to those interested therein;” to mortgage the property; to lease the property for a term not exceeding three years; to make ordinary repairs; and to grant options for the sale of the property for a period not exceeding six months. EPTL 11-1.1(b). Pursuant to the broad powers granted to a fiduciary by law, Okon, as executor, must have been given an opportunity to decide what actions to take with respect to the real property, whether it was to sell it to satisfy the estate’s debts and obligations, or to sell under terms that he determines is most advantageous to the estate and its beneficiaries.Moreover, the alleged transaction between plaintiff and McKenzie was in contravention of the executor’s powers under the decedent’s Will, which are even greater than the executor’s powers under the law. The decedent’s Will granted the executor “the fullest power and authority in all matters and questions, and to do all acts which [the decedent] might or could do if living, including without limitation, complete power and authority to retain any and all property, whether real, personal or mixed, and to sell, mortgage, lease, dispose of and distribute in kind, any and all said property, at such times and upon such terms and conditions as [the executor] may deem advisable.” Here, the decedent’s clear intent was to grant the executor exclusive powers to make any decisions with respect to the real property, including when and whether to partition or sell it. It is axiomatic that the testator’s intent, as expressed in a will, is paramount and must be the “absolute guide” in deciding disputes over a testate estate. In re Bieley, 91 N.Y.2d 520, 525 (1998). Therefore, McKenzie was without legal authority to convey by deed her beneficial entitlement to a one-third share in the real property before Okon was appointed and given an opportunity to exercise his exclusive powers over the property.This is the only conclusion that logically flows from these facts when considered in light of the law, and the practicalities and logistics of administering an estate, whether title to estate property vests in the beneficiaries at the moment of death or not. To allow one or more beneficiaries to unilaterally convey their beneficial interest in real property, before an executor has had the opportunity to exercise his fiduciary duties and powers over the property, would frustrate the purpose of the laws designed to foster the orderly administration of estates. Indeed, this matter is an extreme example of how an executor could be impeded in his duties and powers to the detriment of the estate, if individual beneficiaries are allowed to act unilaterally in disposing of real property. Here, even before the Will was probated, plaintiff filed a partition action, tying up the estate in litigation and holding the disposition of the real property hostage.7 The premature conveyance by deed,8 allegedly made between plaintiff and McKenzie, wrongfully usurped the powers of the executor and thwarted the intent of the testator, all to the detriment of the estate and its surviving beneficiaries. This type of forced self-help partition of an estate’s real property, commenced two months after the purported transfer and three months prior to admission of the Will to probate, has no support in law and cannot be countenanced.The court is cognizant that “[a] person entitled to share in an estate may assign or grant his interest in the estate, and the assignee becomes a person interested in the estate.” 6 Warren’s Heaton on Surrogate’s Court Practice 75.02 (2018). An assignment of interest in an estate must be in writing and recorded in the county clerk’s office of the county where the estate’s real property is situated, or in the case of personal property, in the Surrogate’s Court. EPTL 13-2.2. Further, an assignment may not be recorded “unless accompanied by an affidavit in a form satisfactory to the court, which shall state whether any power of attorney or separate agreement exists which relates to such assignment or which fixes presently or prospectively the amount payable by or to the assignor.” 22 NYCRR 207.47. Where such a power of attorney or separate agreement exists, it must be attached to the affidavit. Id. None of these procedures were followed in the transaction between plaintiff and McKenzie. Had a valid assignment of McKenzie’s beneficial share in the estate been made and recorded, plaintiff might have a claim against the estate which could be raised at the time of the estate’s accounting.That part of defendants’ motion, asserting that the deed should be rescinded on the grounds that plaintiff engaged in fraudulent conduct and that the transaction was otherwise unconscionable, is denied as moot and without prejudice. The alleged conveyance of a one-third interest in a parcel of real property in Brooklyn valued at $1.8 million, by an unrepresented seller in exchange for the paltry sum of $10,000, strikes the court as subject to a claim of unconscionable conduct as a matter of law. However, the court need not rule on these issues given the outcome.9CONCLUSIONFor the foregoing reasons, defendants’ motion is granted and plaintiff’s cross-motion is denied. The deed dated August 17, 2011 and recorded on September 29, 2011, purporting to convey Pamela McKenzie’s one-third interest in the real property located at 258 Fenimore Street, Brooklyn, NY to plaintiff is void, rescinded and cancelled. It is further ordered that plaintiff shall have no claim to the real property located at 258 Fenimore Street, Brooklyn, NY and is forever barred from asserting any interest, claim, or ownership over the real property located at 258 Fenimore Street, Brooklyn, NY. All other arguments have been considered and found unavailing or otherwise moot.Settle decree.Dated: May 25, 2018Brooklyn, New York
