Monday, September 26, 2016


In this case, the names mentioned are an attorney who had himself named as power of attorney and an attorney who prepared the papers. This case is interesting as it describes some potential ethical issues when counsel is asked to prepare these documents.

Matter of Mitchell 2016 NY Slip Op 50853(U) Decided on June 3, 2016 Supreme Court, Kings County Pesce, J.:

"Respondent argues in his post trial memorandum, that this Court should find that the $122,000 in gifts to Mr. Shadoian were proper, because: 1) it is movant's burden to show that the IP was suffering from mental infirmity at the time the gifts were made and that movant had offered no proof as to the IP's debilitated mental status on the specific dates the checks were issued ( See Lee v. Bank of NY, 294 AD2d [2d Dept 2002]; Gala v. Magarinos, 245 AD2d [2d Dept 1997]) and 2) despite the fact that the gifts were made to a fiduciary, there is nothing in the record to indicate that the gifts resulted form undue influence or that they were based on anything other than gratitude, affection and esteem. (See Matter of Hedges, 100 AD2d 586, [2d Dept 1984]).

Movant concedes that, typically, the burden of proving undue influence rests upon the party alleging it. (See Allen v. La Vand , 213 NY 322, 323 [1915]). Movant, however, advances [*6]the convincing and well established argument that if the donee of a transaction has a fiduciary or confidential relationship with the donor, the burden of proof shifts to the party receiving the benefit to prove by clear and convincing evidence that the transaction was fair and free of undue influence. (See Matter of Connelly, 193 AD2d 602 [2d Dept 1993]). Movant cites that this axiom was just reiterated by the Court of Appeals in Matter of Aoki, 27 NY3d 32 (2016) , where the court shifted the burden to the grantee that held a fiduciary relationship with the grantor.

However, an exception to that general rule provides that where a fiduciary relationship exists between the parties, the law of constructive fraud will operate to shift the burden to the party seeking to uphold the transaction to demonstrate the absence of fraud (see Matter of Aoki, supra, 39 citing Matter of Greiff, 92 NY2d 341, 345 [1998]).

It is uncontroverted that at the times of the gifts, to wit: January 23, 2012, April 24, 2012, June 15, 2012 and September 19, 2012, Mr. Shadoian was in two fiduciary relationships with the IP. He was the IP's attorney-in-fact and her health care proxy, and therefore it is Mr. Shadoian's obligation to prove that the IP freely and voluntarily gifted $122,000.00 to him. Under New York law, it is Mr. Shadoian's burden to prove that the IP made $122,000.00 of cash gifts to him knowingly and voluntarily, without the taint of undue influence.

To prove that the IP freely and knowingly made these gifts, Mr. Shadoian called Mr. Gagliardi to testify. Mr. Gagliardi's testimony did nothing to prove that the gifts were voluntary. He spoke to the IP briefly over the phone and met her one time for 30 minutes while the IP was in the company of Mr. Shadoian. Additionally, when Mr. Gagliardi telephoned the IP and she answered the phone and the two spoke, we do not know if Mr. Shadoian was present and influencing the IP. Mr. Gagliardi's testimony was too threadbare to carry much weight. He spent so little time with the IP that his impression cannot be given much weight, especially in light of the fact that Mr. Gagliardi was never informed that APS had intervened in the IP's life, that the IP had been prescribed Alzheimer medication, that she had been hospitalized on several occasions due to her own and Mr. Shadoian's neglect.

Moreover, Mr. Gagliardi failed to make even elementary inquiries as to the actual size of the IP's estate, her medical condition, her social and familial history. Contrary to usual practice, he allowed an unrelated person, designated as beneficiary, to orchestrate the completion and execution of the Will. As to the validity of the Will, it will have to be decided on another day in another court, if the Will ever arrives back in the United States from its sojourn in Iran.Also as Mr. Shadoian's case, two letters, purportedly from medical personnel, placed into evidence by Mr. Shadoian, stating the IP was fine are likewise given little to no weight. These providers were unaware of IP's hospitalizations or history with APS, and their statements are devoid of any medical basis for their declarations."

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