A FAMILY BUSINESS DISPUTE

Harounian v Harounian, 2021 NY Slip Op 05550, Decided on October 13, 2021, Appellate Division, Second Department:

"The complaint in this action alleges that the plaintiff, Jacob Harounian (hereinafter Jacob), owned and operated a rug business called J. Harounian Oriental Rug Center (hereinafter JHORC). Jacob eventually asked his son, the defendant Mark Harounian (hereinafter Mark), to help him run JHORC. Jacob thereafter gave Mark a 40% ownership interest in JHORC. In addition, Jacob formed a partnership with Mark and Mark's two sisters called JAM Realty Co. (hereinafter JAM Realty) to take title to certain property located on 25th Street in Manhattan. Jacob had a 76% ownership interest in JAM Realty, while Mark's two sisters had 5% each, and Mark had 14% (10% plus a 4% "equity kicker") in light of the active role Mark would be taking in JAM Realty. Jacob, Mark, and Mark's two sisters (hereinafter collectively the family) decided to purchase and manage investment properties in Manhattan. JAM Realty purchased two more buildings, and then the family formed another partnership called United Nationwide Realty. The ownership interests in United Nationwide Realty were divided as follows: (1) Jacob 40%, (2) Mark's sisters 14% each, and (3) Mark 32% (28% plus a 4% "equity kicker"). Mark eventually converted JAM Realty to a limited liability company called Jam Realty NYC, LLC, and formed three new limited liability companies, [*2]United Flatiron, LLC, United Seed, LLC, and United Square, LLC (hereinafter collectively with Jam Realty NYC, LLC, the JAM LLCs), to own the three properties formerly owned by JAM Realty. Mark converted United Nationwide Realty to a limited liability company called United Nationwide Realty, LLC.

Over the course of the next several years, the family formed multiple companies to acquire a number of properties, including United Hay, LLC, 3M Properties, LLC, United West, LLC, United Chelsea, LLC, United Village, LLC, and United East, LLC (hereinafter collectively with United Nationwide Realty, LLC, the United LLCs). The family acquired a building located on 32nd Street for use as a showroom for the rug business and as the business headquarters (hereinafter the family headquarters), using funds from JAM Realty for the purchase and renovation of the building. It was agreed that Mark or an entity owned by Mark would take title to the family headquarters and hold the family's interests therein in trust for the family. The ownership interests would be divided as follows: (1) Jacob 40%, (2) Mark's sisters 14% each, and (3) Mark 32% (28% plus a 4% "equity kicker"). In addition to showroom and office space, the building also had a living space for Jacob.

Jacob commenced the instant action asserting 13 causes of action, including to recover damages for breach of fiduciary duty and unjust enrichment, and for an accounting and injunctive relief. The complaint alleged, among other things, that Mark amended the operating agreements or had new operating agreements drafted to reduce or eliminate Jacob's ownership interests in JAM Realty, United Nationwide Realty, and the United LLCs, and to permit payment of "reasonable compensation" to Mark for managing the JAM LLCs and the United LLCs. The complaint further alleged that Mark caused the family headquarters to be vacated, including, but not limited to, the rug showroom and Jacob's living space. The defendants and nominal defendants moved, inter alia, to dismiss the complaint pursuant to CPLR 3211(a)(1), (4), (5), (7), 1001(a), and 3016(b). Jacob opposed the motion. The Supreme Court denied the motion. The defendants and nominal defendants appeal.

"[M]embers of a limited liability company (LLC) may bring derivative suits on the LLC's behalf" (Tzolis v Wolff, 10 NY3d 100, 102). In a derivative suit, "[t]he remedy sought is for wrong done to the corporation; the primary cause of action belongs to the corporation; [and] recovery must enure to the benefit of the corporation" (Isaac v Marcus, 258 NY 257, 264; see Marx v Akers, 88 NY2d 189, 193). In the context of a corporation, "the standing of the shareholder is based on the fact that . . . he [or she] is defending his [or her] own interests as well as those of the corporation" (Tenney v Rosenthal, 6 NY2d 204, 211). "Where the plaintiff voluntarily disposes of the stock, his [or her] rights as a shareholder cease, and his [or her] interest in the litigation is terminated. Being a stranger to the corporation, the former stockowner lacks standing to institute or continue the suit" (Independent Inv. Protective League v Time, Inc., 50 NY2d 259, 263-264 [citations omitted]; see Tenney v Rosenthal, 6 NY2d at 211). The same is true of a limited liability company. "In order to maintain a derivative cause of action, a plaintiff must be a member of the LLC" (Jacobs v Cartalemi, 156 AD3d 605, 607).

"To succeed on a motion to dismiss pursuant to CPLR 3211(a)(1), the documentary evidence that forms the basis of the defense must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim" (Teitler v Pollack & Sons, 288 AD2d 302, 302; see Leon v Martinez, 84 NY2d 83, 87-88). Here, the United LLCs' operating agreements conclusively establish that Jacob is not a member of the United LLCs. As a nonmember of the United LLCs, Jacob lacks standing to bring derivative causes of action on their behalf (cf. Tzolis v Wolff, 10 NY3d 100). Accordingly, the Supreme Court should have granted those branches of the motion of the defendants and nominal defendants which were pursuant to CPLR 3211(a)(1) to dismiss the third, fifth, and seventh causes of action alleging derivative causes of action.

"To prevail on a cause of action for an accounting, in addition to being a shareholder, a party must show that he or she demanded an accounting and that the demand was refused by the corporation, or that such demand would have been futile" (World Ambulette Transp., Inc. v Lee, 161 AD3d 1028, 1032; see Matter of Gross v Gross, 38 AD3d 893).

On a motion to dismiss pursuant to CPLR 3211(a)(7), the court must accept the facts [*3]alleged in the complaint as true and determine whether those facts state a cause of action (see Leon v Martinez, 84 NY2d at 87-88; Guggenheimer v Ginzburg, 43 NY2d 268, 275). Pursuant to the JAM LLCs' operating agreements, members are entitled to inspect the JAM LLCs' books and records for the immediately preceding three-year fiscal period upon 10 days' written notice. Here, the complaint fails to allege that Jacob made a demand to inspect the books and records of the JAM LLCs, and that Mark refused his demand, or that such demand would have been futile. Additionally, the thirteenth cause of action, which is a derivative cause of action for an injunction, is vague in that it fails to indicate upon which limited liability companies the cause of action is being litigated, and fails to specify the conduct which it seeks to enjoin. Accordingly, the Supreme Court should have granted that branch of the motion of the defendants and nominal defendants which was pursuant to CPLR 3211(a)(7) to dismiss the sixth cause of action, which was for an accounting with respect to the JAM LLCs, and the thirteenth cause of action.

The usual elements of a constructive trust are (1) a confidential or fiduciary relationship, (2) a promise, (3) a transfer in reliance thereon, and (4) unjust enrichment (see O'Brien v Dalessandro, 43 AD3d 1123). However, these factors should be applied flexibly (see Simonds v Simonds, 45 NY2d 233, 241). These factors serve only as a guideline, and a constructive trust may still be imposed even if all four elements are not established (see Tyree v Henn, 109 AD3d 906). "The ultimate purpose of a constructive trust is to prevent unjust enrichment and, thus, 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'" (Cruz v McAneney, 31 AD3d 54, 58-59, quoting Sharp v Kosmalski, 40 NY2d 119, 121 [internal quotation marks omitted]). Here, the complaint does not allege that Jacob provided any personal funds or made any personal guarantees towards the purchase or renovation of the property on 32nd Street (cf. Quadrozzi v Estate of Quadrozzi, 99 AD3d 688). Furthermore, the complaint does not allege that Jacob made any transfer of property in reliance upon a promise by Mark. Accordingly, the Supreme Court should have granted that branch of the motion of the defendants and nominal defendants which was pursuant to CPLR 3211(a)(7) to dismiss the eighth cause of action, seeking to impose a constructive trust.

The eleventh cause of action sought a judgment declaring that Jacob is a 40% owner of the JAM LLCs and United Nationwide Realty, LLC. The complaint alleges that Mark "unilaterally" converted JAM Realty and United Nationwide Realty into limited liability companies, and "unilaterally" and "without any authority whatsoever" filed paperwork reducing Jacob's 40% ownership interests therein to 28%. However, Jacob executed operating agreements which expressly stated that his ownership interest in each resulting limited liability company was 28%. "[A] contract is to be construed in accordance with the parties' intent, which is generally discerned from the four corners of the document itself. Consequently, 'a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms'" (MHR Capital Partners LP v Presstek, Inc., 12 NY3d 640, 645, quoting Greenfield v Philles Records, 98 NY2d 562, 569). The language in the operating agreements was sufficient to place Jacob on notice that his ownership interests would be reduced from 40% to 28% (see Snyder v Voris, Martini & Moore, LLC, 52 AD3d 811). Accordingly, the Supreme Court should have granted that branch of the motion of the defendants and nominal defendants which was pursuant to CPLR 3211(a)(1), in effect, for a judgment declaring that Jacob is not a 40% owner of the JAM LLCs or United Nationwide Realty, LLC.

The complaint also alleges that Mark falsely or mistakenly reported capital distributions to the Internal Revenue Service over the course of four years. The operating agreements for the JAM LLCs and the United LLCs provide that for any intentional misconduct by a manager of the limited liability companies, the sole remedy is money damages. Thus, pursuant to the operating agreements, Jacob would not be entitled to injunctive relief. "The words and phrases used in an agreement must be given their plain meaning so as to define the rights of the parties" (Matter of Bokor v Markel, 104 AD3d 683, 683 [internal quotation marks omitted]). Accordingly, the Supreme Court should have granted that branch of the motion of the defendants and nominal defendants which was pursuant to CPLR 3211(a)(1) to dismiss the twelfth cause of action, seeking a mandatory injunction.

Finally, the operating agreements prohibited Jacob from seeking punitive damages in this action (see Matter of Bokor v Markel, 104 AD3d 683). Accordingly, the Supreme Court should have granted that branch of the motion of the defendants and nominal defendants which was pursuant to CPLR 3211(a)(1) to strike the demand for punitive damages.

The defendants and nominal defendants' remaining contentions are without merit.

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Nassau County, for the entry of a judgment, inter alia, declaring that Jacob is not a 40% owner of the JAM LLCs or United Nationwide Realty, LLC (see Lanza v Wagner, 11 NY2d 317)."

ON PARTITIONS AND CONSTRUCTIVE TRUSTS

Parker v. Parker, 2021 NY Slip Op 50489 - NY: Appellate Term, 2nd Dept. May 21, 2021:

"Plaintiff commenced this action in Supreme Court, Kings County, in October 2014 against her sister for partition of a multi-family building in Brooklyn, for which the deed listed them as joint tenants. Defendant's answer asserted as an affirmative defense that, based on the doctrine of constructive trust, plaintiff has no interest in the subject property and interposed a counterclaim for the imposition of a constructive trust upon the subject property. In January 2019, the action was transferred to the Civil Court, Kings County, pursuant to CPLR 325(d). After a nonjury trial, at which it was uncontested that the deed for the subject building was in the names of both parties as joint tenants and that the mortgage was co-signed by plaintiff and defendant, the Civil Court found that defendant is, in effect, the sole owner of the subject property, granted defendant's counterclaim to "impose[] a constructive trust" on behalf of defendant, directed that the "current" deed be stricken and a "new" one "perfect[ed]" in the name of defendant, Renee D. Parker, "solely and exclusively," and dismissed the complaint.

The Civil Court is a court of limited jurisdiction, possessing only that subject matter jurisdiction as is provided by law (see NY Const, art VI, § 15; Green v Lakeside Manor Home for Adults, Inc., 30 Misc 3d 16 [App Term, 2d Dept, 2d, 11th and 13th Jud Dists 2010]). An order "transferring down" an action from Supreme Court to Civil Court pursuant to CPLR 325(d) does not confer subject matter jurisdiction on the Civil Court (see Priel v Linarello, 7 Misc 3d 64, 66 [App Term, 2d Dept, 2d & 11th Jud Dists 2005], affd 44 AD3d 835 [2007]) other than permitting a monetary award greater than the limit set by the New York City Civil Court Act (see CCA 202; Green v Lakeside Manor Home for Adults, Inc., 30 Misc 3d at 18). This court's authority is merely to rule on the validity of the Civil Court's amended final judgment, not to reverse the Supreme Court's CPLR 325(d) transfer order in the event the Civil Court lacks subject matter jurisdiction to grant the relief sought (see Green v Lakeside Manor Home for Adults, Inc., 30 Misc 3d at 18; Rivera v Buck, 25 Misc 3d 27 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]; Briscoe v White, 8 Misc 3d 1 [App Term, 2d Dept, 9th & 10th Jud Dists 2004]; Priel v Linarello, 7 Misc 3d 64; but see Kaminsky v Connolly, 73 Misc 2d 789 [App Term, 1st Dept 1972]).

Here, plaintiff seeks a partition of the subject property. Pursuant to CCA 203(a), the Civil Court has jurisdiction over "[a]n action for the partition of real property where the assessed valuation of the property at the time the action is commenced does not exceed $25,000." As it is uncontested that the assessed valuation of the property was less than $25,000 when the action was commenced in Supreme Court, contrary to plaintiff's argument, the Civil Court had jurisdiction to hear the action.

A partition action is governed by Article 9 of the Real Property Actions and Proceedings Law. "A person holding and in possession of real property as joint tenant or tenant in common ... may maintain an action for the partition of the property, and for a sale if it appears that a partition cannot be made without great prejudice to the owners" (RPAPL 901[1]). Since it is undisputed that the parties are on the deed as joint tenants of the subject property, plaintiff has demonstrated, prima facie, that she is entitled to partition.

Defendant's counterclaim seeks the imposition of a constructive trust. A counterclaim in the Civil Court may only be maintained if the subject matter would be within the jurisdiction of the court "if sued upon separately" (CCA 208). The imposition of a constructive trust is a form of equitable relief (see Simonds v Simonds, 45 NY2d 233, 241 [1978]; Rowe v Kingston, 94 AD3d 852 [2012]; Jimenez v Nunez, 42 Misc 3d 145[A], 2014 NY Slip Op 50341[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014]) and there is no statute conferring upon the Civil Court of the City of New York the subject matter jurisdiction to grant this affirmative equitable relief (see CCA 201, 203). Consequently, to the extent that the Civil Court adjudicated that issue as an affirmative claim, it went beyond its jurisdiction (see Nissequogue Boat Club v State of New York, 14 AD3d 542 [2005]) and, thus, the counterclaim must be dismissed. However, the Civil Court is not barred from, and indeed has the authority to, adjudicate the issue of a constructive trust as an affirmative defense to this partition action (see CCA 905; Nissequogue Boat Club, 14 AD3d 542; Fizzinoglia v Capozzoli, 58 Misc 3d 149[A], 2018 NY Slip Op 50081[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2018]; Freire v Fajardo, 28 Misc 3d 137[A], 2010 NY Slip Op 51453[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]), in which the ultimate title to the property is always at issue (see RPAPL 907[1]).

Upon a review of the record, we find that defendant failed to establish a constructive-trust defense. "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 NY2d 119, 121 [1976] [internal quotation marks and brackets omitted]; see Edwards v Walsh, 169 AD3d 865 [2019]; Ning Xiang Liu v Al Ming Chen, 133 AD3d 644 [2015]). "The elements of a constructive trust are (1) a fiduciary or confidential relationship; (2) an express or implied promise; (3) a transfer in reliance on the promise; and (4) unjust enrichment" (Ning Xiang Liu v Al Ming Chen, 133 AD3d at 644 [internal quotation marks omitted]; see Sharp v Kosmalski, 40 NY2d at 121). Here, defendant failed to establish that she made any transfer in reliance on a promise, or that, prior to the parties' joint purchase, she possessed any legally cognizable interest in the property with which she could have parted (see Kaufman v Torkan, 51 AD3d 977, 980 [2008]; Schwab v Denton, 141 AD2d 714, 715 [1988]).

Since plaintiff demonstrated at trial that she is entitled to partition as a joint tenant with defendant, and defendant's sole defense was based upon a constructive trust, which was not established, the respective rights of the parties must be determined (see Levine v Goldsmith, 71 App Div 204, 209 [1902] ["The authority for the interlocutory judgment must be found in the decision of the court made upon the trial of the issues"]). There is a presumption that plaintiff and defendant each have an equal interest in the subject property (see Matter of McKelway, 221 NY 15 [1917]), which presumption has not been rebutted. In addition, under the circumstances presented, we find that the property cannot be partitioned without great prejudice to the parties and, thus, that plaintiff is entitled to a sale (see Cadle Co. v Calcador, 85 AD3d 700 [2011]; Bufogle v Greek, 152 AD2d 527 [1989]).

Accordingly, the amended final judgment is reversed, the counterclaim is dismissed, and the matter is remitted to the Civil Court for the entry of an interlocutory judgment in accordance with this decision and order."

NOT MARRIED BUT "DIVORCED"?

Equitable distribution of the marital residence is only available to married couples but if you are not married, and there is a "cohabitive residence", other remedies may exist when there is a split.

Whalen v McElroy 2021 NY Slip Op 50379(U) Decided on April 30, 2021 Supreme Court, Westchester County Ruderman, J.:

"Plaintiff Charles Whalen initiated this action to impose a constructive trust on 115 Hunter Avenue, Sleepy Hollow, New York (115 Hunter), which is currently owned and occupied by defendant Grace McElroy f/k/a Grace C. Behrens. He also asserts causes of action for unjust [*2]enrichment, replevin, and conversion. In the verified complaint, plaintiff alleges that he and defendant became involved in a romantic relationship in 2008, and that he resided at 115 Hunter with her from the fall of 2011 until December 2018, when defendant ended the relationship and demanded that he vacate the premises.

Plaintiff maintains that, while residing with defendant at 115 Hunter, he made substantial expenditures of time and money toward improvement and maintenance of the premises in reliance on defendant's promise that they would be married and that they would jointly own the property. Specifically, plaintiff alleges that he installed a new modulating hydronic heating system, installed a new "on demand" hot water boiler, repaired the toilet and shower in the second-floor bathroom, replaced windows and insulation, painted the exterior of the house, repaired the foundation, replaced the kitchen range, performed electrical work in the living room, repaired the roof, rear deck, and driveway, maintained the landscaping, and renovated the basement, which included demolition, painting, electrical work, and the installation of flood management systems. Plaintiff further asserts that he paid for each item himself. Additionally, in his last two causes of action, plaintiff claims that he kept personal property at the premises, which he was unable to retrieve before moving out.

As a result, plaintiff seeks a judgment (1) imposing a constructive trust on 115 Hunter, (2) awarding $302,500 for improvements he made to the property and payments he made toward cable and utilities, (3) ordering the return of certain personal property listed in Exhibit A to the verified complaint, and (4) awarding $81,500 in damages for conversion.

Defendant moves to dismiss the complaint pursuant to CPLR 3211 (a) (7) for failure to state a cause of action, and to cancel the notice of pendency pursuant to CPLR 6514. She argues that plaintiff's claims for a constructive trust and unjust enrichment fail because he does not indicate when the alleged promise took place or in what manner, nor does he claim with any specificity when the work was done. Defendant further notes that plaintiff failed to allege that defendant made the purported promises without intending to honor them.

Additionally, defendant contends that a constructive trust cannot exist and damages for unjust enrichment cannot be awarded because the claimed expenses were undertaken for the benefit of both parties, since plaintiff was living in the home that he allegedly improved, and he benefited from the payment of cable and utility bills. Defendant also takes the position that the formation of an implied contract by an unmarried couple's cohabitation is inconsistent with New York's abolition of common law marriage. If the first cause of action is dismissed, defendant contends that the notice of pendency should be cancelled as well.

Defendant also argues that plaintiff's third and fourth causes of action, for replevin and conversion respectively, should be dismissed because plaintiff failed to specifically identify certain general household items listed in Exhibit A to the complaint. To the extent that some items were properly identified, defendant argues that plaintiff failed to state when and how he became the owner of such items.

In opposition, contrary to defendant's position, plaintiff argues that a constructive trust can be based on cohabitation between two unmarried parties with the promise of marriage and an interest in the property. He also contends that the fact that certain claimed expenditures were partially for his own benefit does not preclude claims for a constructive trust or unjust enrichment. Finally, he takes the position that Exhibit A to the complaint sufficiently identifies the items subject to his replevin and conversion claims.

In reply, defendant notes that she acquired 115 Hunter before she met plaintiff and began a romantic relationship with him. She further indicates that plaintiff did not pay any costs associated [*3]with acquiring the property, nor did he make payments toward the mortgage or any other carrying costs other than cable and utilities. Defendant reiterates that the expenses for which plaintiff seeks recovery were made for his own benefit as well as hers, and that he did so without any promise on the part of the defendant.

Analysis

On a motion to dismiss a complaint under CPLR 3211 (a) (7), the complaint is liberally construed, the facts as alleged in the complaint are accepted as true, and the party whose pleading is challenged must be afforded the benefit of every possible favorable inference (see Leon v Martinez, 84 NY2d 83, 87 [1994]). "[T]he criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one" (id. at 88).

To impose a constructive trust, plaintiff must establish "(1) a confidential or fiduciary relation, (2) a promise, (3) a transfer in reliance thereon and (4) unjust enrichment (Sharp v Kosmalski, 40 NY2d 119, 121 [2d Dept 1976]). "However, as these elements serve only as a guideline, a constructive trust may still be imposed even if all of the elements are not established" (Rowe v Kingston, 94 AD3d 852, 853 [2d Dept 2012]). "Where the party has no actual prior interest in the property, he or she will be required to show that an equitable interest developed through the expenditure of money, labor and time in the property" (Rock v Rock, 100 AD3d 614, 615 [2d Dept 2012]).

Defendant does not dispute that a confidential relationship existed between her and plaintiff. Since it is undisputed that plaintiff and defendant were in a romantic relationship for approximately ten years, and cohabitated for over six years, and no marital or familial relationship is essential to the existence of a confidential relationship (see Sharp, 40 NY2d at 121), the first element is satisfied.

Although a promise to marry cannot be enforced (see Civil Rights Law § 80-a), plaintiff satisfied the second factor through the allegation that defendant promised him that he would ultimately share a partial interest in 115 Hunter. Relying on Mance v Mance (128 AD2d 448 [1st Dept 1987]), defendant asserts that plaintiff was required to plead that plaintiff never intended to honor or act on her alleged promise in order to satisfy the second factor; this is incorrect. Although Mance imposes this element in relation to a cause of action for fraud, it does not hold that the same is required for a constructive trust claim (see id. at 448, 449). Defendant has not provided authority for the proposition that plaintiff was required to plead that she never intended to honor the alleged promises to plaintiff.

Moreover, plaintiff met the third factor through the allegation that he improved and maintained the premises in reliance on the promise that he would acquire a partial interest in the premises. "The transfer concept extends to instances where funds, time and effort were contributed in reliance on a promise to share in the result" (Sylvester v Sbarra, 268 AD2d 424, 424 [2d Dept 2000] [internal quotation marks and citation omitted]).

With respect to the fourth factor, "[t]o prevail on a claim of unjust enrichment, a party must show that (1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered" (Cruz v McAneney, 31 AD3d 54, 59 [2d Dept 2006] [internal quotation marks and citation omitted]). Plaintiff has satisfied each of these elements through his allegations that he significantly improved the value of defendant's property at his own expense in reliance on defendant's promise as discussed above. Therefore, plaintiff has sufficiently pleaded the fourth factor for a constructive trust claim, as well as his second cause of action for unjust enrichment.

Defendant's reliance on Morone v Morone (50 NY2d 481 [1980]) for the proposition that the Court should not impose an implied contract between an unmarried cohabitating couple is misplaced. Notably, plaintiff does not seek to enforce a contract against defendant, or to be compensated for household services, and Morone does not involve a constructive trust claim. Morone analyzes claims of an express and implied contract for personal services between two unmarried, cohabitating people. Morone is further distinguishable from the instant matter in that it relates to contracts as opposed to the alleged improvement of property in exchange for a promise. Additionally, the alleged promise here was not for personal services, but for concrete, significant improvements to defendant's property.

Nevertheless, defendant relies principally on Morone's holding that a contract will not be implied between an unmarried cohabitating couple because the nature of the relationship results in certain personal services being rendered gratuitously (see id. at 488). However, the Court concluded that an express agreement between an unmarried cohabitating couple is enforceable (see id. at 487). Similarly, here, the alleged promise at issue is an explicit one — that the couple would be married and plaintiff would then jointly own 115 Hunter. Therefore, Morone does not preclude plaintiff's claim for a constructive trust, and the branches of defendant's motion to dismiss the first and second causes of action are denied.

The branch of defendant's motion to dismiss the third and fourth causes of action must be denied as well. "Two key elements of conversion are (1) plaintiff's possessory right or interest in the property and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff's right" (Petrone v Davidoff Hutcher & Citron, LLP, 150 AD3d 776, 777 [2d Dept 2017] [internal quotation marks and citation omitted]). "A cause of action sounding in replevin must establish that the defendant is in possession of certain property of which the plaintiff claims to have a superior right" (Nissan Motor Acceptance Corp. v Scilapi, 94 AD3d 1067, 1068 [2d Dept 2012]).

The facts alleged in the complaint sufficiently establish that plaintiff left certain items at his former residence that he has been unable to retrieve. Such items were specifically listed in Exhibit A to the verified complaint. Since plaintiff has claimed to have a superior possessory right to property under defendant's control, and that defendant is interfering with that right, the branches of defendant's motions seeking to dismiss the third and fourth causes of action are denied."

WHEN A NON-MARITAL RELATIONSHIP SOURS - CONSTRUCTIVE TRUSTS

Unmarried couples may purchase homes, etc. but, for various reasons, keep title in one name. If the relationship ends, and since they are not married, the home is not marital property but the doctrine of constructive trusts may apply.

GRIFEL v. Madsen, 2020 NY Slip Op 33118 - NY: Supreme Court September 23, 2020:

".....

A constructive trust is an equitable remedy that "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" (Watson v. Pascal, 65 AD3d 1333, 1334 [2d. Dept. 2009]). A constructive trust cause of action includes four elements: "(1) a confidential or fiduciary relationship; (2) a promise; (3) a transfer in reliance on that promise; and (4) unjust enrichment" (Id.). Since constructive trust is an equitable remedy, "courts do not rigidly apply the elements but use them as flexible guidelines" (Beason v. Kleine, 96 AD3d 1611, 1613 [4th Dept. 2012]; see also Hernandez v. Florian, 173 AD3d 1144, 1145 [2d. Dept. 2019] (stating that since "the elements serve only as a guideline, a constructive trust may still be imposed even if all of the elements arc not established")). Courts have held that the transfer in reliance element "is not limited to instances in which the plaintiff has actually transferred title to the property to the defendant, but may also include instances where the plaintiff has provided substantial funds for the maintenance and improvement of it" (Hairman v. Jhawarer, 122 AD3d 570, 572 [2d. Dept. 2014]; see also Washington v. Defense, 149 AD2d 697, 698-99 [2d. Dept. 1989]; Lester v. Zimmer, 147 AD2d 340, 342 [3d. Dept. 1989]). Cases have indicated that unjust enrichment may be established where the plaintiff contributed money for the down payment, mortgage payments, and for maintenance of the property (Diaz v. Diaz, 130 AD3d 560, 562 [2d. Dept. 2015]).

A constructive trust claim is governed by a six-year statute of limitations (See CPLR 213(1); Zane v. Minion, 63 AD3d 1151, 1153 [2d. Dept. 2009]). If the plaintiff alleges that the defendant acquired the property wrongfully, then the constructive trust claim accrued on the date it was acquired (Id.). If the plaintiff contends that the defendant wrongfully withheld property, then the claim accrued on the "date the trustee breache[d] or repudiate[d] the agreement to transfer the property" (Id. at 1153-54, indicating that "the plaintiff's claim accrued when the defendant allegedly failed to honor her promises, which according to the complaint, occurred in late 2005 or early 2006").

.....

Plaintiff's cause of action for constructive trust should not be dismissed, since plaintiff has stated a valid claim to impose a constructive trust. Plaintiff has adequately pleaded the first element, a confidential or fiduciary relationship, as the complaint alleges that defendant and plaintiff were in a romantic relationship since 2006, had cohabitated since 2007, and were registered as domestic partners in the State of New York as of 2014 (Complaint ¶ 11). Plaintiff has also adequately pleaded the second element, a promise, since the complaint states that when the property was purchased in December 2013, "Defendant Madsen promised plaintiff that the Premises belonged to both of them, that defendant Madsen would hold title to the Premises for the benefit of plaintiff, and that defendant Madsen would add plaintiff's name to the deed to the Premises at the first possible opportunity" (Id. at ¶ 28). Defendant does not contest that plaintiff has adequately pleaded the first two elements of a constructive trust claim.

Defendant maintains that the plaintiff has failed to adequately plead the third and fourth elements of a constructive trust claim: a transfer in reliance on the promise and unjust enrichment, because the down payment was not directly transferred from plaintiff to defendant, and defendant was not unjustly enriched, since plaintiff benefited by living in the home, and from the improvements she made to the property (Chatterton Affirmation ¶¶ 45, 55). Although plaintiff's mother transferred the money for the down payment directly to defendant's bank account, the complaint alleges that plaintiff asked her mother to loan the funds, and that the mother loaned the funds to the defendant "on behalf of plaintiff' (Id. at ¶¶ 19, 25). Since constructive trust is an equitable remedy, and not all elements need to be present to impose a constructive trust, the court declines to dismiss the cause of action merely because the down payment was not directly transferred from the plaintiff to the defendant. In any event, the transfer in reliance element has been adequately pleaded, since the plaintiff contends that she "contributed her personal funds to the costs of renovations" and "gave [money] to defendant Madsen on a nearly monthly basis for payment of the costs of the premises, including the mortgage and other carrying costs" (See Lester, 147 AD2d at 342 (stating that "a constrictive trust may be imposed ... where the proponent has extended funds or effort in reliance on a promise")).

Defendant's claim that plaintiff has not adequately pleaded unjust enrichment is incorrect. The cases defendant cites in support of this contention are distinguishable. Henning v. Henning, 103 AD3d 778 (2d. Dept. 2013) involved a constructive trust cause of action by a wife against her husband's parents, contending that defendants were unjustly enriched by her improvements to the property. This case can be differentiated, since defendants moved pursuant to CPLR 4401 for judgment as a matter of law "dismissing the complaint," "at the close of plaintiff's case at a nonjury trial" (Id. at 778). Similarly, Wilson v. La Van, 22 NY2d 131 (1968) is distinguished, since it involves an oral agreement for the transfer of real property, not a constructive trust claim. In Onorato v. Lupoli, 135 AD2d 693 (2d. Dept. 1987), the judge merely states in reference to a cause of action for specific performance, that "the fact that plaintiff made mortgage, taxes and other payments on the property during the period in which he resided in his brother-in-law's house, could be considered as rent for the use of the property" (Id. at 694). The judge denied plaintiff's motion to amend the pleadings to add a cause of action for the imposition of a constructive trust based on the fact that plaintiff "failed to establish that he had a prior interest in the subject property, nor [did] he [establish] the existence of an oral promise to convey title to the property" (Id. at 695). The judge never addressed unjust enrichment in his opinion. Marini v. Lombardo, 79 AD3d 932 [2d. Dept. 2010] is inapplicable since the judge made the decision to dismiss the constructive trust cause of action after a nonjury trial.

Plaintiff has adequately pleaded all three elements for unjust enrichment in her complaint. The first two elements, that the other party was enriched at her expense, are supported by plaintiff's allegations that she asked her mother to loan money to defendant for the down payment, and she also spent money, and dedicated her time and effort to maintaining and renovating the premises, and acquiring tenants (Complaint ¶¶ 30, 32). Plaintiff's complaint sufficiently alleges the third element, "that it is against equity and good conscience" to permit the defendant "to retain what is sought to be recovered." Plaintiff maintains that without her mother's contributions, defendant would not have acquired any interest in the premises, and that if the court dots not grant her an equitable interest in the premises, defendant would be unjustly enriched by her monetary contributions and the time and labor she devoted to finding and managing tenants for the premises (Id. at ¶¶ 62-64).

Defendant's contention that plaintiff has merely stated an unenforceable oral agreement for the transfer of property that is barred by the Statute of Frauds is without merit. As stated above, plaintiff has adequately pleaded a cause of action for imposition of a constructive trust. The Statute of Frauds is not a defense to a cause of action to impose a constructive trust (Vanasco v. Angiolelli, 97 AD2d 462, 462 [2d. Dept. 1983]).

The cause of action to impose a constructive trust is not barred by the statute of limitations. Although defendant contends that plaintiff's claim accrued in 2013 when the property was purchased, since there was no legal impediment to adding plaintiff's name to the deed, the parties had an agreement that plaintiff's name was left off the deed due to her prior bankruptcy filing (Chatterton Affirmation ¶ 40-42; Complaint ¶ 27). In light of the fact that a court is required to give the plaintiff the "benefit of every favorable inference" on a motion to dismiss, the court declines to interpret the statement in the complaint that defendant promised to add plaintiff to the deed "at the first possible opportunity" literally. The language, "the first possible opportunity" can be interpreted to mean when plaintiff's prior bankruptcy filing was no longer included in her credit history, which according to the complaint was in mid-2017 (Id. at ¶ 57). Since defendant did not wrongfully acquire the property, plaintiffs claim accrued on the date defendant wrongfully withheld it, which was in mid-2017. Therefore, since a cause of action to impose a constructive trust is governed by a six-year statute of limitations, plaintiff's first cause of action is not time-barred."

CONSTRUCTIVE TRUST ON REAL PROPERTY

In this matter, the defendant holds title to the home and plaintiff resides in the home. Defendant sought to evict plaintiff in Housing Court. Plaintiff brings this action to impose a constructive trust, alleging plaintiff is a 50% owner, and is able to obtain a stay of the eviction. Supreme Court dismisses the complaint and the plaintiff appeals. NOTE: The parties are related by marriage.

Abehsera v Saldin, 2020 NY Slip Op 04723, Decided on August 26, 2020, Appellate Division, Second Department:

"The plaintiff commenced this action against the defendant to impose a constructive trust on certain real property in Nassau County, and for related relief. The plaintiff alleged that he, by virtue of an oral agreement with the defendant and equitable contributions to the premises by the plaintiff, owns one half of the premises. The defendant answered and thereafter moved for summary judgment dismissing the complaint. By order dated April 26, 2017 (hereinafter the April 2017 order), the Supreme Court granted the motion. The plaintiff then moved for leave to renew and reargue his opposition to the defendant's motion for summary judgment. By order entered December 11, 2017, the court denied that branch of the plaintiff's motion which was for renewal, granted that branch of the plaintiff's motion which was for reargument, and upon reargument, adhered to its prior determination in the April 2017 order. The plaintiff appeals from both orders.

The defendant established his prima facie entitlement to judgment as a matter of law dismissing the complaint by submitting his affidavit denying the existence of any agreement with [*2]the plaintiff regarding ownership or an interest by the plaintiff in the premises, and denying that the plaintiff performed repairs to the premises. However, in opposition, the plaintiff submitted the affidavits of two nonparties who each attested, inter alia, to admissions made by the defendant that the plaintiff was an equal owner of the premises with the defendant. Thus, the affidavits submitted by the parties raise triable issues of fact as to whether the parties, who are in-laws by virtue of the defendant's marriage to the plaintiff's daughter and who lived with each other for several years prior to the defendant moving out, orally agreed to a shared ownership of the subject premises, and as to whether the plaintiff relied on that agreement by paying for repairs and expenses on the home for the benefit of the defendant. Accordingly, the defendant's motion for summary judgment should have been denied (see JP Morgan Chase Bank, N.A. v Bank of Am., 164 AD3d 565, 568; see also Marini v Lombardo, 39 AD3d 824, 825-826)."

BROTHERS ESTABLISHED CONSTRUCTIVE TRUST DEFENSE IN HOUSING COURT

The family dispute among the siblings continues after the Mother has passed.

Hampton v. Hampton, NYLJ January 02, 2020, Date filed: 2019-11-29, Court: Civil Court, Queens, Judge: Judge Julie Poley, Case Number: 55878/19:

"It is well settled that title cannot be determined in the context of a Housing Court summary proceeding, but that the Court is empowered with the jurisdiction to determine any “legal or equitable” defense for purpose of determining a right to possession. (Chopra v. Prusik, 9 Misc.3d 42 [App Term, 2nd Dep't 2015] citing, Nissequogue Boat Club v. State of New York, 14 AD3d 542 [2nd Dep't 2005]; see also, Decaudin v. Velazquez, 15 Misc.3d 45 [App Term, 2nd Dep't 2007]; RPAPL §743). Hence, even though parties are unable to challenge title in a summary proceeding, a licensee may defeat a summary proceeding by establishing an equitable affirmative defense such as constructive trust. (See, Paladino v. Sotille, 15 Misc.3d 60 [App Term, 2nd Dep't 2007]. Additionally, the statute of frauds is not applicable if the imposition of a constructive trust has been shown to be warranted. (Panetta v. Kelly, 17 A.D. 3d 163 [2005]; see also, Paladino v. Sotille, 15 Misc.3d 60 [App Term, 2nd Dep't 2007].² Therefore, the Court now turns to Respondents’ affirmative defense of constructive trust.

A constructive trust is a cause of action seeking to equitably assert an interest in real property. (A.G. Homes, LLC v. Gerstein, 52 AD3d 546 [2nd Dep't 2008]; see also, Scivoletti v. Marsala, 97 AD2d 401 [2nd Dep't 1983]). 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 NY2d 119,121 [1976] citing, Beatty v. Guggenheim Exploration Co., 225 NY 380,386 [1919] rev’d on other grounds). To satisfy the constructive trust doctrine four elements must be established: (1) a confidential or fiduciary relationship; (2) a promise, express or implied; (3) a transfer in reliance thereon; and (4) unjust enrichment. It has long been settled that although all four elements must be present, the elements are to be applied flexibly to satisfy the salutary purpose of preventing unjust enrichment to a transferee. (See, Giammona v. 72 Mark Lane, LLC, 143 AD3d 941 [2nd Dep't 2016]; see also, Bankers Sec. Life Ins. Society v. Shakerdge, 49 NY2d 939 [1980]; (Sharp v. Kosmalski, 40 NY2d 119 [1976]). To that end, to avail the defense, the burden of proof rests with the party asserting the constructive trust theory to prove all four elements of the defense. (See, Fireman’s Fund Ins. Co. v. Farrell, 57 AD3d 721 [2nd Dep't 2008]; see also Suissa v. Barron 24 Misc.3d 1236(A) [Dist Ct, Suffolk County 2009]).

Constructive Trust: Confidential Relationship

As the Court of Appeals in Sharp opined, “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 NY2d 119,121 [1976]). A marital or other family relationship, although frequently present, is not an essential element to establish a confidential relationship. Instead, the moving party needs to demonstrate “a relationship of trust and confidence” to trigger the imposition of the obligation not to abuse that trust. (Id.) Here, the parties are siblings and children of the deceased, and by the nature of their relationship, are entrusted with trust and confidence to each other. Therefore, the family relationship between the parties, coupled with joint possession of the property from the inception of the ownership, dictates that a confidential relationship existed between the parties. (Id.)

Constructive Trust: Transfer and Promise

Unquestionably there was a transfer of property as ownership in its entirety vested to Petitioner upon her mother’s demise. The center of the dispute is whether there was a promise made to Respondents by their mother that they have an interest in the subject premises and whether Petitioner was entrusted with holding the deed for her own benefit and that of her brothers. For purposes of forming a constructive trust, a promise does not need to be in writing and does not even need to be expressly made. Court have imposed constructive trusts from implied promises, or a promise inferred from the transaction itself. (See, Paladion v. Sotille, 15 Misc.3d 60 [App Term, 2nd Dep't 2007]; see also, (Sharp v. Kosmalski, 40 NY2d 119,122 [1976]).

It is undisputed that Linda Hampton died intestate and that she did not leave any written instructions regarding the distribution of her interest in the subject property. The Court, however, credits Respondents’ undisputed testimony that Linda Hampton told both Respondents that she is purchasing a two-family house for the benefit of the family, that she asked both sons whether they would like to be part of the family enterprise, and once they agreed they all moved into the house from inception of its purchase.³ At the time of purchase, Linda Hampton was 62 years old, recovering from a debilitating stroke, and Respondents credibly testified that it was her lifelong dream to purchase a home for her entire family. Both Respondents testified that after the purchase they assumed their role in the family enterprise by contributing money to be applied toward the mortgage. Particularly relevant is the undisputed credible testimony that Linda Hampton assured her sons that although the deed for the premises did not contain their names, they had nothing to worry about because she would never do anything for the benefit of one child. Furthermore, Respondents testified that their mother’s employment with the MTA, her credit, and her income, contributed to secure the down payment for the house and mortgage approval because Petitioner’s credit or income alone was insufficient to secure the purchase.

Although Petitioner testified that it was her employment and her personal finances that secured the down payment for the house, she did not rebut Respondents testimony by way of documents or testimony to substantiate her claim that the purchase was made for her sole benefit. Petitioner admitted that the “right of survivorship” clause in the deed was not something that was contemplated by the parties prior to the closing, and that the language was added by hand at the closing at the suggestion of the title company, possibly for the purpose of ensuring the loan commitment by the financial institution. Additionally, even though both Respondents conceded that they did not contribute toward the down payment, Petitioner acknowledged that both Respondents financially contributed toward the house by giving money to their mother. Petitioner testified that she did not know how much money Respondents contributed or how their mother applied the contributions, but that she and her mother equally split the expenses associated with the house up until she passed away. Finally, Petitioner did not offer testimony or any evidence to rebut Respondents’ claim that although their names did not appear on the deed, the purchase was made with an implied promise that they have an interest in the purchase. Therefore, based on the testimony and the evidence provided, the Court find that a promise existed as an element of a constructive trust.

Constructive Trust: Unjust enrichment

Unjust enrichment exists where the retention of a benefit received from a transaction would be unjust. (See, Sharp v. Kosmalski, 40 NY2d 119 [1976]).). Here, without the imposition of a constructive trust, Petitioner would benefit from ownership and possession of the entire property. In turn, Respondents would lose any possessory interest they have in what they call a “family home,” including losing their financial interest based on contributions made toward the mortgage and any beneficial interest in the property as distributees which stems from their late mother’s ownership interest. Therefore, Respondents have demonstrated unjust enrichment and Respondents have satisfied all four elements of their defense of constructive trust.

Accordingly, both licensee proceedings are dismissed with prejudice as Petitioner has failed to prove a cause of action pursuant to relevant provisions of the RPAPL. As discussed, although Respondents have established their affirmative defense of constructive trust, this Court does not have jurisdiction to determine issues of title or the division of interests in the property.

This is without prejudice to both parties seeking appropriate relief in a Court of competent jurisdiction.

1. It has been held in Heckman v. Heckman, 55 Misc 3d 86 [App Term, 2nd Dep't 2017], when asserting a familial exception, absent a "legal support obligation" there is no bar to the maintenance of a licensee proceeding in situations in which the occupant can properly be held a licensee.
2. The statute of frauds, codified in General Obligations Law 5-703(1), provides the general rule that any transfer in interest in real property must be made by deed or a conveyance in writing.
3. The Court notes that Petitioner did not raise any objections during Respondents' testimony pursuant to New York's "dead man statute" codified in CPLR §4519, and that Petitioner did not offer any testimony to challenge Respondents' assertions regarding interactions with their mother concerning the property."

PROPERTY OWNERS SEEK A CONSTRUCTIVE TRUST ON A POSSIBLE SCAM

Here, desperate property owners made a bad deal with false promises and now seek  to impose a constructive trust on certain real property, to set aside a deed, and to recover damages for fraud,

Reece v SHC Equities, LLC, 2019 NY Slip Op 02571, Decided on April 3, 2019, Appellate Division, Second Department:

The plaintiffs were joint owners of real property located in Brooklyn which was encumbered by certain mortgages securing debts incurred by the plaintiff Anthea Walford. According to the plaintiffs, after Walford defaulted on the debts, the plaintiffs were approached by a representative of the defendant SHC Equities, LLC (hereinafter the defendant), who advised them that the value of the premises was less than the remaining balance of the mortgages, such that, to get relief from the debt, their only option was to pursue a short sale of the premises. The plaintiffs, who were not represented by counsel, alleged that the defendant, a short sale broker, promised to effectuate the short sale and presented them with certain documents, representing them to be "short sale applications and authorizations allowing it to negotiate the short sale with the banks." One of the documents included a quitclaim deed and accompanying transfer documents, transferring the property to the defendant. According to the plaintiffs, the defendant failed to make any effort to negotiate a short sale of the premises, attempted to collect rent from tenants at the premises, and Walford's debts remained unsatisfied.

The plaintiffs commenced this action, inter alia, to impose a constructive trust on the property, to set aside the deed transferring the property to the defendant, and to recover damages for fraud. In response to a motion by the plaintiffs to appoint a temporary receiver, the defendant cross-moved for summary judgment dismissing the complaint insofar as asserted against it. The Supreme Court denied the cross motion, and the defendant appeals.

The defendant failed to demonstrate its prima facie entitlement to judgment as a matter of law dismissing the first cause of action, seeking the imposition of a constructive trust. "A constructive trust may be imposed in favor of one who transfers property in reliance on a promise [*2]originating in a confidential relationship where the transfer results in the unjust enrichment of the holder" (Rogers v Rogers, 63 NY2d 582, 585-586). "[A] real estate broker is a fiduciary with a duty of loyalty and an obligation to act in the best interests of the principal" (Dubbs v Stribling & Assoc., 96 NY2d 337, 340).

Here, in support of its motion, the defendant submitted an alleged contract in which the plaintiffs agreed to transfer the property to the defendant as well as a check from the defendant to the plaintiffs in the sum of $11,000, which was drawn on the date of the contract, 11 months before the deed was executed. These items fail to rebut the allegations in the first cause of action that the plaintiffs, being in a confidential broker-principal relationship with the defendant, executed all of the documents presented to them in reliance upon the defendant's promise that it would effectuate a short sale of the premises that would satisfy Walford's debt. Indeed, the plaintiffs acknowledge that they executed documents which effected the transfer of title to the defendant. The contract is just one other such document. Further, the plaintiffs alleged that the defendant represented to them that the $11,000 paid by the defendant to the plaintiffs was part of the short sale process.

The defendant also did not meet its prima facie burden on the fraud cause of action. "The elements of a cause of action for fraud [are] a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages" (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559). The contract allegedly signed by the plaintiffs agreeing to transfer the property failed to establish, prima facie, that the defendant did not misrepresent that the contract and all other documents presented for the plaintiffs' signatures would be used to effectuate a short sale and relieve Walford of her debt.

The defendant's evidence also did not demonstrate its prima facie entitlement to judgment as a matter of law dismissing the remaining two causes of action, alleging, respectively unjust enrichment and promissory estoppel (see generally Can Man Carting, LLC v Spiezio, 165 AD3d 1029, 1031-1032; Imperial Capital Bank v 11-13-15 Old Fulton D, LLC, 88 AD3d 652, 653-654). To the extent that the alleged contract, which included one page containing the plaintiffs' undated, un-notarized signatures and no initials or signatures on any of its preceding pages, is found to be invalid, or not to cover the subject matter of the complaint, such causes of action will lie (see generally EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 23).

Since the defendant failed to demonstrate its prima facie entitlement to judgment as a matter of law, we agree with the Supreme Court's denial of its cross motion, without regard to the sufficiency of the opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).

NOT MARRIED BUT ENDS LIKE A DIVORCE

Baron v Suissa, 2018 NY Slip Op 08453, Decided on December 12, 2018, Appellate Division, Second Department:

The plaintiff and the defendant met in 1992, while each of them was married to another person. After the defendant obtained a divorce from his wife in or about 1995, the parties began living together and, thereafter, moved into a house located in Northport. The parties do not dispute that the defendant is the only person named on the deed and mortgage as the owner of the house. The plaintiff alleged, however, that the parties agreed that the house was to be retitled into joint ownership upon the completion of her divorce. The plaintiff also alleges that she and the defendant entered into an oral agreement to form an antiques business as partners and to share equally in the profits and inventory of the partnership. She further alleged that the defendant promised, in exchange for her domestic services and legal services to the defendant's other businesses during the course of the relationship, to maintain and support her and share equally in the income and assets acquired during the relationship. When the parties' relationship ended in 2008, the defendant sought to evict the plaintiff and her son from the house. The plaintiff alleged that the defendant removed from the house fixtures, antiques, and other personal property in which the plaintiff alleges she had an ownership interest.

In May 2009, the plaintiff commenced this action, seeking relief in the nature of, inter alia, a constructive trust, an accounting of partnership assets, specific performance, recovery for [*2]unjust enrichment, conversion, and replevin, and to recover damages for fraud and slander. The defendant moved, pre-answer, to dismiss the complaint pursuant to CPLR 3211(a)(1), (3), (5), and (7), but the motion was misfiled by the Supreme Court and remained pending and undecided for several years. In 2012, the defendant made a motion, denominated as one pursuant to CPLR 2221(a) for leave to renew his pending and undecided motion to dismiss the complaint. In the order appealed from, the Supreme Court, among other things, granted leave to renew and, upon renewal, granted those branches of the motion which were pursuant to CPLR 3211(a)(5) and (7) to dismiss the complaint. The plaintiff appeals, and we modify.

CPLR 3211 provides, inter alia, that a party may move for judgment dismissing one or more causes of action on the ground that "the cause of action may not be maintained because of . . . [the] statute of frauds" (CPLR 3211[a][5]). "On a CPLR 3211 motion made against a complaint, including a motion pursuant to CPLR 3211(a)(5) to dismiss a complaint based on the statute of frauds, a court must take the allegations as true and resolve all inferences which reasonably flow therefrom in favor of the pleader" (AAA Viza, Inc. v Business Payment Sys., LLC, 38 AD3d 802, 803, quoting Cron v Hargro Fabrics, 91 NY2d 362, 366 [internal quotation marks omitted]).

We agree with the Supreme Court that, insofar as they related to real estate, the causes of action arising from the multiple purported oral agreements between the parties were required to be in writing pursuant to the statute of frauds (see General Obligations Law § 5-703). The court, however, failed to consider the plaintiff's contention in opposition to the defendant's motion that her allegations of partial performance under the purported agreements were sufficient to permit her claims related to real estate to survive the absence of an appropriate writing (see General Obligations Law § 5-703[4]). With respect to the defendant's alleged promise to retitle the house in both parties' names upon the plaintiff's divorce and in consideration of her alleged $100,000 contribution to the purchase price, the plaintiff's allegations were sufficient, at this early procedural stage, to fall within an exception to the statute of frauds and survive dismissal. Accordingly, the court should not have granted those branches of the motion which were pursuant to CPLR 3211(a)(5) to dismiss the seventeenth cause of action and so much of the twentieth cause of action as pertain to ownership of the house (see Mackenzie v Croce, 54 AD3d 825, 826).

We disagree with the Supreme Court as to the applicability of the statute of frauds to the plaintiff's allegations as to other express oral agreements between the parties, namely those related to her provision of domestic and legal services in exchange for support and sharing of business profits. Agreements between persons cohabiting together are not per se required to be in writing (see Morone v Morone, 50 NY2d 481, 487-488). Moreover, the plaintiff's allegations as to the terms of the oral agreements do not otherwise fall within the statute of frauds (see General Obligations Law § 5-703; Starr v Akdeniz, 162 AD3d 948, 949; Meagher v Doscher, 157 AD3d 880, 883; Kelley v Galina-Bouquet, Inc., 155 AD2d 96, 100). Accordingly, the court should have denied those branches of the defendant's motion which were pursuant to CPLR 3211(a)(5) to dismiss the second, sixth, ninth, tenth, eleventh, twelfth, thirteenth, eighteenth, and nineteenth causes of action, and the part of the twentieth cause of action that does not pertain to ownership of the house.

We also disagree with the Supreme Court's determination granting that branch of the motion which was to dismiss the plaintiff's third cause of action pursuant to the statute of frauds. The third cause of action seeks the return of certain personal items that allegedly were owned by the plaintiff separately prior to her relationship with the defendant. Thus, the property that was the subject of that cause of action was not within the statute of frauds.

We agree with the Supreme Court that certain evidence submitted by the defendant in support of the motion did not constitute "documentary evidence" within the meaning of CPLR 3211(a)(1).

Nevertheless, we disagree with the court's directing dismissal of the majority of the remaining causes of action, which are for equitable relief, on the ground that the same evidence established as a matter of law that the plaintiff had, among other things, engaged in a dubious scheme to avoid creditors and a Medicaid lien and, in doing so, had committed perjury by disclaiming, at that time, any ownership interest in the house, personal property of value contained in the house, and a safe deposit box and its contents. The court's determination that the plaintiff is, in effect, judicially estopped by that evidence is premature. Viewing the complaint in the light most favorable to the plaintiff and affording her every favorable inference, we find that the complaint [*3]sufficiently alleged causes of action to recover for conversion and seeking, inter alia, a constructive trust and replevin. Accordingly, the court should have denied those branches of the motion which were to dismiss the first, fifth, eighth, twenty-third, and twenty-fourth causes of action, and those portions of the fourth and seventh causes of action that did not relate to property purportedly owned by the plaintiff's son.

We agree with the Supreme Court's determination granting those branches of the motion which were to dismiss those portions of, inter alia, the fourth and seventh causes of action that relate to property allegedly owned by the plaintiff's son. The plaintiff failed to allege facts that would support her right to assert those causes of action on her son's behalf.

TRANSFER OF PROPERTY TO AVOID CREDITORS - DANGER

Flores v Guambana, 2018 NY Slip Op 04699, Decided on June 27, 2018, Appellate Division, Second Department:

"A person who transfers property to another to be held in trust for the purpose of hindering, delaying, or defrauding creditors has unclean hands, and equity will not afford relief when he or she seeks the reconveyance of the property (see Pattison v Pattison, 301 NY 65, 74). Stated differently, "the fraudulent grantor cannot undo, for his [or her] own benefit, the transfer he [or she] has made" (Ford v Harrington, 16 NY 285, 287). Such agreements are not enforced "as a matter of public policy to protect the integrity of the court" (Festinger v Edrich, 32 AD3d 412, 414), and the court "will leave the parties where it finds them" (Pattison v Pattison, 301 NY at 74).

Here, we agree with the Supreme Court's determination, based on the allegations in the complaint, that the plaintiffs' alleged conveyance of real property to the defendant Moises M. Guambana was for the purpose of frustrating their creditors and, therefore, the alleged oral agreement for the reconveyance of the property was unenforceable (see Dolny v Borck, 61 AD3d 817, 818; Festinger v Edrich, 32 AD3d at 414; Moo Wei Wong v Shirley Wong, 293 AD2d 387, 387; Walker [*2]v Walker, 289 AD2d 225, 226). Accordingly, we agree with the court's determination to grant Guambana's motion pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against him and to cancel the notice of pendency filed against the subject property."