Foreclosures—Landlord/Tenant—Summary Proceeding—Temporary Receiver in Foreclosure Action Entitled to Invoke Dead Man’s Statute in Summary Proceeding

A lender had commenced a foreclosure action. Some defendants had served an answer and a temporary receiver had been appointed. Thereafter, a holdover summary proceeding had been commenced by the temporary receiver, alleging that the respondents are oral month-to-month tenants and that their lease had expired based upon a notice of termination. The respondents asserted that the notice of termination was insufficient, they have a written lease and pursuant to the written lease, their tenancy did not expire until September, 2016. The subject issue involved a motion in limine. The respondents argued that the temporary receiver lacked standing “to invoke the Dead Man’s Statute, codified in Civil Practice Law and Rules (CPLR) §4519, thus preventing the decedent’s daughter…from testifying in regard to the lease at issue.”

In essence, CPLR §4519 “bars testimony from a person interested in the event or a person from, through or under whom such person derives his or her interest or title with regard to any personal transaction or communication with the decedent.” The rule, inter alia, protects “the estate of the deceased from claims of the living who, through their own perjury, could make factual assertions which the decedent could not refute in court…. An exception to the statute exists where the executor is examined in his own behalf….”

A “temporary receiver in a foreclosure matter is appointed to preserve and operate the property…. The receiver, as an officer of the court, is a fiduciary and owes a duty to protect the property for all interested parties.” Prior to “an actual sale under a judgment of foreclosure, the owner/mortgagor retains the right of redemption.” Thus, although the receiver stands “in the stead of the financially defaulting owner of property,” until the foreclosure sale is final, the estate of the former owner and executors of the estate still have an interest in the property.

In the subject case, the temporary receiver had the burden of showing that the “witness is a person interested in the event and thus, incompetent to testify….”

The court found that the temporary receiver had “standing to invoke the Dead Man’s Statute…, since his fiduciary responsibilities include standing in the shoes of the financially defaulting owner of the property….” In essence, the receiver is acting for the benefit of the estate of an owner as the petitioner in the special proceeding. Since, respondent “A” is a co-executor of the estate, the receiver is also acting on her behalf.” “A” “is not only the executor, but she also is a distributee under the estate and is an interested person under the statute….” Since she is an interested person, “A” is “barred from testifying as to any personal communication or transaction with her deceased mother….” Although the Appellate Division, Third Department has held that the Dead Man’s Statute does not preclude “an interested party from testifying against his own interest, in this case, “A”, as co-executor of the decedent’s estate, could [not] be caused to testify against her own penal interest, as well as against the interests of the other co-executor and distributees of the estate.”

The respondents had argued that even if “A”‘s testimony was barred by the Dead Man’s Statute, the statute was “waived when the petitioner elicited certain testimony on cross-examination” of a witness “as to the circumstances surrounding the lease.” However, the court found that based on such testimony, a waiver had not occurred.

Accordingly, the court held, inter alia, that the Dead Man’s Statute precluded “A” from testifying in this case.

Bains v. The Attic Clothing Co. Inc., L&T, 066774/11, NYLJ 1202537372048, at *1 (Civ., QU., Decided Dec. 15, 2011), Buggs, J.

Land Use—Court Grants Verizon Wireless Motion for Summary Judgment and Orders Town to Grant Approvals Necessary to Construct Cellular Tower—Community Leader Had Declared “Progress Is Great Except When It’s in My Own Backyard”—E-Mail Campaign—Sent Incendiary Letters to a Church—Threatened Legal Action Based on “Reckless Endangerment and Depraved Indifference,”—Extensive Media Coverage, Etc.—Court Found Bases for Denial Were “Simply Put, Absurd”

A plaintiff partnership, d/b/a Verizon Wireless, commenced an action against a town, “alleging violations of, inter alia, the Telecommunications Act of 1996 (TCA).” The court granted Verizon’s motion for summary judgment.

Verizon had sought the town’s approval for “construction and operation of a wireless communication facility” (facility) on the property of a church. The facility consisted of a “’60-foot bell tower’ with ‘camouflaged’ telecommunications equipment on the inside” (tower). The tower was “designed to match the color and architecture of the Church,” and would have been “invisible to the public.” After Verizon’s use ceased, the tower would “remain as a permanent improvement to the Church.” Although the Church welcomed the “enhancement to [its] building,” “some of the Town’s residents were not as receptive.”

The town’s Zoning Board of Appeals (ZBA) was asked to grant “a use and height variance.” Verizon had conducted a comprehensive study which found that the tower was necessary “to fill a significant gap in existing…system coverage,” “no ‘feasible or less intrusive sites’ exist to adequately address the coverage gap,” “the…tower complies with the applicable ‘exposure limits’ and guidelines adopted by the Federal Communications Commission (FCC) governing human exposure to radio frequency electromagnetic fields,” and “the…tower will not be visible from any of the Town’s historic districts.”

Independent sources verified Verizon’s analysis, e.g., the town’s Planning and Economic Development Department (PEDD) reported that the facility would “not have a significant effect on the environment.” Verizon’s and the town’s engineering consultants agreed “that the tower is not visible unless you are standing right beneath it.” The town’s consultant also found that the tower was needed and the facility “integrates well with [Verizon's] other telecommunications tower sites and solves some of their coverage objectives.” The ZBA “unanimously approved Verizon’s application and granted an unconditional use and height variance.” No appeals were taken from the ZBA’s decision. Verizon then asked the town’s Planning Board (Board) for approval of its “Minor Site Plan Review (‘Minor’)….” Although the town’s land use law permits the PEDD to render a decision on a Minor SPR, the PEDD referred Verizon’s application to the full Board.

Notwithstanding the Church’s support for and “the ZBA’s approval of the…tower, [Town] residents mounted a campaign to block its final approval.” An opponent at a ZBA meeting, “declared ‘progress is great except when it’s in my own backyard.” Opponents instigated “an email listserv dedicated to raising opposition,” “incendiary letters to the Church” which “threatened to organize televised protests during Sunday services,” a “notice of intended legal action regarding health traumas” and “accusing Verizon and the Church of ‘reckless endangerment and depraved indifference,’” “a request for the installation of RF monitoring stations,” “extensive media coverage,” “including the televised delivery of petitions to the PEDD,” and “the creation of a community organization….” The opposition cited health risks and emphasized that the tower was being “constructed in the midst of a residential neighborhood near an elementary school.”

All of “the involved Town departments had reviewed [Verizon's Minor SPR application] and expressed ‘satisfaction’ with or ‘no objection’ to it.” The PEDD had recommended “a finding of no significant environmental impact and issuance of final approval.” In response to a Board request, Verizon had revised its proposal to “further disguise the tower” and had provided an updated “compliance report on RF exposure.” The court noted that a Board member had expressed his intent to vote against Verizon’s application two months before the Board voted to deny the application. The Board concluded, inter alia, that the tower would “be a non-residential, commercial use,” and “would fundamentally change the residential nature of the…property, as well as…invite other non-residential and/or commercial uses…further jeopardizing the residential and historic character of this portion of the Town.”

Although the court was “mindful of the Town’s underlying concerns,” it found that “the law,…overwhelmingly supports Verizon’s position.” Congress had enacted the TCA, “to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services by opening all telecommunications markets to competition” and “to reduce ‘the impediments imposed by local governments upon the installation of facilities for wireless communications, such as antenna towers.’” The TCA “preserved the authority of state and local governments over zoning and land use issues, but imposed limitations on that authority.”

Thus, the TCA “requires that ‘[a]ny decision by a State or local government or instrumentality thereof to deny a request to place, construct, or modify personal wireless service facilities shall be in writing and supported by substantial evidence contained in a written record’…. The substantial evidence standard demands ‘less than a preponderance, but more than a scintilla of evidence’; ‘[i]t means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’” “A denial should be ‘overturned where, as here, the ‘record is devoid of substantial evidence to support [it].’”

The court found that the Board’s denial “was not only unsubstantiated, but also wholly incompatible with the findings of Verizon’s experts, the ZBA, the PEDD and [the town's engineer].” Moreover, the court found that the stated bases for the denial were “simply put, absurd.”

The Board had “conceded its control was limited to deciding the design and location of the…tower on the site,” and the Board’s Chairman had acknowledged that the Board “would have ‘no leg to stand on if it voted down’ Verizon’s application.” Further, the ZBA had determined that the tower was not a “non-conforming use in a SFR zone” and a state agency concluded that the project would have “[n]o Effect upon cultural resources in or eligible for inclusion in the National Registers of Historic Places.”

The court concluded that the town’s “baseless refusal” to approve the Minor SPR violated the TCA and that “‘further review by defendants would serve no useful purpose and would greatly prejudice Verizon by further delaying its ability to’ address a significant gap in its coverage, ‘and that immediate injunctive relief is the appropriate remedy for [defendants'] violation of the TCA.’” Accordingly, the court directed that the town, within 30 days of its order, “approve Verizon’s Minor SPR application, and grant all permits, licenses and/or approvals necessary to effectuate the construction of the…tower.”

Cellco Partnership v. Town of Colonie, NY, 1:10-cv-581 (GLS/ATB), NYLJ 1202536852890, at *1 (NDNY, Decided Nov. 28, 2011), Sharpe, J.

Constructive Trust—Court Held That to Permit Defendants’ $58,500 to Be Deemed a Contribution Without Expectation of Return, Would Be Unjust and Inequitable and Court Held That a Constructive Trust Should Be Imposed Against the Subject Home

This case involved a third-party action commenced by the third-party plaintiff husband (son-in-law) against his father-in-law and mother-in-law.

The son-in-law sought to impress a private home with a constructive trust in order to avoid “unjust enrichment.” The property was held in the name of the father-in-law and mother-in-law. Prior to the acquisition of the subject property, the son-in-law and his wife lived together before they were married, i.e., they lived together in the wife’s leased home. Although they were thereafter married, a divorce action was commenced a year later.

The son-in-law had testified that he had a “cordial relationship” with his in-laws. The son-in-law had provided $58,500 to his wife, who subsequently delivered such funds to her father, “who undoubtedly used the money to purchase the subject premises.” The in-laws and the wife attempted to establish that the $58,500 was payment to the wife for “her living expenses” at her previously “leased household.”

Although the wife and in-laws attempted to portray the son-in-law as a “free loader,” the son-in-law had “credibly testified” that he had contributed to the ordinary household expenses of the previously leased home. The son-in-law’s banking statements corroborated his testimony. The subject home had been purchased pursuant to a contract dated Feb. 25, 2009. The “money transferred equaling $58,500″ was transferred pursuant to checks dated Feb. 25, 2009, March 1, 2009 and March 29, 2009.

The son-in-law testified that he and his wife had been house hunting, had done “walk-throughs, negotiations and decision making together.”

The son-in-law testified that the purchase price of the subject home had been negotiated by him and his wife and not by the in-laws. He testified that the home had been acquired so that he, his wife and his wife’s children from a prior marriage could move into the home as a family and that such was necessary since the wife was being evicted from her prior rental home.

The in-laws could qualify for a mortgage and it was “very questionable as to whether or not the [son-in-law] and his wife would have qualified.” The son-in-law testified that “the payment from him was clearly a ‘down payment’ of the subject [home].” The contract of purchase provided for a down payment in the amount $33,000. The court found it “compelling” that the son-in-law had withdrawn $29,000 from a college fund he had for his daughter “from a prior marriage in order to contribute to the purchase of the subject [home].”

The son-in-law acknowledged that he had no conversations with the in-laws concerning repayment of the money or the nature of the transaction. However, he testified that his wife had told him that “[i]t will be paid back.” The court found that there was no doubt that the father-in-law knew that the son-in-law had contributed the $58,500. Checks had been issued by the son-in-law payable to the father-in-law and had been deposited in the father-in-law’s account. The wife contributed $100,000 towards the purchase of the home and she currently resides in the home.

At the closing for the subject home, the son-in-law had appeared, although he did not stay for the entire closing. Thereafter, the parties separated. The son-in-law had never entered the home as an occupant. The son-in-law acknowledged that the real estate contracts were signed or dated prior to the son-in-law transferring his funds. However, the son-in-law remained adamant that his money went toward the purchase of the home and the in-laws “offered no evidence to controvert the evidence produced by the [son-in-law] that his entire $58,500 made its way into the subject [home].”

The court found that the father-in-law “saw himself as a temporary caretaker” of the home. “If there came a time, or when there came a time, that his son-in-law and daughter could afford and obtain their own funding, he stood ready, willing and able to transfer the home to them.”

The defense had moved for a directed verdict, claiming that “the plaintiff failed to prove two elements necessary for a constructive trust,” i.e., a confidential relationship; and either an express or implied promise by the in-laws. The court explained that the elements of a constructive trust are a confidential or fiduciary relationship, a promise, a transfer and reliance on the promise and unjust enrichment. The court cited precedent which held that the foregoing four elements “are not rigidly applied,” and that a constructive trust may be applied “to whatever knavery human ingenuity can invent.”

Precedent also held that “a constructive trust has been deemed particularly applicable where family transactions are involved and it is not necessary that the person against whom the constructive trust is sought to be imposed, has done anything wrong.” In fact, a recent Appellate Division, Second Department case, had noted that “the four elements serve only as a guideline, and a constructive trust may still be imposed even if all of the elements are not established.”

After noting that a constructive trust may be “used to prevent unjust enrichment in a wide variety of circumstances,” the court observed that this case “is filled with good intentions.” The in-laws “were motivated to provide and help their daughter secure suitable living arrangements.” The son-in-law, while married to his wife, “was looking to do his share” and even the wife had deposited $100,000 of her own funds to purchase the home. The court concluded that to permit the son-in-law’s “$58,500 to be deemed a contribution without expectation of return would indeed be unjust and inequitable” and therefore, the court ordered that “a constructive trust be imposed in favor of the [son-in-law] against the [home].”

Tyree v. Henn, 27590-2009, NYLJ 1202535536068, at *1 (Sup., SUF, Decided Dec. 2, 2011), Garguilo, J.

Scott E. Mollen is a partner at Herrick, Feinstein and an adjunct professor at St. John’s University School of Law.