WHITEHEAD v. TOWN HOUSE EQUITIES, LTD

Citation Codes

Equivalent Citations

citation codes

Docket Number

2003-00445, 2003-02382.

Attorney(S)

Meyers Meyers, Brooklyn, N.Y. (Allan S. Meyers and Glenn R. Meyers of counsel), for appellant Thomas Hansard, and Herrick, Feinstein, LLP, New York, N.Y. (Stacy Kellner Rosenberg, Richard Y. Im, and Jacqueline Shapiro of counsel), for appellant The Money Store (one brief filed).

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Smart Summary

Factual and Procedural Background

The plaintiff, Lillian Whitehead, an 89-year-old woman, agreed orally to sell her dilapidated rooming house to defendant Thomas Hansard for $5,000, the assumption of approximately $100,000 in debt secured by liens on the property for which she was personally liable, and the right to remain in an apartment on the premises for life. At closing, she executed a deed transferring the property to Town House Equities, Ltd., a company owned by Hansard's acquaintance, Calvin Holte. Whitehead received $5,000 and remained in her apartment. Hansard and Town House invested nearly $100,000 in renovations, after which Hansard secured a mortgage loan, later assigned to The Money Store. With the loan proceeds, Hansard paid off existing liens and purchased the premises in his own name.

The plaintiff commenced an action against Hansard, Holte, Town House, and The Money Store seeking rescission of the deed on grounds of fraud, lack of mental capacity, and undue influence. Hansard and The Money Store separately moved for summary judgment dismissing the complaint against them, but the Supreme Court, Kings County, denied those motions. Both appellants appealed.

Legal Issues Presented

Whether the defendants Hansard and The Money Store are entitled to summary judgment dismissing the complaint alleging fraud, lack of mental capacity, and undue influence in connection with the deed transfer.

Arguments of the Parties

Appellants' Arguments

No misrepresentations were made to the plaintiff regarding the deed or transaction.
The plaintiff understood the nature and consequences of the deed she signed.
The plaintiff received more than fair value in consideration for the conveyance.
Hansard had no confidential or trust relationship with the plaintiff and did not exert undue influence.
The plaintiff was mentally competent to understand and execute the transaction.

Respondent's Arguments

Alleged fraud in the execution of the deed.
Claimed lack of mental capacity at the time of signing.
Alleged undue influence exerted by Hansard.
Concluded that the plaintiff was tricked into executing the deed.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Cayuga Partners v. 150 Grand, 305 A.D.2d 527, 528	Elements required to sustain a fraud cause of action.	Used to define the requirements plaintiff must meet to prove fraud.
Clearview Concrete Prods. Corp. v. S. Charles Gherardi, Inc., 88 A.D.2d 461	Supporting authority for fraud elements.	Referenced to reinforce the fraud standard.
Fleming v. Ponziani, 24 N.Y.2d 105, 111	Definition of fraud in the execution involving misunderstanding nature or consequences of a document.	Applied to assess whether plaintiff was misled about the deed.
Gilbert v. Rothschild, 280 N.Y. 66, 71-72	Fraud in the execution standard.	Used to evaluate plaintiff’s knowledge of the deed.
National Bank of North Amer. v. Around the Clock Truck Serv., 58 Misc.2d 660	Fraud in the execution principles.	Supported the court’s fraud analysis.
Pommer v. Trustco Bank, 183 A.D.2d 976, 977-978	Consideration of plaintiff’s experience as a real estate investor and value received.	Used to show plaintiff understood and received fair value.
New York City School Constr. Auth. v. Koren-DiResta Constr. Co., 249 A.D.2d 205	Insufficiency of conclusory allegations to raise triable issues.	Applied to reject plaintiff’s conclusory fraud claims.
Matter of Chiurazzi, 296 A.D.2d 406, 407	Definition of undue influence requiring moral coercion.	Used to evaluate plaintiff’s undue influence claim.
Children's Aid Socy. of N.Y. v. Loveridge, 70 N.Y. 387, 394	Clarification of moral coercion standard in undue influence.	Supported the court’s undue influence analysis.
Mandell v. Finkel, 298 A.D.2d 365	Undue influence standard.	Referenced in undue influence evaluation.
Alston v. Gregory, 281 A.D.2d 440	Undue influence principles.	Used in assessing undue influence claim.
Hennessey v. Ecker, 170 A.D.2d 650	Undue influence requirements.	Applied to plaintiff’s claim.
Lukaszuk v. Lukaszuk, 304 A.D.2d 625	Standard for mental capacity in real estate transactions.	Used to evaluate plaintiff’s mental capacity claim.
Smith v. Comas, 173 A.D.2d 535	Mental capacity standard.	Applied to determine plaintiff’s competency.
Feiden v. Feiden, 151 A.D.2d 889, 890	Definition of incapacity to understand transaction.	Referenced to assess plaintiff’s mental state.
Aldrich v. Bailey, 132 N.Y. 85, 89	Standard for mental capacity in contract signing.	Used to support mental capacity analysis.
Ortelere v. Teachers' Retirement Bd. of City of N.Y., 25 N.Y.2d 196, 203	Capacity to control conduct as part of mental competence.	Applied to plaintiff’s mental capacity claim.
Call v. Ellenville Natl. Bank, 5 A.D.3d 521	Mental capacity standard.	Referenced in mental capacity evaluation.
Matter of Lee, 294 A.D.2d 366, 367	Assessment of mental competence.	Used to analyze plaintiff’s capacity.
Gala v. Magarinos, 245 A.D.2d 336	Mental capacity considerations.	Applied in mental capacity determination.

Court's Reasoning and Analysis

The court analyzed the plaintiff's claims of fraud, undue influence, and lack of mental capacity through the lens of established legal principles and precedent. For fraud, the court required proof of a false material misrepresentation made knowingly to induce reliance, justifiable reliance by the plaintiff, and resulting injury. The appellants submitted evidence, including depositions and affidavits, demonstrating that no misrepresentations occurred, the plaintiff understood the deed's nature and consequences, and she received fair value. The plaintiff's conclusory claims were insufficient to create a triable issue of fact.

Regarding undue influence, the court found that Hansard had no confidential or fiduciary relationship with the plaintiff, who conceded that Hansard was only a casual acquaintance and that the transaction was at arm's length. The plaintiff failed to provide evidence of coercion or moral pressure sufficient to overcome free will.

On the issue of mental capacity, the court considered affidavits and deposition testimony showing the plaintiff was capable of managing her financial affairs and comprehending the transaction at the time of signing. The plaintiff did not demonstrate that her condition rendered her wholly incompetent or unable to control her conduct.

Consequently, the court concluded that the appellants were entitled to summary judgment dismissing the complaint against them.

Holding and Implications

The court REVERSED the orders of the Supreme Court, Kings County, granted the motions for summary judgment filed by appellants Thomas Hansard and The Money Store, and dismissed the complaint insofar as asserted against them. The action against the remaining defendants was severed.

The direct effect of this decision is the dismissal of the claims against Hansard and The Money Store, narrowing the litigation. The court did not establish any new legal precedent but applied established principles to the facts presented.

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LILLIAN WHITEHEAD, respondent, v. TOWN HOUSE EQUITIES, LTD., ET AL., defendants, THOMAS HANSARD, ET AL., appellants.

DECISION ORDER

ORDERED that the orders are reversed, on the law, with one bill of costs, the motions are granted, the complaint is dismissed insofar as asserted against the appellants, and the action against the remaining defendants is severed.

After orally accepting an offer from the defendant Thomas Hansard to purchase her dilapidated rooming house (hereinafter the premises) for $5,000, the assumption of approximately $100,000 of debt secured by liens on the premises for which she was personally liable, and permission to remain in an apartment at the premises for the remainder of her life, the 89-year-old plaintiff attended a closing and executed a deed transferring the premises to the defendant Town House Equities, Ltd. (hereinafter Town House), a company owned by Hansard's acquaintance, the defendant Calvin Holte. The plaintiff received $5,000 and remained in her apartment. After Hansard and Town House expended almost $100,000 in renovating the premises, Hansard secured a mortgage loan from a lender which later assigned the mortgage and note to the defendant The Money Store. With the loan proceeds, Hansard paid off all of the existing liens on the premises, and purchased the premises in his own name.

The plaintiff commenced this action against Hansard, Holte, Town House, and The Money Store to rescind the deed, alleging fraud, lack of mental capacity, and undue influence. Hansard and The Money Store (hereinafter the appellants) separately moved for summary judgment dismissing the complaint insofar as asserted against them, and the Supreme Court denied the motions. We reverse.

To sustain a cause of action sounding in fraud, a party must show "a misrepresentation or a material omission of fact which was false and known to be false by the defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury" ( Cayuga Partners v. 150 Grand, 305 A.D.2d 527, 528; see Clearview Concrete Prods. Corp. v. S. Charles Gherardi, Inc., 88 A.D.2d 461). Fraud in the execution, as alleged by the plaintiff in this action, arises where a party did not know the nature or the contents of the document being signed, or the consequences of signing it, and was nonetheless misled into doing so ( see Fleming v. Ponziani, 24 N.Y.2d 105, 111; Gilbert v. Rothschild, 280 N.Y. 66, 71-72; National Bank of North Amer. v. Around the Clock Truck Serv., 58 Misc.2d 660). The appellants established their entitlement to judgment as a matter of law in this regard by submitting deposition testimony and affidavits that no misrepresentations were made to the plaintiff, she understood the nature and consequences of the document she signed, and received more than fair value in consideration for the conveyance of the premises, as well as documentary evidence that the plaintiff was an experienced real estate investor ( see Pommer v. Trustco Bank, 183 A.D.2d 976, 977-978). In opposition, the plaintiff made only conclusory allegations that she was somehow tricked into executing the deed. These allegations were insufficient to raise a triable issue of fact ( see New York City School Constr. Auth. v. Koren-DiResta Constr. Co., 249 A.D.2d 205).

With respect to the claim of undue influence, the appellants established that Hansard had no relationship of confidence or trust with the plaintiff, much less that he abused any such position by "`moral coercion * * * which, by importunity which could not be resisted, constrained the [plaintiff] to do that which was against [her] free will and desire but which [she] was unable to refuse or too weak to resist'" ( Matter of Chiurazzi, 296 A.D.2d 406, 407, quoting Children's Aid Socy. of N.Y. v. Loveridge, 70 N.Y. 387, 394; see Mandell v. Finkel, 298 A.D.2d 365; Alston v. Gregory, 281 A.D.2d 440; Hennessey v. Ecker, 170 A.D.2d 650). The plaintiff failed to raise a triable issue of fact in opposition to this showing, conceding that Hansard never managed her day-to-day affairs, was a casual acquaintance, and that the challenged transaction was effected at arm's length.

Moreover, after the appellants made out a prima facie case for summary judgment, the plaintiff failed to raise a triable issue with respect to her alleged lack of mental capacity ( see Lukaszuk v. Lukaszuk, 304 A.D.2d 625; Smith v. Comas, 173 A.D.2d 535) . The information adduced in the affidavits, and at the depositions of the various parties and witnesses, established that the plaintiff was capable of taking care of her financial affairs at the time she executed the deed, and was not "so affected" by her condition "as to render [her] wholly and absolutely incompetent to comprehend and understand the nature of the transaction" ( Feiden v. Feiden, 151 A.D.2d 889, 890, quoting Aldrich v. Bailey, 132 N.Y. 85, 89) or "unable to control [her] conduct" ( Ortelere v. Teachers' Retirement Bd. of City of N.Y., 25 N.Y.2d 196, 203; see Call v. Ellenville Natl. Bank, 5 A.D.3d 521; Lukaszuk v. Lukaszuk, supra; Matter of Lee, 294 A.D.2d 366, 367; Gala v. Magarinos, 245 A.D.2d 336; Smith v. Comas, supra).

Accordingly, the appellants' motions for summary judgment should have been granted, and the complaint dismissed insofar as asserted against them. In light of our determination, we do not reach their remaining contention.

PRUDENTI, P.J., KRAUSMAN, TOWNES and SPOLZINO, JJ., concur.