Gass v. Irina Mamedova-Braz, Ilya Braz, 191 Spring LLC
| Decision Date | 18 August 2017 |
| Docket Number | 15 Civ. 3799 (ER) |
| Parties | BERNHARD GASS, Individually and as Co-Administrator of the Estate of Walter Gass, ELENA GASS, and CLAUDIA ZIEGLER, Plaintiffs, v. IRINA MAMEDOVA-BRAZ, ILYA BRAZ, 191 SPRING LLC, and REDEMA REAL ESTATE DEVELOPMENT LLC, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Ramos, D.J.:
This diversity action centers on a dispute over title to two parcels of real property in Brooklyn and Manhattan, New York. The parties have filed cross-motions for summary judgment. Docs. 41, 42. For the reasons stated below, Plaintiffs' motion is GRANTED in part and DENIED in part and Defendants' motion is GRANTED in part and DENIED in part.
The following facts are undisputed except where otherwise noted.
Walter Gass ("the Decedent") owned in whole or in part two investment properties in Brooklyn and Manhattan (the "Brooklyn Property" and the "Manhattan Property," and together, the "Subject Properties") until shortly before his death in September 2014. Plaintiffs Bernhard Gass, Elena Gass, and Claudia Ziegler (collectively, "Plaintiffs") were his three children and sole heirs. Defendants' Statement of Undisputed Material Facts Pursuant to Local Rule 56.1 ( ) (Doc. 45) ¶ 1; Plaintiffs' Local Rule 56.1(A) Statement of Material Facts ( ) (Doc. 46) ¶ 4. The Decedent was an Austrian citizen and resided and died in Vienna, Austria. Pls.' R. 56.1 ¶ 3.
Defendants are Irina Mamedova-Braz ("Mamedova-Braz"), Ilya Braz ("I. Braz"), Redema Real Estate Development LLC ("Redema"), and 191 Spring LLC ("191 Spring") (collectively "Defendants"). Defs.' R. 56.1 ¶¶ 5-8. Mamedova-Braz is a United States citizen and resides in Brooklyn, New York. Pls.' R. 56.1 ¶ 6. The parties dispute the precise nature of Mamedova-Braz's relationship with the Decedent. Defendants assert that Mamedova-Braz was the "loving companion" of the Decedent for the twenty five years prior to his death and that she and Decedent held themselves out to be husband and wife for nearly three decades. Defs.' R. 56.1 ¶ 9; Defendants-Counterclaim Plaintiffs' Counterstatement of Material Facts ( ) (Doc. 53) ¶ 16. Plaintiffs assert that the Decedent rarely saw Mamedova-Braz for the last 15 years of his life because he lived in Vienna while she lived in New York City. Plaintiffs' Local Rule 56.1 Counter-Statement of Material Facts ( ) (Doc. 56) ¶¶ 9-10. Regardless, it is undisputed that Mamedova-Braz and the Decedent met in 1987 and had some form of personal relationship, but were never married. Defs.' R. 56.1 ¶ 10; Pls.' R. 56.1 ¶ 16. The couple resided together for periods of time throughout their relationship in both Vienna and New York. Defs.' Cntr. R. 56.1 ¶ 17.
Currently, Mamedova-Braz is a member and sole owner of both Redema and 191 Spring, two New York limited liability companies. Defs.' R. 56.1 ¶¶ 8-9; Pls.' R. 56.1 ¶¶ 9, 11. I. Braz is Mamedova-Braz's nephew, and is a licensed New York attorney who advised both the Decedent and Mamedova-Braz in relation to the creation of a power of attorney ("POA") and conveyances related to the Subject Properties. Defs.' Cntr. R. 56.1 ¶¶ 7, 29.
On October 29, 1998, the Decedent appointed Mamedova-Braz to be his attorney-in-fact in a power of attorney ("the 1998 POA") relating to the purchase of real property at 191 Spring Street, Manhattan. Pls.' Cntr. R. 56.1 ¶ 13. On February 24, 1999, the Decedent purchased theManhattan Property for $1,275,000. Defs.' R. 56.1 ¶ 14. It was purchased with the Decedent's own funds and title was held solely in his name for 15 years from 1999 to 2014. Id. ¶¶ 14-15. During that time, Mamedova-Braz managed the Manhattan Property through Redema Real Estate Development & Management Co., Inc. ("Redema Management").1 Pls.' R. 56.1 ¶ 53.
On May 27, 2004, Mamedova-Braz purchased the Brooklyn Property, which was a vacant parcel of land located at 2571 East 17th Street. Defs.' R. 56.1 ¶ 20. The parties dispute whether Mamedova-Braz purchased the Brooklyn Property entirely with her own funds. See Pls.' Cntr. R. 56.1 ¶¶ 20-21. However, it is undisputed that when Mamedova-Braz acquired the Brooklyn Property, it was understood that the Decedent would be providing the funds to construct a building thereon. Pls.' R. 56.1 ¶ 31. The construction costs for the Brooklyn Property were approximately $1,000,000. Id. ¶ 32. The parties dispute the exact level of financing that Decedent provided for construction at the Brooklyn Property, but it is undisputed that the Decedent personally financed at least $500,000 of the construction costs. Id.2 Mamedova-Braz also managed the Brooklyn Property through Redema Management. Pls.' R. 56.1 ¶ 53.
On June 3, 2004, the Decedent appointed Mamedova-Braz to be his attorney-in-fact through a power of attorney for "general, real estate & bank business" (the "2004 POA"). Pls.' Cntr. R. 56.1 ¶ 18; Declaration of Stephen B. Meister ("Meister Decl.") (Doc. 44) Ex. 17. No party alleges that any disputed transfer in this action was facilitated using the 2004 POA. See Pls.' Cntr. R. 56.1 ¶ 7.
On June 23, 2004, one month after purchasing the Brooklyn Property, Mamedova-Braz signed a bargain and sale deed3 transferring a 50% interest in the Brooklyn Property to Decedent. Doc. 44-14 ("2004 Brooklyn Deed of Conveyance"). The deed did not specify whether a joint ownership or tenancy in common was created or whether a right of survival applied to the property. See id. The parties now dispute the legal effect of this conveyance.4
In May 2013, the Decedent was diagnosed with cancer and underwent a course of chemotherapy in June and July of that year. Declaration of Nancy J. Rudolph ("Rudolph Decl.") (Doc. 47) Ex. 8 at 13:8-14; 100:25-101:4. On August 2, 2013, in Vienna, the Decedent executed a "Power Of Attorney New York Statutory Short Form"5 authorizing Mamedova-Braz to act as his "agent" regarding, inter alia, real estate transactions (the "2013 POA"). Pls.' R. 56.1 ¶ 20; Meister Decl. Ex. 19.6
The majority of the key events in this case took place during the six months prior to Decedent's death and involve transactions undertaken by Mamedova-Braz under the authority of the 2013 POA. On March 31, 2014, the articles of organization for 191 Spring LLC were filedwith the New York State Department of State, Division of Corporations. Pls.' R. 56.1 ¶ 21. That same day, Mamedova-Braz, acting as Decedent's agent pursuant to the 2013 POA, signed a bargain and sale deed, acknowledged by her nephew and attorney, I. Braz, which purported to convey Decedent's 100% interest in the Manhattan Property to Defendant 191 Spring LLC (the "Manhattan Deed"). Id. ¶ 41; Meister Decl. Ex. 21. The legality of this transfer is contested by the parties. The Manhattan Deed transferred the Manhattan Property to 191 Spring for "Ten Dollars ($10) and other valuable consideration." Meister Decl. Ex. 21 at G000158. However, according to the Form TP-584 "Combined Real Estate Transfer Tax Return" from the New York State Department of Taxation and Finance7 that was signed by Mamedova-Braz on January 22, 2015, as both grantor and grantee, there was "no consideration" and "0.00 consideration" for the Manhattan Property Conveyance. Rudolph Decl. Ex. 20 at Plaintiff_00441; Pls.' R. 56.1 ¶ 44. Moreover, according to the Form RP-5217NYC "Real Property Transfer Report" from the State of New York, State Board of Real Property Services8 that was signed by Mamedova-Braz on the same day, the "full sale price" for the Manhattan Property Conveyance was $0.00. Rudolph Decl. Ex. 21 at Plaintiff_00421; Pls.' R. 56.1 ¶ 45. The Manhattan Deed was not recorded or filed in the Office of the City Register of the City of New York until March 10, 2015—almost one year after the transfer of the property to 191 Spring. Meister Decl. Ex. 21. Memodova-Braztestified that the Manhattan Property was worth approximately $7,000,000 at the time of the disputed transfer. Pls.' R. 56.1 ¶ 42.
On May 30, 2014, Mamedova-Braz and the Decedent executed the operating agreements for both Redema and 191 Spring while they were in Vienna. See Pls.' Cntr. R. 56.1 ¶¶ 39, 47. No witnesses were present for the execution of these agreements. Id. The 191 Spring agreement was not dated May 30, 2014, but instead was dated retroactively "as of March 31, 2014," the same day as the transfer of the Manhattan Property. Meister Decl. Ex. 23 at G000269.9 The operating agreement for 191 Spring indicates that Decedent and Mamedova-Braz had a "membership interest" of 51% and 49% respectively and that Mamedova-Braz was the "managing member." Pls.' R. 56.1 ¶¶ 22-23. The operating agreement for Redema sets forth that the Decedent and Mamedova-Braz each had a "membership interest" of 50% and that Mamedova-Braz was the "managing member." Id. ¶¶ 25-26.
Additionally, the Redema and 191 Spring operating agreements contained a right-of-survivorship provision, which provided in relevant part that "the [Decedent and Mamedova-Braz] covenant and agree that on the death of any Member, the membership interests of the deceased Member in the Company shall automatically transfer to the surviving Member." Id. ¶¶ 27-28; Meister Decl. Ex. 23, § 18; Meister Decl. Ex. 24, § 18. While the operating agreements allowed Decedent and Mamedova-Braz each to assign their respective membership interests in the LLC upon notice, Meister Decl. Ex. 23, § 17; Meister Decl. Ex. 24, § 17, it is undisputed that Decedent did not assign his membership interests prior to his death. Only in theevent of the simultaneous death of the two members would each member's interests "pass to their respective estates." Meister Decl. Ex. 23, § 18; Meister Decl. Ex. 24, § 18. The operating agreements also referenced "good and valuable consideration" received in exchange for the membership interests of the entity distributed to the members. Meister Decl. Ex. 23 at G000269; Meister Decl. Ex. 24 at G000277.
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