Greene v. Greene

• Decision Date: 07 April 1981
• Citation: 437 N.Y.S.2d 339,80 A.D.2d 55
• Court: New York Supreme Court — Appellate Division
• Parties: Helen C. GREENE, Plaintiff-Appellant, v. Theodore J. GREENE, individually, and a Partner of the law firm of Finley, Kumble, Wagner, Heine & Underberg, and Finley, Kumble, Wagner, Heine& Underberg, Defendants-Respondents and Third-Party Plaintiffs, v. Norman Roy GRUTMAN and Jewel Bjork, Third-Party Defendants.

Page 339

437 N.Y.S.2d 339

80 A.D.2d 55

Helen C. GREENE, Plaintiff-Appellant, v. Theodore J. GREENE, individually, and a Partner of the law

firm of Finley, Kumble, Wagner, Heine & Underberg, and Finley, Kumble, Wagner, Heine& Underberg, Defendants-Respondents and Third-Party Plaintiffs, v. Norman Roy GRUTMAN and Jewel Bjork, Third-Party Defendants.

Supreme Court, Appellate Division, First Department.

April 7, 1981.

Jeffrey H. Squire, New York City, of counsel (Ralph L. Ellis, New York City, with him on brief, Shea & Gould, New York City), for plaintiff-appellant.

Alan M. Gelb, New York City, of counsel (Philip S. Kaufman, New York City, with him on brief, Finley, Kumble, Wagner, Heine, Underberg & Casey, New York City), pro se.

Charles M. McCaghey, New York City, of counsel (Olwine, Connelly, Chase, O'Donnell & Weyher, New York City), for defendant-respondent third-party plaintiff Greene.

Before BIRNS, J. P., and ROSS, CARRO and BLOOM, JJ.

BLOOM, Justice:

From 1967 through 1977 plaintiff was a client of the law firm of Finley Kumble Wagner Heine and Underberg (Finley Kumble) and its predecessors. Theodore J. Greene (Greene) who is not related to plaintiff by blood or affinity, is, and during all pertinent periods, was a member of that firm. During a portion of this period Norman Roy Grutman and Jewel Bjork, both of whom are sued as third party defendants but who are not parties to this appeal, were members of Finley Kumble.

In 1969, plaintiff executed a trust indenture naming herself as income beneficiary with a direction that upon her death the trust estate was to be divided into as many separate parts as she left children her surviving. Each part was to be held in trust for one of her surviving children. The indenture also contained dispositive provisions not here germane. The trustees named in the trust agreement were plaintiff and Greene.

Particularly pertinent to the issue at hand is the wide discretionary power conferred upon Greene. Since the purpose of the trust was to provide for a maximum cash return, after taxes, the possibility for incurring financial losses inherent in an operation of this kind was recognized. It was expressly provided that, in determining the responsibility of the trustees for their actions, those "actions must be considered in relation to the inherent risks involved in the operation of a business of the character represented". By consequence, the liability of the trustees was limited solely to their willful misconduct.

The term of the trust was limited to a period of two years. However, it was to renew itself automatically for further two year periods, unless the settlor gave notice of termination not less than thirty days prior to any expiration date, nor more than sixty days prior thereto. Notice of termination was given by plaintiff in December, 1977.

At or about the time of termination of the trust, plaintiff commenced this action. The complaint contains two causes of action. The first cause, which is the only one here at issue, is for recision of the trust agreement; the second is for an accounting.

The first cause of action, after setting forth the requisite jurisdictional facts, alleges that in 1969, while plaintiff was a client of Finley Kumble, she was induced by the defendants to enter into the agreement as a result of which she initially delivered to Greene and to herself, as trustees, securities and other assets of the approximate value of $2,000,000. Subsequently she delivered to them, as trustees, additional assets of the approximate value of $700,000. The trust agreement was executed by her and the assets delivered to Greene and to herself solely upon the advice of defendants and without any independent advice; and that defendants then knew that she was but 25 years old and inexperienced in the world of business. Finally, she alleges that she relied on defendants in executing the trust indenture and in delivering the assets to Greene.

It is of more than passing interest to note that the firm of which Grutman and Bjork became members after leaving Finley Kumble drew the complaint in this action and initially appeared for plaintiff. Defendants moved, among other things, to disqualify that firm. Special Term denied the motion. We affirmed by a divided Court (Greene v. Greene, 64 A.D.2d 558, 408 N.Y.S.2d 766). The Court of Appeals modified by reversing that portion of the order which refused to disqualify the firm of which Grutman and Bjork are members and disqualifying that firm (Greene v. Greene, 47 N.Y.2d 447, 418 N.Y.S.2d 379, 391 N.E.2d 1355).

The defendants thereupon moved to dismiss the first cause of action upon various grounds included among which was the claim that that cause was barred by the statute of limitations (CPLR § 213, subd. 1). Special Term held that the action accrued in 1969, at the time of the entry into the trust indenture. Since the action was not brought until some seven and one-half years later, it concluded that the action was time-barred. We disagree.

The complaint is premised on the ancient truism that an attorney occupies a fiduciary relationship with respect to his client and when he claims the...