In re Estate of Steinberg

• Decision Date: 14 May 2020
• Docket Number: 529134
• Citation: 124 N.Y.S.3d 98,183 A.D.3d 1067
• Parties: In the MATTER OF the Estate of Yehuda STEINBERG, Also Known as Jay Steinberg and David Barnett, Deceased. Aviva Aviv Steinberg et al., Respondents; Scott Eisenmesser, as Executor of the Estate of Yehuda Steinberg, Deceased, Appellant.
• Court: New York Supreme Court — Appellate Division

183 A.D.3d 1067

124 N.Y.S.3d 98

In the MATTER OF the Estate of Yehuda STEINBERG, Also Known as Jay Steinberg and David Barnett, Deceased. Aviva Aviv Steinberg et al., Respondents; Scott Eisenmesser, as Executor of the Estate of Yehuda Steinberg, Deceased, Appellant.

529134

Supreme Court, Appellate Division, Third Department, New York.

Decided and Entered: May 14, 2020

Calendar Date: March 23, 2020

Sperber & Stein, LLP, Garden City (Michelle S. Stein of counsel), for appellant.

Smith, Gambrell & Russell, LLP, New York City (John G. McCarthy of counsel), for respondents.

Before: Egan Jr., J.P., Clark, Devine, Pritzker and Colangelo, JJ.

MEMORANDUM AND ORDER

Pritzker, J.

Prior to his death in January 2017, Yehuda Steinberg (hereinafter decedent) was a real estate developer and owner of several income-producing properties that were purportedly valued in excess of $60 million. Petitioner Aviva Aviv Steinberg (hereinafter Steinberg) is decedent's sister, and petitioners Yuval Eilam, Ofer Eilam and Ehud Eilam are Steinberg's children and decedent's nephews (hereinafter collectively referred to as the nephews). During his lifetime, decedent allegedly expressed his intent to transfer ownership of several parcels of property to petitioners. The present appeal concerns a number of decedent's properties, located mainly in Brooklyn, which, at various times in his life, decedent conveyed to petitioners and himself as joint tenants with rights of survivorship. In essence, it is alleged that decedent gifted petitioners their interests in the properties as part of his ongoing tax and estate planning, and that, years after doing so, decedent surreptitiously divested petitioners of their interests in certain properties by filing deeds in the Kings County Clerk's office. Petitioners purportedly did not learn that decedent had transferred interest in several of the properties until after his death.

In September 2014, decedent executed his last will and testament, leaving his tangible property and his residuary estate to his friend, Ronald Minner; he appointed respondent, his attorney, as the executor of his estate, and named Minner as respondent's successor. Following decedent's death, preliminary letters testamentary were issued to respondent, and his last will and testament was admitted to probate in March 2017. Thereafter, in May 2018, petitioners commenced the instant proceeding against respondent, as executor of decedent's estate, asserting seven causes of action, including breach of fiduciary duty and constructive trust.¹ Respondent thereafter filed a pre-answer motion to dismiss the petition under CPLR 3211(a)(1), (5) and (7), which petitioners opposed. Surrogate's Court denied the motion, and respondent appeals.

"Where, as here, we are tasked with resolving a motion to dismiss pursuant to CPLR 3211, we must accept the facts as alleged in the [petition] as true and accord the [petitioner] the benefit of every possible favorable inference" ( Krog Corp. v. Vanner Group, Inc., 158 A.D.3d 914, 915, 72 N.Y.S.3d 178 [2018] [citations omitted]; see New York State Workers' Compensation Bd. v. Consolidated Risk Servs., Inc., 125 A.D.3d 1250, 1252–1253, 4 N.Y.S.3d 680 [2015] ). The relevant facts, as alleged by petitioners, center around the following properties and entities in which petitioners allege an interest.

In 1980, decedent and Steinberg held a property located at 3906 Avenue K in Brooklyn as joint tenants with rights of survivorship. Steinberg's interest was gifted to her by decedent as part of his tax and estate planning and to compensate her for her contributions to his business. In 1981, Steinberg, who was living in Israel at the time, executed a power of attorney naming decedent as her attorney-in-fact. Thereafter, in 2007, decedent exercised his authority as attorney-in-fact and transferred full ownership of this property to a limited liability company (hereinafter LLC) in which decedent was a manager and member. In January 2015, decedent filed a deed, wherein he allegedly forged Steinberg's signature, confirming that he and Steinberg transferred their interest in this property to the LLC. In March 2015, this LLC sold this property to another LLC for substantially less than the true value of the property. Steinberg did not receive any funds from this sale.

In 1984, decedent and Steinberg owned a property located at 566 Seventh Avenue in Brooklyn, as joint tenants with rights of survivorship. Steinberg's interest was gifted to her by decedent. In 2007, decedent again exercised his authority, as Steinberg's power of attorney, and transferred full ownership rights of the property to an entity of which decedent was a member and manager. Steinberg was not compensated.

Following the death of Belle Steinberg, decedent's and Steinberg's mother, Belle Steinberg left behind several parcels of real estate – two in Brooklyn, located at 2241 East 29th Street and 847 East 19th Street – and two in Jerusalem, one of which was located on Alfassi Street. It is alleged that after their mother's death, decedent and Steinberg agreed to share ownership of three of the properties – the 2241 East 29th Street property, the 847 East 19th Street property and the Alfassi Street property. More specifically, decedent and Steinberg agreed that Steinberg would deed the Alfassi Street apartment in Jerusalem to herself and decedent as joint tenants with rights of survivorship, and that decedent would similarly deed the properties at 2241 East 29th Street and 847 East 19th Street to himself and Steinberg as joint tenants with rights of survivorship. Steinberg followed through with this agreement, but decedent did not.

In 1986, decedent and Ofer Eilam owned, as joint tenants with rights of survivorship, a property located at 2031 Ocean Avenue in Brooklyn. Ofer Eilam's interest was gifted by decedent as part of his tax and estate planning. Because Ofer Eilam was living in Israel, he executed a power of attorney naming both decedent and Steinberg as his agents. In 1991, decedent informed Ofer Eilam and Steinberg that the Ocean Avenue property needed to be mortgaged and, to do so, he needed full ownership interest in the property and that Ofer Eilam's share would be reconveyed to him after the refinancing was complete. Steinberg, acting as Ofer Eilam's attorney-in-fact, transferred Ofer Eilam's interest in this property to decedent, who then obtained a mortgage in 1991 and another mortgage in 2003. In 2004, decedent transferred full ownership rights of the property to an entity of which decedent was a manager and member. Petitioners allege that, "[o]n information and belief, [d]ecedent still intended to re-convey the 50% interest in [this] property back" to Ofer Eilam at this time. Thereafter, in 2014, the entity sold the property to three other entities for $2.4 million. Ofer Eilam did not receive compensation as a result of this sale.

In 1986, decedent conveyed by deed a property located at 45 Wyckoff Street in Brooklyn to himself and Yuval Eilam as joint tenants with rights of survivorship, purportedly as a gift in accordance with decedent's tax and estate planning. Decedent allegedly failed to account to Yuval Eilam the profits and losses of the property and failed to remit to Yuval Eilam his share of the net proceeds of the rent from the property.

In 1986, decedent conveyed by deed a property located at 41 Wyckoff Street in Brooklyn to himself and Ehud Eilam as joint tenants with rights of survivorship, again as a gift in accordance with decedent's tax and estate planning. Decedent failed to account to Ehud Eilam the profits and losses of the property and failed to remit to Ehud Eilam his share of the net proceeds of the rent from the property.

Lastly, in 2005, decedent transferred his ownership interest in six apartment units at 125 8th Avenue in Brooklyn, conveying two units to each of three separate entities – Ehud LLC, Ofer LLC and Yuval 125 LLC. Decedent was a member and manager of each entity until his death. Petitioners allege that decedent gifted an unknown interest in each of these entities to each of the nephews as part of his ongoing tax and estate planning.

Petitioners' first cause of action alleges a breach of fiduciary duty by decedent to petitioners by "engaging in self-dealing, entering into self-interested transactions, committing forgery, and concealing acts of his impropriety." Respondent argues that Surrogate's Court erred in denying the motion to dismiss the first cause of action as it is time-barred. We disagree. To dismiss a cause of action as "barred by the applicable statute of limitations, a [respondent] bears the initial burden of demonstrating, prima facie, that the time within which to commence the [proceeding] has expired" ( Krog Corp. v. Vanner Group, Inc., 158 A.D.3d at 915, 72 N.Y.S.3d 178 [internal quotation marks and citations omitted] ). "If the [respondent] meets this burden, the burden then shifts to the [petitioner] to raise a question of fact as to whether the statute of limitations has been tolled or was otherwise inapplicable" ( id. at 916, 72 N.Y.S.3d 178 [internal quotation marks, brackets and citations omitted] ). "[C]laims alleging a breach of fiduciary duty do not accrue until there is either an open repudiation of the fiduciary obligation or a judicial settlement of the account" ( Matter of Baird, 58 A.D.3d 958, 959, 871 N.Y.S.2d 755 [2009] [internal quotation marks, ellipsis and citation omitted]; see Matter of Barabash, 31 N.Y.2d 76, 80, 334 N.Y.S.2d 890, 286 N.E.2d 268 [1972] ; Matter of Behr, 191 A.D.2d 431, 431, 594 N.Y.S.2d 314 [1993] ). Open repudiation "requires proof of a repudiation by the fiduciary which is clear and made known to the beneficiaries" ( Matter of JPMorgan Chase Bank N.A. [Roby], 122 A.D.3d 1274, 1276, 996 N.Y.S.2d 816 [2014] [internal quotation marks, emphasis added and citation omitted]; see Matter of Barabash, 31 N.Y.2d at 80, 334 N.Y.S.2d 890, 286 N.E.2d 268). "Where there is any doubt...