Jacobs v. Mazzei

• Decision Date: 12 December 2013
• Citation: 977 N.Y.S.2d 123,2013 N.Y. Slip Op. 08320,112 A.D.3d 1115
• Court: New York Supreme Court — Appellate Division
• Parties: Jean C. JACOBS, Appellant, v. Stephen J. MAZZEI Jr., Respondent, and Morgan Stanley Smith Barney, LLC, Defendant and Third–Party Plaintiff–Respondent; Florence Louise Weston, Third–Party Defendant–Respondent, et al., Third–Party Defendants.

112 A.D.3d 1115

977 N.Y.S.2d 123

2013 N.Y. Slip Op. 08320

Jean C. JACOBS, Appellant,

v. Stephen J. MAZZEI Jr., Respondent,andMorgan Stanley Smith Barney, LLC, Defendant and Third–Party Plaintiff–Respondent;Florence Louise Weston, Third–Party Defendant–Respondent, et al., Third–Party Defendants.

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

Dec. 12, 2013.

Basch & Keegan, LLP, Kingston (Derek J. Spada of counsel), for appellant.

Greenberg Traurig, LLP, New York City (Michael P. Manning of counsel), for defendant and third-party plaintiff-respondent.

Blatchly & Simonson, PC, New Paltz (Jon A. Simonson of counsel), for third-party defendant-respondent.

Before: ROSE, J.P., LAHTINEN, STEIN and GARRY, JJ.

GARRY, J.

Appeal from an order of the Supreme Court (Connolly, J.), entered July 16, 2012 in Ulster County, which, among other things, granted defendants' motion for summary judgment dismissing the complaint.

In 2007, Helen Van Alst (hereinafter decedent) opened an individual account and an individual retirement account (hereinafter IRA) at defendant Morgan Stanley Smith Barney, LLC (hereinafter MSSB). Decedent named no joint owners of the individual account and named her estate as the sole beneficiary of the IRA. Defendant Stephen J. Mazzei Jr. was later assigned as the financial advisor for these accounts. In January 2011, plaintiff, who was decedent's longtime friend and neighbor, took decedent—then 88 years old and suffering from lung cancer—to the hospital. Five days later, while still hospitalized, decedent executed a durable power of attorney—prepared by an attorney—that designated plaintiff as decedent's agent. Decedent initialed line (P) in the section headed “Grant of Authority,” thus authorizing plaintiff to exercise all of the powers enumerated in that section, but neither initialed the section authorizing plaintiff to make gifts pursuant to a statutory gifts rider, nor executed such a document ( seeGeneral Obligations Law § 5–1513 [1] [Power of Attorney New York Statutory Short Form(f)(2); (h)]).

Shortly thereafter, plaintiff presented the power of attorney to defendants and asked to be added to decedent's individual account as a joint owner and to be listed as the sole beneficiary of the IRA. Based upon decedent's failure to initial the statutory gifts rider section of the power of attorney, defendants declined to make the requested changes, and Mazzei allegedly advised plaintiff that personal confirmation from decedent was required. Plaintiff later presented defendants with handwritten notes, allegedly signed by decedent, asking to have plaintiff added to the individual account as a joint owner.¹ However, no changes were made, and decedent passed away several days later.

Plaintiff commenced this action alleging negligence and breach of contract arising out of defendants' failure to make the requested account changes. Defendants answered, asserting lack of standing and other affirmative defenses. MSSB brought a counterclaim against plaintiff, as well as a third-party complaint for interpleader against, among others, decedent's sister. Shortly thereafter, defendants moved for summary judgment dismissing the complaint. Plaintiff opposed the motion and cross-moved for denial or a continuance on the ground that further discovery was required. Supreme Court granted defendants' motion, denied plaintiff's cross motion and dismissed the complaint. Plaintiff appeals.

Whether a defendant owes a duty of care to a plaintiff is a threshold inquiry in a negligence action, as there can be no liability in the absence of such a duty ( see Lauer v. City of New York, 95 N.Y.2d 95, 100, 711 N.Y.S.2d 112, 733 N.E.2d 184 [2000]; Baker v. Buckpitt, 99 A.D.3d 1097, 1098, 952 N.Y.S.2d 666 [2012] ). We agree with Supreme Court that defendants did not owe a duty to plaintiff to make the requested changes in decedent's accounts. A principal who wishes to authorize an agent to make gifts other than those authorized by General Obligations Law § 5–1502I(14), including gifts by the agent to himself or herself, “must expressly grant such authority ... in a statutory gifts rider” (General Obligations Law § 5–1514 [1]; seeGeneral Obligations Law § 5–1501B [2][a]; Matter of Curtis, 83 A.D.3d 1182, 1183, 923 N.Y.S.2d 734 [2011]; see also Marszal v. Anderson, 9 A.D.3d 711, 712–713, 780 N.Y.S.2d 432 [2004] ). Further, in the absence of a statutory gift rider, an agent may not “add, delete or otherwise change the designation of beneficiaries in effect for any ... retirement benefit or plan” (General Obligations Law § 5–1502L [2] ). It is undisputed that decedent did not execute a statutory gifts rider or initial the pertinent section of the power of attorney. Thus, plaintiff was without authority to make the requested changes in decedent's accounts ( seeGeneral Obligations Law § 5–1514[4][b]; see also Matter of Marriott, 86 A.D.3d 943, 945, 927 N.Y.S.2d 269 [2011], lv. denied17 N.Y.3d 717, 2011 WL 5829297 [2011] ) and, as the power of attorney was not executed in accordance with the statutes applicable to plaintiff's requests, defendants owed her no duty to honor it ( seeGeneral Obligations Law § 5–1504[1] ).

Alternatively, plaintiff contends that she was acting as a liaison between defendants and decedent, rather than pursuant to the power of attorney. In this respect, she asserts that decedent's hand-written notes and the forms that decedent allegedly signed to add plaintiff as joint owner of the individual account and beneficiary of the IRA create issues of fact as to whether decedent intended to make the contested changes in her account, and whether defendants breached a duty to act according to her intent. However, even assuming that plaintiff could act for decedent independently of the power of attorney in this fashion, any resulting duty of defendants would necessarily be owed to decedent, not to plaintiff. Moreover, plaintiff's authority to raise any related legal claims on decedent's behalf under the power of attorney terminated when decedent passed away ( seeGeneral Obligations Law § 5–1502H [1]; 1511[1][a] ), and in the absence of such authority, she lacks standing to raise decedent's legal rights ( see Society of Plastics Indus. v. County of Suffolk, 77 N.Y.2d 761, 772–773, 570 N.Y.S.2d 778, 573 N.E.2d 1034 [1991] ). Thus, “plaintiff has wholly failed to demonstrate that defendant[s] breached any legally cognizable duty owed to her,” and her negligence claims were properly dismissed (Poole v. Susquehanna Motel Corp., 280 A.D.2d 764, 765, 720 N.Y.S.2d 592 [2001] ).

Upon this appeal, plaintiff's arguments are primarily addressed to her cause of action for breach of contract, as she asserts that there are material issues of fact as to whether she was a third-party beneficiary of decedent's contracts with defendants, and whether defendants breached the contracts by refusing decedent's alleged request to add plaintiff to the accounts. To establish that she was an intended beneficiary, plaintiff is required to show that there was a valid contract, that the contract was intended to provide her with a benefit, and that this benefit was “sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate [her] if the benefit [was] lost” (Boyd v. Hall, Ltd., 307 A.D.2d 624, 626, 763 N.Y.S.2d 149 [2003] [internal quotation marks and citations omitted]; see ...