Rakowski v. Rakowski

• Decision Date: 03 June 1985
• Citation: 109 A.D.2d 1,489 N.Y.S.2d 929
• Parties: Norine RAKOWSKI, Appellant, v. Barry RAKOWSKI, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 929

489 N.Y.S.2d 929

109 A.D.2d 1

Norine RAKOWSKI, Appellant, v. Barry RAKOWSKI, et al., Respondents.

Supreme Court, Appellate Division Second Department.

June 3, 1985.

Ashley, Lewittes & Burton, New York City (Paul Lewittes of counsel, J. Anthony Burton, on brief), for appellant.

Ira Richard Bennett, New York City, for respondent Barry Rakowski.

Before MANGANO, J.P., and GIBBONS, NIEHOFF and LAWRENCE, JJ.

MANGANO, Justice Presiding.

In July 1981, the plaintiff herein, Norine Rakowski, commenced the instant action against defendant Barry Rakowski and two corporate defendants seeking, inter alia, to impose a constructive trust upon the shares of a cooperative apartment, i.e., apartment 16E, located at 118-17 Union Turnpike in Forest Hills, Queens, which had originally been rented by the Rakowskis in 1977 and had served as their marital residence. The complaint alleged, inter alia, that (1) the lease on apartment 16E expired on March 30, 1981 and at that time a "co-operative offering plan was still pending", (2) on April 10, 1981, plaintiff was advised by defendant Foremost Management Corp., that defendant Barry Rakowski had made a $1,000 deposit "towards the purchase of the co-operative stock allocated to apartment 16-E" and that the purchase could only be consummated by plaintiff and defendant Barry Rakowski "jointly", and (3) shortly thereafter, on April 15, 1981, defendant Barry Rakowski purchased the stock "allocated to apartment 16-E" in his own name, by "unlawful and improper" means. The complaint alleged that although defendant Barry Rakowski was the sole record owner of the cooperative apartment, plaintiff was entitled to a constructive trust for her benefit "consisting of a one-half interest in and ownership of the stock and proprietary lease allocated to apartment 16E".

The Rakowskis were also parties to a matrimonial action which was commenced by Barry Rakowski in May 1980 prior to July 19, 1980, the effective date of the Equitable Distribution Law (see, L.1980, ch. 281, § 47).

In the matrimonial action, Norine Rakowski interposed (1) an answer containing a general denial of the complainant's allegations of cruel and inhuman conduct, and (2) a counterclaim. The counterclaim sought a divorce based on Barry Rakowski's cruel and inhuman treatment, and also made certain allegations with respect to jointly owned business property and a condominium located in Fort Lee, New Jersey. Specifically, the counterclaim alleged:

"(e) on or about March 29, 1980, plaintiff locked defendant out of the business they owned together, refused to have defendant draw any money from the business while plaintiff continued to operate the business as a sole proprietorship and draw money from it; (f) defendant contributed approximately $18,000., towards purchase of a condominium in Ft. Lee, New Jersey, which plaintiff has and refuses to return".

No mention was made in the matrimonial counterclaim regarding the marital apartment, and during the trial of the matrimonial action, which was conducted on April 10, 1981, Norine Rakowski did not introduce any evidence regarding or seeking to explore the ramifications of the proposed conversion of the apartment to cooperative status.

A final judgment, inter alia, (1) granting Barry Rakowski a divorce against Norine Rakowski, (2) dismissing Norine Rakowski's counterclaim for divorce, and (3) disposing of the jointly owned business property, was signed on June 2, 1981, a month before the instant action to impress a constructive trust was commenced.

In connection with the instant action, plaintiff moved for a preliminary injunction, and defendant Barry Rakowski cross-moved to dismiss the action upon the ground of collateral estoppel in that the instant matter was merely "an offshoot" of the matrimonial action previously determined.

In denying the cross motion of defendant Barry Rakowski to dismiss the action, Special Term (Linakis, J.), by order dated September 23, 1981, stated:

"A review of the papers indicates that the issues concerning the cooperative shares were not adjudicated in the matrimonial proceeding so as to cause this present proceeding to be barred".

At the ensuing trial on the merits of the instant action, testimony was adduced which indicated that (1) plaintiff had left the apartment permanently in March 1980 due to marital difficulties, and (2) she was aware at that time that the owners of the apartment building in which she and defendant Barry Rakowski resided were contemplating conversion to cooperative ownership. This knowledge was obtained by virtue of her receipt in November 1979 of a "red herring" prospectus, i.e., a notice to the tenants that a plan for the conversion of the property to cooperative ownership had been filed with the Attorney-General for his approval. At that time both she and defendant Rakowski discussed the possibility of buying the apartment and agreed that it would be a good idea. Testimony was also adduced which established that (1) the conversion plan was approved for filing by the Attorney-General on October 17, 1980, and presented by hand delivery "to each of the tenants who were in occupancy in the building" two days later, and (2) the owner of the building received an application and deposit in the amount of $1,000 from defendant Rakowski on February 23, 1981 for the purchase of the apartment. Finally, the testimony indicated that plaintiff was aware, during the trial of the matrimonial action on April 10, 1981, that the marital apartment "was going co-op".

After the conclusion of the trial testimony, the court afforded counsel the opportunity to submit posttrial memoranda. Apparently, defendant Rakowski's counsel, after the conclusion of the trial, again raised the issue of collateral estoppel that had been previously raised in the cross motion to dismiss, and rejected in the order of Special Term.

Trial Term, in its decision, also rejected defendant Rakowski's argument regarding collateral estoppel, holding:

"Turning first to defendant Barry Rakowski's contention that this action is barred by collateral estoppel, the court determines the argument to be without merit. While, concededly, the court in any action for divorce 'may (1) determine any question as to the title to property arising between the parties.' (Domestic Relations Law, § 234), the language is permissive, not mandatory (Perry v. Perry, 79 AD2d 851 Trecot v. Taxter, 69 Misc 2d 248 ). Since the matter of title to the apartment was not placed in issue in the divorce action, the present proceeding is not barred."

However, with respect to the merits of plaintiff's action to impress a constructive trust on the shares of the cooperative apartment, Trial Term held in favor of the defendants.

Preliminarily, we note that both Special Term and Trial Term erred in rejecting defendant Rakowski's argument that the instant action was barred.

Clearly, the record herein supports the conclusion that the instant action was commenced in order "to determine title issues that could have been, but were not, raised in the matrimonial action" (Scheinkman 1982 Practice Commentary, McKinney's Cons.Laws of N.Y., Book 14, Domestic Relations Law § 234, 1984-1985 Cumulative Annual Pocket Part, p. 39). In this particular setting, this court held in Marinelli v. Marinelli, 88 A.D.2d 635, 450 N.Y.S.2d 229, that a separate action to determine title issues which could have been, but were not raised in a prior matrimonial action, will be barred. In Marinelli (supra) a matrimonial action was commenced in 1978, proceeded to trial and in April 1981 a judgment of divorce was entered. During the pendency of the matrimonial action, i.e., in January 1981, the plaintiff wife instituted a separate action to, inter alia, impress a constructive trust on one-half of the family car and one-half of the proceeds of certain life insurance and annuity policies surrendered by the defendant husband. By order entered May 22, 1981, Special Term dismissed the complaint in the latter action on the ground that the causes of action were barred by res judicata because they could have been litigated in the matrimonial action. In affirming the order of Special Term, this court stated (Marinelli v. Marinelli, supra, at 636, ...