Rockwell v. Despart

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: Garry, P.J.
• Citation: Rockwell v. Despart, 212 A.D.3d 27, 181 N.Y.S.3d 345 (N.Y. App. Div. 2022)
• Decision Date: 08 December 2022
• Docket Number: 533476, 533477, 533985
• Parties: Elizabeth Haley ROCKWELL, as Executor of the Estate of Marjorie D. Rockwell, Deceased, Appellant, v. Thomas DESPART, Respondent. Letitia James, as Attorney General of the State of New York, Proposed Intervenor—Appellant. (Action No. 1.) Elizabeth Haley Rockwell, as Executor of the Estate of Marjorie D. Rockwell, Deceased, et al., Appellants, v. The Audubon Society of New York State, Inc., Respondent, et al., Defendants. (Action No. 2.)

212 A.D.3d 27

181 N.Y.S.3d 345

Elizabeth Haley ROCKWELL, as Executor of the Estate of Marjorie D. Rockwell, Deceased, Appellant,

v.Thomas DESPART, Respondent.

Letitia James, as Attorney General of the State of New York, Proposed Intervenor—Appellant.

(Action No. 1.)

Elizabeth Haley Rockwell, as Executor of the Estate of Marjorie D. Rockwell, Deceased, et al., Appellants,

v.The Audubon Society of New York State, Inc., Respondent, et al., Defendants.

(Action No. 2.)

533476, 533477, 533985

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

Calendar Date: October 11, 2022

Decided and Entered: December 8, 2022

Gleason, Dunn, Walsh & O'Shea, Albany (Richard C. Reilly of counsel), for Elizabeth Haley Rockwell, appellant.

The Baynes Law Firm, PLLC, Ravena (Brendan F. Baynes of counsel), for Thomas Despart, respondent.

Whiteman Osterman & Hanna LLP, Albany (Christopher M. McDonald of counsel), for The Audubon Society of New York State, Inc., respondent.

Letitia James, Attorney General, Albany (Kate H. Nepveu of counsel), for proposed intervenor-appellant in action No. 1 and in her capacity under EPTL 8–1.1(f) in action No. 2.

Before: Garry, P.J., Clark, Aarons, Pritzker and Fisher, JJ.

Garry, P.J. Appeals (1) from an order of Supreme Court (Peter A. Lynch, J.), entered May 7, 2021 in Albany County, which, in action No. 1, denied the Attorney General's motion to, among other things, intervene, and (2) from an order of said court, entered April 28, 2021 in Albany County, which, in action No. 2, among other things, upon reargument, adhered to its prior decision partially granting a motion by defendant the Audubon Society of New York State, Inc., to dismiss the complaint against it.

These actions, concerning certain restrictive covenants, stem from a charitable bequest made by the Estate of Marjorie D. Rockwell, which has been the subject of two prior appeals ( 205 A.D.3d 1165, 169 N.Y.S.3d 167 [3d Dept. 2022] [action No. 1]; Gorman v. Despart, 164 A.D.3d 1059, 83 N.Y.S.3d 714 [3d Dept. 2018], lv dismissed 32 N.Y.3d 1193, 95 N.Y.S.3d 147, 119 N.E.3d 787 [2019] ). As relevant here, the last will and testament of Marjorie D. Rockwell (hereinafter decedent) authorized her executors, including plaintiff Elizabeth Haley Rockwell (hereinafter Rockwell), to, in their discretion, (1) grant to one or more "qualified organization[s]" ( Internal Revenue Code § 170 [h][3]) one or more historical preservation or conservation "restriction[s]" ( Internal Revenue Code § 170 [h][2][C]; see Internal Revenue Code § 2055 [f]) in and to all or any part of her real property, (2) convey any or all of said property to one or more charitable or not-for-profit organizations, including for no consideration, upon such restrictions, and/or (3) convey any or all of said property for its fair market value, subject to any such restrictions as the executors may impose thereon, to one or more persons or organizations, including one or more adjoining landowners, with the proceeds of any such sale(s) added to the estate's residue, which, in turn, was to be distributed to named charitable organizations in accordance with a trust created by decedent. The executors were also expressly authorized to establish one or more endowments that may be necessary to enforce the terms of any such restrictions or to provide for the maintenance and upkeep of property if conveyed.

The executors thereafter entered into discussions with the Audubon Society of New York State, Inc., a charitable corporation (see generally N–PCL 201[c] ), to establish a bequest. In 1997, the parties agreed that the Estate would convey decedent's property to the Audubon Society as three parcels, each with separate deeds subject to individual conditions. Parcel A, consisting of approximately nine acres and decedent's house, would be conveyed for the purpose of furthering the mission of the Audubon Society, with the house anticipated to be used for executive offices, a research library and event space; if the Audubon Society obtained a variance permitting it to so use the house, or established that a variance was not needed, then it would also be provided an endowment. The Estate expressly placed no restriction on the sale of parcel A, except that, if sold, it could only be sold for use as a single-family dwelling. Parcel B, consisting of approximately 26 acres of undeveloped land, was to be conveyed with the restrictions that the parcel remain "forever wild" and "be used as a research, education and management area for urban wildlife conservation and water resource protection[, with] [n]o new permanent structures greater than 100 square feet ... constructed on the premises, excluding necessary and accessory use structures to carry out research and education projects and programs for urban wildlife management and water resource conservation efforts." Parcel C, consisting of approximately 7.5 acres of vacant land, was to be deeded to the Audubon Society for the furtherance of its mission, the deed carrying "the restriction that[,] if sold, [parcel C] can only be subdivided into two lots." In 1998, the parcels were conveyed subject to these restrictions. The deed for parcel B also included a restriction that the property be used to further the mission of the Audubon Society. The Estate also subsequently distributed an endowment to the Audubon Society.

The Audubon Society sold parcel A and parcel C in 2001 and 2002, respectively, subject to all enforceable covenants and restrictions. Following each sale, corrective deeds were issued by the Estate expressly stating that no purchaser of parcel A or parcel C from the Audubon Society was required to use the property to further its mission. Meanwhile, no action was taken with respect to the Audubon Society's plan for the ecological restoration of parcel B. In 2013, parcel B was sold to Thomas Despart, an adjoining property owner. The 2013 deed contained all the same restrictions as the 1998 deed, but, unlike the other two parcels, no corrective deed for parcel B was ever issued.

Following the 2013 conveyance, Despart allegedly undertook actions in contravention of the forever wild restriction in his chain of title. In 2014, the owners of parcel A commenced an action against him seeking to enjoin his alleged disruption of parcel B. That action was dismissed for lack of standing in 2017 ( Gorman v. Despart, 164 A.D.3d at 1060–1062, 83 N.Y.S.3d 714 ), prompting Rockwell to obtain amended letters testamentary permitting her to bring the instant actions on behalf of the Estate.

In 2019, Rockwell commenced action No. 1 seeking a declaration that Despart is bound by the forever wild restriction and that said restriction requires parcel B to be forever maintained as an ecological preserve and thus prohibits Despart from destroying, removing or otherwise disturbing vegetation thereon. Following joinder of issue, Rockwell moved for partial summary judgment as to the desired declaration, and Despart cross-moved for summary judgment extinguishing the restriction. Supreme Court (Connolly, J.) denied those motions in all relevant respects. Upon Despart's appeal, this Court upheld that determination ( 205 A.D.3d at 1169, 169 N.Y.S.3d 167 ).

In 2020, Rockwell commenced action No. 2 seeking declaratory and equitable relief in the form of an accounting of the Audubon Society's use of the endowment and disgorgement of same along with the right to enforce the forever wild restriction and delivery of said assets and right to another qualified organization. Rockwell also sought damages related to the Audubon Society's allegedly fraudulent inducement with respect to the 1998 conveyances, breach of various contractual and fiduciary obligations owed to the Estate, unjust enrichment and monies had and received. The Audubon Society later moved to dismiss the complaint against it, arguing, as relevant here, that the factual events giving rise to Rockwell's claims all occurred beyond the longest applicable limitations period. Supreme Court partially agreed, dismissing Rockwell's causes of action for fraud and any portion of Rockwell's remaining causes of actions that sought "recission/ ‘disgorgement and delivery’ " of real property having been conveyed in 2013 or earlier. However, based upon the continuing wrong doctrine, Rockwell was permitted to proceed with all remaining aspects of her causes of action. The Audubon Society accordingly joined issue.

Thereafter, the Attorney General, relying on her authority to represent the beneficiaries of dispositions of property for charitable purposes and oversee not-for-profit corporations, moved to intervene in both actions, to consolidate same and to add certain necessary and/or permissive parties. The Attorney General also sought leave to reargue the partial grant of the Audubon Society's motion to dismiss, asserting that Supreme Court had overlooked that, because the Audubon Society conveyed parcel B without first obtaining cy pres relief permitting it to allegedly deviate from the foregoing gift restrictions, the 2013 deed was void ab initio and, thus, the challenge to the conveyance could not be time-barred. In her proposed intervenor's complaint, the Attorney General sought, among other relief, a declaration that the 2013 conveyance was a nullity given the alleged violations of N–PCL 513(b) and EPTL 8–1.1(c)(1), or, alternatively, recission of the deed for said violations, and, in either scenario, transfer of parcel B and the endowment to an appropriate land trust organization.

With respect to action No. 2, Supreme Court (Lynch, J.) permitted the Attorney General to intervene and directed that certain former officers of the Audubon Society be added as defendants therein, but the court otherwise denied the Attorney General's motion, concluding that the 2013 deed was not a nullity and thus adhering to the prior determination that any challenge to the conveyance was time-barred.¹ The court therefore also found that there was no need to join...