The opinion of the court was delivered by: MARIAN W. PAYSON, Magistrate Judge
Plaintiff, Norrine Halvorsen, a resident of New York, has filed suit
against her sister, Ellen Sheive, a legal resident of Nevada, seeking
recovery of the proceeds of an Individual Retirement Account ("IRA")
established by their deceased father, Ivar Halvorsen, Pursuant to
28 U.S.C. § 636(c), the parties have consented to have a United States
magistrate judge conduct all further proceedings in this case, including
the entry of final judgment. (Docket # 9).*fn1 Currently before this
Court is defendant's motion for summary judgment. (Docket # 16), For the
reasons discussed below, defendant's motion is granted in part and denied
Based upon a careful review of the record before this Court, the
following facts appear undisputed.*fn2 Plaintiff and defendant are
siblings and the adult daughters of Ivar Halvorsen, who died on December
9, 1999. At the time of his death, Ivar*fn3 was the owner of three real
properties and several investment accounts, including a First Albany
Corporation IRA that was worth approximately $240,000. From the date of
the IRA's inception until April 1997, plaintiff was named as the sole
beneficiary of the IRA. On April 21, 1997, Ivar Halvorsen executed a
change of beneficiary form, substituting defendant as beneficiary of the
IRA. (Docket ## 1, 16).
During the period 1998 through June 1999, plaintiff lived with Ivar in
his home. (Docket # 17, Ex. A at 4, 14). She moved in with her father
after having lived for several years with her mother following the
foreclosure of her own home. (Id. at 4-5, 25-26). Although they
lived together during Ivar's later years, plaintiff admittedly had "very
little contact" with him and "didn't interact with him routinely,"
(Id. at 13, 15). She did act as his power of attorney during his
final months in a nursing home. (Id. at 19-20).
Defendant describes her relationship with her father, variously, as
having been "at best, cordial" (Docket # 16, Sheive Aff. at ¶ 8) and
a "pleasant adult, friendly relationship." (Docket #17, Ex. B at 5-6).
Defendant explained that she had moved out of her father's house in
1964 at the age of eighteen, married her husband and eventually
established residence in San Diego, California. (Docket # 17, Ex. B at
5-6; Docket # 16, Sheive Aff. at ¶ 3). For the following thirty
years, defendant's contact with her father was infrequent and irregular,
consisting of sporadic visits (approximately six in twenty-one years) and
infrequent telephone calls and letters. (Docket # 17 at 7-10; Docket #
16, Sheive Aff. at ¶¶ 4-7). Her last visit with her father occurred in
June 1999 when she and her husband moved her father into a nursing home
following his discharge from a hospitalization in Albany. (Docket # 17,
Ex. B at 13-18), Defendant testified that it was during this visit that
she first learned from, her father's broker that she was the beneficiary
of Ivar's IRA and certain annuities he owned.*fn4 (Docket # 17 at 18).
This testimony directly and disquietingly conflicts with the statement in
her attorney's reply affirmation that defendant "did not know at any time
prior to her father's death, that she was to be the beneficiary of the
IRA funds." (Docket # 26 at ¶ 6).
Eleven months before he died, Ivar Halvorsen executed a new will.
(Docket # 23, Ex. G). The will named defendant as executor and bequeathed
to her all of his real and personal property. (Id.) In addition,
the will provided that 60% of his residuary estate was to be distributed
to defendant, with 40% left in trust for the benefit of plaintiff, with
defendant named as trustee. (Id.). The residuary estate trust
was Ivar's sole bequest to plaintiff under his will. (Id.)
The will specifically defined the residuary estate to "includ[e]
[Ivar's] investments at Brighton Securities Corp." (Docket # 23, Ex, G at
¶ 4), At the time of his death, Ivar held various investment accounts
through Brighton Securities, which included the IRA, six annuities (as to
which defendant and her daughter were the named beneficiaries) and a
money market fund. (Decision of Hon. Edmund Calvaruso, Surrogate's Court
Judge, dated August 21, 2001 (hereinafter referred to as "Surrogate Court
Decision") at 2, submitted herewith by plaintiff), While the record is
not entirely clear on this point, it appears that the value of the IRA
and other annuities which passed outside his estate
totaled in excess of $300,000. (Docket # 23, Affidavit of Jeffrey Weiss,
Esq. at ¶ 22). The value of the money market fund, by contrast, which
constituted the principal asset making up the residuary estate, totaled
only approximately $5,000. (Surrogate Court Decision at 2). Defendant
subsequently renounced her interest under the will, thus leaving
plaintiff to inherit the real properties, the personal property and
defendant's interest in the residuary estate, (Docket #17, Ex, B at 28).
Both plaintiff and defendant testified that Ivar's decision, to
establish a trust for the benefit of plaintiff grew out of his concern
over plaintiffs perceived inability to manage finances.*fn5 (Docket # 1
at 15-16, 24; Docket #17, Ex, B at 31-32). According to
defendant, Ivar told her that he intended to leave his estate to her
because he trusted her to manage it well and to "bail" out plaintiff with
the funds "if she needed it." (Docket # 17, Ex. B at 31-32). As defendant
testified at her deposition:
[Ivar] felt that to leave [plaintiff] the money
was to doom her to eventually being out of money
again, and on the street. He felt that she
couldn't handle the dealing with principal or
being responsible for principal. So he gave it to
me. He said also, I have never given you
any money, I never helped you with anything in
your life. He said, I would like to give it to
you, you would be able to manage it well. I trust
that . . . if your sister needs bailing, this
will help you to bail her. That's basically what
he wanted, her to be bailed if she needed it. But
he didn't feel like she had proven herself capable
of handling the inheritance.
(Docket #17, Ex. B at 31-32). Similarly, the attorney who drafted
Ivar's will testified that it had been Ivar's intent to leave plaintiffs
share in trust because of his concern that "she was not capable of
managing her money." (Docket #17, Ex. D at 7-8).
With respect to the IRA, both plaintiff and defendant stated that they
did not discuss the IRA beneficiary change specifically with Ivar, At her
deposition, defendant stated that she understood that Ivar's intention
was that the IRA proceeds be used "to help take care of [plaintiff]"
(Docket #17, Ex. B at 30) a statement which she argues in no way
constitutes an admission that she understood that they were left in trust
for the benefit of plaintiff. (Id. at 32). Indeed, whether Ivar
left the IRA funds in trust, as he did with the assets in his residuary
estate, is the very essence of the parties* dispute. Plaintiff contends
that he did; defendant disagrees.
In claiming entitlement to the IRA proceeds, plaintiff relies on two
legal theories. First, plaintiff contends that Ivar created a
constructive trust with respect to the IRA. According to plaintiff, Ivar
intended that the proceeds of the ERA be used to "bail" her out, and, to
effectuate that intent, he changed the beneficiary upon defendant's
assurance that she would use the IRA to take care of and provide for her
sister. (Docket # 1). While defendant concedes that such an
understanding existed with respect to the residuary estate, she
disputes that such an. understanding existed with respect to the IRA.
Second, plaintiff claims that defendant exerted undue influence over
her father in order to compel him to change the beneficiary of his IRA.
According to the complaint, Ivar's mental capabilities had been
diminished as the result of age and illness, making him particularly
susceptible to the influence of family members. Defendant preyed on that
susceptibility, plaintiff maintains, by promising him that the proceeds
from the IRA would be used to benefit plaintiff after his death.
Plaintiff contends that defendant's influence was so great as to override
Ivar's intentions and decision-making ability, (Docket #1).
Defendant now moves this court for summary judgment on both ...