The opinion of the court was delivered by: DENNY CHIN, District Judge
In this diversity action for breach of contract and declaratory
relief, two not-for-profit entities dispute entitlement to
certain bequests of two estates. Before the Court are
cross-motions for partial summary judgment. For the reasons that
follow, both motions are granted in part and denied in part.
The facts have been described in detail in two prior memorandum
decisions, Clalit Health Services v. Israel Humanitarian
Foundation, No. 02 Civ. 6552 (DC), 2003 WL 22251329, at **1-2
(S.D.N.Y. Sept. 30, 2003) ("Clalit I"), and Clalit Health Services v. Israel Humanitarian Foundation, No. 02 Civ.
6552 (DC), 2004 WL 2199505, at **1-4 (S.D.N.Y. Sept. 29, 2004)
("Clalit II"). Familiarity with Clalit I and Clalit II is
assumed. A brief background and additional facts pertinent to
this motion are detailed below.
Plaintiff Clalit Health Services ("Clalit") is a not-for-profit
corporation existing under the laws of Israel, with its principal
place of business in Israel. (Aviram Decl. ¶¶ 2-3). Clalit
provides medical and health care services in Israel. (Id. ¶ 2).
Defendant Israel Humanitarian Foundation ("IHF"), formerly known
as Israel Histadrut Foundation, is a not-for-profit corporation
organized under New York law, with its principal place of
business in New York. (Def.'s 56.1 Statement Ex. 1).*fn1 IHF
is a charitable foundation that solicits and administers
charitable donations for diverse humanitarian causes. (Id.).
From its inception until 1996, IHF raised money to provide
assistance to Histadrut, a social organization started in Israel
in 1920 that provided social services, including medical
services, to its members. (Id. ¶¶ 1, 4; Am. Compl. ¶
10).*fn2 The medical arm of Histadrut was Clalit, so money
raised by IHF for medical services in Israel was, until that time, invariably given
by IHF to Histadrut and, in turn, by Histadrut to Clalit. (Abrams
Decl. ¶¶ 3-5, 7). There was no contractual relationship between
Clalit and IHF. (Id. ¶ 6).
In January 1995, a new health insurance law became effective in
Israel that guaranteed medical care to all residents by using
payroll deductions to fund four designated service providers, the
largest of which is Clalit. (Aviram Decl. ¶ 3). As a result of
the new law, Clalit no longer receives funding from the
Histadrut. (Def.'s 56.1 Statement ¶ 8). In addition, residents of
Israel no longer need to be members of Histadrut to be members of
Clalit, as was previously the case. (Aviram Decl. ¶ 3).
This changed the relationship IHF had with Histadrut, and in
turn its relationship with Clalit. (Id. ¶ 6; Abrams Decl. ¶¶
12, 13, 14, 15). Whereas before IHF had raised money exclusively
for Histadrut (that, when earmarked for medical services, would
be given by Histadrut to Clalit), IHF began to bypass
Histadrut*fn3 and enter into agreements with individual
charitable entities in Israel, including Clalit. (Def.'s 56.1
Statement ¶¶ 13, 14). On September 9, 1996, IHF and Clalit
entered into a "memorandum of understanding" (the "MOU") that
governed the terms of IHF's ongoing fundraising efforts for
Clalit. (Id. ¶ 14). Most importantly for purposes of this lawsuit, the MOU required IHF to "transmit . . . to [Clalit] . . .
the contributions and bequests which IHF receives on its
behalf." (MOU ¶ 5).
The MOU also required IHF to disclose to Clalit the following:
(1) regarding "prior" bequests, "[a] list of bequests to [Clalit]
and/or its facilities currently on file with the IHF . . .
including the recipient institution, department, etc., and the
outright amount and/or percentage of bequest" (id. ¶ 7(d)); (2)
"copies of all documents relating to bequests, executed wills,
charitable remainder trusts, perpetual trusts and/or annuities of
every type, as well as all chattel and/or real properties of
every type, naming [Clalit] and/or any of its facilities as donee
and/or beneficiary" (id. ¶ 8); (3) "in the case of segregated
endowment funds, all relevant information regarding the time
period of the trust, the income per annum and the principal
amount at the conclusion of the period" (id. ¶ 9); and (4) "if
requested, an accounting and all relevant information regarding
estates in probation in which [Clalit] is named as beneficiary in
whole or in part, including total and final distribution figures
of said estates." (Id. ¶ 10).
On or about July 27, 1984, Leon Berlin executed a will (the
"Berlin Will") in California. (Berlin Will at 1). Berlin died on
June 21, 1999. (Def.'s 56.1 Statement ¶ 46). The Berlin Will
makes eight specific bequests, in amounts ranging from $5,000 to
$20,000, and then provides: I give the residue of my estate, after payment of
taxes as directed in the clause entitled Death Taxes,
to the charitable beneficiary named below, provided
that on the date of my death it is an organization
described in section 2055(a) of the Internal Revenue
Code. If it is not an organization so described, I
give the residue as follows:
Charitable beneficiary: ISRAEL HISTADRUT FOUNDATION,
INC., whose present address is 8455 Beverly
Boulevard, Los Angeles, California.
Alternative distribution: To Jewish Charities for the
education of underprivileged, needy and deserving
children in Israel, which charities are to be
selected by my Executor.
I request that said gift, be used, if possible, by
the ISRAEL HISTADRUT FOUNDATION, INC., as follows:
(1) Twenty-Five percent (25%) of said gift to be
directed for use at the Histadrut Carmit Children's
Village in Jerusalem, Israel, and Children's Village
of Histadrut at Tivon, Haifa, Israel;
(2) Twenty-five percent (25%) of said gift to be used
to establish scholarships in the names of my late
parents HYMAN BERLIN and REBECCA BERLIN, for needy
and deserving children through the Histadrut
(3) Twenty-five percent (25%) of said gift to be
directed for use by the KUBAT [sic] HOLIM for general
(4) Twelve and one-half percent (12½%) of said gift
is to be directed to the HISTADRUT AMAL EDUCATIONAL
(5) Twelve and one-half percent (12½%) of said
gift is to be directed for use at KAPLAN HOSPITAL in
Rehovot, Israel, and used, if possible, for cancer
research in the department of Dr. Zvi Bentwhich.
Each use of this residuary gift is to be commemorated by a plaque or other testamentary
acknowledgment in the names of my late parents HYMAN
BERLIN and REBECCA BERLIN.*fn4
(Berlin Will at 3-4). IHF received a total of $2,869,090.93 from
the Berlin estate. (Pl.'s 56.1 Statement ¶ 24). IHF did not
transfer any of the funds it received from the Berlin estate to
Clalit. (Id. ¶ 27). Instead, IHF transferred $500,000 from
funds received from the Berlin estate to the "IHF Geriatric
Center" in or about January 2001. (Id. ¶ 26).
Joseph Nower executed a revocable living trust on March 16,
1992 (the "Nower Trust"). (Id. ¶ 29). Elaine Levitt, the former
national sales director of IHF, is listed as one of the trustees
of the Nower Trust. (Id. at ¶ 17; Nower Trust at 1, 7). The
trust document does not indicate that Levitt was appointed in her
capacity as an IHF employee. Nower directed that upon his death
all property then belonging to the income or
principal of the Trust shall be distributed as
. . .
(2) The Entire Trust Corpus and all accumulated
income shall be distributed and paid over as soon as
reasonably possible as law and good administration
will permit to the Israel Histadrut Foundation . . .
for the express benefit and general use in Israel of the
Kupat Holim Hospitals in Israel and for no other
purpose and said charitable foundations should not
use the funds domestically.
(Nower Trust at 6). As to how the trust would be funded, the
trust document provided that Nower "or another person or
persons? may hereafter deposit with the Trustees cash or other
property, or may ...