In an action, inter alia, to set aside a deed conveying real property, (1) the defendant Jacob Feller appeals, as limited by his brief, from stated portions of an order of the Supreme Court, Kings County (Schack, J.), dated May 29, 2008, which, inter alia, granted that branch of the plaintiffs' cross motion which was for summary judgment dismissing his affirmative defenses, (2) the defendant Julian Frankel separately appeals, as limited by his brief, from stated portions of the same order which, inter alia, denied his motion for summary judgment dismissing the amended complaint insofar as asserted against him, granted those branches of the plaintiffs' cross motion which were for summary judgment dismissing his affirmative defenses, and, among other things, voided and canceled the deed conveying the real property to him, and (3) the defendant Uziel Frankel separately appeals, as limited by his brief, from so much of the same order as granted that branch of the plaintiffs' cross motion which was for summary judgment dismissing his affirmative defenses.
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This opinion is uncorrected and subject to revision before publication in the Official Reports.
ROBERT A. SPOLZINO, J.P., MARK C. DILLON, ANITA R. FLORIO and ARIEL E. BELEN, JJ.
ORDERED that the order is modified, on the law, (1) by deleting the provision thereof denying that branch of the motion of the defendant Julian Frankel which was for summary judgment dismissing the sixth cause of action predicated on the Racketeer Influenced Corrupt Organizations Act (18 USC § 1961 et seq.) insofar as asserted against him, and substituting therefor a provision granting that branch of the motion, and, (2) by adding thereto a provision, upon searching the record, awarding the defendants Jacob Feller and Uziel Frankel summary judgment dismissing the sixth cause of action predicated on the Racketeer Influenced Corrupt Organizations Act (18 USC § 1961 et seq.) insofar as asserted against them; as so modified, the order is affirmed insofar as appealed from, with one bill of costs to the plaintiffs.
By Declaration of Trust (hereinafter the trust declaration) dated August 15, 1997, Jeno Ungar established "The Mazel Guaranty Trust" (hereinafter the trust) for the benefit of his children, their spouses, and their descendants. Article IX of the trust declaration appointed Rabbi Meier Weisz as trustee, and provided that if Rabbi Weisz "shall predecease the termination of any of the trusts created herein, or for any reason, shall cease to serve as such, then Nechama Weisz [Weisz's wife] shall be the successor trustee."
In addition, a resigning trustee was required to give 30 days written notice to the remaining trustees. Article VI of the trust declaration authorized the trustee, in pertinent part, to sell or convey the trust's real property known as 1941 51st Street, Brooklyn, New York, "to a bona fide purchaser for the Property's fair market value upon the written and acknowledged consent of the Grantor's fourth born child on the condition the entire proceeds of such sale or conveyance is applied toward the purchase of another property." It is undisputed that the "fourth born child" refers to Martin Ungar. Moreover, according to the plaintiffs, Martin suffers from mental impairment.
The plaintiffs allege that the defendant Uziel Frankel persuaded Martin to substitute Uziel's friend, the defendant Jacob Feller, as trustee of the trust to succeed Rabbi Weisz. The plaintiffs further allege that Uziel, Jacob, and the defendant Julian Frankel made a plan whereby Jacob, as trustee, would sell the real property owned by the trust, in which Martin, his wife Chana Ungar, and their five children resided. The proceeds of this sale were then to be used as a down payment for three properties located at 960-964 East 3rd Street in Brooklyn, with Martin to be given a partnership interest in those properties.
In contrast, the defendants contend that Martin was the originator of this real estate transaction, as evidenced by his admission that he persuaded Rabbi Weisz to resign as trustee so that Martin could participate in the real estate deal. However, even accepting the defendants' contention, the extent of Martin's initial participation in this scheme has no bearing on the sustainability of the transfer of the subject property in violation of the trust declaration. Notably, the purpose of the trust was to protect the subject property on behalf of Martin and his wife and children from irresponsible divestment. As such, it does not matter whether the divestment occurred because of Martin's incompetence, greed, or cupidity.
On December 31, 2003, Rabbi Weisz submitted his written resignation as trustee "for personal reasons" and appointed Jacob as successor trustee. The record does not demonstrate that the conditions set forth in Article IX of the trust declaration with respect to substitution of the trustee were met, i.e., that Nechama Weisz was given 30 days' notice of her husband's resignation as trustee and/or whether she declined to serve as successor trustee. Two weeks later, on January 15, 2004, Jacob conveyed, for a purchase price of $370,000, the subject property to Julian, by Uziel as "attorney in fact." There is no evidence in the record before us showing that the proceeds of this sale of the subject property by Jacob to Julian was used, as required under Article VI of the trust declaration, to purchase a home for Martin and his family.
Thereafter, Jacob, on behalf of the trust, commenced an arbitration proceeding in a rabbinical court (hereinafter the Beth Din) against Uziel and Julian, seeking to recover the $370,000 proceeds from the sale of the subject property. Neither the plaintiffs herein nor Martin were parties to the Beth Din proceeding. The Beth Din determined that Julian was the lawful purchaser and owner of the real property and directed him to pay the trust the purchase price of $370,000 over 25 years with no interest, with only $50,000 to be treated as secured debt. It is noted that one week before the Beth Din proceeding, Julian had mortgaged the subject property with the defendant Fairmont Funding, Ltd. (hereinafter Fairmont), to secure a loan in the sum of $329,000.
The trust then filed a petition in the Supreme Court, New York County, to confirm the Beth Din award. Julian and Frankel did not oppose the petition. The Supreme Court granted the petition in a judgment dated September 2, 2004. The plaintiffs and Martin were not parties to the proceeding to confirm the Beth Din award.
The reliance by the defendants Julian, Uziel, and Feller on the Beth Din arbitration award and the judgment of the Supreme Court confirming such award, is misplaced. Julian, Uziel, and Feller committed misconduct, if not fraud, by concealing crucial information from those forums, including pertinent terms of the trust declaration and the terms of the sale of the subject property to Julian, and there was fraud in the very means by which judgment was procured in each of these venues. Accordingly, the judgments and all subsequent judgments based thereon, ...