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Thomas v. Thomas

February 25, 2010


Order, Supreme Court, Bronx County (Paul A. Victor, J.), entered June 10, 2008, which, to the extent appealed from, as limited by the briefs, granted defendant Janet Thomas's motion to dismiss, for failure to state a cause of action, plaintiffs' claim for a constructive trust, reversed, on the law, without costs, the motion denied, and the complaint reinstated to the extent it seeks imposition of a constructive trust on the property in dispute.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Mazzarelli, J.P., Nardelli, Catterson, DeGrasse, RomÁn, JJ.


Plaintiffs allege in their complaint that defendant Janet Thomas*fn1 orally agreed to temporarily take title to real property owned by them. They claim that they were financially unqualified to refinance the property and that Janet Thomas offered, in exchange for a payment of $5,000, to hold the property in her name and apply for a new mortgage. They also allege that she agreed to then transfer the property back to plaintiffs after their financial position improved. Plaintiffs assert that, after they transferred the property to her and the mortgage was successfully refinanced, Janet Thomas refused to transfer it back to them. Indeed, they claim that Janet Thomas has taken steps to further encumber the property and to transfer it to a third party. The complaint asserts a cause of action denominated as one "pursuant to New York State [Real Property and Proceedings Law] Article 15*fn2," and a cause of action for "equitable relief." Plaintiffs seek as relief an order placing the property in a constructive trust for plaintiffs' benefit and conveying the property back to plaintiffs.

After interposing her answer, Janet Thomas moved to dismiss the complaint pursuant to CPLR 3211(a)(7). She argued that the agreement between the parties was unenforceable as violative of the statute of frauds because it was never reduced to writing. In support of the motion, Janet Thomas submitted an affidavit in which she admitted the existence of the agreement. She claimed, however, that plaintiffs had failed to make mortgage payments, that the property was in foreclosure, and that her own credit had been adversely affected. Janet Thomas further stated in the affidavit that she had known plaintiffs for over ten years. Finally, Janet Thomas specifically refuted plaintiffs' allegation that she was paid $5,000 in consideration for her agreement to take title to the property. Rather, she claimed, the payment represented money owed to her by a "partner" program. The partner program, she explained, is a system whereby people, most of Jamaican origin, pool their cash. At the time of the transaction at issue, Janet Thomas stated, Sharon Thomas was responsible for the program's intake and payout of funds.

In opposition to the motion, plaintiffs argued that the parties' partial performance of the agreement took it out of the purview of the statute of frauds pursuant to General Obligations Law § 5-704. However, in granting Janet Thomas's motion, the IAS court apparently rejected this argument. It based its decision to dismiss the complaint entirely on the absence of a writing memorializing the parties' agreement.

A strong argument exists that, contrary to Supreme Court's conclusion, the statute of frauds is not a bar to plaintiffs' claim. That is because Janet Thomas admitted in her affidavit that she agreed to the arrangement proposed by plaintiffs (see Cole v Macklowe, 40 AD3d 396, 399 [2007] ["the statute was not enacted to enable defendants to interpose it as a bar to a contract fairly and admittedly made."]) However, while they made such an argument below, plaintiffs have abandoned it on appeal (see McHale v Anthony, 41 AD3d 265, 266-267 [2007]). Rather, plaintiffs argue that, notwithstanding the statute of frauds, the court should have found that plaintiffs made out a claim for a constructive trust on the property. They assert that the complaint supports such a cause of action because the complaint alleges a confidential relationship between the parties, a promise by Janet Thomas upon which plaintiffs relied, and the unjust enrichment of Janet Thomas (see Sharp v Kosmalski, 40 NY2d 119, 121 [1976]). Janet Thomas responds that the complaint does not allege any of the elements necessary to establish a cause of action for a constructive trust.

Because the instant motion is pursuant to CPLR 3211, the complaint "is to be afforded a liberal construction (see, CPLR 3026). We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory." (Leon v Martinez, 84 NY2d 83, 87-88 [1994]). Applying this standard, plaintiffs have stated a cause of action for a constructive trust. As a preliminary matter, it is accepted that a constructive trust over real property can be imposed even where an underlying agreement is not in writing (see Sharp, 40 NY2d at 122). The complaint clearly alleges that Janet Thomas promised to transfer the property back to plaintiffs. It can be inferred that plaintiffs relied on that promise, or they would have not made the transfer. That plaintiffs meant to convey in their complaint that Janet Thomas would be unjustly enriched without judicial intervention can be similarly assumed.

While it is not clearly spelled out in the complaint that plaintiffs and Janet Thomas had a confidential relationship, Janet Thomas's affidavit, submitted in support of her motion, provides sufficient information to draw such an inference. Specifically, the affidavit volunteers the existence of the partner program and the fact that, until shortly before the transaction at issue, the parties were co-venturers in a quasi-banking enterprise, however informal that enterprise may have been. This is sufficient to infer that the parties had fiduciary responsibilities to one another which elevated the relationship from one of mere acquaintances to a "confidential" one. We disagree with the dissent's position that we may not consider Janet Thomas's affidavit. On a CPLR 3211 motion a plaintiff's affidavit "may be used freely to preserve inartfully pleaded, but potentially meritorious, claims" (Rovello v Orofino Realty Co., Inc., 40 NY2d 633, 635 [1976]). It follows, a fortiori, that admissions in a defendant's affidavit may similarly be used to ascertain whether a plaintiff has a valid cause of action.

We have not applied a rigid standard when identifying relationships that can be the predicate for imposition of a constructive trust. For example, in Panetta v Kelly (17 AD3d 163 [2005], lv dismissed 5 NY3d 783 [2005]), the plaintiff and her business partner paid for a cooperative apartment that they intended to use for business purposes, but asked a "family friend" of the business partner to hold the shares. When the partner's friend refused to cooperate in selling the apartment, the plaintiff sought a constructive trust over the shares. Affording the plaintiff "the benefit of all favorable inferences," we found an issue of fact to exist as to whether plaintiff and the partner's "family friend" enjoyed a confidential relationship. In Forbes v Clarke (194 AD2d 393 [1993]), we again demonstrated flexibility in determining whether a confidential relationship existed, upholding a verdict imposing a constructive trust where the parties' relationship was merely described as being "undoubtedly close." The Second Department has been similarly liberal in its characterization of such relationships. For example, in Brand v Lipton (274 AD2d 534 [2000]), it affirmed the denial of a motion to dismiss a cause of action for a constructive trust where the parties were "lifelong friends" who shared season tickets for a football team. Thus, the allegations here concerning the parties' relationship, including those in Janet Thomas's affidavit, are sufficient to survive a motion to dismiss. Accordingly, we reverse the order and reinstate the complaint, to the extent it seeks imposition of a constructive trust on the property in dispute.

All concur except DeGrasse and RomÁn, JJ. who dissent in a memorandum by RomÁn, J. as follows:

ROMÁN, J. (dissenting)

Since I believe that the majority misconstrues well settled law, applicable to motions to dismiss pursuant to CPLR ...

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