Surrogate's Court of New York, Schenectady County
In the Matter of the ESTATE OF Edmund Felix HENNEL, also known as Edmund Hennel, Deceased.
[967 N.Y.S.2d 627]Michael D. DiFabio, Esq., The DiFabio Law Firm, P.C., Albany, attorneys for petitioners Gregory Hennel and Gary Hennel.
John A. Fantauzzi, Esq., Englert, Coffey, McHugh & Fantauzzi, Schenectady, attorneys for respondent Hazel Hennel, Executrix.
Michael L. Costello, Esq., Tobin & Dempf, PLLC, Eric T. Schneiderman, Attorney General for the State of New York, Nathan M. Courtney, Assistant Attorney General, Charities Bureau, Albany, attorneys for respondent St. Adalbert's Church.
VINCENT W. VERSACI, J.
Petitioners, Gregory Hennel and Gary Hennel, two grandchildren of the Decedent, Edmund Hennel, commenced this proceeding pursuant to SCPA § 1809 to determine the validity of their claim against the Estate for satisfaction of an outstanding mortgage encumbering certain real property that the Decedent conveyed to the Petitioners four years prior to his death. The Petitioners' claim also seeks reimbursement for the mortgage payments they have paid since the Decedent's date of death, with interest from the date of each such payment. The Petitioners
allege four causes of action sounding in 1) breach of contract; 2) breach of title warranty and the covenant of quiet enjoyment; 3) promissory estoppel; and 4) unjust enrichment. In addition, the Petitioners seek an award of attorneys' fees on their second cause of action for breach of warranty.
Respondent, Hazel Hennel, the Executrix of the Estate, filed Objections to the Petition, denying that the Petitioners have a valid claim against the Estate. The Respondent also asserted various affirmative defenses including the lack of standing of the Petitioners, the statute of limitations, laches, and the statute of frauds. Following discovery, both parties moved for summary judgment pursuant to CPLR Rule 3212. The motions have been fully briefed, and the Court has had due deliberation thereon.
In support of their claim, the Petitioners allege that at some time during the summer months of 2006, discussions began between them and the Decedent regarding a multi-unit apartment building located at 233 Jackson Avenue in Schenectady, New York that was owned by the Decedent. The Petitioners claim that the Decedent was looking for someone to take over the management and/or ownership of this rental property for him. Pursuant to these discussions, the Petitioners allege that they entered into an agreement with the Decedent wherein it was agreed that the Petitioners would accept title to the property with a reservation of a life estate to the Decedent. Further, it was agreed that the Petitioners would take over all of the management responsibilities of the above noted property for the Decedent during his lifetime in exchange for the [967 N.Y.S.2d 628] Decedent's promise to pay off a mortgage that was existing on the property at the time of his death from assets remaining in his Estate.
This mortgage, that was in the original amount of $100,000, had been taken against the property by the Decedent in 2001. The Petitioners allege that the Decedent used the proceeds of the mortgage to make cash gifts to six family members, including the two Petitioners, who in turn invested this money into the Stadium Golf Course, a family-run business. The Decedent refinanced the mortgage with Trustco Bank in 2003. Over the course of time but prior to September, 2006, four of the six family members (those besides the Petitioners) separated from the business, at which time the money they respectively invested was paid back to them by the Petitioners. The Petitioners stayed with the business and continue to run the business to this day.
The Petitioners had full knowledge of the mortgage and the purpose for which the proceeds were used by the Decedent. They
were not willing to assume the outstanding balance of the mortgage or be personally obligated to this debt because they had their own debts, in part, from buying the other family members out of the business. Notably, if they assumed the mortgage, they would in essence be subsidizing the gifts made by the Decedent to the other family members from the mortgage proceeds, which they viewed as, in essence, paying the debt twice. The Petitioners claim that they only agreed to accept title with the above noted encumbrance and requisite management responsibilities of the property because of the Decedent's promise that the mortgage balance remaining at the time of his death would be paid off by his Estate, terms to which the Decedent purportedly agreed.
To memorialize and consummate this agreement, the family's attorney, Frank Parisi, was contacted for the purpose of preparing the necessary legal documents. On September 22, 2006, the Decedent and the Petitioners met at Attorney Parisi's law office to sign the documents his office had prepared. All of the documents were signed together while the parties were seated at the conference table. First, the Decedent signed a Warranty Deed conveying title to the Jackson Avenue property to the Petitioners, reserving a life estate for himself. The Deed contained the standard covenant language that " the parties of the second part [the Petitioners] shall quietly enjoy the same premises", and that " the party of the first part [the Decedent] will forever warrant the title to said premises." Notably, the Deed did not contain an assumption of mortgage clause. The Deed was properly notarized by Attorney Parisi and later recorded in the Schenectady County Clerk's Office.
Along with the signing of the Deed, two other real estate forms, the Real Property Transfer Report (RP-5217), and the Combined Real Estate Transfer Tax Return (TP-584) were also signed by the Decedent and the Petitioners. Notably, the RP-5217 Form indicates that the transfer is between relatives, and does not state a sales price. The TP-584 Form reports that there is no continuing lien deduction and that the transfer is not subject to an outstanding credit line mortgage.
Simultaneously with the signing of the above documents, the Decedent executed a Last Will and Testament, also prepared by Attorney Parisi. This document was shown to the Petitioners at the conference table and contained the following provision at Article Fifth: " I direct that the mortgage on the property at 233 Jackson Avenue, Schenectady, New York, if any, in existence at
the time of my death shall be [967 N.Y.S.2d 629] paid from the assets of my estate." These were the only documents that were signed that day.
Within a few days after the signing of these documents, the Decedent gave to the Petitioners a personal check with which to open a bank account for the management of the property. From this point going forward, the Petitioners took over and assumed all of the management responsibilities of the property, thereby permanently relieving the Decedent of these same responsibilities. The Petitioners used the initial deposit monies given to them by the Decedent to pay the taxes on the property as well as the monthly mortgage payment then ...