Abandonment under the Estates Powers and Trusts Law (“EPTL”)

Posted on November 19, 2013 by Richard Klass

A parent is not supposed to outlive his/her children. This is a tragic truth that can only be enhanced when determining that child’s estate. Due to the statute EPTL 3-1.1, a child under 18 dies intestate, meaning without a will.(1) The laws of intestacy clearly state that in the event the decedent is not married and has no children, his estate shall be inherited by the decedent’s parents. But what happens when one of those parents has not been there for the child? Either due to divorce or other circumstances the child and parent do not have a relationship; is that parent still entitled to collect his distributive share of the child’s estate?

The statute is clear. EPTL 4-1.1(a)(1) provides: “No distributive share in the estate of a deceased child shall be allowed to a parent if the parent, while the child is under the age of 21 years has failed or refused to provide for the child or has abandoned such child, whether or not such child dies before having attained the age of 21 years, unless the parental relationship and duties are subsequently resumed and continue until the death of the child.”

In interpreting and applying this statute, the courts have been clear in their determination. The disqualification of a parent is premised upon either (1) a failure or refusal to support the child or (2) abandonment of the child.(2) Either of these can be the basis for denying a parent their right a distributive share of the child’s estate, although neither is a necessary element in order to prove the other.(3) A parent’s disqualification is determined by their relationship before the child turns 18, regardless of whether or not the child dies after 18. If the child dies intestate and one parent asserts abandonment by the other parent, an analysis is necessary to determine whether the parent asserting abandonment has sustained her burden.(4)

A parent has the duty to support his minor child in accordance with his means.(5) A failure or refusal to support a child financially can prevent that parent from receiving his distributive share. Financial support of a minor child must be shown by monies paid by the non-custodial parent to the parent with custody. Direct payments to the child are not included, nor are payments made to the child by others. Relying on others, including the state in the form of public assistance will result in the parent forfeiting his rights to any distributive share. The statute “imposes an equitable penalty upon parents who fail to fulfill their obligations of support under FCA 413.”(6)

It is relatively easy to determine whether a parent takes on the responsibility of financially supporting his child. It is more difficult to determine whether a parent has abandoned his child. What is abandonment? The statute does not provide a definition of abandonment, so a review of the case law is necessary to determine how the term ‘abandonment’ is interpreted.

Case law has been clear on what constitutes ‘abandonment.’ Abandonment is a voluntary breach of neglect of the duty to care for and train a child and the duty to supervise and guide his growth and development.”(7) There are limitless interpretations of the relationship between a parent and child and each one is unique. Therefore, how can a court determine that a particular parent has abandoned his child under the statute? There must be an analysis of the facts and circumstances of the parent/child relationship in order to make a determination.

A father who paid child support, but made no effort to contact his son for the seven years between his remarriage and the child’s death, despite living nearby was found to have abandoned his son, despite the fact that he paid child support.(8)

Similarly, a father who professed his long-distance love for his child but had no more than sporadic, infrequent visits did not reach the threshold of demonstrating his “natural and legal obligations of training, care and guidance owed by a parent to a child.”(9) A claim the child’s custodial parent ‘poisoned’ the child against the non-custodial parent will not be sufficient to overcome the burden of proof.(10)

A court’s order limiting a parent’s involvement is also not a valid excuse to avoid a determination of abandonment. Courts have clearly held, “while a court order restricting a parent to visitation may lessen the measure of such parent’s obligation, it does not eliminate it. Rather the inquiry then becomes whether or not the parent has fulfilled this responsibility…”(11)

However, a father who was absent for nearly half a child’s life due only to the fact that he did not know of the child’s existence, and subsequently financially supported and attempted to participate was found to have not abandoned the child.(12)

A parent who has failed to fulfill his parental duties due to incompetency will not be held as abandoning his child so long as there is no history of non-support.(13)

A parent cannot prove his involvement in his child’s life merely by asserting his love for the child or by stating his intent to have a relationship with the child. Actions speak louder than words. It is the actions of the parent accused of abandoning his child that will determine whether or not his parental duties were fulfilled, not his plan or intent or wish to spend time with the child during their life. A parent’s absence in the child’s life, as evidenced by a lack of knowledge regarding the child’s health, education and well-being are strong indicators of abandonment and will support a court’s denial of any distributive share of the child decedent’s estate.

by Elisa S. Rosenthal, Esq.,

Associate

Law Office of Richard A. Klass

NY EPTL §3-1.1; N.Y. Prac., Trusts and Estates Practice in New York §7:61 (A person must be 18 in order to execute a will).
In the matter of Wright, 20 Misc.3d 648 (2008); In the matter of Pessoni, 11 Misc.3d 245 (2005).
Matter of Pridell, 206 Misc. 316 (1954) (Where the father paid child support to decedent’s mother, he admits to having no relationship with the decedent, and was denied participation in decedent’s estate); Matter of Musczak, 196 Misc. 364 (1949).
Matter of the Estate of Clark, 119 A.D.2d 947 (1986).
Matter of Gonzalez, 196 Misc.2d 984 (2003).
Id at 988.
Wright at 867; Pessoni at 247; Pridell at 318; N.Y. Prac., Trusts and Estates Practice in New York §7:63
Pridell at 318.
Gonzalez at 987.
Pessoni at 549.
Pridell at 318.
The matter of the Estate of Ball, 24 A.D.3d 1062 (2005).
Musczak at 367.

copyr. 2013 Richard A. Klass, Esq.

Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.

R. A. Klass
Your Court Street Lawyer

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Stone Cold

Posted on October 29, 2013 by Richard Klass

The business idea was a good one: one partner, we’ll call him “Salesman,” was experienced in the stone business. He would bring his knowledge and talents. The other partner, we’ll call him “Moneybags,” would bring his cash. Together, they would launch a business to import and distribute stone material from China. The plan was for Moneybags to invest money into the newly-formed corporation to be used to purchase the stone material, and Salesman was going to make profitable deals, moving the product to market through wholesalers.

In anticipation of launching the business, and in order to buy the stone material, Moneybags gave Salesman more than $250,000, a bit at a time. Every time Moneybags invested a chunk of money, Salesman gave him an “IOU” for the money. After a while, and after a series of exchanges which raised his suspicions, Moneybags became convinced that Salesman was diverting the seed money from the stone business and was using it instead for personal purposes. Thinking he had been defrauded, Moneybags began an action to recoup whatever he could of his original investment. The situation was dire and complicated, but it got worse. During this period, Salesman went on a business trip to Africa and died.

Substitution of wife/administrator as defendant

Before learning that Salesman had died, Moneybags had already brought a lawsuit against Salesman, through counsel other than Richard A. Klass, Your Court Street Lawyer, for breach of contract and embezzlement. After Salesman died, Moneybags’ lawsuit was “stayed” or stopped from proceeding. According to law, when a defendant dies, there is a stay of the legal proceeding until someone is appointed to represent the estate of the deceased. CPLR 1015 (“If a party dies and the claim for or against him is not thereby extinguished the court shall order substitution of the proper parties.”). Salesman’s widow was appointed as the administrator of his estate. At this point, Moneybags sought help from Richard A. Klass. The first step was to substitute the wife/administrator as the defendant in place of her deceased husband.

Elements of Fraud and Conversion

The next, important, step was to amend the Complaint in the action to include various causes of action, including fraud and conversion against the estate of the defendant. To allege fraud, the Complaint contained the essential elements that (a) Salesman made representations to Moneybags about investing the money into buying stone material; (b) those representations were false and misleading; (c) that Salesman made those representations knowingly and with the intent and purpose of inducing Moneybags to invest the money; (d) that Moneybags justifiably relied on those representations to his detriment; and (e) he sustained damages. The Complaint also alleged that Salesman wrongfully took and converted the investment moneys for his own purposes and in derogation of Moneybags’ rights.

Rights as a Shareholder in the Corporation

Aside from alleging that Salesman was a fraudster who diverted his investment moneys into his own pocket, Moneybags also pursued rights afforded to him as a shareholder in a New York State corporation. New York Business Corporation Law Section 717 states that “A director shall perform his duties as a director, including his duties as a member of any committee of the board upon which he may serve, in good faith and with that degree of care which an ordinarily prudent person in a like position would use under similar circumstances.” (Similarly, Business Corporation Law Section 715(h) provides “An officer shall perform his duties as an officer in good faith and with that degree of care which an ordinarily prudent person in a like position would use under similar circumstances.”)

Aiding and Abetting Breach of Fiduciary Duty

Unless some “bite” could be put into the Complaint to allege that the wife and son may have some personal liability, Moneybags realized he was nearly certain to lose his entire $250,000 investment. Richard A. Klass amended the Complaint to allege numerous causes of action against not only the estate of Salesman but also his wife/administrator of the estate and son, including fraud, conversion, constructive trust, accounting, breach of fiduciary duties, aiding and abetting breach of duties, and unjust enrichment. Under New York law, a claim for aiding and abetting breach of fiduciary duty consists of the following elements: (1) a breach of fiduciary duty, (2) that the defendant knowingly induced or participated in the breach, and (3) that the plaintiff suffered damages as a result of the breach. See, S&K Sales Co. v. Nike, Inc., 816 F2d 843 [2 Cir. 1987]. In this case, Moneybags alleged that the wife and son should be held liable to him, and not only Salesman’s estate.

The amendment of the Complaint to include numerous allegations against the several defendants pushed them to immediately settle the case for a substantial percentage of Moneybag’s initial investment.

copyr. 2013 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.

R. A. Klass
Your Court Street Lawyer

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Anticipatory Repudiation

Posted on October 9, 2013 by Richard Klass

Anticipatory repudiation: This principle, known as the doctrine of anticipatory repudiation, provides that when there has been a repudiation of the contract by one party before the time for his performance has arrived, the other party may treat the entire contract as breached and commence suit without delay. 22A N.Y. JUR.2D Contracts § 444 (1996). Resort to this doctrine is at the election of the non-breaching party. See Sven Salen AB v. Jacq. Pierot, Jr., & Sons, Inc., 559 F.Supp. 503, 506 (S.D.N.Y.1983), aff’d, 738 F.2d 419 (2d Cir.1984). However, “there must be a definite and final communication of the intention to forego performance before the anticipated breach may be the subject of legal action. Mere expression of difficulty in tendering the required performance, for example, is not tantamount to a renunciation of the contract.” Rachmani Corp. v. 9 East 96th Street Apartment Corp., 211 A.D.2d 262, 629 N.Y.S.2d 382, 385 (1st Dep’t 1995) (citations omitted). The doctrine of anticipatory breach thus obviates the need for the non-breaching party to postpone suit until the time for performance of the other party has expired.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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The “Merger” clause

Posted on October 2, 2013 by Richard Klass

The “Merger” clause: If the contract of sale contains the typical merger clause, which indicates that “all prior understandings and agreements between the parties are merged in this agreement….” this clause will bar any claim that the seller should be held liable for any representations or omissions. See, Chase Manhattan Bank, N.A. v. Edwards, 87 A.D.2d 935, 450 N.Y.S.2d 76, 78 (3d Dept.1982), aff’d 59 N.Y.2d 817, 464 N.Y.S.2d 739, 451 N.E.2d 486 (1983); Dorsey Products Corp. v. United States Rubber Co., 21 A.D.2d 866, 251 N.Y.S.2d 311, 313 (1st Dept.1964), aff’d 16 N.Y.2d 925, 264 N.Y.S.2d 917, 212 N.E.2d 435 (1965).

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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Seller has no duty to disclose: New York

Posted on September 25, 2013 by Richard Klass

Seller has no duty to disclose: New York law does not impose a duty on a seller of real property to disclose information concerning the property. See, Renkas v. Sweers, 10 Misc.3d 1076(A), 814 N.Y.S.2d 892 (Sup. Ct. Monroe Co), “Active concealment is some conduct, more than mere silence, by the seller that may create a duty to disclose information concerning the property (Gizzi at 881; Bethka v. Jensen, 250 A.D.2d 887,888 [3d Dept.1998] ). To recover damages for active concealment, “the plaintiff must show, in effect, that the seller or the seller’s agents thwarted the plaintiff’s efforts to fulfill his responsibilities fixed by the doctrine of caveat emptor” (Jablonski at 485).

Any potential fraud claim to be brought against a seller for failing to disclose a lawsuit involving the property and its circumstances would fail. Facts which are accessible as a matter of public record bar a claim of justifiable reliance necessary to sustain a cause of action for fraud. Grumman Allied Industries, Inc. v. Rohr Industries, Inc., 748 F.2d 729, 737 (2d Cir.1984); Danann Realty Corp. v. Harris, 5 N.Y.2d 317, 184 N.Y.S.2d 599, 603, 157 N.E.2d 597, 601 (1959); Most v. Monti, 91 A.D.2d 606, 456 N.Y.S.2d 427, 428 (2d Dept.1982).

To the extent that there may be “latent” defects in the building, a duty to disclose a latent defect concerning the premises may be based (post-closing and upon later discovery) on the theory that where a buyer is not able to discover the defect in question through ordinary inspection and would not be willing to purchase the property if he or she knew of it, then a contract that is procured without disclosing such a defect is procured by fraud and misrepresentation. See, Young v. Keith, 112 A.D.2d 625, 492 N.Y.S.2d 489 (3d Dep’t 1985); McMillen v. Marzacano, 277 A.D. 977, 100 N.Y.S.2d 240 (1st Dep’t 1950). These allegations would require a high burden of proof.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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