FILED: NEW YORK COUNTY CLERK 05/19/ :21 PM INDEX NO /2016 NYSCEF DOC. NO. 18 RECEIVED NYSCEF: 05/19/2017

Transcription

1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK SUMNER M. REDSTONE, - vs - Plaintiff, MANUELA HERZER and HOTEL CARLYLE OWNERS CORPORATION, Index No /2016 IAS Part 47 Hon. Erika M. Edwards, J.S.C. Motion Sequence # 2 Defendants. PLAINTIFF S MEMORANDUM OF LAW IN SUPPORT OF HIS MOTION FOR SUMMARY JUDGMENT Howard I. Elman Judd R. Spray Yelena Rapoport MATALON SHWEKY ELMAN PLLC 450 Seventh Avenue, 33rd Floor New York, New York (212) Attorneys for Plaintiff Sumner M. Redstone May 19, of 16

2 TABLE OF CONTENTS Page TABLE OF AUTHORITIES... ii PRELIMINARY STATEMENT...1 FACTUAL BACKGROUND...2 A. Redstone And Herzer Agree That Redstone Will Buy The Apartment To Own Until His Death...2 B. Redstone Purchases The Apartment...3 C. Redstone Makes All Monthly Payments On The Apartment...3 D. Herzer s Name Appears On The Proprietary Lease And Co-Op Shares As A Matter Of Convenience...4 PROCEDURAL BACKGROUND...4 LEGAL STANDARD...5 ARGUMENT...6 A. Redstone Disclaimed Any Intent To Make An Inter Vivos Gift To Herzer, And Herzer Acknowledged That Disclaimer...7 B. Redstone s Previous Intent To Make A Gift At His Death Is Unenforceable C. Herzer s Name Appears On The Proprietary Lease And Co-Op Shares Solely To Avoid Probate And For Other Reasons of Convenience CONCLUSION of 16

3 TABLE OF AUTHORITIES CASES Page(s) Alvarez v. Prospect Hosp., 68 N.Y.2d 320 (1986)...5 Bailey v. N.Y.C. Transit Auth., 270 A.D.2d 156 (1st Dep t 2000)...6 Bank of Am., N.A. v. Tatham, 305 A.D.2d 183 (1st Dep t 2003)...6 Flores v. City of N.Y., 66 A.D.3d 599 (1st Dep t 2009)...6 Gruen v. Gruen, 68 N.Y.2d 48 (1986)...7, 10 Hom v. Hom, 101 A.D.3d 816 (2d Dep t 2012)...11, 12 HSBC Bank USA, N.A. v. Prime, L.L.C., 125 A.D.3d 1307 (4th Dep t 2015)...6 In re Baum, 66 A.D.3d 412 (1st Dep t 2009)...7 In re Estate of Hicks, 82 Misc. 2d 326 (Sur. Ct. Cattaraugus Cnty. 1975)...8 In re Estate of Korn, 25 A.D.3d 379 (1st Dep t 2006)...6, 7 In re Lefrak, 215 B.R. 930 (Bankr. S.D.N.Y. 1998)...7 In re Schlacter s Will, 34 A.D.2d 1093 (4th Dep t 1970)...10 In re Voyiatgis, 110 A.D.3d 911 (2d Dep t 2013) Lichtenstein v. Eljohnan, Inc., 161 A.D.2d 397 (1st Dep t 1990)...7, 9 ii 3 of 16

4 McCarthy v. Pieret, 281 N.Y. 407 (1939)...8 Pinasco v. Del Pilar Ara, 219 A.D.2d 540 (1st Dep t 1995)...12 Towbin v. Towbin, 117 A.D.3d 607 (1st Dep t 2014)...7, 10 Widom v. Mittman, 39 A.D.3d 374 (1st Dep t 2007)...7 W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157 (1990) STATUTES AND RULES CPLR 3212(a)...5 CPLR 3212(f)...6 RPAPL Art , 5, 12 iii 4 of 16

5 PRELIMINARY STATEMENT Plaintiff Sumner M. Redstone moves for summary judgment on his First Cause of Action, pursuant to Article 15 of the New York Real Property Actions and Proceedings Law ( RPAPL ), to compel the determination of a claim to a co-operative apartment in The Carlyle, a hotel in Manhattan (the Apartment ). Specifically, Redstone seeks a judicial declaration that Defendant Manuela Herzer has no valid ownership interest in the Apartment, and to compel Defendant Hotel Carlyle Owners Corp. ( Carlyle Owners Corp. ) to cancel the parties proprietary lease, cancel the 2,110 shares it issued to Redstone and Herzer as joint tenants, and issue a new proprietary lease and new shares solely to Redstone. The relationship between Redstone and Herzer is the subject of a lawsuit pending in California Superior Court. Redstone s Complaint in that lawsuit (the California Complaint ) describes in detail how Redstone was emotionally abused, deceitfully manipulated, and financially drained by Herzer and her confederate, Sydney Holland. Fortunately, to quiet title to the Apartment, this Court need not wade into that tragic story of elder abuse. The Court need only consider the undisputed facts set forth in Redstone s Complaint and Herzer s Answer in this lawsuit. Redstone alone purchased the Apartment. On January 8, 2015, shortly before Redstone closed on his purchase, he and Herzer signed an agreement (the January 8 Agreement ) stating: Sumner intends to make a gift of the Apartment to Manuela at his death. To avoid probate and for other reasons of convenience, Sumner and Manuela will take title to the Apartment as joint tenants with right of survivorship.... Sumner is providing all of the consideration for the purchase of the Apartment and does not intend to make a current gift to Manuela.... Manuela acknowledges that notwithstanding that the Apartment is held in Sumner and Manuela s names as joint tenants with right of survivorship, until Sumner s death, the Apartment belongs exclusively to Sumner. Herzer admits to signing this agreement in her Answer. Redstone did, in fact, provide all 5 of 16

6 consideration for the Apartment, which Herzer also admits in her Answer. Herzer also admits that Redstone paid all transaction costs in connection with closing. These facts compel the conclusion that Herzer is not a joint tenant with Redstone. The January 8 Agreement clearly states that Redstone allowed Herzer s name to appear on the proprietary lease and co-op shares [t]o avoid probate and for other reasons of convenience. Further, Manuela acknowledges that notwithstanding that the Apartment is held in Sumner and Manuela s names as joint tenants with right of survivorship, until Sumner s death, the Apartment belongs exclusively to Sumner. (Emphasis added.) As the January 8 Agreement also states in clear and unequivocal terms, Redstone d[id] not intend to make a current gift of a joint tenancy to Herzer. New York law is therefore clear that Redstone did not make any gift of an interest in the Apartment to Herzer. New York courts routinely quiet title in favor of the alleged grantor where, as here, one or more of the elements necessary for completing an inter vivos gift is lacking. Despite admitting that Redstone paid for the Apartment, and that she signed the January 8 Agreement, Herzer refuses to relinquish the Apartment to Redstone. She asserts several affirmative defenses, none of which creates a triable issue of fact. This is a straightforward action to quiet title, and Redstone is entitled to a declaration that he alone owns the Apartment. FACTUAL BACKGROUND A. Redstone And Herzer Agree That Redstone Will Buy The Apartment To Own Until His Death The January 8 Agreement concerns Redstone s then-impending purchase of the Apartment. (See Affidavit of Gabrielle A. Vidal, sworn to on May 12, 2017 ( Vidal Aff. ), Ex. A.) Redstone and Herzer agree that Sumner is providing all of the consideration for the purchase of the Apartment and does not intend to make a current gift to Manuela. (Id.) Herzer 2 6 of 16

7 further acknowledges that notwithstanding that the Apartment is held in Sumner and Manuela s names as joint tenants with right of survivorship, until Sumner s death, the Apartment belongs exclusively to Sumner. (Id. (emphasis added).) Herzer admits executing the January 8 Agreement in her Answer. (See Affirmation of Judd R. Spray, dated May 18, 2017 ( Spray Aff. ), Ex. A 16 & Ex. B 16.) B. Redstone Purchases The Apartment On March 6, 2015, Redstone closed on his acquisition of the Apartment from its prior owner, National Amusements, Inc. ( National Amusements ). (See Vidal Aff. 2; Affidavit of Paula J. Keough, sworn to on May 18, 2017 ( Keough Aff. ), 3.) Redstone acquired the Apartment through a Contract of Sale with National Amusements. (See Keough Aff. Ex. A.) Herzer admits that she did not sign the Contract of Sale in her Answer. (See Spray Aff. Ex. A 12 & Ex. B 12.) Redstone provided all of the consideration for the Apartment in the form of a promissory note to National Amusements. (See Keough Aff. Ex. B.) Redstone also paid all of the purchaser s transaction costs in connection with closing on the Apartment. (See Affidavit of Peter I. Isenberg, sworn to on May 18, 2017 ( Isenberg Aff. ), 6 & Ex. A.) Herzer admits these facts as well in her Answer. (See Spray Aff. Ex. A 2 & Ex. B 2.) C. Redstone Makes All Monthly Payments On The Apartment Since closing on the Apartment, Redstone has made all of the monthly co-operative maintenance payments to the Carlyle. (Isenberg Aff & Exs. B-D.) In the Contract of Sale, the monthly maintenance payment is listed at $23,906.30, but it has increased every year, from $25, in 2015 to $26, in 2016 to $27, in (Id ) Redstone alone has made these payments, with no contribution from Herzer. (Id. 11.) 3 7 of 16

8 Although Redstone alleges these facts in his Complaint (see Spray Aff. Ex. A 25), Herzer neither admits nor denies them in her Answer, claiming she lacks knowledge or information sufficient to form a belief as to the truth of the allegations (id. Ex. B 25). Herzer does not allege, nor can she, that she made any of the monthly co-operative maintenance payments. 1 D. Herzer s Name Appears On The Proprietary Lease And Co-Op Shares As A Matter Of Convenience In April 2015, Redstone and Herzer both signed a long-term proprietary lease with Carlyle Owners Corp. as JTWROS ( joint tenants with right of survivorship ). (Vidal Aff. Ex. B.) Carlyle Owners Corp. subsequently issued co-op shares to Redstone and Herzer as JTWROS. (Id. Ex. C.) This was in accordance with the parties intent, expressed in the January 8 Agreement, to keep the Apartment out of probate in the event of Redstone s death. (See id. Ex. A.) Redstone and Herzer agreed that Sumner intend[ed] to make a gift of the Apartment to Manuela at his death, and therefore further agreed that, [t]o avoid probate and for other reasons of convenience, Sumner and Manuela w[ould] take title to the Apartment as joint tenants with right of survivorship. (Id. 2.) The appearance of Herzer s name on the proprietary lease and co-op shares does not reflect a present ownership interest on Herzer s part. PROCEDURAL BACKGROUND Since closing on the Apartment, the parties relationship deteriorated for the reasons set forth in the California Complaint, which are beyond the scope of this lawsuit. Before bringing the instant lawsuit, Redstone demanded that Herzer confirm that she has no right, title, or interest 1 In addition to these monthly payments, Redstone made substantial payments to renovate and redecorate the Apartment after purchasing it, even though Herzer, not Redstone, resided at the Apartment at that time. (Isenberg Aff & Ex. E.) 4 8 of 16

9 in the Apartment and that Redstone is the exclusive owner of the Apartment. (See Vidal Aff. 6 & Ex. D.) Herzer simply ignored that demand. (Id. 7.) Accordingly, Redstone filed his Summons and Complaint on November 22, 2016, asserting three causes of action: to quiet title, for imposition of a constructive trust, and for partition and sale. (Spray Aff. Ex. A.) Each cause of action is in the alternative to the others. (Id.) Herzer answered on December 5, (Id. Ex. B.) Herzer denies that Redstone is entitled to any relief and asserts twelve affirmative defenses. (Id.) On December 5, 2016, Herzer also served interrogatories, document requests, and a deposition notice, purporting to schedule Redstone s deposition for December 27, (Spray Aff. 5.) Counsel for both parties agreed to stay the deposition and all other discovery pending resolution of certain motions in the California Action. (Id.) Herzer subsequently served a new deposition notice, purporting to schedule Redstone s deposition for May 25, (Id. 6.) LEGAL STANDARD RPAPL 1501 provides that: Where a person claims an estate or interest in real property... such person... may maintain an action against any other person, known or unknown... to compel the determination of any claim adverse to that of the plaintiff which the defendant makes[.] Redstone s First Cause of Action seeks a determination that Herzer has no ownership interest in the Apartment. Any party may move for summary judgment after issue has been joined. CPLR 3212(a). The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact. Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 (1986). The burden then shifts to the nonmoving party to present evidentiary facts in admissible form sufficient to raise a genuine, triable issue of fact. Id. 5 9 of 16

10 New York courts routinely grant summary judgment motions before the parties have conducted discovery when the nonmoving party fails to show that facts essential to justify opposition to the motion may emerge through discovery. See Bailey v. N.Y.C. Transit Auth., 270 A.D.2d 156, 157 (1st Dep t 2000); see also Bank of Am., N.A. v. Tatham, 305 A.D.2d 183, 183 (1st Dep t 2003) (affirming summary judgment for plaintiff where defendant failed to demonstrate that facts essential to justify his opposition to the motion may yet be disclosed. ); In re Estate of Korn, 25 A.D.3d 379, 380 (1st Dep t 2006) (affirming summary judgment for plaintiff where further discovery would serve no purpose. ). Although the CPLR allows for a motion to be denied or continued where facts essential to justify opposition may exist but cannot then be stated, CPLR 3212(f), the nonmoving party must demonstrate that facts essential to oppose the motion are within the moving party s exclusive knowledge and possession and might be disclosed through discovery. HSBC Bank USA, N.A. v. Prime, L.L.C., 125 A.D.3d 1307, 1308 (4th Dep t 2015). The mere hope that evidence sufficient to defeat a motion for summary judgment may be uncovered during the discovery process is insufficient to deny a summary judgment motion. Flores v. City of N.Y., 66 A.D.3d 599, 600 (1st Dep t 2009). ARGUMENT Redstone makes a prima facie showing below of his entitlement to summary judgment on his First Cause of Action: Redstone purchased the Apartment to own until his death and explicitly disclaimed any intention to make a present gift to Herzer. Herzer explicitly acknowledged and accepted these facts when she signed the January 8 Agreement. Redstone paid all of the consideration to purchase the Apartment, paid all related transaction costs, and has made all of the monthly maintenance payments since closing. Herzer admits these facts as well. Redstone therefore moves now, before discovery has commenced, because the pleadings and 6 10 of 16

11 other submissions demonstrate that there is no triable issue of material fact preventing summary judgment, and discovery would serve no purpose here. In re Estate of Korn, 25 A.D.3d at 380. A. Redstone Disclaimed Any Intent To Make An Inter Vivos Gift To Herzer, And Herzer Acknowledged That Disclaimer. Under New York law, [a] valid gift requires a donor s intent to make a present transfer, actual or constructive delivery of the gift to the donee and the donee s acceptance. Towbin v. Towbin, 117 A.D.3d 607, 608 (1st Dep t 2014) (emphasis added); Gruen v. Gruen, 68 N.Y.2d 48, 53 (1986) ( An inter vivos gift requires that the donor intend to make an irrevocable present transfer of ownership. ) (Emphasis added). The purported recipient bears the burden of proving these elements by clear and convincing evidence. In re Baum, 66 A.D.3d 412, 413 (1st Dep t 2009). Where donative intent is lacking, there is no enforceable gift. See, e.g., Widom v. Mittman, 39 A.D.3d 374 (1st Dep t 2007) (affirming dismissal due to, inter alia, absence of a present donative intent ); Lichtenstein v. Eljohnan, Inc., 161 A.D.2d 397, 398 (1st Dep t 1990) (affirming summary judgment where defendant s actions manifest[ed] a clear intention by him not to make a present gift ). Courts frequently apply these elements and burden of proof in deciding the validity of a purported gift of ownership in a co-operative apartment. For example, in In re Baum, the respondent failed to sustain her burden of establishing that her husband had given her a one-half interest in his co-operative apartment, in part because there was insufficient evidence of delivery of the purported gift. 66 A.D.3d at Similarly, in Towbin, the First Department affirmed dismissal where co-op shares and the proprietary lease were not delivered to the purported gift recipient. 117 A.D.3d at 608; see also In re Lefrak, 215 B.R. 930, (Bankr. S.D.N.Y. 1998) (holding that husband had not made inter vivos gift of co-operative apartment to wife under New York law because he did not deliver co-op shares) of 16

12 While these cases involved delivery, the principle that a valid gift requires that each element be satisfied is applicable with equal force here. And here, Herzer cannot ever establish the most critical element for a legally enforceable gift that Redstone had the intent to make an irrevocable present transfer of an ownership interest in the Apartment to her. To the contrary, the January 8 Agreement precludes any such finding. Since Redstone did not make an inter vivos gift to Herzer, the Court should grant summary judgment on Redstone s First Cause of Action. The January 8 Agreement precludes Herzer from arguing that Redstone intended to give her an ownership interest in the Apartment as an inter vivos gift. The parties could hardly have been clearer on this point: 2. Sumner intends to make a gift of the Apartment to Manuela at his death. To avoid probate and for other reasons of convenience, Sumner and Manuela will take title to the Apartment as joint tenants with right of survivorship. The Contract is being revised to add Manuela as a joint purchaser. Sumner is providing all of the consideration for the purchase of the Apartment and does not intend to make a current gift to Manuela. 3. Manuela acknowledges that notwithstanding that the Apartment is held in Sumner and Manuela s names as joint tenants with rights of survivorship, until Sumner s death, the Apartment belongs exclusively to Sumner. (Vidal Aff. Ex A (emphases added).) Because Redstone [did] not intend to make a current gift to Manuela, well-settled New York law compels the conclusion that he did not make an enforceable gift to her when he acquired the Apartment. See In re Estate of Hicks, 82 Misc. 2d 326, 329 (Sur. Ct. Cattaraugus Cnty. 1975) ( [I]t is the donor s intention that is paramount in determining whether a transaction is an inter vivos gift. ); McCarthy v. Pieret, 281 N.Y. 407, 409 (1939) (describing donative intent as the deciding factor on the facts of that case) of 16

13 The First Department s decision in Lichtenstein, supra, is instructive. In that case, the parties father caused his corporations to issue stock certificates in the plaintiff s name (for which plaintiff never paid anything), but required each certificate to be endorsed in blank. 161 A.D.2d at 397. Before his death, the father retained exclusive possession, custody and control of the certificates, and after a falling out, ultimately transferred the stock to defendant, plaintiff s brother. Id. The First Department found these actions to manifest[] a clear intention... not to make a present gift of stock, and granted summary judgment dismissing plaintiff s complaint. Id. at 398. Here, the clear intention not to make a present gift is even more manifest after all, Herzer expressly agreed that Redstone [did] not intend to make a current gift to her. (Vidal Aff. Ex. A 2.) Despite the plain language of the January 8 Agreement, Herzer inexplicably claims in her Second Affirmative Defense that [t]he gift of an interest in the Carlyle apartment was intended to be an inter vivos gift. (Spray Aff. Ex B at 6.) This purported defense is irreconcilable with Herzer s admission that she signed the January 8 Agreement (id. 16), and thereby adopted and endorsed the statement that, until Sumner s death, the Apartment belongs exclusively to Sumner. (Vidal Aff. Ex. A 3). In New York, when parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms. W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990). Here, Herzer unambiguously expressed her intention and understanding that Redstone would own the Apartment until his death. If Herzer nevertheless claims that some parol evidence exists indicating that Redstone and Herzer did not mean what they said in the January 8 Agreement, that parol evidence could not be used to alter the agreement s plain meaning. Evidence outside the four corners of the 9 13 of 16

14 document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing. Giancontieri, 77 N.Y.2d at 162. Herzer therefore should not be allowed to delay the resolution of this case by claiming that she is entitled to discovery of any alleged parol evidence. B. Redstone s Previous Intent To Make A Gift At His Death Is Unenforceable. New York law is similarly clear that Redstone s express disavowal in the January 8 Agreement of any intent to make a current gift to Herzer means that he did not make any gift to Herzer. In Gruen, the Court of Appeals held that [a]n inter vivos gift requires that the donor intend to make an irrevocable present transfer of ownership; if the intention is to make a testamentary disposition effective only after death, the gift is invalid unless made by will. 68 N.Y.2d at 53 (emphasis added); see also In re Schlacter s Will, 34 A.D.2d 1093, 1093 (4th Dep t 1970) ( A gift causa mortis of realty is not recognized. ). Thus, even if Redstone had died before bringing this action, Herzer would have no viable claim to the Apartment. C. Herzer s Name Appears On The Proprietary Lease And Co-Op Shares Solely To Avoid Probate And For Other Reasons of Convenience. The fact that Herzer s name, like Redstone s, appears on the proprietary lease and the Certificate of Shares as a Joint Tenant With Right Of Survivorship, does not change the immutable fact that Redstone alone owns the Apartment. Redstone and Herzer acknowledged in the January 8 Agreement that Herzer would take title to the Apartment solely [t]o avoid probate and for other reasons of convenience. (Vidal Aff. Ex. A 2.) New York courts deciding cases with similar facts have held that a landowner s decision to allow another person s name to appear on a deed, proprietary lease, or co-op shares is meaningless where one or more of the elements of a valid inter vivos gift is lacking of 16

15 In Towbin, for example, the First Department affirmed dismissal of the case where actual or constructive delivery of the purported gift was lacking even though the plaintiff alleged that the defendant had executed a stock power and an assignment of the proprietary lease. 117 A.D.3d at A particularly instructive case is Hom v. Hom, 101 A.D.3d 816 (2d Dep t 2012). There, the plaintiff sought a judgment declaring that he was the sole owner of a property and removing his son s name from all indicia and records of title or ownership. Id. at Although plaintiff had previously added his son s name to the deed as a joint tenant with right of survivorship, plaintiff claimed that he only did so to ensure that ownership would transfer to his son and not to his daughters upon his death. Id. at The trial court found that the father did not have a present intention to transfer an interest in the property to the appellant, despite having placed his name on the deed. Id. at 817 (emphasis added). Among other things, the son, like Herzer, had not contributed to purchase of the property. Id. The Second Department affirmed. The Second Department made a similar ruling in In re Voyiatgis, 110 A.D.3d 911 (2d Dep t 2013). The appellant s brother had conveyed a one-third interest in real property to his sister by deed. Id. at 911. After the brother died, the administrator of his estate petitioned for the return of his interest in the property. Id. at The Second Department held that the decedent s conveyance was for [his] convenience, and was designed to obtain a favorable interest rate on a refinance loan. Id. at 912. The decedent further expected that the property would be conveyed back to him after the refinancing. Id. The Second Department affirmed the Surrogate s Court s ruling that the property rightfully belonged to the decedent s estate, holding that the sister failed to come forward with clear and convincing proof that the decedent intended of 16

16 to make a gift of his interest in the subject real property. Id. In Hom and in Voyiatgis, courts considered whether one of the names on a deed was put there pursuant to a true inter vivos gift, or rather as a means of avoiding probate or for other reasons of convenience. These decisions are consistent with the long line of New York authority concerning bank and brokerage accounts, where the presumption of joint tenancy with right of survivorship may be rebutted by clear and convincing evidence that the account was opened only as a matter of convenience. See, e.g., Pinasco v. Del Pilar Ara, 219 A.D.2d 540, 540 (1st Dep t 1995). In the instant case, Redstone and Herzer had the foresight to agree, in writing, that they were taking title jointly solely [t]o avoid probate and for other reasons of convenience. (Vidal Aff. Ex. A 2.) Here, as in Hom and Voyiatgis, the Court should grant summary judgment because the undisputed facts show that Redstone lacked the requisite intent to make an inter vivos gift of a joint tenancy to Herzer. CONCLUSION For all of the reasons stated above, the Court should grant Redstone s motion for summary judgment on his First Cause of Action, To Compel the Determination of a Claim to Real Property pursuant to RPAPL Article 15. Respectfully submitted, /s/ Howard I. Elman Howard I. Elman Judd R. Spray Yelena Rapoport MATALON SHWEKY ELMAN PLLC 450 Seventh Avenue, 33rd Floor New York, New York (212) of 16