State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: March 3, 2016 521492
________________________________
CHARLES T. DWYER et al.,
Appellants,
v MEMORANDUM AND ORDER
PATRICIA VALACHOVIC,
Respondent.
________________________________
Calendar Date: January 8, 2016
Before: Peters, P.J., Garry, Egan Jr., Devine and Clark, JJ.
__________
Richard P. Weinheimer, Fort Plain, for appellants.
Thomas C. Walsh, Johnstown, for respondent.
__________
Garry, J.
Appeal from an order of the Surrogate's Court of Fulton
County (Hoye, S.), entered December 23, 2014, which dismissed
petitioner's application, in a proceeding pursuant to SCPA 2103,
to, among other things, direct respondent to deliver certain
property to decedent's estate.
Decedent died in December 2012, and in her will she left
her property to her five children in equal shares. Petitioners
are three of her children; respondent is the child with whom she
was living for a period of time prior to her death. Decedent's
will was admitted to probate, and petitioner Charles T. Dwyer was
granted letters testamentary for the limited purpose of
discovering any assets owned by decedent at the time of her
death. Petitioners commenced this proceeding pursuant to SCPA
2103 against respondent, seeking information about a vehicle,
bank deposits and rental income alleged to be assets of the
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estate.1 Respondent denied that she possessed any estate assets,
and petitioners submitted a reply. Surrogate's Court determined
that petitioners had neither demonstrated that respondent was in
possession of estate assets nor shown reasonable grounds for
further inquiry, and, accordingly, denied the request for a
hearing and dismissed the petition. Petitioners appeal.
SCPA 2103 establishes a discovery procedure by which a
fiduciary can identify and recover estate assets held by a third
party (see Matter of Van Patten, 190 AD2d 322, 326 [1993];
Margaret Valentine Turano, Practice Commentaries, McKinney's Cons
Laws of NY, Book 58A, SCPA 2103 at 295). The fiduciary bears the
burden to prove that property held by a respondent is an estate
asset; only when that obligation has been satisfied does the
burden shift to the respondent to prove the proper disposition of
the disputed property (see Matter of Voyiatgis, 110 AD3d 911, 912
[2013]; Matter of Rappaport, 66 AD3d 1032, 1032-1033 [2009]). We
agree with Surrogate's Court that petitioners did not satisfy
this initial burden and failed to establish grounds for further
inquiry.
First, petitioners submitted no proof whatsoever to support
their claim that decedent owned or had an interest in bank
deposits totaling approximately $90,000. The only substantial
financial asset in which decedent was shown to have an interest
was a sum of $9,000 that respondent was holding for decedent's
benefit at the time of her death. Petitioners acknowledge that
these funds were duly distributed following decedent's death.2
This sum originated from a savings account that decedent closed
in September 2009. Respondent placed these funds in her own name
to protect them in the event that decedent needed long-term care,
1
Petitioners also sought information about the contents of
decedent's house, but, upon appeal, raise no challenge to
respondent's assertion that the property was divided among
decedent's children. We thus deem any related claims to be
abandoned (see Matter of Van Patten, 190 AD2d 322, 325 [1993]).
2
Certain estate-related expenses were deducted before the
distribution.
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and she testified that she held them solely for decedent's
benefit. Petitioners contend that the fact that respondent
admittedly placed these funds in her own name indicates that she
may have also done so with other funds and used them for her own
benefit. Specifically, petitioners rely upon a bank record
revealing that the balance in decedent's savings account when it
was closed was approximately $14,000, and they assert that the
difference of approximately $5,000 between this sum and the
amount that respondent admittedly received has not been accounted
for. Respondent denies that the remainder of the balance ever
came into her possession or that she has any knowledge of how
decedent disposed of it, and petitioners proffer no contrary
evidence.
We reject petitioners' contention that respondent is
obliged to account for the remainder of the account balance on
the ground that she held a power of attorney for decedent and
therefore had a confidential relationship with her. When there
are allegations of undue influence or constructive fraud, the
existence of a confidential relationship in which the parties
dealt on unequal terms shifts the burden to the more powerful
individual to show that there was no deception or undue influence
exercised (see Matter of Nealon, 104 AD3d 1088, 1088-1089 [2013],
affd 22 NY3d 1045 [2014]; Oakes v Muka, 69 AD3d 1139, 1140-1141
[2010], appeal dismissed 15 NY3d 867 [2010]). Critically,
however, in this matter, petitioners do not make any claim that
decedent suffered from any physical or mental incapacity, or that
she lacked the ability to manage her own affairs and exercise her
own free will, and they have neither claimed nor shown any
exercise of undue influence. Respondent asserts that decedent
was fully financially independent and managed all of her own
banking at the time that she closed the savings account; this is
wholly undisputed by petitioners. There is no evidence that
respondent used the power of attorney in connection with the
savings account, or that it was ever used at all. In these
circumstances, the mere existence of the power of attorney
neither establishes that there was a confidential relationship
nor shifts the burden of proof to respondent (see Matter of
Bonczyk v Williams, 119 AD3d 1124, 1127 [2014]; compare Matter of
Nealon, 104 AD3d at 1089). Further, decedent's September 2009
savings account balance is not subject to discovery, as the
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three-year limitations period applicable to any conversion claim
pertaining to these funds expired before decedent died (see CPLR
201, 214 [3]; Matter of Perelman, 123 AD3d 436, 436-437 [2014],
lvs denied 25 NY3d 905 [2015]; Margaret Valentine Turano,
Practice Commentaries, McKinney's Cons Laws of NY, Book 58A, SCPA
2103 at 300). Accordingly, petitioners established no reasonable
basis for further inquiry on this ground.
Likewise, petitioners established no grounds for inquiry
related to decedent's joint checking account with respondent.
This account was opened in August 2010 with a balance of roughly
$1,500; it was funded by decedent's Social Security payments and
held approximately $600 at the time of her death. Petitioners
make no claim that this balance was improperly withheld by
respondent. Instead, they assert that respondent could have
taken advantage of the fact that she was named on the account to
divert other account funds to herself. The only proof offered to
support this speculative claim, however, is monthly account
statements, which reveal that several small checks were written
each month without indicating the names of the check payees, or
whether they were endorsed by decedent or respondent. Respondent
asserts that these payments covered decedent's routine expenses;
there is no evidence that any such payments were made improperly,
or made either to or by respondent. The fact that respondent was
the only one of decedent's children listed on the account, while
others had also been listed on previous joint accounts, does not
shift the burden of proof in the absence of any showing that
respondent exerted undue influence or transferred funds to
herself (see Matter of Graeve, 113 AD3d 983, 984-985 [2014]).
Next, petitioners assert that respondent should account for
rental income due to decedent under a September 2010 lease that
decedent entered into with her grandson – respondent's son – and
his wife.3 Decedent's bank records fail to reveal that she ever
received these rent payments. However, as previously noted,
petitioners have neither claimed nor shown that decedent lacked
3
Decedent had life use of the leased premises, which she
and her now-deceased husband had previously conveyed to their
children.
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capacity to handle her financial affairs, and the record does not
reveal that respondent handled any transactions relative to this
lease on decedent's behalf, nor that she was responsible for
collecting the rent. Decedent signed the lease with the tenants,
in which the tenants agreed to make monthly rent payments to
decedent. Decedent thereafter executed lease extensions in 2011
and 2012, and, again, respondent was not a signatory. Whether
decedent forgave the rent payments, or whether she collected them
and made some disposition that is not reflected in her bank
records, is irrelevant in the absence of any evidence that
respondent ever possessed the payments or was in any manner
responsible for collecting and accounting for them.
Finally, petitioners argue that further inquiry is required
regarding decedent's 2003 Buick Century automobile, which
respondent asserts that decedent transferred to her as a gift in
September 2009. As petitioners contend, a respondent's claim of
title in SCPA 2103 proceedings to an asset that was previously
owned by a decedent ordinarily gives rise to a triable issue of
fact (see Matter of Luttrell, 99 AD2d 603, 603 [1984]). Here,
however, in view of the vehicle's age and limited value and the
remoteness in time of petitioners' claim, Surrogate's Court
elected to exercise its discretion to deny petitioners' request
for a hearing on this issue. We note that any claim for recovery
of the vehicle accrued in September 2009, more than three years
before decedent's death, and is therefore time-barred (see CPLR
214 [3]; Matter of Perelman, 123 AD3d at 436-437). As such, and
in view of all the circumstances, we find no abuse of the court's
"broad discretion in discovery proceedings to accomplish justice"
(Margaret Valentine Turano, Practice Commentaries, McKinney's
Cons Laws of NY, Book 58A, SCPA 2103 at 301). Given petitioners'
failure to meet their burden to establish on a prima facie basis
that any of the disputed property belonged to the estate, the
petition was properly dismissed (see Matter of Perelman, 123 AD3d
at 436-437; Matter of Rappaport, 66 AD3d at 1033; see also Matter
of Fishman, 134 AD3d 1110, 1112 [2015]).
Peters, P.J., Egan Jr., Devine and Clark, JJ., concur.
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ORDERED that the order is affirmed, with costs.
ENTER:
Robert D. Mayberger
Clerk of the Court