Opinion
Index No. 515515/2018
06-09-2022
EDGAR REID, JR. AS TRUSTEE FOR EDGAR REID, SR. and EDGAR REID, JR. In his personal capacity, Plaintiff, v. LORNA B. SERVICE and NATIONWIDE, Defendants.
Unpublished Opinion
DECISION & ORDER
HONORABLE FRANCOIS A. RIVERA, J.S.C.
Recitation in accordance with CPLR 2219 (a) of the papers considered on the notice of motion of Lorna B. Service (hereinafter the defendant or Lorna S.), filed on October 14, 2021, under motion sequence number four, for an order dismissing the complaint of Edgar Reid Jr. as Trustee for Edgar Reid, Sr. and Edgar Reid, Jr, individually (hereinafter the plaintiffs) for failure to state a cause of action. This motion is opposed.
-Notice of Motion
-Affidavit in Support
-Exhibit A
-Memorandum of Law in Support
-Affidavit in Opposition
BACKGROUND
On July 30, 2018, the plaintiffs commenced the instant action by filing a summons and verified complaint with the Kings County Clerk's office (KCCO). On December 20, 2018, Nationwide filed an answer with the KCCO. On May 10, 2019, Lorna S. filed an answer with the KCCO. On March13, 2020, the plaintiffs filed a rejection of Lorna S.' answer as untimely with the KCCO.
The verified complaint alleges twenty-four allegations of fact in support of three cause of actions. The first cause of action alleges fraud and is asserted against Lorna S. The second cause of action, also asserted against Lorna S., alleges tortious interference with contractual relations. The third cause of action is asserted against Nationwide for breach of contract. The fourth cause of action is asserted against Nationwide for negligence.
By decision and order dated September 9, 2020, this Court granted Nationwide's motion, filed under motion sequence number one, to dismiss the complaint as asserted against it for failure to state a cause of action.
The verified complaint alleges the following salient facts. Honorable Johnson the Surrogate of Kings County granted limited letters of administration to Lorna S. over the estate of Edgar Reid, Sr. On or about May 23, 2012, plaintiffs' counsel sent a letter to Charles Brody, a Court Attorney-Referee. Included in this letter were exhibits which detailed Edgar Reid, Sr.'s assets at the time of his death. The assets included two recorded deeds which show that properties located at 1842 Maple Street Brooklyn, New York and 373 Midwood Street, Brooklyn, New York, respectively, were transferred to the Edgar Reid Revocable Living Trust on July 3, 2007.
A Provident Mutual Life Insurance (now Nationwide by merger) policy was originated by Isoline Reid, now deceased, and on the second to last page of the policy it noted that only Isoline Reid's four (4) natural children were listed as the contingent beneficiaries, of which Edgar Reid, Sr. was a beneficiary.
By correspondence in May 2011, a Nationwide processor stated that the policy beneficiaries were the children of Edgar Reid, Sr. In response to this correspondence, Nationwide received affidavits from four of the children of Edgar Reid, Sr. claiming a portion of the death benefit. The claimants were Edgar Reid, Jr. Andre Reid, Karen Reid and Romy Reid (hereinafter the Reid family). Additionally, Nationwide received communication from Lorna S. indicating that she was also a child of Edgar Reid, Sr. and was entitled to a portion of the policy benefit.
By letter, dated June 15, 2015, Nationwide informed those with an interest in the benefit payment that the May 2011 communication was an error. Upon review of the policy, it was discovered that Edgar Reid, Sr. had not designated any beneficiaries, that the processor had misinterpreted the file information, and that upon the death of Edgar Reid, Sr. the beneficial interest in the payment he was to receive transitioned to his estate.
The plaintiffs allege that through the court supervised estate administration processes Lorna S. was granted limited letters of administration and through such limited and circumspect authority identified herself as personal representative appointed by the court to collect the assets of Edgar Reid, Sr. and ultimately distribute the assets to the beneficiates. By way of telephonic and electronic communications, Lorna S. misrepresented her capacity as an appointed beneficiary of Edgar Reid, Sr. Lorna S. lacked authority to communicate with any insurance company on behalf of the estate of Edgar Reid, Sr.
Furthermore, through fraud and in direct contravention of her limited authority and upon reliance therein Nationwide, without the proper following of internal protocols and procedures, commuted a lump sum value of the policy which was quoted and accepted by Lorna S., as the administrator. Nationwide processed two checks made payable to the estate of Edgar Reid Sr. One in the amount of $99,450.34 on February 26, 2014, and another a few days later for $1,072.34.
Lorna S. is alleged to have violated Insurance Law § 3205(b)(2), which provides in pertinent part that no person shall procure…, directly or by assignment… any contract of insurance upon the person of another unless the benefits…are payable to the person insured or his personal representatives, or to a person having, at the time when such contract is made, an insurable interest in the person insured.
The plaintiffs allege that Lorna S., by way of fraud and misrepresentation, knew of the contract and without reasonable justification or excuse induced Nationwide to issue the proceeds of the annuity and contract to the wrong party resulting in damages to the plaintiffs. The plaintiffs contend that they have been damaged in the amount of $100,522.68 plus applicable interest.
LAW AND APPLICATION
Lorna S. seeks dismissal of the first and second cause of action as asserted against her for failure to state a cause of action. On a motion to dismiss pursuant to CPLR 3211(a)(7), the complaint is to be afforded a liberal construction, the facts alleged are presumed to be true, the plaintiff is afforded the benefit of every favorable inference, and the court is to determine only whether the facts as alleged fit within any cognizable legal theory" (Gorbatov v Tsirelman, 155 A.D.3d 836, 837 [2nd Dept 2017]). Where evidentiary material is submitted and considered on a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), and the motion is not converted into one for summary judgment (Agai v Liberty Mut. Agency Corp., 118 A.D.3d 830, 832 [2nd Dept 2014], citing Guggenheimer v Ginzburg, 43 N.Y.2d 268, 275 [1977]). Rather, the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one and, unless it has been shown that a material fact as claimed by the plaintiff to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, dismissal shall not eventuate (id.)
The first cause of action asserted against Lorna S. is for fraud. The elements of a cause of action for fraud require a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 N.Y.3d 553, 559 [2009]). CPLR 3016(b) requires that the circumstances underlying a cause of action based in fraud be "stated in detail" (Emby Hosiery Corp. v Tawil, 196 A.D.3d 462, 464 [2nd Dept 2021]).
The allegations in the verified complaint were in many instances unclear, confusing and grammatically challenging. The verified complaint alleges that Lorna S. misrepresented her authority as an administrator of the estate of Edgar Reid, Sr. and that she did so to receive the proceeds of an annuity contract in order to distribute it to Edgar Reid Sr.'s beneficiaries, herself among them. It further alleges, that through fraud and in direct contravention of her limited authority and upon reliance therein Nationwide, without the proper following of internal protocols and procedures, commuted a lump sum value of the policy which was quoted and accepted by the administrator. The plaintiffs further allege that the proceeds should have been paid directly to Edgar Reid Sr.'s estate and not to his children which include Lorna S.
The plaintiffs' verified complaint, however, also specifically alleges that Surrogate Johnson appointed LORNA S. as administrator of Edgar Reid Sr.'s estate. Moreover, Lorna S. submitted evidence conclusively establishing that she had authority as the duly appointed administrator of Edgar Reid Sr.'s estate to assess and gather his assets and debts and to distribute those assets to his entitled beneficiaries under the supervision of the Surrogate. There is no dispute that in September 2013, the Honorable Diana A. Johnson of the Surrogate's Court of the State of New York, Kings County, appointed Lorna S., fiduciary for the estate of Edgar Reid Sr. and granted her letters of limited administration. Lorna S., as a fiduciary of Edgar Reid Sr.'s estate and pursuant to the authority granted by the letters of administration, submitted a claim under the annuity on behalf of Edgar G. Reid, Sr., estate to Nationwide. Nationwide processed Lorna S.' request and forwarded her the total amount due under the Annuity. Consequently, an essential fact alleged in the claim for fraud, namely, that Lorna S. misrepresented her authority, is not a fact at all. Any alleged mistakes in the administration of the estate of Edgar Reid Sr. performed by Lorna S. was not based on a knowing misrepresentation by her. Assuming the facts alleged in the complaint are true and giving the plaintiffs the benefit of every favorable inference, the verified complaint does not plead a cause of action for fraud.
Furthermore, the plaintiffs cannot argue or allege that Lorna S.' procurement of the letters of administration was somehow improper because the issuance of the letters of administration is not susceptible to collateral attack outside of the Surrogate's Court case (see Capozzola v Oxman, 216 A.D.2d 509 [2nd Dept 1995]). Moreover, pursuant to SCPA 703 (1) letters of administration granted by the court are conclusive evidence of the authority of the persons to whom they are granted (id.). Here, the plaintiffs have neither sought to have the letters of administration reversed, modified, suspended, or revoked (see SCPA 703). Accordingly, the plaintiffs' cause of action for fraud against Lorna S. must be dismissed.
Plaintiffs second cause of action asserted against Lorna S. is for tortious interference with contractual relations. The elements of a cause of action for a claim of tortious interference with contractual relations are: (1) a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional inducement of the third party to breach or otherwise render performance impossible; and (4) damages to the plaintiff resulting therefrom (Pac. Carlton Dev. Corp. v 752 Pac., LLC, 62 A.D.3d 677, 679 (2nd Dept 2009]). The plaintiffs claim that Lorna S. fraudulently and without reasonable justification or excuse induced Nationwide to issue the proceeds of the annuity and contract to the wrong party resulting in damages to the plaintiffs. Plaintiffs further claim that this conduct violated Insurance Law § 3205(b)(2).
Lorna S., however, was acting in her representative capacity as the duly appointed Administrator of Edgar Reid Sr.'s estate when she obtained the proceeds of the aforementioned annuity and distributed it to Edgar Reid Sr.'s children, herself included. Furthermore, Lorna S. did not intentionally induce Nationwide to breach or render performance of its annuity contract impossible. In fact, this Court dismissed the causes of action asserted against Nationwide because Nationwide did not breach, but rather performed, its annuity contract when it distributed the annuity proceeds to Lorna S. Consequently, the plaintiffs do not have a cause of action for tortious interference of contractual relations against Lorna S. Any inferential claim that Lorna S. may have exceeded her authority in the administration of the estate of Edgar Reid Sr. is not an element of either fraud or tortious interference with contractual relations. Rather, it is a claim more appropriately pursued before the Surrogate Court in the proceeding in which LORNA S.'s appointment was made (Capozzola v Oxman, 216 A.D.2d 509 [2d Dept 1995]).
CONCLUSION
The motion by Lorna B. Service for an order dismissing the claims of fraud and tortious interference with contract asserted against her in the complaint of Edgar Reid Jr. as Trustee for Edgar Reid, Sr. and Edgar Reid, Jr., individually is granted.
The foregoing constitutes the decision and order of this Court.