Were Defenses of Life Estate and Constructive Trust Barred As A Matter of Law?
Kenneth Rosenblum brought a license holdover proceeding against Diana Treitler and Bruce Treitler seeking possession of apartment 15 at 42 Bank Street. The Treitlers answered and asserted several affirmative defenses.
The third affirmative defense:
That Respondent Diana Treitler who is the sister of the Petitioner has been granted the equivalent of a Life Estate to occupy the subject premises by the Petitioner who promised her the apartment for as long as she wanted. Said Life Estate was granted in or about 2011 and the Respondent has been in possession of the subject apartment since said date. Respondent Diana Treitler has unequivocally relied upon the representation of Petitioner who said that he was giving the subject apartment to said Respondent for as long as she wanted. Respondent in reliance has taken possession of the subject apartment and made improvements thereto. Thus, pursuant to Promissory Estoppel and detrimental reliance, the Petitioner is estopped from denying Respondent’s right of possession to the subject apartment.
The fifth affirmative defense:
That Respondent Diana Treitler is entitled to a Constructive Trust in the subject apartment. Even were there not an express promise, a promise is to be inferred from the transaction and facts herein.
Rosenblum moved to dismiss the third and fifth affirmative defenses.
In a motion to dismiss an affirmative defense, the petitioner bears the heavy burden of showing that the defense is without merit as a matter of law. The allegations set forth in the answer must be viewed in the light most favorable to the respondent. The respondent is entitled to the benefit of every reasonable intendment of the pleading, which is to be liberally construed. And the court should not dismiss a defense where there remain questions of fact requiring a trial.
Rosenblum argued that the Treitlers’ third affirmative defense alleging an oral life estate was barred by the statute of frauds. He further argued that an oral contract for the creation of a life estate is valid only if it is executed in writing, and an oral agreement for a life estate violates the statute of frauds.
According to General Obligations Law § 5-703,
1.An estate or interest in real property, other than a lease for a term not exceeding one year, or any trust or power, over or concerning real property, or in any manner relating thereto, cannot be created, granted, assigned, surrendered or declared, unless by act or operation of law, or by a deed or conveyance in writing, subscribed by the person creating, granting, assigning, surrendering or declaring the same, or by his lawful agent, thereunto authorized by writing. . . .
The Treitlers in opposition argud that the statute of frauds was not an absolute bar to a determination that an occupant was entitled to a life estate because there is an exception to the writing requirement where there is part performance or reliance. They further argued that where the elements of promissory estoppel are established and the injury to the party who acted in reliance on the oral promise is so great that enforcement of the statute of frauds would be unconscionable, then the promisor should be estopped from reliance on the statute of frauds.
There are two types of life estates. One is an outright life estate also known as a “legal life estate” and the other is a life tenancy created by a trust. Where the property is not placed in trust, the estate created is a legal life estate, and the life tenant is a legal life tenant. A trust which does not contain language entitling the grantee unconditionally to “use and occupy” the property does not convey a life estate. However, where it is placed in trust, the estate is an equitable life estate, and the life tenant is an equitable life tenant.
Moreover, whether a life tenant has a legal life estate where he or she has an estate in the property itself and the right to its possession or control, or whether he or she is a trust beneficiary entitled merely to income for life, is a matter to be determined by the court by construction of the particular instrument involved.
Additionally, the ordinary expense of the care and management of a life estate must be paid by the life tenant. In particular, a tenant for life, enjoying the rents and profits of the land, ordinarily must pay the taxes and make all ordinary, reasonable repairs required to preserve the property and prevent it from going to decay or waste, unless the instrument creating the tenancy expressly provides otherwise, the life tenant is generally deemed an owner of the property.
Here, Diana Treitler did not have a written instrument providing her a life estate for occupancy of the apartment Therefore, under the statute of frauds she could not assert such a defense in the licensee holdover proceeding. Further, Diana Treitler in her affidavit has failed to show any part performance, reliance, or promissory estoppel. She only showed that she took occupancy of the apartment in 2011 with Rosenblum’s permission; decorated the premises; and made ordinary “improvements” to the unit such as installation of a window air conditioner, ceiling fan, television wall brackets, bathroom drying rack, two glass shelves in the bathroom, and cabinet over a toilet. But those were merely standard apartment additions that a renter would make to his or her apartment to make it fit their individualized needs. It was not the equivalent to reasonable repairs required to preserve the property and prevent it from going to decay or waste of a life tenant. If Diana Treitler was a life estate tenant, she would have to maintain reasonable repairs to the property to prevent it from decay and pay costs such as taxes. Nowhere in her affidavit did she mention that she maintained the property (i.e. plumbing, heating, water supply to unit or the entire multiple dwelling with at least 31 units in it nor pay building taxes or any other costs associated with building maintenance). Diana merely showed standard apartment additions that a renter would make to his or her apartment to make it fit their individualized needs and nothing more.
Accordingly, Rosenblum’s motion to strike the third affirmative defense alleging an oral life estate was stricken, as the affirmative defense was without merit as a matter of law.
Rosenblum argued that the fifth affirmative defense of constructive trust was also lacking in merit because it failed to establish the required elements of a constructive trust.
A constructive trust may be imposed, if property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest. The doctrine of constructive trust as a remedy requires the following four elements: a confidential or fiduciary relation; a promise; a transfer in reliance thereon; and unjust enrichment.As such, to avail the defense, the burden of proof rests with the party asserting the constructive trust theory to prove all four elements of the defense..
Title cannot be determined in the context of a Housing Court summary proceeding, but Housing Court is empowered with the jurisdiction to determine any “legal or equitable” defense for purpose of determining a right to possession. As such, although parties are unable to challenge title in a summary proceeding, a licensee may defeat a summary proceeding by establishing an equitable affirmative defense such as constructive trust.
But here Diana Treitler had not facially shown the existence of a constructive trust as an affirmative defense. Specifically, she did not sustain her burden of proof. Rosenblum did not promise the Treitlers an ownership interest in the rental unit or building nor was there a transfer of title to them. And they did not make financial contributions to his purchase of the subject building. Nor did they assist Rosenblum in gaining title to the apartment. And they did not show that Rosenblum had has been unjustly enrichment by their ordinary “improvements” to the premises such as by installation of a window air conditioner, ceiling fan, television wall brackets, bathroom drying rack, two glass shelves in the bathroom, and cabinet over a toilet. Those ordinary “improvements” were not a profit to Rosenblum worthy of unjust enrichment to him nor was it unconscionable.
Rosenblum’s motion to strike the fifth affirmative defense of constructive trust was stricken, as the affirmative defense was without merit as a matter of law.