Daughter Alleges Mother and Sister Breached Oral Agreement to Share Account Proceeds

Court Considers If Sibling Improperly Exercised Power of Attorney/Violated GOL 5-1505

In 2011, Claire Pare allegedly entered into an oral agreement with her mother, Doris Pare. Pursuant to the terms of the alleged oral agreement, in exchange for Claire agreeing not to sue her mother over Roth accounts held by her deceased father, Doris  agreed to pay Claire an amount equal to any amounts she paid to Pare’s siblings from certain accounts. The oral agreement, in effect, allegedly required that Doris list Claire as a beneficiary on any transfer upon death accounts to the extent her siblings were beneficiaries.

After learning that Doris had paid each of her siblings at least $10,000 annually for several years while not distributing an equal amount to her, Claire commenced related actions, which were subsequently joined for purposes of discovery and trial. In Action No. 1, Claire sought to recover damages against Doris  for her breach of the alleged oral contract. In Action No. Claire sought damages against her sister, Janice Pare Shirley, who was Doris’ attorney-in-fact by a power of attorney executed by their mother in 2017, for tortious interference with contract, fraud, and violation of General Obligations Law § 5-1505.

Doris and Janice moved to dismiss the complaints in both actions. Supreme Court granted that branch of the motion which was to dismiss the cause of action in Action No. 1 to recover damages for breach of contract with respect to the alleged oral agreement as violating the statute of frauds and also granted that branch of the motion which was to dismiss the cause of action in Action No. 2 alleging tortious interference with contract because there was no valid oral agreement.   The Court also granted those branches of the motion to dismiss the causes of action in Action No. 2 for fraud and violation of GOL § 5-1505 for failure to state a cause of action. By judgments upon the order, the complaints were dismissed. Claire appealed. While the appeal was pending, Doris died, and Marianne Aalbue and Janice, as executors of the mother’s estate, were substituted for the mother in Action No. 1.

To the extent that Claire alleged that Doris breached the oral agreement by failing to list her as a beneficiary on the mother’s transfer upon death accounts, that portion of the breach of contract cause of action was properly dismissed. An agreement to make a testamentary disposition of any kind must be in writing and signed by the party to be charged. The complaint in Action No. 1 did not allege the existence of an enforceable written agreement between Claire and Doris– so the complaint failed to state a cause of action to recover damages for breach of contract predicated upon Doris’ failure to list Claire as a beneficiary on her transfer upon death accounts, a kind of testamentary disposition.

As to the remainder of the breach of contract cause of action, the statute of frauds concerns those agreements which, by their terms, have absolutely no possibility in fact and law of full performance within one year.  The portion of the alleged oral agreement that required Doris to make payments to Claire in amounts equal to those payments the mother made to the siblings was capable of an indefinite continuance– but it could have been fully performed within a year of its making. Accordingly, Supreme Court should not have granted that branch of the  motion which was to dismiss the entire breach of contract cause of action as violating the statute of frauds.

Doris and Janice contended, in effect, that the entire breach of contract cause of action in Action No. 1 should have been dismissed for failure to state a cause of action.

The essential elements of a cause of action to recover damages for breach of contract are the existence of a contract, the plaintiff’s performance pursuant to the contract, the defendant’s breach of its contractual obligations, and damages resulting from the breach. Generally, a party alleging a breach of contract must demonstrate the existence of a contract reflecting the terms and conditions of the purported agreement. Where the terms of an alleged oral agreement are vague or indefinite, they will not support a cause of action alleging breach of contract. Nevertheless, the terms of a contract do not need to be fixed with absolute certainty to give rise to an enforceable agreement.

Here, with respect to the portion of the alleged oral agreement requiring Doris to pay Claire an amount equal to any amounts she paid to the  siblings, the complaint sufficiently alleged all of the essential elements of a breach of contract cause of action, including the material terms of the alleged oral agreement, necessary to survive a motion to dismiss. So Supreme Court should not have dismissed the breach of contract cause of action against Doris, except insofar as that cause of action was predicated upon the mother’s failure to list Claire as a beneficiary on her transfer upon death accounts.

The elements of a cause of action alleging tortious interference with contract are: (1) the existence of a valid contract between the plaintiff and a third party, (2) the defendant’s knowledge of that contract, (3) the defendant’s intentional procurement of a third-party’s breach of that contract without justification, and (4) damages. Here,  Supreme Court properly dismissed so much of the tortious interference with contract cause of action in Action No. 2 as was predicated upon the mother’s failure to list Claire as a beneficiary on the transfer on death accounts, as that portion of the alleged oral agreement was unenforceable. However, assuming that the facts alleged in the complaint were true and according Claire the benefit of every favorable inference, the complaint sufficiently sets forth a cause of action sounding in tortious interference with contract, alleging that she sustained damages when Janice intentionally and improperly interfered with the portion of the alleged oral agreement requiring Doris to pay Claire an amount equal to any amounts the mother paid to her siblings, and aided in her breach of that portion of the agreement. Thus, Supreme Court should not have dismissed so much of the tortious interference with contract cause of action as was predicated upon the portion of the oral agreement that required  Doris to pay Claire an amount equal to her siblings.

And Supreme Court should not have dismissed the cause of action in Action No. 2 alleging violation of GOL § 5-1505 which governs the use of a power of attorney. The complaint alleged that Claire was listed as a beneficiary on some of Doris’ transfer upon death accounts in 2012, and further alleged that Janice misused the authority provided to her in her mother’s 2017 power of attorney to remove Claire as a beneficiary from those accounts. Doris and Janice failed to provide evidence that conclusively demonstrated that Claire had no cause of action against Janice for misusing the power of attorney.

But Supreme Court properly dismissed the cause of action in Action No. 2 to recover damages for fraud for failure to state a cause of action. The elements of a cause of action sounding in fraud are a material misrepresentation of an existing fact, made with knowledge of the falsity, an intent to induce reliance thereon, justifiable reliance upon the misrepresentation and damages. Where a cause of action is based on a misrepresentation or fraud, the circumstances constituting the wrong must be stated in detail. Here, Claire’s allegations in support of the cause of action alleging fraud consisted of conclusory assertions, and thus, were insufficient to state a cause of action.

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