Kaprov v. Stalinsky

145 A.D.3d 869

44 N.Y.S.3d 123

2016 N.Y. Slip Op. 08509

Gala KAPROV, respondent,

v.Roman STALINSKY, et al., appellants.

Supreme Court, Appellate Division, Second Department, New York.

Dec. 21, 2016.

Jeffrey S. Schecter & Associates, P.C., Garden City, NY, for appellants.

Stark & Levoritz, P.C., Brooklyn, N.Y. (Yonatan S. Levoritz of counsel), for respondent.

MARK C. DILLON, J.P., THOMAS A. DICKERSON, JOSEPH J. MALTESE, and COLLEEN D. DUFFY, JJ.

Appeal by the defendants from stated portions of a judgment of the Supreme Court, Kings County (Eric L. Prus, J.), dated September 9, 2014. The judgment, inter alia, made an equitable distribution of the marital assets of Gala Kaprov and Roman Stalinksy, and directed Alla Stalinsky, as the executor of the estate of Boris Stalinsky, to transfer title to a certain Florida apartment to Gala Kaprov.

ORDERED that the judgment is affirmed insofar as appealed from, with costs.

Gala Kaprov (hereinafter the wife) and Roman Stalinsky (hereinafter the husband) were married in 1998. The wife commenced an action for divorce and ancillary relief on November 12, 2010.

The main assets of the marriage were a business known as Multi, Inc., held in the name of the husband, a condominium apartment in Manhattan held in the name of the husband (hereinafter the Manhattan apartment), and a Mitchell–Lama cooperative apartment in Brooklyn held in the name of the wife (hereinafter the Brooklyn apartment). Also at issue was a condominium apartment located in Bal Harbor, Florida (hereinafter the Florida apartment). Title to the Florida apartment was held in the name of the husband's father, Boris Stalinsky (hereinafter Boris).

Several days after initiating the action for divorce, the wife commenced an action against Boris to impose a constructive trust on the Florida apartment. The wife alleged in her complaint that in April 2002, the husband provided marital funds to Boris to purchase the apartment and thereafter expended more than $150,000 in marital funds to make improvements on it and paid all of the carrying charges. The complaint alleged that these funds were expended in reliance on a promise that the husband and wife were the true owners of the apartment and that Boris held title to the apartment only for tax purposes. According to the wife, since 2002, the apartment had been used solely by the husband and the wife as a vacation home. However, beginning in April 2010, due to marital difficulties, the husband would no longer allow the wife access to the apartment. He thereafter told her that she would not receive any money from the property. Boris also insisted that the wife had no rights in the apartment. The wife claimed that Boris would be unjustly enriched if he were permitted to retain the property, and she therefore asked the Supreme Court to impose a constructive trust on the apartment and to direct Boris to deed his interest in the apartment to the husband and the wife.

By order dated February 18, 2011, the Supreme Court consolidated for all purposes the divorce action and the action to impose a constructive trust on the Florida apartment. Boris died during the course of the consolidated action. His wife, Alla Stalinsky, as the executor of his estate (hereinafter Alla), was substituted for Boris as a defendant.

In an order of reference dated January 4, 2013, the Supreme Court referred the matter to a Referee to hear and determine the issues of equitable distribution, spousal maintenance, counsel fees, and the constructive trust. In the same order of reference, an issue related to a special proceeding involving the Manhattan apartment was referred to the Referee to be tried jointly with the consolidated action. The special proceeding is not at issue on this appeal.

The Referee held a hearing, during which the parties stipulated that the Referee would determine the wife's application for counsel fees on written submissions. In her application, the wife sought an award of $377,835.13 in counsel fees pursuant to Domestic Relations Law § 237, in addition to $25,000 that had been previously awarded to her.

The Referee issued a decision, concluding that the evidence adduced at the hearing supported the imposition of a constructive trust on the Florida apartment and that, since the apartment was purchased after the marriage, it was a marital asset subject to equitable distribution. The Referee also decided, inter alia, that the Manhattan apartment, the Brooklyn apartment, Multi, Inc., and two other businesses in which the Referee found the husband to have held an interest, were also marital assets. The Referee decided that the wife was entitled to 70% of the marital assets and awarded her a credit for the husband's wasteful dissipation of marital assets, maintenance in the amount of $3,000 per month for seven years, effective September 1, 2014, and $125,000 in counsel fees. A judgment dated September 9, 2014, incorporated the decision. The husband and Alla appeal from stated portions of the judgment.

Contrary to the husband's contention, the wife presented evidence which established the elements of a constructive trust. " ‘[A] constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him [or her] into a trustee’ " (Simonds v. Simonds, 45 N.Y.2d 233, 241, 408 N.Y.S.2d 359, 380 N.E.2d 189, quoting Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 386, 122 N.E. 378 ). " ‘The elements of a constructive trust are (1) a fiduciary or confidential relationship; (2) an express or implied promise; (3) a transfer in reliance on the promise; and (4) unjust enrichment’ " (Ning Xiang Liu v. Al Ming Chen, 133 A.D.3d 644, 644, 19 N.Y.S.3d 565, quoting Diaz v. Diaz, 130 A.D.3d 560, 561, 13 N.Y.S.3d 455 ; see Simonds v. Simonds, 45 N.Y.2d at 242, 408 N.Y.S.2d 359, 380 N.E.2d 189 ; Sharp v. Kosmalski, 40 N.Y.2d 119, 121, 386 N.Y.S.2d 72, 351 N.E.2d 721 ). "[A]s these elements serve only as a guideline, a constructive trust may still be imposed even if all of the elements are not established" (Marini v. Lombardo, 79 A.D.3d 932, 933, 912 N.Y.S.2d 693 ). "Thus, although the elements of a constructive trust must be proved by clear and convincing evidence (see Diaz v. Diaz, 130 A.D.3d at 561, 13 N.Y.S.3d 455 ), ‘[t]he constructive trust doctrine is given broad scope to respond to all human implications of a transaction in order to give expression to the conscience of equity and to satisfy the demands of justice’ " (Ning Xiang Liu v. Al Ming Chen, 133 A.D.3d at 645, 19 N.Y.S.3d 565, quoting Iwanow v. Iwanow, 39 A.D.3d 476, 477, 834 N.Y.S.2d 251 ).

Here, evidence adduced at the hearing showed that the wife was related to the husband and Boris through marriage and that Boris allowed the Florida apartment to be used solely by the husband and wife as their vacation home for many years. Therefore, the first element for the imposition of a constructive trust was satisfied (see Henning v. Henning, 103 A.D.3d 778, 780, 962 N.Y.S.2d 189 ; Marini v. Lombardo, 79 A.D.3d at 933–934, 912 N.Y.S.2d 693 ; Reiner v. Reiner, 100 A.D.2d 872, 874, 474 N.Y.S.2d 538 ). The wife also satisfied the second element by demonstrating the existence of an implied promise that Boris was holding title to the Florida apartment for purposes convenient to the husband and that the apartment belonged to the husband and wife (see Sharp v. Kosmalski, 40 N.Y.2d at 122, 386 N.Y.S.2d 72, 351 N.E.2d 721 ). She also demonstrated that, in reliance on that implied promise, marital funds were used to purchase the apartment and to make renovations costing more than $150,000 (see Ning Xiang Liu v. Al Ming Chen, 133 A.D.3d at 645, 19 N.Y.S.3d 565 ; Marini v. Lombardo, 79 A.D.3d at 934, 912 N.Y.S.2d 693 ; Eickler v. Pecora, 12 A.D.3d 635, 636, 785 N.Y.S.2d 126 ). Furthermore, the wife demonstrated that a constructive trust was necessary " ‘to satisfy the demands of justice’ " (Simonds v. Simonds, 45 N.Y.2d at 241, 408 N.Y.S.2d 359, 380 N.E.2d 189, quoting Latham v. Father Divine, 299 N.Y. 22, 27, 85 N.E.2d 168 ). Therefore, the Referee properly decided that a constructive trust should be imposed on the Florida apartment and that it was a marital asset subject to equitable distribution.

The husband contends that this determination was erroneous as it was largely based upon the testimony of the wife and her friend, who were unworthy of belief. However, " ‘[t]he credibility determinations of a referee are entitled to deference on appeal, since the referee had the opportunity to see and hear the witnesses' " (S. Nicolia & Sons Realty Corp. v. A.J.A. Concrete Ready Mix, Inc., 137 A.D.3d 994, 995, 30 N.Y.S.3d 636, quoting Tihomirovs v. Tihomirovs, 123 A.D.3d 808, 809, 998 N.Y.S.2d 445 ; see Contarino v. North Shore Univ. Hosp. at Glen Cove, 13 A.D.3d 571, 572, 786...