Molokotos-Liederman v. Molokotos

Molokotos-Liederman v Molokotos 2024 NY Slip Op 31450(U) April 19, 2024 Supreme Court, New York County Docket Number: Index No. 654888/2023 Judge: Lyle E. Frank Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.

INDEX NO. 654888/2023 NYSCEF DOC. NO. 70 RECEIVED NYSCEF: 04/19/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. LYLE E. FRANK PART 11M Justice ----------------------------------------------------------------- ----------------X INDEX NO. 654888/2023 POL YXENI (LINA) MOLOKOTOS-LIEDERMAN, MOTION DATE 11/30/2023 Plaintiff, MOTION SEQ. NO. 001 - V -

THANASIS MOLOKOTOS, DIANE VARDAKAS MOLOKOTOS, HELEN STASSINOPOULOS MOLOKOTOS, DECISION + ORDER ON JAMES SPANOS, PENNY SPANOS MOTION

Defendant. ------------------------------------------------------------------- --------------X

The following e-filed documents, listed by NYSCEF document number (Motion 001) 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17,49,51,52,53,54,55,56,57,65 were read on this motion to/for DISMISSAL

This action arises out of allegations that plaintiff, as beneficiary of a trust, has suffered

damages based on the defendants' breach of their fiduciary duties, among other alleged acts of

misconduct 1.

Defendants James Spanos and Penny Spanos move to dismiss the complaint, pursuant to

CPLR § 321 l(a)(3), (4) and (7) or in the alternative, to remove the action to the New York

County Surrogate's Court pursuant to CPLR § 325(e). Plaintiff opposes the instant motion.

When considering a motion to dismiss based upon CPLR § 3211(a)(7), the court must

accept the alleged facts as true, accord the plaintiff the benefit of every possible favorable

inference, and determine whether the facts alleged fit into any cognizable legal theory. Leon v.

Martinez, 84 NY2d 83 [1994]. On a motion to dismiss the court "merely examines the adequacy

1 The Court notes that after oral argument of the instant motion and the other pending motion to dismiss, the parties have submitted letters. The Court has not reviewed those post argument submissions and they were not considered in rendering its decisions. 654888/2023 Motion No. 001 Page 1 of 8

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of the pleadings", the court "accept as true each and every allegation made by plaintiff and limit

our inquiry to the legal sufficiency ofplaintiff s claim." Davis v Boeheim, 24 NY3d 262,268

The complaint contains four causes of action against James and Penny in their capacities

as trustees: Count I, breach of fiduciary duty and constructive fraud, Count VI, mismanagement

of trust assets, Count VII, declaratory judgment, and Count VIII, equitable accounting.

Penny Spanos

Movants contend that the causes of action as against Penny are time-barred. Penny

became a trustee of the 2001 Trust on February 9, 2001. The January 29, 2015, amendment to

the 2001 Trust removed Penny as trustee. Thus, movants contend that the statute of limitations

for any claims against Penny as trustee of the 2001 Trust expired on January 29, 2018, or on

January 29, 2021, at the latest. The complaint alleges that Penny is being sued in her capacity as

a trustee of the 2001 Trust.

In opposition plaintiff contends "[r]ather, it stems from her role as de facto trustee for the

2015 Trust, in that she acted alongside James - whose correspondence she sends and with whom

she participates in phone calls - in allowing the Molokotos Defendants to defraud Lina."

Plaintiff contends that Penny's fiduciary duties rose from that context, not from her formal role

in connection with the 2001 Trust which also gives rise to the doctrine of equitable estoppel,

which tolls the running of the statute of limitations and renders the claims against Penny timely.

Where the parties have a fiduciary relationship that creates an obligation to inform the plaintiff

"of facts underlying the claim," equitable estoppel can toll the statute of limitations if the

defendant conceals those facts.

In support of this argument plaintiff cites Ganzi v Ganzi, 183 AD3d 433, 433-34 [1st

Dept 2020]. Ganzi however does not involve trusts or equitable estoppel, rather it involves

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allegations of breach of fiduciary duties to shareholders based on executing various licensing

agreements. Ganzi is distinguishable from the instant matter and plaintiff does not expand on the

basis for its reliance.

Plaintiff also cites to Nick, which stands, in part, for the proposition that when it is

defendant's own "acts of deception" that prevents the commencement oflitigation, there is a

question of fact as to whether the doctrine of equitable estoppel should apply to toll the statute of

limitations (Nick v Greenfield, 299 AD2d 172, 173 [1st Dept 2002]).

As to plaintiff's arguments regarding a de facto trustee, plaintiff has not cited to any legal

authority or factual allegations to support that contention. Plaintiff urges this Court to deem its

own lack of knowledge regarding the existence of the trust as wrongful conduct on behalf of the

trustees, specifically Penny, for the purposes of tolling the statute of limitations. There are,

however, no factual allegations to support the argument that equitable estoppel should apply, as

there is no allegation of misconduct by the trustee defendant that prevented plaintiff from

learning of the alleged wrongdoing. Rather plaintiff does not allege that Penny exercised control

over the assets of the 2015 Trust or made any substantive decisions concerning the 2015 Trust at

all.

Here, the Court finds that the complaint as against Penny Spanos is time-barred.

Moreover, there are insufficient factual allegations to invoke any doctrine tolling or extending

the statute of limitations for any causes of action as against Penny Spanos. Accordingly, the

complaint is dismissed in its entirety as against Penny Spanos.

The Court will now address each cause of action as alleged against James Spanos.

Breach of Fiduciary Duty and Constructive Trust

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In order to adequately plead a cause of action, plaintiff must allege the existence of a

fiduciary relationship, misconduct by the defendant and damages caused by the misconduct. See

Pokoikv Pokoik, 115 AD3d 428,429 [1st Dept 2014]. Pursuant to CPLR § 3016(b), where a

cause of action alleges breach of trust, "the circumstances constituting the wrong shall be stated

in detail".

The complaint alleges that James was "never appropriately or sufficiently involved in the

administration of the trusts" and either had no idea that the Molotokos defendants were misusing

the assets or was "complicit in the scheme". See NYSCEF Doc. 2, Complaint ,i 16. Further, the

complaint alleges that in 2022, James admitted that he had not been involved in the management

of the trusts for nearly 6 years. See id. at ,i 18. Plaintiff alleges that it was "apparent that James

[ ... ]had not actually taken any affirmative actions as Trustee. Id. at ,i 165. Nor, did James have

any signing authority or rights with respect to the real property assets held by the trust. Id. at ,i,i

177, 182.

At this stage, the Court finds that the complaint sufficiently alleges a cause of action as

against James for breach of fiduciary duty. The Court agrees that the allegations that James did

nothing and was otherwise complicit in the alleged misconduct of the Molotokos defendants

mishandling of trust assets are sufficient to survive the instant motion to dismiss.

Mismanagement of Trust Assets

Defendants seek to dismiss plaintiffs second cause of action for mismanagement of trust

assets because it is not a cognizable claim, and it is duplicative of the breach of fiduciary cause

of action.

In opposition, plaintiff contends that this is a distinct cause of action and cites to Will of

Mead, 90 Misc 2d 144, 147 [Sur Ct 1977]; Matter of Hahn, 62 NY2d 821 [1984] and an article

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to support this contention. Plaintiff contends that this cause of action is not duplicative of the

breach of fiduciary claims because additional allegations must be made and proven to recover,

unlike claims pursuant to breach of fiduciary duty. However, plaintiff does not expand upon that

statement to provide the additional allegations distinguishable from the breach of fiduciary duty

cause of action.

The Court finds that neither case cited by plaintiff, nor the article are persuasive or refute

defendants' prima facie showing that mismanagement of trust assets is not a viable cause of

action in New York and even assuming that it was is duplicative of the breach of fiduciary duty

claim. Accordingly, the sixth cause of action alleging mismanagement of trust assets is

dismissed.

Declaratory Judgment

Defendants contend that the complaint fails to state a cause of action as it is inappropriate

in the instant action. In opposition, plaintiff contends that this cause of action should not be

dismissed because the "need may arise for a judicial declaration". Plaintiff does not

substantively oppose defendants' prima facie showing that the relief plaintiff seeks is duplicative

of its cause of action seeking an accounting and the action pending in the Surrogates Court and is

not appropriate, see (Spitzer v Schussel, 48 AD3d 233,234 [1st Dept 2008]).

Accordingly, the seventh cause of action seeking declaratory judgment is dismissed.

Equitable Accounting

Defendants contend that this cause of action should be dismissed because plaintiff has

failed to adequately plead a cause of action for breach of fiduciary duty. As the Court has

previously found, the complaint sufficiently alleges facts to maintain that cause of action, as such

the Court does not find that an adequate basis to dismiss this cause of action.

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Defendants do not submit an alternative argument in support for the dismissal of this

cause of action, as such it survives the instant motion.

The Court declines to dismiss the instant action based on the pending action in

Surrogate's Court. Although the pending Surrogate's Court accounting relates to one named

defendant in this action, it is undisputed that the Molotokos defendants are not parties to that

action, therefore the claims asserted against them here are not duplicative of the pending action

and therefore dismissal is not appropriate.

This Court does however find that movants have established that it is appropriate to

remove the instant action to Surrogate's Court. In support of its removal argument defendants

rely on In re Estate ofBrandt, 81 AD2d 268 [1st Dept 1981] to support the argument that

although the Molotokos defendants are not trustees the Surrogates Court may still adjudicate the

claims asserted against them. In Brandt, the First Department held that the Surrogates Court

maintained jurisdiction over the claims asserted against the non-trustee defendants. The claims

there were similar to the claims asserted here, in that it is alleged that the defendants conspired or

as stated here were complicit, in a scheme that diverted trust assets. The First Department held

that "the Surrogate's Court should retain jurisdiction over the entire matter to provide a single

forum for resolution of the claims, inextricably interwoven, against both the [third-party

defendants] and the trustees." Id. at 278. Accordingly, it is hereby

ORDERED that defendants' motion to dismiss is granted in part in that the complaint is

dismissed in its entirety as against Penny Spanos as time-barred; and it is further

ORDERED that plaintiffs sixth cause of action alleging mismanagement of trust assets is

dismissed as against James Spanos; and it is further

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ORDERED that plaintiffs seventh cause of action seeking declaratory judgment is

dismissed; and it is further

ORDERED that the motion of James Spanos is granted and the remaining claims in this

action shall be removed to the Surrogate's Court of said county pursuant to CPLR 325 (e); and it

is further

ORDERED that, within 30 days from entry of this order, counsel for the plaintiff herein

shall serve a copy of this order with notice of entry upon the Clerk of this Court and shall contact

the staff of the Clerk to arrange for the effectuation of the transfer in an efficient manner; and it is

further

ORDERED that the Clerk shall transfer this action and all documents filed herein to said

Court; and it is further

ORDERED that such service upon the Clerk of the Court shall be made in accordance with

the procedures set forth in the Protocol on Courthouse and County Clerk Procedures for

Electronically Filed Cases (accessible at the "E-Filing" page on the court's website)]

; and it is further

ORDERED that the Clerk of this Court and the Clerk of the Surrogate's Court shall

coordinate the transfer of the documents in the file in this case so as to ensure an efficient transfer

and minimize insofar as practical the reproduction of documents, including with regard to

documents that may be in digital format.

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4/19/2024 DATE LYLE E. FRANK, J.S.C.

~ ~ CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION

□ DENIED □ GRANTED GRANTED IN PART OTHER

APPLICATION: SETTLE ORDER SUBMIT ORDER

□ CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE

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