In McDermott-Guber v. Estate of McDermott, parents deeded a one-half property interest in a vacant parcel to their daughter in 1986. The daughter and her husband began building a home on the property. According to the daughter, after her father died and left her mother as the sole owner of the remaining one-half interest, her mother asked her to revise the building plans to include a space for her; in return, her mother agreed to deed the remaining property interest to her daughter. The daughter did so, and construction was complete in 1996.
The mother resided in the home with her daughter and son-in-law until 2011. At that point, the mother obtained a domestic violence temporary restraining order against her daughter, and moved in with her son. Her daughter and son-in-law continued to live on the property.
In 2012, the daughter filed a quiet tile action against her mother and brother, alleging that she was the sole owner of the property. She alleged that her mother conveyed the remaining interest to her by an unrecorded deed dated in 1993, and that a 2011 deed conveying the interest to her brother was invalid.
Discovery revealed that, in 2001, the mother had her attorney prepare a deed (and later a corrective deed), both of which transferred her interest in the property to her daughter. The attorney retained the first of those deeds, and the mother gave her son the other deed to retain.
According to the mother, she never recorded or delivered the deed that would have given her daughter the remaining interest in the property, and she never intended it to be an inter vivos gift. Instead, the mother stated that she intended the deed to become effective on her death, to avoid inheritance taxes, but that she changed her mind and gifted the remaining property interest to her son because of her daughter’s mistreatment of her.
The mother and son moved for partial summary judgment, which was granted. The court ruled that the son owned an undivided one-half interest in the property, because there had been no delivery of the deed to the daughter, and no evidence of donative intent.
Next, the sister sought partition of the property, and credits for the costs of improving and maintaining the property over the years. On the issue of partition, the brother moved for summary judgment. The motion was granted in part: the trial judge ruled that partition credits could not be assessed against the brother before he took title to the property (the mother had died during the litigation, and her estate was substituted), and that the brother was entitled to credit for rental value of the property.
The parties then resolved the remaining issues, and final judgment was entered. The judgment provided that its enforcement would be stayed if either party appealed the interlocutory orders.
Thereafter, the son and the estate filed a motion seeking frivolous litigation sanctions. That motion was granted, although the amount awarded ($20,000) was a fraction of the amount claimed ($263,000).
On appeal, the Appellate Division affirmed the trial court’s orders, with the exception of the order for sanctions.
With regard to the summary judgment order declaring the brother to be the owner of the one-half property interest, the appellate court articulated the required three elements of an inter vivos gift:
First, there must be actual or constructive delivery; that is the donor must perform some act constituting the actual or symbolic delivery of the subject matter of the gift. Second, there must be donative intent; that is the donor must possess the intent to give. Third, there must be acceptance.
The appeals court disagreed with the trial court’s view that the proofs of intent had not been met, because the daughter and her husband submitted proof that, on several occasions, the mother had represented her intent to convey the one-half interest to the daughter.
Nevertheless, the appeals court agreed that the remaining two elements regarding an inter vivos gift had not been met, and that summary judgment in favor of the son was therefore appropriate. As to delivery, it was undisputed that neither deed had been delivered to the daughter, or that the mother had wanted the deeds to be delivered to her. The mother never relinquished control of her remaining half-interest in the property. In fact, the daughter was not even aware of those deeds until after the litigation commenced; consequently, the daughter was never in a position to accept the gift.
The appeals court also affirmed the partition orders, noting that a court may equitably reduce a tenant’s property interest based on expenditures made by the co-tenant, and that the occupying tenant could be required to give a credit for the value of his or her use and occupation. It agreed with the trial court that the son could not have been held responsible for partition credits prior to his ownership interest (although it could have been asserted against the mother’s estate).
However, the Appellate Division reversed the sanction award, finding that the trial court had abused its discretion on this issue: A grant of summary judgment without more does not support a finding of bad faith by the losing party. Because the frivolous litigation statute must be interpreted strictly against the applicant based on the principle that citizens are entitled to ready access to the judiciary,
When a frivolous litigation claim is based on the lack of a reasonable basis in law or equity, and the non-prevailing party is represented by an attorney who presumably advised the party to proceed, an award cannot be sustained unless the court finds that the party acted in bad faith in pursuing or asserting the unsuccessful claim.
The appeals court concluded that the sister’s claims had some legal and factual foundation, and that the brother had failed to establish that she acted in bad faith. Consequently, the fee award was reversed.
A copy of McDermott-Guber v. Estate of McDermott can be found here McDermott-Guber v. Estate of McDermott
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