The Court of Appeals Takes a Look at an Undue Influence Claim from a Non-Jury Trial

The COVID-19 pandemic has forced litigants to wrestle with the dilemma of waiting for a jury trial or moving forward more expeditiously by way of a bench trial.  Recently, the Appellate Division, Fourth Department, and the Court of Appeals passed on the issue of undue influence arising out of a Surrogate’s Court bench trial.

In Matter of Kotsones, following a non-jury trial, the Surrogate’s Court denied a decedent’s will probate, and granted a petition to invalidate the decedent’s lifetime trust and certain lifetime real estate transactions.  The Surrogate’s Court determined that the will, trust, and real estate transactions, all part of the decedent’s estate plan, were the product of undue influence.  The Appellate Division reversed and the Court of Appeals affirmed.  The case provides a helpful summary of the law applicable to claims of undue influence, and New York appeals courts’ power on appeals from non-jury trials.

The case turned in large part on the issue of whether the alleged undue influencers were in a confidential relationship with the decedent.  The Appellate Division reiterated the well-settled rule that where a confidential relationship exists between the beneficiary and the decedent, an inference of undue influence will arise, and require the beneficiary to come forward with an explanation of the circumstances of the transaction, to demonstrate that it was fair and free from undue influence.

The Surrogate’s Court held that the petitioner alleging undue influence had met his initial burden of establishing the existence of the confidential relationship between the alleged undue influencers and the decedent.  The Appellate Division disagreed, observing that the hallmark of a confidential relationship is inequality in power and dealing.  The Appellate Division found that while the record established that the alleged undue influencers held a position of trust with decedent, and assisted the decedent with her finances, that decedent was actively and personally involved in managing her own financial affairs, and plainly stated her motives for her actions.  The Court held that under these circumstances, the petitioner failed to meet his initial burden of establishing that the relationship of the alleged undue influencers with the decedent was of such an unequal or controlling nature as to give rise to an inference of undue influence.

With no inference of undue influence, the Appellate Division reiterated that the heavy burden of proving undue influence requires a showing of the exercise of a moral coercion, which restrained independent action and destroyed free agency, or which, by importunity that could not be resisted, constrained the testator to do that which was against his or her free will.  The Appellate Division agreed with the trial court in finding that the alleged undue influencers wanted to benefit from decedent’s estate, and that one of them assisted decedent in preparing the estate plan and effectuating the transactions in question.  The Appellate Division held that “the relevant inquiry, however, is not what [the alleged undue influencers] may have wanted, asked for, or facilitated, but rather whether decedent’s free will, independent action, and self-agency were overcome by their conduct.”

According to the Appellate Division, the petitioner simply did not carry the heavy lift of his burden to prove undue influence.   The Appellate Division found that the record reflected that the decedent played an affirmative role in effecting the disputed transactions based on her stated personal motives, and that there was no indication that she, at any relevant time, lost her free will or agency.  Among the facts that the Appellate Division found compelling in reaching its conclusion was that the decedent had direct conversations with her attorney, instructing him to revise her estate plan, and explaining her motives for her desired changes.  The court also found it relevant that numerous non-beneficiaries established the decedent’s capacity and the decedent’s active management of her own affairs during the relevant time frame (albeit with the assistance of one of the alleged undue influencers).

The Court of Appeals affirmed the Appellate Division.  However, the Hon. Jenny Rivera dissented.  According to the dissent, the Appellate Division’s decision was predicated largely on trial testimony that the decedent participated in the contested transactions and revisions to her estate plan.  But the dissent looked at other testimony in the record, which suggested that the decedent’s participation was merely the result of the alleged undue influencers’ coercive influence.  The dissent’s view was that the Surrogate, who observed the trial testimony first hand and had the opportunity to see and hear the witnesses and assess their demeanor, was in a better position to assess credibility.

While it is impossible to know how the case would have been decided if it were tried before a jury, the standard of review would have been different on appeal.   Where the Appellate Division concludes that jury has made erroneous factual findings, the Appellate Division must order new trial, since it does not have power to make new findings of fact in an appeal arising from a jury verdict.  In non-jury cases, however, the Appellate Division does have power to make new findings of fact and change the verdict. Litigants should, of course, consider this among many other factors when deciding whether to wait or to proceed to a bench trial under the current circumstances.