Appellate Division Decides Case Of First Impression Regarding Joint Tenancy Issue

December 01, 2011

In Trotta v. Ollivier, the Appellate Division, Second Department, decided an issue of first impression in any New York State appellate court, to wit, whether the estate of a joint tenant may sue a surviving joint tenant to recover one-half of payments made by the decedent for the purchase and upkeep of property. The court answered this question in the negative.

The facts of the case, as alleged in the complaint, were not particularly remarkable. In 1992, the decedent, Susan Leone, and the defendant, Charles Ollivier, purchased real property as joint tenants with the right of survivorship. Thereafter, they lived together for a period of time as an unmarried couple.  From her own funds, Leone allegedly paid $90,000 toward the purchase price, a construction loan, and other closing costs and expenses, and thereafter paid $102,000 for the mortgage, $20,000 for property insurance, $11,000 for repairs, $2,500 for utilities, and $1,000 for replacement appliances. In total, Leone allegedly expended $226,500 from her own funds in connection with the property. Allegedly, Ollivier did not contribute to the purchase and carrying charges of the property or, if he did, his contributions were not equal to those of Leone. At no time did either Leone or Ollivier seek a partition of the property.

Leone died unexpectedly in 2008.  Subsequent to her death, the plaintiff, the executor of Leone’s estate, made mortgage and other payments on the property totaling $7,500.

The executor commenced an action against Ollivier in Supreme Court alleging unjust enrichment and seeking a judgment reimbursing the estate for one-half of the purchase price of the property and the carrying charges of the property, and full reimbursement of the $7,500 in carrying charges paid by the estate.

The trial court granted Ollivier’s pre-answer motion to dismiss the complaint for failure to state a cause of action, holding that the estate’s reimbursement claim did not survive Leone’s death, and that RPAPL 1201 — discussed below — was inapplicable. The Appellate Division reversed, agreeing that the complaint failed to state a cause of action as to any of the expenses paid by Leone prior to her death, but holding that the estate stated an unjust enrichment claim against Ollivier for reimbursement of the $7,500 paid post-death.

The court began its analysis by noting that Leone, while she was alive, could have sought to partition the property, effectively severing her joint tenancy with Ollivier, and in that regard could have sought an equitable adjustment of the interests she and Ollivier held in the property.  She never did so. The court further noted that “Leone, during her lifetime, was free to manage her finances and spend her money as she saw fit, even if, with the benefit of hindsight, her decision to purchase the subject property and hold title with Ollivier as a joint tenant, and to continue to pay its ongoing expenses after Ollivier moved to another address, inured to the financial benefit of Ollivier.” Thus, according to the court, the estate had no claim for unjust enrichment for reimbursement of Leone’s pre-mortem expenditures.

The court further rejected plaintiff’s argument that RPAPL 1201 provided the basis for a claim for reimbursement. That statute provides that “[a] joint tenant or a tenant in common of real property, or his executor or administrator, may maintain an action to recover his just proportion against his co-tenant who has received more than his own just proportion, or against his executor or administrator.” Despite a “paucity” of case law interpreting the statute, the court determined that RPAPL 1201 vests joint tenants and tenants in common, or their estates, with the right to recover monies “received” by a co-tenant that exceed his or her proportionate share; it does not extend the right of recovery to expenses “paid” by a tenant beyond his or her equitable share means.

Accordingly, the court held that no claim existed against Ollivier with respect to pre-death payments made by Leone.

The court reached a different determination with respect to the $7,500 the estate paid toward the property’s expenses after Leone’s death.  When those payments were made, ownership of the property had already passed to Ollivier by operation of law.  The estate, according to the court, had a valid claim for unjust enrichment in connection with those payments, as it would be “against equity and good conscience to permit Ollivier to retain the value of those payments.”