This is an action brought pursuant to Section 81.43 of the Mental Hygiene Law seeking inter alia an accounting and the recovery of certain funds and property alleged to have been wrongfully taken or withheld from the guardian's ward, an incapacitated person.

The claim arises from the sale of the ward's primary residence, which occurred on December 5, 2005.

Petitioner is the guardian of the property and person of Vita Vaughan, now deceased. Respondents are Golan Developers Corp., the purchaser; Samiel Hanasab and Yuval Golan, both experienced real estate developers and principals of the corporation; New Millennium Abstract Title Corp and Linda Lynch, its principal; Robert Gelman, an attorney who prepared certain papers subsequent to the closing; and Yvette Dudley, an attorney who represented Golan Developers Corp. in a related action against Ms. Vaughan for specific performance.^[FN1]

In seeking to recover the property or its value, together with punitive damages, the guardian alleges that (1) the respondents withheld funds due Vaughan from the sale of her house, and (2) joined together in a fraud to deprive her of her property, resulting in their unjust enrichment.

A nonjury trial was held commencing on May 18, 2009, and continuing on May 19, 20, 21, 22 and June 1, 2009.

Based on the credible testimony and documentary evidence, I make the following Findings of Fact and Conclusions of Law.

Vita Vaughan was the owner of certain residential property located at 27 Chester Court, Brooklyn, New York, which served as her primary residence. It appears that by the fall of 2005, Ms. Vaughan was elderly and in poor health, and had fallen in arrears on her financial obligations.

Representatives of Golan Developers Corp. previously had contacted Ms Vaughan with an offer to purchase the property, which offer she had rejected. However, by late September she had agreed to the sale, and on the evening of Thursday, September 29, 2005, respondent Hanasab drove Ms. Vaughan to the Golan Developers office in Queens, New York, There she entered into a contract of sale for the property. Also present at the office that night was Linda Lynch on behalf of [*2]Millennium Abstract Title Co., the title company that later would issue a title insurance policy to the purchaser. Ms. Lynch subsequently attempted to file the contract and related ACRIS documents with the City of New York, but these were rejected due to improper verification.(See Court Exhibit 5H). Ms. Vaughan was not represented by counsel at the contract signing.^[FN2]

The contract recited the purchase price as $250,000. Although neither the contract nor the subsequent documents indicate that the property was being sold subject to the outstanding mortgage, Ms. Vaughan was verbally advised that Golan Developers would satisfy the outstanding mortgage for her.^[FN3]

Two business days later, on October 3, 2005, Ms. Vaughan attempted to rescind the contract of sale. In response, Golan Developers hired Yvette Dudley Esq., who filed a lis pendens against the property and commenced an action for specific performance of the contract on Friday, October 7, 2005. It appears that Ms. Vaughan did not consult an attorney when that action was commenced. (The action subsequently was discontinued on December 23, 2005, following transfer of title to Golan Developers Corp).

On December 5, 2005, Hanasab drove Ms. Vaughan to the offices of Millennium Abstract Title Corp. where the closing took place. Present were Ms. Vaughan and respondents Golan Developers Corp., Hanasab, Golan (by telephone), New Millennium Abstract Title Corp., and Lynch. Vito Giannola, Esq.had prepared the deed and recording documents for the transaction on behalf of Millennium Abstract Title Corp.. Ms. Vaughan was not represented by counsel.

Ms. Vaughan signed a Bargain and Sale Deed transferring title to Golan Developers for $250,000. Respondent Lynch notarized her signature.

Ms. Vaughan received $10,000 of the purchase price at the closing. However, it is undisputed that Golan Developers retained the balance of the proceeds, allegedly at Ms. Vaughan's request pending her resolution of unrelated family problems. In addition, Golan Developers Corp., agreed to pay the then-outstanding balance on the mortgage, which eventually amounted to $45,903.85 (see paragraphs 11and 12 below).

On December 15, 2005, Ms. Vaughan was again brought to the Queens building where Golan Developers had its offices, this time to the office of Robert Gelman, Esq. She was not represented by counsel. At the direction of Golan Developers, respondent Gelman prepared a note and mortgage from Golan Developers Corp. to Vita Vaughan, together with the personal guarantee of respondent Hanasab. However, this note and mortgage were never filed with the County Clerk, and have not been satisfied to date.

Respondent Golan Developers Corp. made no payments on the underlying mortgage held by the first mortgagee until January 30, 2006, when it tendered a check for $2,353.81 to the mortgagee's service company. The memo line on the check reads "27 Chester Court (Vita Vaughan)."Although it took no further steps to satisfy the outstanding first mortgage, on or about May [*3]23, 2006, Golan Developers did commence an eviction proceeding against Ms. Vaughan, who apparently had continued to reside at the premises.^[FN4]

A week later, the first mortgagee commenced a foreclosure action against Ms. Vaughan and Golan Developers Corp. in Kings County Supreme Court.^[FN5] The complaint in that action alleged that Ms. Vaughan had failed to make payments under the note and first mortgage, commencing with her March 1, 2006 payment. The default cited occurred three months after Vita Vaughn had conveyed title. The court-appointed referee in that action later determined that $39,055.68 was due the first mortgagee as of September 30, 2006.

Ms. Vaughan was admitted to the hospital in October, 2006, and later was transferred to a nursing home. The premises apparently remained unoccupied during her absence. Vita Vaughan lay non-responsive in a nursing home bed when a Guardian was appointed for her by this Court on May 2, 2007. Suffering from advanced dementia, unable to feed herself, Ms. Vaughan had been at the nursing home for six months following a hospital stay of nearly six weeks in October and November of 2006. Prior to the hospitalization, Ms. Vaughan resided in her home at 27 Chester Court, Brooklyn, New York. She was found there on October 12, 2006, incoherent and disoriented, with no food in the house. Thereupon, she was brought to the emergency room of Kings County Hospital and diagnosed as suffering from dementia, hypertension and diabetes. Ms. Vaughan had also been physically abused and financially exploited by her family and others.

Golan did not tender payment of the balance of the mortgage principal for more than a year after the closing. On March 12, 2007 Mr. Gelman forwarded a check to the mortgagee "on behalf of the mortgagor (Vita Vaughan)" in the amount of $45,903.85. (See Court Exhibit 3A., Letter to Pay-Off Department).

After being appointed temporary guardian of the person and property of Ms. Vaughan, Cara Buonicontri began an examination of her ward's finances, including the circumstances surrounding the sale of her home to Golan Developers Corp. Upon authorization of Golan Developers, attorney Gelman forwarded various documents concerning the transaction to her on May 10, 2007.

At about this same time and without advising the guardian, Golan Developers was in negotiation for the sale of the subject premises.

By Order and Judgment dated July 30, 2007, Cara Buonicontri was appointed the permanent guardian of the person and property of Vita Vaughan. Based on her investigation of Ms. Vaughan's finances, she then commenced this action seeking inter alia recovery of the property and other assets of Ms. Vaughan. Apparently still unaware of the potential sale, the guardian took no steps to encumber the property with a lis pendens.

On September 11, 2007, Golan Developers sold the premises at 27 Chester Court to John Cooney and Lenore Cooney for $697,000. As noted, the transaction was conducted without the guardian's knowledge and in the absence of a lis pendens.

Thanks to the efforts of doctors, nursing home staff and her devoted guardian, Cara [*4]Buonincontri, Vita Vaughan's condition improved and she survived until June of 2009, when she expired just a few days after the trial of the within Turnover Proceeding. Vita Vaughan was never able to appear in Court but her interests were zealously protected by her guardian and counsel. Their success in this proceeding is circumscribed, however, by the limits of the available evidence and the law.

Apparently unable to secure testimony that Ms. Vaughan's dementia existed a year prior to her hospitalization, her Guardian conceded at the outset of the Turnover Proceeding trial that lack of capacity was not in issue. Instead, the Guardian's position was that Ms. Vaughan was the victim of a fraud when she contracted for the sale of 27 Chester Court to the respondent, Golan Developers Corporation for barely half of its fair market value in the fall of 2005. Unrepresented by counsel, Ms. Vaughan agreed to sell her home for $250,000.

An independent appraisal of the property ordered by the Court valued the premises at $450,000 as of December 7, 2005, well above Golan Developers's purchase price of $250,000, and well below the price paid by the Cooneys.^[FN6] As set forth herein, the Court credits the testimony of the appointed appraiser that the property was worth $450,000. at the time of the transfer in 2005. As set forth above, the property was later sold by Golan Developers to the Cooneys, bona fide purchasers for $697,000. in the summer of 2007. While Golan performed renovations to the property prior to re-sale the court rejects respondents contention that the property was a shell with "no sheet rock, not even walls, no roof ... full of garbage" in 2005, a point in time when their appraiser testified that it was worth $270,000. Nonetheless, a signatory to a contract is "conclusively presumed to know the contents [of the writing] and to assent to them", see Imero Fiorentino Disors v. Green 85 AD2d 419, 420. Moreover, a necessary element of a cause of action in fraud is justifiable reliance. Regarding the contract sale price of $250,000., "[i]f the facts represented are not matters peculiarly within the party's knowledge, and the other party has the means available to him of knowing, by the exercise of ordinary intelligence, the truth or real quality of the subject of the representation, he must make use of those means, or he will not be heard to complain that he was induced to enter into the transaction by misrepresentations", see Danann Realty Corp. v. Harris, 5 NY2d 317, 184 NYS2d 599, 157 NE2d 597; Schumaker v. Mather, 133 NY 590, 596, 30 NE 755; Long v. Warren, 68 NY 426.

There is no question that Vita Vaughan made a "bad deal" when she contracted to sell her home to Golan for $250,000. The appraisal credited by the Court placed the value of the land alone at $224,000. The fact that Ms. Vaughan was facing imminent foreclosure, had a tenant and was relieved of paying any closing costs by the contract does not ordinarily equate to a 45% discount off fair market value. Upon the evidence presented, however, the Court is unable to conclude, by the

requisite standard of clear and convincing proof, that Vita Vaughan was the victim of a fraud perpetrated by the Respondents. That she was taken advantage of, there is no doubt, but in the absence of proof of lack of capacity, the actual value of Ms. Vaughan's home at the time that she agreed to sell it is knowledge that she must be charged with being able to acquire.

Golan Developers Corp. retains the balance of the proceeds from the December 5, 2005 sale.

[*5]Section 81.43 of the Mental Hygiene Law provides that if it appears that the guardian is entitled to possession of certain property wrongfully taken or withheld from the ward, the Court shall direct delivery thereof to her, or if the property shall have been diverted or disposed of, the Court shall direct payment of the proceeds or value of the property so diverted.

The burden of proof with respect to the alleged conversion rests with the guardian, as petitioner. Here, that requires that she establish not just that Ms Vaughan entered into a bad deal, but that the property was wrongfully taken.

As a general rule, however, no matter how hard the bargain, a court will not deprive it of its validity without evidence of fraud or deception. A corollary to this general rule has developed in instances in which a bargain is so one-sided or unreasonable as to be unconscionable under the circumstances existing at the time of its making, for instance, in a situation involving poor persons or otherwise disadvantaged victims of sharp practices.

In the absence of any medical or psychological testimony establishing that Ms. Vaughan was under a disability that prevented her from making a reasoned judgment, including whether to retain the services of an attorney at any point during the transaction, petitioner has failed to establish that she was incapable of making a reasoned decision and have failed to prove fraud.

Nor can it be said that the sale price was unconscionable as a matter of law.

However, petitioner has established that respondents Golan Developers, Samiel Hanasab and Yuval Golan, having obtained property from Vita Vaughan, converted that property to their own use without compensating her, and that they (Golan Developers, Samiel Hanasab and Yuval Golan) breached their obligation to timely satisfy the first mortgage.

Accordingly, the Court determines that the fair market value of the property at the time of the sale was at least $450,000, subject to a first mortgage; that the purchase price of the property on September 29, 2005 was $250,000, significantly less than its appraised value; that purchaser breached its obligation to satisfy the first mortgage in a timely manner; that the failure of purchasers to pay down the balance of the first mortgage in a timely manner resulted in additional interest, costs and attorneys fees to both the mortgagee and the mortgagor, culminating in the initiation of and eventual settlement of a foreclosure action in Kings County in 2007 in which Vita Vaughn was named a party even though she had conveyed her interest in the premises months earlier.

As set forth above, the default cited by Net Bank in the foreclosure proceeding took place in March of 2006 after Golan Developers had taken title from Vita Vaughn and assumed her obligations under the mortgage. Interest and costs accruing after Golan took title on December 5, 2005 were their responsibility. The determination by the Court referee that $39,055.68 was due Net Bank as of September 30, 2006 establishes that the figure owed as of the date of transfer from Vaughn to Golan ten months earlier was certainly lower, but in the absence of evidence of the precise figure, the Court must utilize that amount as a credit towards the sale price. Golan will also be credited $10,000. towards the $250,000. as a result of their payment upon the deed transfer. Although a payment of $2,000. is claimed for a down payment upon the contract signing, this will not be allowed as there is no credible evidence of such a payment. The down payment, to be held in escrow pursuant to the contract, is not acknowledged as received on the line of the contract provided for that purpose.

Accordingly, the Court determines that Golan Developers is credited with a total of $49,055.68 towards the purchase price, leaving a balance of $200,944.32 due to the Guardian of Vita [*6]Vaughn. The rate of interest set forth in the Note, 3%, shall accrue in favor of petitioner from December 5, 2005, the date of conveyance of title.

The CPLR provides that prejudgment interest "shall be recovered upon a sum awarded because of a breach of performance of a contract, or because of an act of omission depriving or otherwise interfering with . . . possession or enjoyment of property" (CPLR 5001(a). In addition to a cause of action founded on breach of contract, "causes of action such as fraud, breach of fiduciary duty, conversion and unjust enrichment qualify for the recovery of prejudgment interest under this section" (Miot v Miot, 24 Misc 3d 1244(A) [Sup Ct 2009]; see, e.g. Eighteen Holding Corp v Drizin, 268 AD2d 371 [1st Dept 2000]).

Accordingly, it is

ORDERED that petitioner shall recover of respondents Golan Developers Corp., Samiel Hanasab and Yuval Golan the amount of $200,944.32, together with interest at a rate of 3% per annum from December 5, 2005 and it is further

ORDERED that causes of action against all other respondents are hereby dismissed.

Settle Judgment.

ENTER

Dated:January 6, 2010__/s/___________________________

Hon. Thomas P. Aliotta, J.S.C.