Hersko v Hersko
Attorneys and Parties
Brief Summary
A family real-estate and loan dispute over enforcement of an alleged oral agreement involving repayment of $700,000 and possible transfer of a Brooklyn condominium.
The Supreme Court, Kings County, denied the defendants' motion for summary judgment dismissing the second amended complaint, allowing both the breach of contract claim and the constructive trust claim to proceed.
The appellate court overturned the denial of summary judgment only as to the breach of contract cause of action and dismissed that claim. It left intact the denial of summary judgment on the constructive trust claim.
The alleged oral repayment agreement was unenforceable under General Obligations Law § 5-701(a)(1) [an oral agreement is void if, by its terms, it cannot be performed within one year], and the alleged promise to convey the condominium was barred by General Obligations Law § 5-703 [the statute of frauds requiring contracts concerning real property to be in writing, subject to an equitable part-performance exception]. The plaintiff failed to show partial performance unequivocally referable to the real-property agreement. But the constructive trust claim, an equitable remedy not subject to the statute of frauds, was not shown to be untimely.
Background
Barry Hersko sued his nephew Morris Hersko and Morris's wife, Sara G. Hersko, alleging that he entered into an oral agreement with them under which he loaned them $700,000. In return, the defendants allegedly promised to pay him $100,000 in 24 monthly installments and then either repay the remaining loan balance by 2017 or convey title to a Brooklyn condominium to him. The plaintiff alleged that the defendants failed to make the required payments, failed to repay the balance by the agreed date, and failed to transfer the property.
Lower Court Decision
The Supreme Court, Kings County, denied the defendants' summary judgment motion insofar as it sought dismissal of the second amended complaint. The defendants had argued that the breach of contract claim was barred by the statute of frauds and that the complaint was time-barred.
Appellate Division Reversal
The Appellate Division modified the order by granting summary judgment dismissing the breach of contract cause of action. It held that the alleged oral loan-repayment terms could not be performed within one year and therefore were void under General Obligations Law § 5-701(a)(1). It also held that any oral agreement to convey the condominium was barred by General Obligations Law § 5-703, and the plaintiff failed to raise a triable issue on part performance. However, the court affirmed denial of summary judgment on the constructive trust claim because the defendants failed to establish that claim was untimely. Under CPLR 213(1) [six-year statute of limitations for actions not otherwise specifically prescribed, including constructive trust claims], the claim accrued in 2017 when the defendants allegedly defaulted on the obligation to convey title.
Legal Significance
The decision reinforces that in New York, oral agreements with terms extending beyond one year are unenforceable under the statute of frauds, and oral agreements concerning conveyance of real property generally must be in writing. It also highlights that the part-performance exception is narrow and requires conduct unequivocally referable to the alleged agreement. At the same time, the case confirms that a constructive trust claim remains available as an equitable remedy even where contract enforcement fails under the statute of frauds, so long as the claim is timely.
A plaintiff cannot enforce an unwritten long-term repayment agreement or an oral promise to transfer real property without a qualifying writing or unequivocal part performance, but may still pursue a timely constructive trust claim based on the same underlying facts.