Genworth Life Insurance Company of New York v. Dwaileebe et al

Filing 61

CORRECTED DECISION AND ORDER. Signed by Hon. Michael A. Telesca on 3/20/17. This version corrects a typographical error on page 9. (AFB)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

GENWORTH LIFE INSURANCE COMPANY OF
NEW YORK,

CORRECTED

Plaintiff,

DECISION and ORDER
No. 6:12-cv-06330-MAT

-vsGARY S. DWAILEEBE, DAVID J.
DWAILEEBE, LINDA A. VAN NESS, MARK
C. DWAILEEBE, JENNY S. TRAPANI,
JAMES A. DWAILEEBE, GEORGE N.
DWAILEEBE, LAURIE J. OVERMEYER,
MICHELE M. AZZI, MICHAEL G.
DWAILEEBE, THE ESTATE OF GERALDINE
H. DWAILEEBE, GEORGE N. DWAILEEBE,
in his capacity as an Executor of
the Estate of Geraldine H.
Dwaileebe; and MICHAEL G.
DWAILEEBE, in his capacity as an
Executor of the Estate of Geraldine
H. Dwaileebe,
Defendants.

INTRODUCTION
Genworth Life Insurance Company of New York (“Plaintiff” or
“Genworth”) brings this interpleader action under 28 U.S.C. § 1335,
seeking, among other forms of relief, discharge from all liability
in

connection

with

two

annuities

it

issued

to

Geraldine

H.

Dwaileebe (“the Annuitant”), who is now deceased.
FACTUAL BACKGROUND
I.

The Annuities and the Purported Beneficiary Change
On August 9, 2011, and August 15, 2011, Genworth issued two

Individual Single Premium Deferred Annuity Contracts (#431641842

and #431409864, respectively) (collectively, “the Annuities”) to
the Annuitant. At the time, the Annuitant’s youngest son, David J.
Dwaileebe (“David” or “the Disclaiming Beneficiary”), was the
designated beneficiary for 100% of the benefits payable under the
Annuities upon her death (“the Death Benefit”). By means of a
New York Statutory Short Form Power of Attorney dated March 24,
2011

(“the

3/24/11

POA”),

the

Annuitant

designated

her

son,

George N. Dwaileebe (“George”), as her attorney-in-fact. George
then submitted Annuity Contract Change Forms, dated January 4,
2012, which purported to reduce David’s interest in the Death
Benefits from 100% to 30.25%, and to disburse 69.75% of David’s
interest in the Death Benefit among the remaining siblings, with
each of them to receive 7.75%.

By letter dated January 18, 2012,

Genworth informed the Annuitant that the 3/24/11 POA did not grant
George the authority to make beneficiary changes for the Annuities,
and that the beneficiary changes set forth on the January 4, 2012
Annuity Contract Change Forms (“the Change Forms”) therefore could
not be effectuated.
The Annuitant passed away on January 23, 2012. Upon her death,
a

Death

Benefit

in

the

amount

of

$237,986.04

(for

Annuity

#431641842), and a Death Benefit in the amount of $222,037.47 (for
Annuity #431409864) became payable.
By letter dated January 25, 2012, Daniel G. Schum, Esq.
(“Attorney Schum”), who represented the Estate of the Annuitant

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(“the Estate”), provided Genworth with a copy of a New York Short
Form Power of Attorney, dated January 11, 2012, designating George
as

the

Annuitant’s

attorney-in-fact

(“the

1/11/12

POA”).

In

contrast to the 3/24/11 POA, the 1/11/12 POA included a Statutory
Gifts Rider, which authorized the designated attorney-in-fact “to
add, remove or otherwise change the named beneficiary(ies) of any
contract of life . . . insurance or any combination of insurance
procured by or on behalf of the principal prior to or after the
creation of the agency.” However, as Genworth informed Attorney
Schum by letter dated February 7, 2012, because the Change Forms
were

signed

prior

to

execution

of

the

1/11/12

POA

with

the

Statutory Gifts Rider, the change-of-beneficiary designations could
not

be

effectuated.

Genworth,

in

an

attempt

to

resolve

the

competing claims, suggested to the Estate, that if David were
willing to sign a Disclaimer and Release, the Death Benefit under
the Annuities could be distributed in accordance with the Change
Forms. Genworth subsequently received a Disclaimer and Release
(“the Disclaimer”),1 signed by David and dated March 2, 2012.
Genworth received claim forms for the Annuities’ Death Benefit
from certain of David’s siblings, namely, Linda A. Van Ness, Jenny

1

The Disclaimer provides, in relevant part, as follows: “The undersigned,
David J. Dwaileebe, hereby irrevocably and unqualifiedly renounces and disclaims
69.75% of his right, title and interest in and to the following described
property: Annuity Contract numbers 431409864 and 431641842, with Annuitant/Owner
as Geraldine H. Dwaileebe, issued by Genworth Life Insurance Company of New
York.” (Complaint (“Compl.”) (Dkt #1), ¶ 30).

-3-

S. Trapani, James A. Dwaileebe, George (individually), Laurie J.
Overmeyer, Gary S. Dwaileebe, Michelle M. Azzi, and Michael G.
Dwaileebe (individually). By Deferred Annuity Claim Form dated
April 2, 2012, David also made a claim for the Death Benefit.
In a letter to Genworth dated April 5, 2012, Mark C. Dwaileebe
(“Mark” or “the Contesting Beneficiary”), disputed David’s capacity
to execute the Disclaimer.2 The Contesting Beneficiary’s letter
stated, in pertinent part, as follows:
[P]lease be advised that David [the Disclaiming
Beneficiary] signed over his shares without fully
understanding what he was doing. It is and always has
been that David was to be provided for in the event of
both our parent’s [sic] deaths. David does not have the
ability to understand nor comprehend what he was signing
over. He is 47 years of age and has always lived at home
with both our parents because he has always needed
guidance due to an illness at birth.
On or about January 16th 2012 my mother who was dying of
cancer was coerced into changing her power of attorney so
that the benefactor would be changed. This is not what
she ever intended for 30 plus years.
(Compl. ¶ 33). In light of the adverse and conflicting demands for
payment of the Death Benefit, and Genworth’s inability to determine
whether David was competent to execute the Disclaimer, Genworth
commenced the instant interpleader action on June 19, 2012.

2

Notwithstanding the fact that the Change Forms purported to give 7.75% of
the Death Benefit to Mark, Genworth has never received a claim form from him.
(Compl. ¶ 34).

-4-

II.

The Federal Interpleader Action
On September 11, 2012, an answer to Genworth’s complaint was

filed by six of David’s siblings: Linda A. Van Ness; Jenny S.
Trapani;

James

A.

Dwaileebe;

Laurie

J.

Overmyer;

George,

individually and as an executor of the Estate; and Michael G.
Dwaileebe,

individually

and

as

an

executor

of

the

Estate

(collectively, “the Objectants”). The Objectants’ answer also was
purportedly filed on behalf of David. On April 1, 2013, the
Objectants filed a motion to settle this case consistent with the
terms of the purported Disclaimer.
On June 7, 2013, Mark filed his pro se answer, alleging, among
other things, that David was “not aware of the documents presented
to him to sign on or about March 2, 2012 [i.e. the Disclaimer] and
April 2, 2012, and furthermore does not have the mental capacity to
understand what he was signing away.” (Answer of Mark C. Dwaileebe
(Dkt #3), ¶ 3). On June 17, 2013, Gary S. Dwaileebe filed his pro
se

answer,

requesting

that

this

Court

order

a

comprehensive

psychological evaluation of David and further order that David
receive 100% of the Annuities’ Death Benefit. (Answer of Gary S.
Dwaileebe (Dkt #38) at 5).
On June 17, 2013, Brian Laudadio, Esq. (“Attorney Laudadio”)
was substituted as David’s counsel of record and, on June 19, 2013,
he moved to stay (Dkt #39) this action pending the adjudication of
a petition pursuant to New York Mental Hygiene Law (“M.H.L.”)

-5-

Article 81 (“the Article 81 Proceeding”) in the Monroe County
Surrogate’s Court (“Surrogate’s Court”). On June 19, 2013, this
Court entered an order (Dkt #41) denying the Objectants’ motion to
approve the proposed settlement and staying the action in its
entirety pending the resolution of the Article 81 Proceeding in
Surrogate’s Court.
III. The Surrogate’s Court Proceedings
By means of an Article 81 petition filed on June 17, 2013,
David’s sister, Michele M. Azzi (“Azzi”), sought a finding that
David was likely to suffer harm because he lacked the capacity to
manage his financial affairs. Azzi requested that she be appointed
as the guardian of his property. The co-defendants in the federal
interpleader action all were named in the Article 81 proceeding as
interested parties.
On August 15, 2013, Andrew R. Randisi, Esq., counsel for the
Objectants, filed a response to the Article 81 petition asserting
that David did not require appointment of a guardian. On April 8,
2014, one of the Objectants, Jenny S. Trapani (“Trapani”), filed a
pro se cross-petition in Surrogate’s Court alleging that while he
required some assistance with financial and other personal matters,
David did not require the appointment of a guardian. Trapani
alternatively requested that if David were found to require a
guardian, that Azzi should not be appointed to serve in that
capacity.

On

April

17,

2014,

-6-

Azzi

moved

to

dismiss

the

cross-petition.

The

Honorable

Edmund

A.

Calvaruso

(“Surrogate

Calvaruso”) granted Azzi’s motion to dismiss the cross-petition on
August 18, 2014.
On November 20, 2014, a hearing was held before the Surrogate
Calvaruso, without notice to the Objectants. (See Transcript of
Hearing (Dkt #59-7, pp. 23-35 of 35)). At that time, Surrogate
Calvaruso accepted into evidence, inter alia, a Psychological
Evaluation, prepared by Tricia L. Peterson, Ph.D., ABPP, following
her examination and testing of David (Dkt #59-5; also Dkt #59-13);
and the report of the independent court-appointed evaluator, Loren
H. Kroll, Esq., dated November 12, 2014 (Dkt #59-6). At the
conclusion of the hearing, Surrogate Calvaruso determined, among
other things, that it was necessary to appoint a guardian for David
because he “is not able to provide for his property management, is
incapacitated as that term is defined in § 81.02 of the Mental
Hygiene Law, and is at risk of suffering harm due to his functional
limitations and inability to adequately understand and appreciate
the nature and consequences of the limitation.” (Order and Judgment
Appointment Guardian of the Property (Dkt #59-7, pp. 3-4 of 35)).
Consequently, Azzi was appointed to serve as the guardian of
David’s property. Surrogate Calvaruso further determined that David
suffered from the same functional limitations on March 2, 2012, and
sua sponte, declared the purported Disclaimer and Release signed by

-7-

David on March 2, 2012 revoked, null, void, invalid and without
legal effect, pursuant to N.Y. M.H.L. § 81.29. (Id., p. 7 of 35)
The Objectants appealed the Former Surrogate’s order and
judgment to the Appellate Division, Fourth Department, of New York
State Supreme Court (“the Fourth Department”). In a decision dated
July 8, 2016, the Fourth Department concluded, inter alia, that the
Former Surrogate erred in dismissing Trapani’s cross-petition based
on the Objectants’ lack of standing, and found that the Objectants
were “interested parties” under Article 81. Further, the Fourth
Department found, since Azzi’s Article 81 petition did not seek to
have the Disclaimer invalidated, the Objectants reasonably expected
that the issue of its validity to be resolved in the federal
interpleader action—not in the Surrogate’s Court proceeding. Given
the

Objectants’

financial

interest

in

the

validity

of

the

Disclaimer, the Fourth Department held that the Former Surrogate’s
failure to provide notice to them before ruling on the Disclaimer’s
validity deprived the Objectants of notice and an opportunity to be
heard.

The

Fourth

Department

further

found

that

the

Former

Surrogate erred in not appointing independent counsel to represent
David, and in denying without a hearing the Objectants’ motion to
disqualify Attorney Laudadio’s law firm based on its allegedly
impermissible dual representation of David and Azzi. The Fourth
Department noted that it was not clear whether the interests of
Azzi and David were materially adverse. Finding these errors not

-8-

harmless, the Fourth Department remanded the case to Surrogate’s
Court for further proceedings.
Upon remand, Surrogate Calvaruso had retired. His successor,
the Honorable John M. Owens (“Surrogate Owens”), had taken office
on January 1, 2015. Attorney Laudadio and his firm voluntarily
withdrew from representing Azzi in the pending Surrogate’s Court
proceeding. On December 5, 2016, Surrogate Owens entered an order
appointing the Catholic Family Center (“CFC” or “the Guardian”) as
David’s property guardian. Attorney Laudadio proceeded to represent
CFC, in its capacity as Guardian for David. The guardianship
appointment apparently was based on David’s consent, and Surrogate
Owens did not reach the issues of David’s capacity or the validity
of the Disclaimer.
PROCEDURAL STATUS OF THE INTERPLEADER ACTION
The pending summary judgment motion was originally filed by
Attorney Laudadio on David’s behalf on December 31, 2014 (Dkt #44,
with Exhibits).

On

January

21,

2015,

the

Objectants

filed

a

response (Dkt #45) in opposition to the motion. On January 27,
2015, Genworth submitted a response (Dkt #46) requesting that it be
permitted to deposit the interpleader property into the Court’s
registry. Attorney Laudadio filed an affidavit in further support
of the motion (Dkt #47) on January 27, 2015.

-9-

The case was administratively closed on August 31, 2016
(Dkt #53), pending the completion of the Article 81 Proceeding in
Surrogate’s Court and the appeal taken to the Fourth Department.
On February 22, 2017, the case was restored to the Court’s
active docket, and the Court issued an order (Dkt #55) directing
Genworth to deposit the interpleader property into the Court’s
registry. The Court directed that any further submissions in regard
to David’s pending summary judgment motion be filed by March 16,
2017. The Objectants filed a response (Dkt #56, #57). Attorney
Laudadio filed an affidavit with exhibits in further support of the
motion (Dkt #59). The motion was deemed fully submitted and ready
for decision.
However, late in afternoon of March 17, 2017, the Objectants’
hand-delivered a package to the District Court Clerk’s Office in
Rochester. The package contained a letter dated March 16, 2017,
from Trapani to the Court. Attached to the letter from Trapani was
a

duplicate

copy

of

the

affidavit

filed

by

the

Objectants’

attorney, Richard Kaul, Esq. (“Attorney Kaul”), on March 7, 2017.
Also included in the package was Michael G. Dwaileebe’s amended
affidavit with exhibits. Trapani states that Attorney Kaul had
requested that they file these documents because he was out of town
and could not do so. Trapani continues that due to the severe
weather and power outages that affected Rochester last week, the
Objectants were unable to correspond with Attorney Kaul, and she

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asked that the Court take this factor into account, if there was a
question as to the tardiness of their amended response. As set
forth in the District’s Administrative Procedures Guide, available
on the website, “[t]he Court requires attorneys to file documents
electronically, absent a showing of good cause[.]” Attorney Kaul
has not attempted to show “good cause” or otherwise sought an
exception to the restriction against manual filing. In addition,
the supplemental submissions are late, and Attorney Kaul did not
seek an extension of time in which to file. However, in the
interest of completeness, and out of courtesy to the Objectant, the
Court has considered the Objectants’ late submissions.
For the reasons discussed below, David’s motion for summary
judgment is granted in its entirety.
DISCUSSION
I.

The Appropriateness of Jurisdiction Under 28 U.S.C. § 1335
Genworth asserts that this Court has jurisdiction over this

matter under the federal interpleader statute, 28 U.S.C. § 1335
(“Section 1335”). Section 1335 provides in part that “[a] district
court[ ] shall have original jurisdiction of any civil action of
interpleader . . . filed by any . . . corporation . . . having
issued a . . . policy of insurance . . . of $500 or more,” if the
following conditions are met:
(1) [t]wo or more adverse claimants, of diverse
citizenship as defined in [28 U.S.C. § 1332], are
claiming . . . to be entitled to . . . any one or more of
the benefits arising by virtue of any . . . policy [of
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insurance] . . .; and . . . (2) the plaintiff has . . .
paid the amount of . . . or other value of such
instrument or the amount due under such obligation into
the registry of the court, there to abide the judgment of
the court. . . .
28 U.S.C. § 1335(a). Although Section 1335 references 28 U.S.C.
§ 1332, which “require[s] . . . complete diversity,” Purdue Pharma
L.P. v. Kentucky, 704 F.3d 208, 213 (2d Cir. 2013), Section 1335
“has been uniformly construed to require only ‘minimal diversity,’
that is, diversity of citizenship between two or more claimants,
without regard to the circumstance that other rival claimants may
be co-citizens[,]” State Farm Fire & Cas. Co. v. Tashire, 386 U.S.
523, 530 (1967) (quotation and footnote omitted).
None of the parties dispute that this Court has jurisdiction.
After independently reviewing the record, the Court finds that
Genworth has satisfied Section 1335’s jurisdictional requirements.
The face value of the Annuities at the time of Decedent’s death was
$237,986.04 (for the 842 Annuity), and $222,037.47 (for the 864
Annuity).

Therefore,

the

Annuities,

individually

and

in

combination, exceed the required amount-in-controversy. There is at
least minimal diversity among the parties since at least two of the
competing parties are of diverse citizenship.3 Finally, Genworth
has deposited the proceeds of the Annuities into the Court’s

3

For instance, Linda A. Van Ness is a resident of Georgia; James A.
Dwaileebe is a resident of Massachusetts; and Laurie J. Overmeyer is a resident
of Oregon.

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registry,

pursuant

to

this

Court’s

order

February

22,

2017

(Dkt #55).
Once the jurisdictional prerequisites of Section 1335 are met,
the appropriateness of an interpleader action depends on whether
the plaintiff has “‘a real and reasonable fear of double liability
or vexatious, conflicting claims[,]’” Washington Elec. Co-op, Inc.
v. Paterson, Walke & Pratt, P.C., 985 F. 2d 677, 679 (2d Cir. 1993)
(quotation omitted), “regardless of the merits of the competing
claims.” John v. Sotheby’s, Inc., 141 F.R.D. 29, 33 (S.D.N.Y. 1992)
(citations omitted). The protracted litigation history of this
matter, in both Surrogate’s Court and this Court, demonstrates that
Genworth’s fear of double liability is quite real. Therefore, the
Court has no difficulty concluding that this interpleader action is
appropriate.
II.

The Summary Judgment Motion
A.

Rule 56 Standard

“Summary judgment is proper only when, construing the evidence
in the light most favorable to the non-movant, ‘there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.’” Psihoyos v. John Wiley & Sons, Inc.,
748 F.3d 120, 123–24 (2d Cir. 2014) (quoting FED. R. CIV. P. 56(a)).
“A dispute about a ‘genuine issue’ exists for summary judgment
purposes where the evidence is such that a reasonable jury could
decide in the non-movant’s favor.” Beyer v. County of Nassau, 524

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F.3d 160, 163 (2d Cir. 2008). A court deciding a summary judgment
motion “resolve[s] all ambiguities, and credit[s] all factual
inferences that could rationally be drawn, in favor of the party
opposing summary judgment.” Cifra v. Gen. Elec. Co., 252 F.3d 205,
216 (2d Cir. 2001). Nevertheless, “a party may not ‘rely on mere
speculation or conjecture as to the true nature of the facts to
overcome a motion for summary judgment.’” Lipton v. Nature Co., 71
F.3d 464, 469 (2d Cir. 1995) (quoting Knight v. United States Fire
Ins. Co., 804 F.2d 9, 12 (2d Cir. 1986)).
B.

Choice of Law

In a federal interpleader action such as this one, where
jurisdiction is based on diversity of citizenship, the court
applies the choice-of-law rules of the forum state. E.g., Union
Cent. Life Ins. Co. v. Berger, No. 10 Civ. 8408(PGG), 2012 WL
4217795, at *8 n. 11 (S.D.N.Y. Sept. 20, 2012) (applying the forum
state’s choice-of-law rules in an interpleader action under 28
U.S.C. § 1335) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313
U.S. 487, 496 (1941)). Here, that state is New York. Although “New
York courts will generally enforce a choice-of-law clause so long
as the chosen law bears a reasonable relationship to the parties or
the transaction,” Ergowerx Int’l, LLC v. Maxell Corp. of Am., 18 F.
Supp.3d 430, 439 n. 5, 2014 WL 1642970, at *3 n. 5 (S.D.N.Y.
Apr. 23, 2014) (internal quotation marks omitted), no party has
provided the Court with copies of the Annuities. As a result, the

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Court is unable to determine whether the Annuities contain a
choice-of-law clause.
Nonetheless, “even when the parties include a choice-of-law
clause in their contract, their conduct during litigation may
indicate

assent

to

the

application

of

another

state’s

law.”

Cargill, Inc. v. Charles Kowsky Res., Inc., 949 F.2d 51, 55
(2d Cir. 1991). Here, David did not cite to any law in his original
pleadings in support of his original motion for summary judgment,
but instead urged the Court to rely on the prior Surrogate’s
November 20, 2014 finding that he was incapacitated under M.H.L.
Article 81.4 The Objectants have not cited to any law in their
opposition to the summary judgment motion. Courts in this Circuit
have held that by not citing to any law, a party thereby indicates
its assent to the application of the law of the forum state. See,
e.g., Guardian Life Ins. Co. v. Gilmore, 45 F. Supp.3d 310, 323
(S.D.N.Y. 2014) (“[B]y not citing to any law or filing any response
to Gilmore’s Motion, Gilmore–Smit and Applebee–McPhillips have
indicated their assent to the application of the law of the forum
state.”) (citing Lenard v. Design Studio, 889 F. Supp.2d 518, 528
n. 5 (S.D.N.Y. 2012) (applying the law of the forum state where the
plaintiff cited no law in her default judgment submissions and the

4

While Surrogate Calvaruso’s finding of incapacity was since vacated by the
Fourth Department by virtue of its reversal of his November 20, 2014 order, the
Fourth Department did not express any opinion on the correctness of that finding.

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defendants did not file any response thereto). The Court therefore
will apply New York law to the motion for summary judgment.
C.

David’s Capacity to Execute the Disclaimer

The sole issue in dispute is whether David had the capacity to
knowingly and voluntarily disclaim a large portion of his interest
in the Annuities, effectively reducing his interest from 100% to
30.25%, with the 69.75% interest he disclaimed to be shared among
his siblings.
No party has addressed the burden of proof regarding this
issue. “In evaluating mental capacity, New York courts apply two
different standards: one for contracts and one for testamentary
instruments. The standard for contracts is more exacting than the
testamentary standard.” Sun Life Assur. Co. of Canada (U.S.) v.
Gruber, No. 05 CIV. 10194(NRB), 2007 WL 4457771, at *17 n. 1
(S.D.N.Y. Dec. 14, 2007), aff’d sub nom. Sun Life Assur. Co. of
Canada v. Gruber, 334 F. App’x 355 (2d Cir. 2009). In contract
cases, New York law “presumes that a person is ‘competent at the
time of the performance of the challenged action and the burden of
proving incompetence rests with the party asserting incapacity.’”
Liberty Life Assur. Co. of Bos. v. Bahan, No. 09–CV–4715, 2010 WL
3431147, at *3 (S.D.N.Y. Aug. 23, 2010) (quoting Sears v. First
Pioneer Farm Credit, ACA, 850 N.Y.S.2d 219, 222 (3d Dep’t 2007)),
aff’d, 441 Fed. Appx. 21 (2d Cir. 2011). On the other hand, in
probate cases, “[i]t is the indisputable rule in [New York] . . .

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that ‘[t]he proponent has the burden of proving that the testator
possessed testamentary capacity[.]’” Estate of Kumstar, 66 N.Y.2d
691, 692 (1985) (second alteration in original; quotation omitted).
The Court need not decide whether the Disclaimer is more akin to a
contractual agreement or a testamentary disposition. Assuming that
the question should be analyzed under contract law principles, the
Guardian, as the party asserting David’s incapacity, has proven his
lack of capacity. Based on that finding, David necessarily would be
found incapacitated under the standard applicable to probate cases.
See Sun Life Assur. Co. of Canada (U.S.), 2007 WL 4457771, at *17
(“In this case, we consider only the contractual standard, since if
Charles would be deemed capable of designating a beneficiary under
the contractual standard, he would necessarily meet the less
demanding testamentary standard.”).
The starting point for the Court’s analysis is M.H.L. Article
81, in particular, § 81.02(b). The Appellate Division, Second
Department explained that a determination of incapacity under this
section
must be based upon clear and convincing evidence that the
person is likely to suffer harm because he is unable to
provide for property management and cannot adequately
understand and appreciate the nature and consequences of
such inability. The burden of proof is on the petitioner
(see, Mental Hygiene Law §§ 81.02[b], 81.12[a]).
Matter of Maher, 207 A.D.2d 133, 139–40, 621 N.Y.S.2d 617, 621
(2d Dep’t 1994). In reaching its determination, the court

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must give primary consideration to the functional level
and functional limitations of the person, including an
assessment of the person’s ability to manage the
activities of daily living related to property management
(e.g., mobility, money management, and banking), his
understanding and appreciation of the nature and
consequences of any inability to manage these activities,
his preferences, wishes, and values regarding management
of these affairs, and the nature and extent of the
person’s property and finances, in the context of his
ability to manage them (Mental Hygiene Law §§ 81.02[c],
81.03[h]).
Matter of Maher, 207 A.D.2d at 139–40.
Here, the evidence submitted on David’s behalf is sufficient
to prove that David is incapacitated within the meaning of M.H.L.
§ 81.02(b). In particular, the Court has relied on the detailed
report

prepared

by

highly

qualified

forensic

psychologist

Dr. Peterson following her evaluation of David in 2013.5 Dr.
Peterson was asked to answer a number of specific questions,
described in further detail below, including whether David had
functional limitations at the time he executed the Disclaimer which
impaired his ability to understand and appreciate the nature and
consequences of that transaction. Dr. Peterson conducted extensive
personal interviews and testing with David, for a total of 9 hours
over three days in July and August of 2013; she also interviewed
with Azzi, with David present, for 3 hours over the course of those
three days. In addition, Dr. Peterson reviewed a letter from

5

Dr. Peterson’s report (Dkt #59-13) and curriculum vitae (Dkt #59-12) are
attached as exhibits to Attorney Laudadio’s affidavit (Dkt #59).

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David’s

brother,

Gary,

and

David’s

records

from

the

Spencerport School District. As far as testing, Dr. Peterson
administered the Mini Mental State Examination-Second Edition,
Standard Version (MMSE-2: SV); the Wechsler Adult Intelligence
Scale-Fourth
Test-Fourth

Edition
Edition

(WAIS-IV);
(WRAT-4);

the

the

Wide

Validity

Range

Achievement

Indicator Protocol

(VIP); the Independent Living Scales (ILS) to David. She had Azzi,
Mark, and Gary complete the Adaptive Behavior Assessment System,
Second Edition (ABAS-11) on David’s behalf. Dr. Peterson then
issued a 17-page report (Dkt #59-13) detailing her diagnoses,
findings, and responses to the specific questions posed to her.
In regards to whether David has functional limitations that
impair his ability to provide for his personal needs, Dr. Peterson
found that based on the results of the ABAS-11, his personal-carerelated functional skills all fell within the “extremely low range
(below

98-99%

of

other

individuals

his

age).”

Consequently,

Dr. Peterson recommended that a guardian be appointed to assist him
with his personal needs, as defined in M.H.L. § 81.03.
Regarding whether David has functional limitations that impair
his ability to engage in property management activities, as defined
in M.H.L. § 81.03(g),6 Dr. Peterson stated the results of current

6

“‘[P]roperty management’ means taking actions to obtain, administer,
protect, and dispose of real and personal property, intangible property, business
property, benefits, and income and to deal with financial affairs.” N.Y. MENTAL
HYG. LAW § 81.03(g)

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testing “strongly indicate[d]” that his functional limitations
“significantly

impair

his

ability

to

independently

engage

in

property management activities,” as defined in M.H.L. Article 81.
(Dkt #59-13, p. 16 of 18). In particular, Dr. Peterson noted that
David “does not have the vocabulary or reading comprehension skills
to read and understand most legal documents, regardless of their
purpose[,]” explaining that David’s “reading composite score on the
WRAT-4 falls at the 1st percentile compared to similar aged peers.
That is, 99 percent of people [David]’s age have higher reading
skills than him.” (Id. (emphasis in original)). Based on her
“review of all available information,” Dr. Peterson recommended
that a guardian be appointed to assist David in making property
management decisions, as defined in M.H.L. § 81.03(g).
Dr.

Peterson

found

“clear

evidence”

that

the

foregoing

functional limitations were present at the time David signed the
Disclaimer

in

March

of

2012,

noting

that

school

records

had

classified him with “Educable Mental Retardation,” since at least
eighth grade. Additionally, there was no reported history of
traumatic brain injury or other significant illness post-March 2012
that could have contributed to the functional limitations detected
by Dr. Peterson.
As to the effect of his limitations on his susceptibility to
undue influence by others, Dr. Peterson first noted that David has
been diagnosed

with

Mild

Mental

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Retardation/Mild

Intellectual

Disability. Dr. Peterson quoted the Diagnostic and Statistical
Manual-Fifth Edition (“DSM-V”), which states that “gullibility” is
“often a feature” of intellectual disability and involves “naiveté
in social situations and the tendency for being easily led by
others. . . .” (Dkt #59-13, pp. 16-17 of 18). With particular
regard to the signing of the Disclaimer, Dr. Peterson opined that
it was “likely that the inherent gullibility and lack of awareness
of risk” stemming from David’s intellectual disability “impair[ed]
his ability to understand and appreciate the potential consequences
of such a transaction, especially given the magnitude of the
decision and given that his brother (i.e., someone he presumably
trusted and whom he knew was in charge of dealing with mother’s
estate) and a lawyer (i.e., someone in a position of authority,
someone he trusted and believed was his ‘mother’s’ attorney) were
reportedly present at the time.”). (Id., p. 17 of 18). In addition,
Dr. Peterson found that the testing results “strongly indicate[d]”
that David’s understanding of money concepts and ability to manage
money is “extremely low compared to same aged peers.” (Id.). For
instance,

he was

“unable to

ascertain his

monthly

or

yearly

financial needs or to estimate his monthly or yearly income[.]”
(Id.). Consequently, Dr. Peterson opined, it was “unlikely that he
could make an informed decision about whether he could ‘afford’ to
agree

to

any

major

financial/business

transaction

appreciate the ramifications of doing so.” (Id.).

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or

fully

Moreover, David

“indicated

[to

Dr.

Peterson]

that

he

did

not

know

what

the

[Disclaimer] forms were for or why he was being asked to sign them
at the time (i.e., March 2012),” and just signed them because his
brother “said ‘sign here.’” (Id.).
Dr. Peterson also was specifically asked whether there was any
evidence that David was malingering. She found that he provided
valid responses on the VIP, a test designed to identify individuals
who are

not

putting forth

full

effort

on

cognitive testing.

Moreover, David provided “consistent responses across interview
dates.” In sum, Dr. Peterson found “no evidence of feigning of
cognitive or functional impairments.” (Dkt #59-13, p. 18 of 18).
In opposition to Dr. Peterson’s well-substantiated, detailed
opinion regarding David’s incapacity, the Objectants have offered
nothing but conclusory assertions about the alleged existence of
“factual issues.” Michael G. Dwaileebe (“Michael”), one of the
Objectants,

states

that

at

a

“hearing”

in this

Court,

their

“attorney expects to call Daniel Schum, Esq. as a witness, as well
as others, including professional witnesses, for their opinions as
to the capacity of David J. Dwaileebe.” (Affidavit of Michael G.
Dwaileebe ¶ 17) (Dkt #57). However, there was no suggestion as to
the identity of these “other” witnesses. In his supplemental,
manually filed affidavit,7 Michael states that he and his siblings
7

While the Court has considered the Objectants’ late-filed, hand-delivered
documents, they are not part of the official docket of this case. If Attorney
Kaul wishes to make them part of the docket, he must file them electronically

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“retained Dr. Jerid Fisher” but they “were denied by the Courts
[sic] in April 2014 the opportunity for a second evaluation or
rebuttal of Dr. Peterson’s report.” (Supplemental Affidavit of
Michael G. Dwaileebe (not docketed) ¶ 12). Michael apparently is
referring

to

the

Surrogate’s

Court

proceeding,

and

Surrogate

Calvaruso’s failure to notice the Objectants so that they could
appear at the November 2014 hearing. As the Fourth Department
found, this was improper, but this error has no bearing on the
instant

interpleader

action

and

the

pending

summary

judgment

motion. The Objectants and Attorney Kaul have been on notice of the
contents

of

Dr.

Peterson’s

report,

and

Attorney

Laudadio’s

intention to use it to support his request for summary judgment on
David’s behalf, for several years. Yet the Objectants have never
addressed any aspect of Dr. Peterson’s report or requested the
opportunity to have an expert of their choosing evaluate David’s
capacity. Instead, Attorney Kaul simply states there are “serious
factual issues which come into play, none of which can be resolved
upon Motion for Summary Judgment.” (Affidavit of Richard Kaul,
Esq., ¶ 13 (Dkt #56)). The Court notes that Michael, David’s older
brother, now raises, at the eleventh hour, an argument contesting
Dr.

Peterson’s

report

and

making

a

passing

mention

to

a

psychological expert, Dr. Fisher, whom the Objectants allegedly
retained three years ago. However, there is no indication that this
via CM/ECF pursuant to the District’s Administrative Procedures Guide for
Electronic Filing.

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expert

has

any

basis

on

which

to

opine

regarding

David’s

capacity—he apparently never examined David, much less reviewed any
of David’s records—including Dr. Peterson’s report. In short, the
Objectants’ proposed expert witness, as well as any opinion he
would offer, are purely hypothetical.

However, it is settled

beyond doubt that “a party may not ‘rely on mere speculation or
conjecture as to the true nature of the facts to overcome a motion
for summary judgment.’” Fletcher v. Atex, Inc., 68 F.3d 1451, 1456
(2d Cir. 1995) (quoting Knight v. United States Fire Ins. Co., 804
F.2d 9, 12 (2d Cir. 1986)); accord, e.g., Hicks v. Baines, 593 F.3d
159, 166 (2d Cir. 2010). The Objectants, as the nonmoving parties,
needed to create more than a “metaphysical possibility” that their
allegations are correct; they needed to come forward with specific
facts showing that there is a genuine issue for trial.” Matsushita
Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586–87
(1986).

This they have not done. The Objectants’ submissions rest

on “speculation” that does not raise more than a “metaphyhsical
possibility” of a different conclusion. Accordingly, the Objectants
cannot overcome David’s well-supported motion for summary judgment.
Based principally on Dr. Peterson’s unrebutted and wellsupported report, the Court finds that David was incapacitated, as
defined in M.H.L. § 81.02(b), when he signed the Disclaimer on
March 2, 2012. Put simply, there is no genuine issue of material
fact that David has been, and presently is, “unable to provide for

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personal needs

and/or

property management;

and .

.

. cannot

adequately understand and appreciate the nature and consequences of
such inability.” N.Y. MENTAL HYG. LAW § 81.02(b)(1)-(2). Based on this
finding of incapacity, it necessarily follows that David did not
have the legal ability to enter into a valid contract in March of
2012.

Furthermore, one of the consequences of a finding of

incapacity under Article 81 of the M.H.L. is that the court that
makes such a finding
may modify, amend, or revoke any previously executed
appointment, power, or delegation . . . , or any
contract, conveyance, or disposition during lifetime or
to take effect upon death, made by the incapacitated
person prior to the appointment of the guardian if the
court finds that the previously executed appointment,
power, delegation, contract, conveyance, or disposition
during lifetime or to take effect upon death, was made
while the person was incapacitated. . . .
N.Y. MENTAL HYG. LAW § 81.29(d). Therefore, lest there be any doubt,
the Court hereby revokes the Disclaimer and declares it to be null
and void and of no legal effect whatsoever.
CONCLUSION
The Motion for Summary Judgment by David J. Dwaileebe (Dkt
#44) is granted in its entirety. The Disclaimer and Release signed
by David J. Dwaileebe is hereby revoked and declared null and void.
Accordingly, as named beneficiary under Individual Single Premium
Deferred Annuity Contracts (#431641842 and #431409864) issued by
Genworth Life Insurance Company of New York, David J. Dwaileebe is
entitled to receipt of 100% of the Death Benefit proceeds payable

-25-

under the Annuities, currently on deposit in the Court’s Registry.
The draft of payment shall be made payable to the Catholic Family
Center, as court-appointed Guardian of the Property of David J.
Dwaileebe, and delivered to Attorney Laudadio. The Annuities’ Death
Benefit thereafter will be dispensed for the benefit of David J.
Dwaileebe,

as

provided

in

Surrogate

Owens’

decision

dated

December 5, 2016.
The injunctive relief requested by Genworth in the complaint
is granted to the extent that each and every one of the Defendants
to this action is restrained from instituting, prosecuting or
maintaining, directly or indirectly, any claim or action of any
type or kind against Genworth, arising from, or relating in any
matter to, the Annuities and the various Defendants’ respective
claims for payment of some or all of the Annuities’ Death Benefit.
IT IS SO ORDERED.
S/Michael A. Telesca
HON. MICHAEL A. TELESCA
United States District Judge
DATED:

March 20, 2017
Rochester, New York

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