Opinion
Filed No. 2015-296/C
10-20-2023
In the Matter of an Intermediate Judicial Accounting by Kathryn Federico and Sharon Vigne, as the Prior Cotrustees of the Anthony D. Aloisi Irrevocable Trust, dated May 24, 1999, and and the Estate of Anthony D. Aloisi.
Kurzman Eisenberg Corbin & Lever, LLP Attn: Lisa M. Capone, Esq. Attorneys for Objectants Anita DeMarco & Linda Bucchi One North Broadway Kathryn M. Federico Petitioner, Pro Se Sharon O. Vigne Petitioner, Pro Se Belowich & Walsh, LLP Attn: Joanna Sandolo, Esq. & Daniel G. Walsh, Esq. Attorneys for Alou Corp.
Unpublished Opinion
Kurzman Eisenberg Corbin & Lever, LLP
Attn: Lisa M. Capone, Esq.
Attorneys for Objectants Anita DeMarco & Linda Bucchi
One North Broadway
Kathryn M. Federico
Petitioner, Pro Se
Sharon O. Vigne
Petitioner, Pro Se
Belowich & Walsh, LLP
Attn: Joanna Sandolo, Esq. & Daniel G. Walsh, Esq.
Attorneys for Alou Corp.
HON. ANTHONY R. MOLÉ, SURROGATE
In accordance with CPLR 2219 (a) and 22 NYCRR 207.7, the following papers were read and considered on the motion of the Respondent-Objectants ANITA DeMARCO and Linda Bucchi (mot. seq. no. 3), requesting an order awarding them partial summary judgment on the following branches of their motion: (a) sustaining their objections to the intermediate judicial accounting of the Petitioner-Cotrustees Kathryn Federico and Sharon Vigne; (b) surcharging the Petitioner-Cotrustees as fiduciaries in an amount to be determined at an inquest; (c) denying the Petitioner-Cotrustees commissions; (d) making determinations that the following "were ultra vires, in bad faith, contrary to the law, contrary to the plain language of the Irrevocable Trust, unenforceable, void, and/or voidable, and should be vacated": (i) the "Amendment" to "The Anthony D. Aloisi Irrevocable Trust," dated May 23, 2011; (ii) the "Revocation of the Trust Agreement," dated August 30, 2011; (iii) the purported conveyance of 139 Teakettle Sprout Road, Mahopac NY 10541 by Deed, executed August 30, 2011, by the Petitioner-Cotrustees of "The Anthony D. Aloisi Irrevocable Trust," to the deceased Anthony D. Aloisi, individually; and (iv) the purported conveyance of said real property was in contravention of the terms of the Trust to Alou Corp., as evidenced by the "Bargain and Sale Deed," dated October 28, 2011; and (e) awarding counsel fees to the Respondent-Objectants in accordance with Matter of Hyde (15 N.Y.3d 179 [2010]):
The term "ultra vires" means something that is unauthorized or beyond one's powers (Bryan Garner, Garner's Dictionary of Legal Usage at 908 [3d ed 2011]).
Papers:
Notice of Motion; Memorandum of Law in Support; Affirmation in Support, Exhibits A-BB; Affidavit of Linda Bucchi (with Exhibits A-D); Affidavit of Michael Levinson
"Affirmation in Opposition" of Petitioners, Exhibits 1-17
In opposing the objectants' motion, petitioners submitted a joint affirmation instead of an affidavit.
Alou Corp.'s Affirmation in Opposition, Exhibits 1-18; Affidavit of Scott Frey; Alou Corp.'s "Reply to Objections with Affirmative Defenses"
Reply Memorandum of Law in Further Support; Reply Affirmation in Further Support
In this contested proceeding to judicially settle the intermediate account of Kathryn Federico and Sharon Vigne (collectively referred to as petitioners hereinafter), as the cotrustees of the trust created by Anthony D. Aloisi (decedent), respondents Anita DeMarco and Linda Bucchi (collectively referred to as the objectants hereinafter) move for, among other associated relief, partial summary judgment on their objections to petitioners' accounting.
Upon review of the aforesaid papers, this Court finds and determines as follows:
Background and Procedural History
This case presents somewhat thorny issues that may arise about a trust and civil procedure which the Court must grapple with on this motion. The facts are sharply contested in this contentious litigation between four sisters and a third-party corporation - namely, Alou Corp. (hereinafter referred to as Alou).
Recitation of the long and complex procedural and factual background of this case is important. Based on prior proceedings and motion practice in this accounting proceeding, the Court incorporates its previous decisions by reference herein.
Petitioners and the objectants are the children of decedent. In 1999, decedent, as the grantor/settlor, created "The Anthony D. Aloisi Irrevocable Trust" (the "trust"), which consists of the real property known as 139 Teakettle Sprout Road in the Town of Mahopac (the subject property) - the main corpus in the trust and its sole principal asset. Decedent simultaneously deeded the subject premises to the objectant Linda Bucchi as trustee, since she was appointed as such per "Article II" of the trust. Some important provisions of the trust warrant referencing at the outset insomuch as they affect important ancillary issues on this motion.
The subject trust document is dated May 24, 1999.
"Article IV (2)" - titled "Provisions for Grantor During Grantor's Lifetime" - states, as relevant here, that "[n]otwithstanding any other provision of th[e] trust, during the lifetime of the [decedent], the Trustee shall have no discretion whatsoever to pay to or apply for the benefit of the [decedent] or any of the principal of th[e] trust." "Article VII" of the trust - entitled "Trust Estate to Grantor's Beneficiaries" - provides, among other things, that it "shall be paid over and distributed... in equal shares to the [decedent's] children, per stirpes" upon decedent's death. And Article XIX - titled "Power of Appointment" - provides in pertinent part that "[t]he [decedent] may at any time... alter, amend[,] or modify Article VII... upon such terms or conditions, in such manner, and at such time or times as the [decedent] shall direct and appoint in writing or by a will, specifically referring to any exercising of these powers, provided, however, that these powers shall not be exercisable to any extent for the benefit of the [decedent], his... estate, his... creditors[,] or the creditors of his... estate."
Of significance here, decedent had the power to appoint successor trustees pursuant to "Article XVI" of the trust. And to that end, he did so twice as will be outlined. That provision, titled "Grantor During Lifetime to Designate Substitute or Successor Trustee" provides, in relevant part, that decedent during his lifetime "may name a substitute or successor trustee... by delivery to any Trustee herein a notice naming the substitute or successor trustee and indicating an intent to replace the Trustee named"; and "[u]pon receipt of such notice[,] the Trustee... shall pay over, deliver, assign, transfer[,] or convey to such substitute or successor Trustee ([who] accepts the appointment as Trustee), the Trust Estate and make a full and proper accounting to the [decedent], whereupon the Trustee... shall be discharged and have no further responsibility under this trust." That provision continues that "[u]pon the failure of the Trustee to make such conveyance[,] the [decedent] may apply to the court having jurisdiction of this trust and such court may compel the conveyance by the Trustee" and the successor trustee "upon acceptance of this trust and the Trust Estate shall succeed to and possess all [of] the rights, powers and duties, authority and responsibility conferred upon the Trustee [that was] originally named."
Decedent exercised provision "Article XVI" by changing trustees twice. First in August of 2002, decedent appointed his son, Anthony D. Aloisi, Jr. (Tony), as the successor trustee. Such was memorialized by an "Amendment" that modified "Article II" of the trust. This document was signed on August 2, 2002 by Tony and decedent. Thereafter, Tony transferred the subject property to himself as the trustee by deed dated March 7, 2003 (the 2003 deed). That document states that "[t]he purpose of this deed is to clarify for the Town of Carmel the change of Trustee of the... Trust."
In April of 2007, decedent again exercised his power to appoint a substitute trustee by removing Tony as the substitute trustee and replacing him with petitioners, Federico and Vigne, as the successor cotrustees. As was done previously, an Amendment, dated April 24, 2007, was signed by petitioners and decedent for purposes of changing the fiduciaries and modifying "Article II" of the trust. A few days later, petitioners transferred the subject property to themselves in their capacity as successor cotrustees. This was memorialized by a quit claim deed dated April 24, 2007 (the 2007 deed) - which has identical language in the document as the 2003 deed about the purpose of the indenture to reflect the change of trustees from Tony to petitioners.
Thereafter, decedent endeavored to sell the subject property and consulted with his attorney to assist him in revoking the trust. Although petitioners consented to revoke the trust, the objectants and decedent's son Jack opposed revocation of the trust. In a letter dated March 9, 2011, decedent's then-counsel, Mr. George H. Roberts, Esq., sent a letter to objectants' and Jack's counsel, stating therein that he had "informed" decedent that he can validly revoke the trust" if all beneficiaries of the trust agree to terminate" it (emphasis supplied). The letter reflects that decedent wanted to sell the subject premises due to a Town mandate that it be "restored to an occupancy for a one family house," which he believed would entail "considerable expense[s] and... curtail future income." The letter further states that decedent made a proposal that if the objectants and Jack consented to the revocation, decedent would pay $5,000 to each beneficiary from the net proceeds when the premises was sold. Notwithstanding, the objectants and Jack rejected the proposal and did not consent.
Faced with a dilemma where all of the trust beneficiaries had not consented to terminating the trust, decedent then sought to further change the trust, by removing nearly of all the remainder beneficiaries except for petitioners, and thus removing the objectants as trust beneficiaries. Decedent executed an Amendment, dated May 23, 2011, to this effect, which provided, among other things, that the trust's assets were to be divided equally to petitioners upon decedent's death (the 2011 amendment). By virtue of the 2011 amendment, this made petitioners the sole beneficiaries of the trust. In addition, decedent made a last will and testament, dated May 25, 2011, which, among other things, named petitioners, his son Tony, and his daughter Cheryl as the estate beneficiaries and nominated petitioners as coexecutrices of his estate. In so doing, decedent excluded the objectants from being named beneficiaries of his estate.
Thereafter, petitioners entered into an "Exclusive Right to Sell Agreement," dated July 26, 2011, with Houlihan Lawrence, a commercial real estate broker. The agreement appointed Houlihan to act as the listing agent. The subject property was listed for sale in July of 2011.
On or about August 30, 2011, decedent purportedly revoked the trust based on a document entitled "Revocation of Trust Agreement" (the purported revocation). On the same date, petitioners, in their capacity as the cotrustees, conveyed the subject property, by deed, to decedent (the 2011 deed).
In or about October 2011, decedent entered into a residential contract of sale with Alou. He ultimately sold the subject property to Alou for $270,000 pursuant to a note and purchase money mortgage in the amount of $225,000. Under the note, Alou is to pay equal installments of $1,721.23 until the maturity date (November 1, 2026), with interest accruing at the rate of 4.5% per annum. Decedent, purportedly, effectuated transfer of the subject premises to Alou by a bargain and sale deed dated October 28, 2011 (hereinafter referred to as the Alou deed).
Decedent died on November 29, 2015, survived by his wife Gloria and seven children, including petitioners and the objectants. In January 2016, petitioners applied for letters testamentary and were granted preliminary letters for decedent's estate. The preliminary letters have been extended since then, and since June of 2022, contain the following limitations upon petitioners: (1) to collect and receive mortgage payments from Alou; (2) to deposit those mortgage payments into the estate bank account; and (3) to ensure that all such funds remain in the estate bank account until further court order. Presently, the subject premises is an improved single-family home which Alou rents to a tenant.
By stipulation dated September 11, 2018 between the parties and Alou, which was so ordered by the undersigned's predecessor, the probate proceeding where petitioners are praying for letters testamentary is stayed and being held in abeyance in view of the accounting.
In February of 2017, the objectants filed a petition for a compulsory accounting, pursuant to SCPA 2205, directing petitioners to account for the trust. Both Alou and petitioners were cited in the compulsory accounting proceeding. Alou interjected, interposing counter and cross-claims in that proceeding. Various motion practice ensued where the parties filed cross-motions for summary judgment and Alou moved for summary judgment on its claims seeking, inter alia, a declaratory judgment as the holder of title to the subject premises being free and clear of any purported interest that the parties may have in the subject premises, or any interest that the parties may have as being subordinate to its interests.
By Decision and Order dated June 5, 2020 (hereinafter referred to as "the 2020 order"), the Hon. James T. Rooney, Surrogate (retired), granted the objectants' petition, thereby directing petitioners to file an accounting. In so doing, Surrogate Rooney denied the cross-motions for summary judgment of Alou and the objectants finding, as relevant here, that the parties and Alou were essentially seeking a declaratory judgment as to the legal rights and relations of the subject premises between them - further suggesting that it should be brought in Supreme Court for a proper adjudication of those claims.
In October 2021, Bucchi individually, and in her capacity as the trustee, also naming the trust as a plaintiff, commenced an action against Alou in Supreme Court, Putnam County, under Index No. 500324/2022. That case has been assigned to the Hon. Victor G. Grossman, J.S.C., and is currently stayed. This related, parallel action is noteworthy since its commencement and ensuing litigation impacts some of the issues in this accounting proceeding. Its procedural history is discussed more in depth later.
By Decision and Order dated January 28, 2022, this Court granted the objectants' motion for a more definite statement. In so doing, it directed petitioners to correct and file the accounting petition, insomuch as they had omitted critical information about the subject premises as a purported asset of the trust. Petitioners subsequently filed an amended petition for an intermediate accounting on March 14, 2022. The objectants, in turn, filed their "Objections to Trustees' Accounting" on April 5, 2022. Thereafter, the parties engaged in discovery which included examinations before trial of petitioners.
Following discovery, the objectants filed this motion for partial summary judgment in December 2022 on their objections, seeking among other associated relief, making various determinations regarding the amendment and the purported revocation of the trust, as well as the 2011 and Alou deeds. Petitioners filed opposition papers on January 24, 2023. The following day, Alou, too, filed opposition papers to the objectants' motion insofar as their motion seeks determinations about the legality of the Alou deed.
It became apparent that Alou had erroneously filed opposing papers while it was a nonparty and had not formally appeared in this accounting proceeding. Alou had never been cited in this accounting proceeding. Hence, Alou moved to intervene in March of 2023. By Decision and Order dated May 5, 2023, this Court granted Alou's motion to intervene pursuant to CPLR 1012 (a) (3) which was not opposed by petitioners and the objectants.
This motion was held in abeyance until Alou's intervention motion was decided. After it was granted, this Court deemed Alou's opposition to this motion properly filed since none of the parties would be prejudiced by the irregularity (see generally CPLR 2001).
On May 18, 2023, Alou filed its answering pleading, denominating it as a "Reply to Objections with Affirmative Defenses." The objectants filed their reply papers, on June 12, 2023, in connection with their summary judgment motion. The subject motion is thus fully submitted for consideration.
The Purported Amendments and Revocation of the Irrevocable Trust
It is well established that "[t]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any triable issues of fact" (Matter of Brenhouse, 192 A.D.3d 887, 888 [2d Dept 2021]). "Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers" (Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985]; see Matter of Carano, 96 A.D.3d 1556, 1557 [4th Dept 2012]).
"Upon a motion for summary judgment, the court's function is one of issue finding rather than issue determination. It is not the function of a court to make credibility determinations or findings of fact, but rather to identify material triable issues of fact (or point to the lack thereof)" (Matter of Salvatore L. Olivieri Irrevocable Trust Dated 9/29/1994, 208 A.D.3d 489, 490-491 [2d Dept 2022] [internal quotation marks, ellipses, and citations omitted]).
Generally, the party opposing a motion for summary judgment must produce evidentiary proof in admissible form sufficient to establish the existence of a material issue of fact which would mandate a trial of the proceeding (Matter of Salvati [Goldstein], 75 Misc.3d 1231 [A], *6 [Sur Ct, Westchester County 2022]). "[M]ere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" (Zuckerman v City of New York, 49 N.Y.2d 557, 562 [1980]).
The Objectants' Position and Submissions
In support of their motion for partial summary judgment on their objections, the objectants submitted, among other things, the amended accounting; their objections; the deposition transcripts of petitioners' examinations before trial; affidavits from Bucchi and Michael Levinson, president of DALCO Reporting, Inc., a court reporting service; copies of the trust and the various amendments made thereto; the purported revocation of the trust; and several deeds that were made and recorded reflecting change in title of the subject premises when decedent changed trustees and supposedly terminated the trust by revoking it.
The objectants argue that they are entitled to summary judgment, as a matter of law, on their objections. Before addressing the accounting itself, the Court must first decide the validity of the purported amendments and purported revocation of the trust insofar as it concerns the submitted account.
Initially, the objectants argue that neither the 2003 nor 2007 deeds effectuated a transfer of the subject premises because decedent failed to comply with the method proscribed by Article XVI of the trust - specifically, that decedent did not notice and ask Bucchi, as the outgoing trustee who was being replaced, to deed over the property; nor did decedent file a formal application with a court to compel conveyance of the subject premises to Tony as the substitute trustee. The objectants claim that the 2011 amendment and purported revocation are invalid as a matter of law since all of the beneficially interested persons did not consent, including petitioner Federico's son, Jack, who was a minor at the time. The objectants further contend that decedent's 2011 amendment and purported revocation are void and of no effect because he impermissibly tried to invade the trust principal and revert it to himself for his own benefit in contravention of Article XIX - which, according to the objectants, was documented by the testamentary wills removing them as beneficiaries of the trust and his estate. In view of what the objectants believe was an improper revocation, they assert that the subject premises (as trust principal) could not be conveyed to decedent, and therefore, it remains as an asset of the trust that is still in existence.
In her affidavit, Bucchi states, among other things, that around the time decedent settled the trust, the subject premises was a two-family house which he rented to generate income and was the primary asset of the trust. Bucchi represents that decedent told her that he created the trust "as part of his estate and Medicaid planning"; and, so, the trust entitled him only to rental income from the property, but prevented a trustee from distributing any trust principal to decedent. Bucchi states that as the initially named trustee, she was never asked to transfer the subject premises to the substitute trustee, her brother Tony, either by him or decedent, when decedent appointed Tony as the substitute trustee.
Bucchi avers in her affidavit that decedent indicated in 2011 that he wanted to sell the subject premises and in order to do so, he would be terminating the trust. In this regard, Bucchi states that she received a letter from an attorney in March of 2011 asking whether she was in agreement to terminate the trust whereafter, she, along with DeMarco and her brother Jack, sought clarification about "concerns as to the proposed sale" of the subject premises due to "the limitations on... [decedent's] right to access" the trust principal. Bucchi represents that she retained counsel with DeMarco and Jack and, shortly after, the three of them sent a response wherein they "refused to consent to the proposed revocation" of the trust. Bucchi states that after decedent initially failed in his plan to invade the trust principal and sell the property on his own accord, he sought counsel in or about April or May of 2011 to amend the trust by purportedly removing 6 of the 8 beneficiaries therefrom, including her and DeMarco - thereby leaving petitioners, the cotrustees, as the sole beneficiaries. Bucchi claims in her affidavit that decedent "had a new [w]ill prepared which did not refer to the [t]rust" and only benefitted petitioners; and about two days later, he "prepare[d] another subsequent [w]ill" adding her siblings Cheryl and Tony as his estate beneficiaries. Bucchi explains that decedent "attempted to complete his plan by revoking the [t]rust" through a purported revocation agreement that was signed only by decedent and petitioners. According to Bucchi, petitioners then transferred the subject premises to decedent so he can sell it - after which decedent entered into a residential contract of sale with Alou for a purchase price of $270,000.
Bucchi claims that she and DeMarco "continue to have" an interest in the trust and the subject property. She represents in her affidavit that the attempted appointment of a successor trustee "was not complete or successful" inasmuch as the trust expressly provided for her to convey the property or it had to be accomplished by a court order. Bucchi states that she "never transferred" the subject premises or "any other assets of the Trust Estate, to Tony or any successor trustee." Bucchi adds that as the first trustee, no one, including decedent, explicitly requested that she transfer the property or any other asset of the trust estate to any successor trustee.
Levinson's affidavit states that audio recordings were made of petitioners' depositions but those are not made available to attorneys or deponents as a matter of policy, and were not released to any of the parties or counsel. Levinson explains that petitioners' allegations that the court reporter either inaccurately or failed to transcribe certain testimony of petitioners' depositions from September 14, 2022 when preparing the transcripts is unfounded. Levinson represents in his affidavit that his staff compared the audio recordings of petitioners' testimonies with the court reporter's transcripts, and upon review, he firmly concludes that their testimonies were "accurately transcribed." According to Levinson, all of the testimony that was heard on the audio recordings is included within the transcripts and he confirms that "both transcripts are complete and accurate."
Petitioners' Opposition
As a preliminary matter, petitioners were required under CPLR 2106 to submit an affidavit rather than a joint affirmation, even despite the fact that Vigne resides in the State of Delaware. "The [L]egislature amended CPLR 2106 effective January 1, 2015. As so amended, CPLR 2106 (b) permits affirmations to be utilized by any person outside the United States, but not persons within the United States except as permitted under CPLR 2106 (a)" (Nelson v Lighter, 179 A.D.3d 933, 936 [2d Dept 2020] [emphasis added]). "CPLR 2106 only authorizes attorneys, physicians, osteopaths, or dentists licensed in [New York] state to utilize an affirmation in lieu of a sworn affidavit" (id. at 935).
Here, petitioners do not fall within one of the classes in CPLR 2106. But given their self-represented status and because petitioners' purported affirmation reflects that it was sworn to by each of them and notarized on separate dates, the Court shall disregard the mistake and treat it as an affidavit in opposition to the motion in order to properly consider the submission. The objectants will not be prejudiced by petitioners' mistake (see CPLR 2001 ; see generally Herod v Das, 36 Misc.3d 1224[A], *4 [Sup Ct, Kings County 2012]).
Petitioners, in opposition, argue that the trust was properly revoked by decedent inasmuch as his attorneys, as officers of the court and counselors, adequately advised him about the proper legal procedure to terminate the trust and prepared the legal documents and instrument to revoke it. Petitioners suspect that the objectants knew of the amendments and revocation of the trust when decedent took those actions, but they posit that the objectants deliberately waited until after he died so they could challenge the amendment and revocation made in 2011. Petitioners press that they and decedent, as laypersons, remained under the impression that the revocation was legitimate pursuant to EPTL 7-1.9 (a) since it was prepared by decedent's lawyers. Petitioners likewise believe that the subject premises was validly transferred to him based on the language of the 2011 deed. In sum, petitioners believe that there is nothing to suggest that the revocation was of no legal effect and the instrument deeding the real property back to decedent is valid.
Among other things, petitioners claim that Bucchi's inactions in handling the trust violated her duties. They aver that decedent removed Bucchi as the trustee in 2002 and appointed a successor trustee because she had "shown" the trust to decedent's ex-wife who was "okay with it." Petitioners also aver that DeMarco "began calling" decedent "several times" from the end of 2006 through the spring of 2007 trying to encourage him to remove Tony as the successor trustee since he was "experiencing financial issues." Petitioners allege that Bucchi called Federico to speak to decedent in order to have Bucchi "put... back on the deed." According to petitioners, the objectants became antagonistic towards decedent and their hostility deeply pained him, thus prompting decedent to explore legal avenues to "remove [the objectants] as beneficiaries" of the trust.
Petitioners additionally claim that the objectants overlooked that the subject premises was not netting significant profits in 2010 and 2011 since the expenses for those years were $27,306 and $11,539, respectively, which, in turn, resulted in net losses of $6,906 and $8,039. Petitioners assert that "all previous tax documents were purged" by decedent due to "retention norms" and they unsuccessfully tried to obtain tax information for the periods of 2007 to 2009 from the Internal Revenue Service (IRS). In addition, petitioners advance that neither of the prior trustees, Bucchi nor Tony, had "a fiduciary account... set up," but petitioners did so on or about May 20, 2011 after they were so advised by their lawyers.
Petitioners also attack the allegations and statements in Bucchi's affidavit. For one, they aver that no request was necessary from Bucchi to transfer the subject premises when she was the trustee because decedent "was always performing all the duties needed himself" and she was aware that "she was no longer on the deed." Petitioners dispute the fair market value of the subject premises when it was sold in 2011 by citing to various comparable real properties and the prices they were sold for.
Petitioners take exception to Bucchi's reference that decedent sold the premises to Alou when he was over 85 years old, where they believe that Bucchi is seemingly indicating that he may not have been of sound mind when he purportedly sold the property in 2011. The Court notes that this proceeding is not a challenge to a will, so, the Court need not address decedent's testamentary capacity.
The Purported Amendments and Revocation of the Trust
Before the Court can review petitioners' accounting, the Court must first address the ancillary issues regarding several changes made by decedent to the trust by the purported amendments and revocation. On the merits, the Court finds that petitioners' opposition papers are insufficient to raise triable issues of fact to defeat those branches of the objectants' motion seeking determinations that the amendment and purported revocation of the trust made in 2011 are invalid and void as a matter of law.
Turning first to decedent's amendments of the trust, the objectants contend that decedent failed to comply with express terms of the trust in Article XVI in attempting to appoint substitute trustees within his lifetime and, so, none of the successor trustees had the requisite legal power over the trust to take any action. The objectants argue that decedent's first amendment in 2002 to appoint his son Tony as successor trustee was invalid; and additionally, his 2007 amendment in substituting petitioners as cotrustees was also void. In further advancing this argument, the objectants assert that the 2003 and 2007 deeds where Tony and petitioners attempted to effectuate a transfer of the subject premises to themselves in their respective capacities as trustees are also invalid because they and decedent neglected to follow the specific procedures proscribed in Article XVI of the trust. The objectants, relying on EPTL 7-2.4, advance that both Tony's and petitioners' acts in effectuating conveyances of the subject premises to themselves in their fiduciary capacities are void because those procedures cannot be dispensed with based on the clear language of the trust.
"In construing a trust, the court must look within the four corners of the trust instrument to glean the grantor's intent. The trust instrument is to be construed as written and the settlor's intention determined solely from the unambiguous language of the instrument itself. If, however, the terms of the trust are ambiguous, the court may consider extrinsic evidence to determine the decedent's intent" (Matter of Hanlon, 169 A.D.3d 1039, 1041 [2d Dept 2019] [internal citations omitted]; see Matter of Arline J. [James J.-Falasco], 174 A.D.3d 604, 606 [2d Dept 2019]; Matter of Stuart, 107 A.D.3d 811, 812 [2d Dept 2013]).
"Where a trust instrument specifies a procedure by which the trust may be amended, an amendment will only be valid where that procedure has been followed" (Matter of Perosi v LiGreci, 98 A.D.3d 230, 235 [2d Dept 2012]). But "if a trust instrument does not set forth an amendment procedure, then the creator is only restricted by the statutory requirements set forth in EPTL 7-1.9" (id.). Moreover, EPTL 7-2.4 provides that if a trustee contravenes the trust terms, his or her action(s) are "void." Only if the trust terms are missing, ambiguous, or unclear can the court then proceed to construe or interpret the method by which an amendment or revocation may be affected (see Matter of Stuart, 107 A.D.3d at 812).
"If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void" (EPTL 7-2.4).
Applying the governing legal principles, the Court finds that decedent did not validly amend the subject trust in 2002 or in 2007 when he tried to replace Tony and petitioners, respectively, as cofiduciaries and appoint them as the successor trustees. Although decedent had the authority under Article XVI of the trust to remove and appoint a successor trustee at any time, at his discretion, the unambiguous terms required decedent to send a notice to Bucchi, the initial trustee, naming the successor trustee, whereafter Bucchi was required to transfer the trust estate (the subject property) to the successor trustee Tony; and render a full accounting to decedent. By the letter of the trust instrument, Bucchi, as the initial trustee, had to transfer the subject premises to Tony, as the successor trustee; or alternatively, decedent had to institute legal proceedings to compel Bucchi's conveyance of the subject premises to Tony, as the successor trustee. Instead, the 2003 deed where Tony transferred the subject property to himself as the trustee appeared to be in error because Bucchi, as the initial trustee, had not deeded over the subject property to Tony, as the successor trustee, who was replacing Bucchi based on decedent's 2002 Amendment.
Further, the same can be said of the 2007 amendment made by decedent. Thus, the Court finds that decedent's 2002 and 2007 amendments in nominating successor trustees were ineffective because he did not comply with the terms set forth in the subject trust in designating Tony and then petitioners, respectively, as the successor trustees (compare Matter of Stuart, 107 A.D.3d at 813).
The same conclusion is reached as to the 2011 amendment where decedent sought to equally divide the trust's asset only to petitioners upon his death and designate them as the sole trust beneficiaries. When reading Articles IV (2), VII, and XIX in conjunction, decedent's 2011 amendment of the beneficiaries was ineffective since it did not comply with the terms set forth in the subject trust for changing the beneficiaries (see Matter of Stuart, 107 A.D.3d at 812-813; Matter of Rice v Novello, 25 A.D.3d 992, 993 [3d Dept 2006]; see also Matter of Branch, 2016 NY Slip Op 31863[U], *4-6 [Sur Ct, New York County 2014], affd Matter of Duerr, 162 A.D.3d 579 [1st Dept 2018] ["case law has consistently held that the terms of the trust instrument must be strictly observed in order to validly amend or revoke a trust"]).
Turning next to the purported revocation made in 2011, the objectants attack its validity, arguing that all of the trust beneficiaries did not provide their consent and, therefore, the trust was not properly revoked and continues to exist. Objectants point to the written revocation itself, underscoring that it was signed only by the decedent-grantor and petitioners, rather than by all persons that have a beneficial interest in the trust estate. The objectants assert that decedent impermissibly sought to revoke the trust in order to revert the corpus back to him so he could invade its principal, sell the realty, and take the sale proceeds - and he did all of that in direct contravention of the express terms of the trust.
The objectants press that the purported revocation is invalid as a matter of law inasmuch as only decedent and petitioners signed it, rather than all of his then-living children (including the objectants) and the grandchildren. Alternatively, the objectants claim that the purported revocation is invalid because petitioner Federico's son, Jack Federico, is a contingent remainderman who was beneficially interested within the meaning of EPTL 7-1.9 and he was a 16-year-old minor at the time incapable of consenting to revoke the trust. Following this argument, the objectants surmise that petitioners, as either de facto or de jure successor cotrustees, lacked any authority to convey any portion of the trust principal to decedent, and doing so violated their fiduciary duties.
The scope of the authority to revoke a trust is defined by the terms of the trust indenture and New York laws. In this regard, EPTL 7-1.16, entitled "Revocation of lifetime trust by will," states that a lifetime trust is irrevocable "unless it expressly provides that it is revocable"; and if it is revocable, the trust "can be revoked or amended by an express direction in the creator's will which specifically refers to such lifetime trust or a particular provision thereof." Alternatively, a trust can be revoked by the method set forth in EPTL 7-1.17 (b), which provides, among other things, that any amendment or revocation authorized by a trust must be in writing and executed by a person authorized to amend or revoke the trust. Hence, EPTL 7-1.17 (b) clearly presumes that a grantor may reserve to himself, or grant to another person, the authority to revoke or amend a trust (see Matter of Goetz, 8 Misc.3d 200, 203 [Sur Ct, Westchester County 2005]).
"[A]n irrevocable trust ordinarily cannot be modified except with the consent of all the beneficiaries" (Whitehouse v Gahn, 84 A.D.3d 949, 951 [2d Dept 2011]; see EPTL 7-1.9; Matter of Cord, 58 N.Y.2d 539, 546 [1983]). Although "EPTL 7-1.9... allows a settlor to revoke a trust upon the written consent of all those beneficially interested therein, 'the terms of the trust setting forth the procedure for revocation must be complied with before the statute comes into play'" (Matter of Elser v Meyer, 29 A.D.3d 580, 580-581 [2d Dept 2006], lv dismissed 7 N.Y.3d 899 [2006], quoting Matter of Dodge, 25 N.Y.2d 273, 285 [1969]). "However, where the procedure for revocation is clearly set forth in the trust instrument, the conditions imposed may not be ignored" (Matter of Mordecai, 24 Misc.2d 668, 670 [Sup Ct, New York County 1960], affd 12 A.D.2d 449 [1st Dept 1960]).
Here, the subject trust instrument undisputedly establishes an irrevocable trust, expressing decedent's intent that it "shall be paid over and distributed... in equal shares to the [decedent's] children, per stirpes" after his death, and that decedent cannot benefit from the trust. Article XXII of the trust states that decedent had "given careful consideration of whether this trust shall be revocable or irrevocable" and decedent "declare[d] that it shall be irrevocable."
When he created the trust in 1999, decedent's eight children were named the beneficiaries. Decedent could not just outright revoke the trust since it could only be modified with the consent of all of the beneficiaries, pursuant to EPTL 7.1-9, which did not occur here. The record reflects that decedent disregarded the legal advice of his then-attorney, Mr. Roberts, who had counseled him that the consent of all of the beneficiaries was required to revoke the trust, which, in turn prompted decedent to retain different lawyers in order to accomplish his objective. Critically, there is no dispute in the record that decedent endeavored to terminate the trust and sell the subject premises to Alou. The record confirms that decedent engaged in a series of acts purposefully designed to revert the subject premises back to him so he could sell it for his personal gain. This was in contravention of "Article IV (2)" of a trust that he made irrevocable. Consequently, the 2011 purported revocation is a nullity, void, and of no effect.
In sum, the Court finds there are no triable issues of fact regarding the decedent's 2011 amendments, the 2011 purported revocation, and petitioners' conveyance of the subject premises to decedent, as evidenced by the 2011 deed. No one disputes petitioners' intent in deeding back the subject premises to decedent because he intended to sell it. As the cotrustees, petitioners remained under a duty to the trust beneficiaries to administer the trust solely in the interest of all of the beneficiaries, not just for the benefit of decedent or themselves. The Court further determines that the purported conveyance of the subject premises, by deed dated August 30, 2011, from the petitioners as cotrustees to the decedent, individually, should be set aside, and declares that deed to be null and void (see Matter of Marini, 119 A.D.3d 584, 584-586 [2d Dept 2014]; Cruz v Cruz, 37 A.D.3d 754, 754 [2d Dept 2007]; see generally JML Invs. Corp. v Hilton, 231 A.D.2d 493, 493-494 [2d Dept 1996]).
Accordingly, the objectants are entitled to summary judgment on those branches of their motion for determinations that the 2011 amendment, the purported revocation, and the 2011 deed reflecting a conveyance of the subject premises from petitioners to decedent, are all void and invalid as a matter of law.
What follows next is an extensive discussion about Alou's belated intervention in this accounting proceeding and whether the claims between the parties are properly before this Court as it pertains to the legal ownership of the subject premises.
Alou's Intervention and Interest in the Subject real property
Alou intervenes in this accounting proceeding and opposes that branch of the objectants' motion to the extent they seek declaratory relief affecting its legal title to the subject premises. Alou presses that no adjudication can be made here as to its rights, including whether the deed and conveyance of the realty at issue is found to be void, voidable, or vacated. In opposition, Alou argues that any such relief or determination ought to be denied because no pleading or claim was asserted against it here in relation thereto, that Surrogate Rooney's 2020 order declined to award such relief by finding that only Supreme Court can issue a declaratory judgment, and because there is a related pending action presently before the Supreme Court that was commenced by the objectants, where issue has been joined and Alou has asserted various counterclaims and cross-claims against petitioners, the objectants and, decedent's estate.
Alou urges that even if this Court were to entertain the objectants' arguments concerning the validity of the deed, they failed to establish their burden as a matter of law that Alou is not a bona fide purchaser for value of the subject premises. Alou concedes it agreed to stay the Supreme Court action since this Court's determination of whether petitioners may be surcharged may impact the related action, and because the objectants cannot recover surcharges here and a declaration of title to the subject premises there.
Initially, Alou's contention that this Court lacks personal jurisdiction over it is rendered moot insofar as it sought and was granted intervention under CPLR 1012 based on the undersigned's decision and order. Any jurisdictional defense is deemed waived by Alou.
Next, Alou stresses that this Court lacks subject matter jurisdiction to grant a declaratory judgment in this accounting proceeding that would affect legal title of the subject real property based on a myriad of reasons: the limited powers of a Surrogate's Court, the 2020 order issued by Surrogate Rooney which the objectants did not take an appeal from and, according to Alou, "is res judicata in this proceeding" (emphasis supplied). Alou is of the view that the objectants are inappropriately going beyond the scope of this accounting proceeding based on how they have framed the relief sought in that branch of their motion for summary judgment - namely, for an adjudicatory determination here that the purported conveyance of the subject premises from decedent to Alou, as documented by the 2011 deed, was "in contravention of the terms" of the trust and is "contrary to the law, contrary to the plain language of the Irrevocable Trust, unenforceable, void, and/or voidable, and should be vacated." Alou feels that the declaratory relief sought against it is already the subject of the pending Supreme Court action, which remains the more proper forum.
Finally, Alou contends that even if the Court were to entertain the merits, the objectants are wrong in their belief that Alou was not a bona fide purchaser of the subject premises when it transacted to buy the realty from decedent. In this regard, Alou argues that even if decedent lacked any power to convey the subject premises to Alou, the Alou deed is "merely voidable" but not entirely void. Alou expounds this argument by asserting that it had no notice of any claimed interest by the objectants when it purchased the subject premises from decedent and it lacked knowledge about the supposed impropriety of the preceding conveyances and transfers. Alou espouses that the objectants fail to recognize this critical distinction inasmuch as a voidable deed could still convey real property to a bona fide purchaser for valuable consideration. Alou thus argues that the objectants have failed to demonstrate that there are no genuine issues of material fact(s) regarding the underlying transaction.
In opposing objectants' motion, Alou submits, among other things, an affidavit from Scott Frey, the president of Alou. According to Frey, he formed Alou in or about September of 2011 "for the purpose of holding title to certain investment properties." Frey states therein that Alou bought the subject premises from decedent in October 2011 for $270,000 pursuant to a written contract.
In his affidavit, Frey recounts that he first met decedent during the summer of 2011 after Alou had purchased and was in the process of renovating three properties across the street from the subject premises. Frey states that decedent told him that the subject premises "was on the market for $275,000" and asked him if he wanted to buy it, to which Frey initially responded that he was not interested since he did not want to pursue "additional funding" from a bank. Frey continues in his affidavit that he agreed to look at the premises when decedent asked him if he "wanted to see... [it] anyway." Frey represents that after he saw the subject premises, he offered $270,000 to decedent with a proposal that he give "a purchase money mortgage in connection with the acquisition" and decedent "agreed to consider" it.
Frey states in his affidavit that decedent later accepted his offer. Frey describes how the transaction came about, stating that he and decedent formally entered into a written residential contract of sale, that Alou made a down payment of $27,000 to decedent, and then decedent gave Alou a purchase money mortgage in the sum of $225,000 as security for the seller financing. Frey describes that a closing occurred on October 28, 2011, when decedent signed and delivered the deed to Alou memorializing the conveyance and Frey, on behalf of Alou, executed a mortgage note in favor of decedent in the amount of $225,000 to secure payment of the indebtedness; whereafter, both instruments were subsequently recorded in the County Clerk's Office on November 29, 2011. Frey further states that Alou "issued a series of checks to close title" at the closing, which are outlined in his affidavit, and he represents that Alou paid $51,630.34 to finalize the transaction at the closing. Frey represents that Alou is current on its mortgage payments which have been timely made to decedent's estate. Frey also says that a title report of the subject premises confirmed that "good and marketable title... was vested in decedent" when he sold the property in October of 2011. Lastly, Frey represents that he had no personal knowledge that anybody had a claim or interest against the subject premises, including the parties.
Contrary to the objectants' view, Alou need not discuss the legality of the amendments and revocation of the trust as those things predate decedent's sale of the property to Alou; nor was Alou in any way involved with the subject trust from inception through when it was improperly revoked by decedent. In other words, Alou had nothing do with the trust when it purchased the subject premises from decedent.
Petitioners assert that the objectants are improperly trying to relitigate the issue of whether this Court has the power to issue a declaratory judgment under CPLR 3001 since, in the 2020 order, Surrogate Rooney already decided that such power is vested in the Supreme Court.
The objectants counter that this Court is empowered to grant all of the relief sought by them on this motion. They claim that their objections do not seek a declaratory judgment, but merely a determination that the Alou deed between decedent and Alou is" ultra vires, in bad faith, contrary to the law, contrary to the plain language of the Irrevocable Trust, unenforceable, void, and/or voidable, and should be vacated." For reasons further explained, the claims between the parties and Alou are not properly before this Court based on the pleadings and current posture of this accounting proceeding.
To begin with, the undersigned does not entirely disagree with the objectants' position that the Surrogate's Court has expansive jurisdiction and could theoretically grant them all of the relief requested. But their independent decision to commence an action in Supreme Court against Alou and petitioners undercuts their argument. A recap of what has occurred is illustrative.
Relevant here, in deciding the prior cross motions filed by the objectants and Alou in the 2020 order, Surrogate Rooney - citing CPLR 3001, 3017 (b), and SCPA 209 (10) - held that the proper vehicle for a "declaration as to [Alou's] rights and other legal relations of the parties" to the subject property is by commencing a declaratory judgment action in Supreme Court to determine those claims (see generally SCPA 201 [3]). In so doing, Surrogate Rooney denied the objectants' and Alou's competing summary judgment motions. He noted that the "precedent in the Second Department has essentially declined to extend the Surrogate's broad grant of authority to include the power to issue a declaratory judgment... which is absolutely vested in the Supreme Court."
Both the objectants and Alou filed cross-appeals of the 2020 order for different reasons. Alou's appeal was from that portion of the 2020 order which denied its motion for summary judgment to the extent it sought a declaratory judgment on the claims it had asserted in the prior compulsory accounting proceeding. Alou withdrew its appeal in April 2021. The objectants advised at a later court conference that they, too, withdrew their appeal of the 2020 order.
As to the commencement of the Supreme Court action, the objectants assert that they, among others, instituted that action in October of 2021 to preserve any claims where the statute of limitations would soon expire (see generally CPLR 212 [a]). The Court notes that the plaintiffs listed in the action are the trust, DeMarco, and Bucchi, both in her capacities individually and as the trustee (herein collectively referred to as the Plaintiffs). Initially, the Plaintiffs only named Alou as a party-defendant. Petitioners later were joined in their capacity as preliminary coexecutrices of decedent's estate.
By Decision and Order dated June 23, 2022, Justice Grossman partially granted Alou's motion to dismiss which, among other things, sustained the Plaintiffs' quiet title claim against Alou - a cause of action predicated on Real Property Actions and Proceedings Law (RPAPL) article 15 (see NY St Cts Elec Filing [NYSCEF] Doc No. 37, decision and order, in Bucchi et al. v. Alou Corp. et al, Sup Ct, Putnam County, index No. 500324/2022). Justice Grossman dismissed the Plaintiffs' causes of action for an accounting and a constructive trust, denied - at the time - imposing a stay of the action, and directed the Plaintiffs to join decedent's estate as a party-defendant in the action (see id.).
The Plaintiffs later filed a verified complaint on July 20, 2022. They simultaneously joined petitioners in the action in their capacities as co-preliminary executrices. In the wherefore clause of their amended complaint, the Plaintiffs seek, inter alia, a declaration that the trust owns the subject premises "in fee simple for the benefit of the initial beneficiaries... and [a]ll] are entitled to full possession and use"; a declaration that "Alou... be barred and forever disclosed of any right, title, interest, estate, mortgage, lien, or claim to the [subject] Property"; and directing the County Clerk to "correct the public records regarding the... Trust's title to the Property."
On August 9, 2022, Alou, in turn, interposed an answer with counterclaims and cross-claims for a declaration of title to the subject property as a bona fide purchaser, adverse possession, restoration of benefits, and for reimbursement for expenses incurred in improving the subject property since acquisition (see NYSCEF Doc No. 43, verified answer with counter claims and cross-claims at 7-9, in Bucchi et al.).
Petitioners, who are also self-represented in the Supreme Court action, filed an answer on August 30, 2022, which was later amended on September 9, 2022 with counterclaims and cross-claims (see NYSCEF Doc Nos. 46, 50 answer, in Bucchi et al.). Justice Grossman has stayed the action due to the ensuing litigation here (see NYSCEF Doc Nos. 62, 64, 66 court notices, in Bucchi et al.).
Beginning with the undersigned's powers, subject matter jurisdiction of the Surrogate's Court has been expanding since the Court of Appeals seminal ruling in Matter of Piccione (57 N.Y.2d 278 [1982]). This Court's research reveals that a Surrogate has the power to award all of the relief concerning the decedent's affairs without issuing and resorting to a declaratory judgment (see SCPA 201 [3]; 209 [4], [10]; Matter of Greenwold, 236 A.D.2d 400, 401 [2d Dept 1997]; Matter of Langfur, 198 A.D.2d 355, 356 [2d Dept 1993]; see also Carmel v Shor, 250 A.D.2d 475, 476 [1st Dept 1998]).
In Carmel v Shor, the First Department, relying on the Second Department's opinion in Matter of Greenwold, held that the Surrogate's Court could grant various relief requested "albeit not necessarily in the form of a declaratory judgment" (see Carmel v Shor, 250 A.D.2d at 476 [emphasis added]; Matter of Greenwold, 236 A.D.2d at 401). Still, some fellow Surrogates have differing views as to whether a Surrogate has that power (compare Matter of Trump, 68 Misc.3d 593, 595 [Sur Ct, Queens County 2020], with Matter of Wontz, 67 Misc.3d 1223 [A], *2 [Sur Ct, Orange County 2020]).
In any event, there is no rigid, bright line test to be applied to such a jurisdictional question. "Each decision is sui generis and greatly depends on the facts giving rise to the legal dispute. In fact, even the specific type of relief sought is not necessarily determinative" (Matter of Trump, 68 Misc.3d at 595).
Here, although not couched as such in their objections nor their motion, that branch of the objectants' motion requesting to annul and vacate the Alou deed, more or less, sounds somewhat like it is asking for a declaratory judgment. Indeed, the objectants explicitly request for this Court to make a determination that the Alou deed is "unenforceable, void and/or voidable, and should be vacated." While a party's objections to an accounting and the account itself constitute as pleadings in Surrogate's Court (see SCPA 302 [1] [a]; Matter of Baum, 7 Misc.3d 1027 [A], *1 [Sur Ct, Nassau County 2005]), a close review of the objections filed by the objectants in this accounting proceeding does not clearly reflect that the objectants are asserting direct claims in the form of a declaratory judgment as against Alou relative to the subject premises.
For its role here, Alou's reply to the objections contains 16 affirmative defenses and denies nearly all of the allegations in the accounting and the objections. Alou maintains that it is entitled to retain the subject property as a bona fide purchaser for value.
In their objections, the objectants did not sufficiently plead a claim or cause of action as against Alou to vacate the Alou deed and mortgage between decedent and Alou. As to Alou, objection "1 (c.)" on page four simply reflects that the objectants "object" to Schedule A (principal received) of the amended accounting insofar as it concerns "the purported conveyance" of the subject premises from decedent to Alou in October of 2011 (which is payable through a note and secured by a purchase money mortgage from Alou to decedent). Also, objection "7 (b.)" as to "Schedule G" (personal property remaining on hand) is grounded on petitioners' failure to list the principal assets at the close of the accounting period "to the extent that Alou... is deemed a good faith purchaser for value and/or the Alou Transaction is not vacated, [and] the proceeds from such purported sale, including the Mortgage payments, as well as all amounts due or to come due under the Note and Mortgage." Lastly, in objection "8 (b.)" as to Schedule A-2 (income collected), the objectants fault petitioners for failing to render an account for the mortgage payments collected with respect to the subject property "allocable to income... to the extent that Alou Corp. is deemed a good faith purchaser for value and/or the Alou Transaction is not vacated." And even after Alou was granted intervention, the objectants did not amend or supplement their objections by leave of the Court (see CPLR 3025 [b]; Matter of Rouson, 32 A.D.3d 956, 958 [2d Dept 2006]; see also Matter of Hopson, 2000 WL 35916452, *1 [Sur Ct, Nassau County 2000]; compare Matter of Nicholson, 2022 NY Slip Op 32138[U], *5-7 [Sur Ct, New York County 2022]).
In its answering pleading, Alou asserts various affirmative defenses, including, among others, that the objections fail to properly state a claim or cause of action as against Alou, that any claims in the objections concerning its rights, title, or interest in the subject premises are barred by documentary evidence and further barred by the doctrines of election of remedies, statute of limitations, res judicata, estoppel, and/or acquiescence. Alou also raises an affirmative defense to the extent that the objectants claim that decedent perpetrated fraud in conveying the subject premises by deed and that Alou's interest is unimpaired by Real Property Law § 266. The Court notes that Alou did not file any motion with respect to its pleading or its affirmative defenses. Furthermore, Alou has not directly asserted any counterclaim or cross-claim against the objectants or petitioners in this accounting proceeding.
Based on the parties' pleadings as constituted in this accounting proceeding, and the earlier determinations made herein, the Court can make a further determination that decedent's purported conveyance of the subject property by the Alou deed was in contravention of the terms of the trust. Decedent's 2011 conveyance violated Articles VII and XIX of the trust because he exercised that power for his own benefit and/or for the benefit of his estate. He seemingly did so in order to sell the property to Alou and to retain the proceeds of the sale. This is as far as this Court can go based on the limited record before it.
To the extent that the objectants' seek a determination that the Alou deed is "unenforceable, void, and/or voidable, and should be vacated," the Court declines to reach and decide that issue because those claims were initially asserted in the pending Supreme Court action and, thus, should properly be resolved there.
"Pursuant to CPLR 3001, the Supreme Court 'may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed'" (21st Century Pharm. v American Intl. Group, 195 A.D.3d 776, 778 [2d Dept 2021]). "As a court of original, unlimited and unqualified jurisdiction, the New York State Supreme Court is vested with general original jurisdiction" (id.; [internal quotation marks and citations omitted]; see NY Const, art VI, § 7 [a]; Judiciary Law § 140-b; Pollicina v Misericordia Hosp. Med. Ctr., 82 N.Y.2d 332, 338-339 [1993]).
In contrast, "[t]he Surrogate's Court is a court of limited jurisdiction which has the power to entertain matters 'relating to the affairs of decedents'" (Solomon v Solomon, 136 A.D.2d 697, 698 [2d Dept 1988], quoting NY Const, art VI, §§ 12 [d], [e]; see SCPA 201 [3]; Matter of Stortecky v Mazzone, 85 N.Y.2d 518, 523-524 [1995]). Surrogate's Court is not a court of co-ordinate jurisdiction to the Supreme Court. As such, this Court would be bound by any judgment adjudicating the parties' rights to the subject premises. This is all to say that the objectants cannot seek similar relief in different forums.
A further reason for awarding limited relief here on the objectants' motion is that Surrogate Rooney's 2020 order remains law of the case in this accounting proceeding. "The doctrine of the law of the case is a rule of practice, an articulation of sound policy that, when an issue is once judicially determined, that should be the end of the matter as far as Judges and courts of co-ordinate jurisdiction are concerned. The doctrine seeks to prevent relitigation of issues of law that have already been determined at an earlier stage of the proceeding. The law of the case doctrine applies only to legal determinations that were necessarily resolved on the merits in a prior decision" (Matter of Hanlon, 189 A.D.3d 1405, 1407 [2d Dept 2020], lv denied 37 N.Y.3d 1020 [2021] [internal quotation marks, brackets, and citations omitted]). If a prior adjudication becomes controlling in a proceeding in a court of co-ordinate jurisdiction, then it also remains controlling in such court, "and if no appeal is taken from the prior adjudication, it is conclusive as the law of the case" (Gebbie Found. v Rogerson, 62 Misc.2d 944, 948 [Sup Ct, Erie County 1970] [internal quotation marks and citation omitted]).
Here, the arguments raised in support of various relief requested by the parties in their prior summary judgment motions before Surrogate Rooney concerning each of their legal rights as to the subject premises were, in effect, previously considered and decided in the 2020 order. Neither the objectants nor Alou ultimately pursued appeals of Surrogate Rooney's order. Law of the case applies to courts of co-ordinate jurisdiction. Application of it must be made here as far as the Surrogate's Court is concerned and cannot be contravened by this Court as a court of co-ordinate jurisdiction (cf. Matter of Hanlon, 189 A.D.3d at 1407-1408).
True, the "Supreme Court and Surrogate's Court have concurrent jurisdiction in matters involving decedents' estates. Generally, where a dispute is brought in both courts, jurisdiction should continue to be exercised by the court whose process was first issued. However, it is also true that jurisdiction should continue where all rights can be properly determined in a single action. Although Surrogate's Court has broad jurisdiction over the affairs of decedents, such jurisdiction does not extend to independent matters involving controversies between living persons" (Matter of Ryan, 212 A.D.3d 902, 903-904 [3d Dept 2023], appeal dismissed 39 N.Y.3d 1095 [2023] [internal quotation marks, brackets, and citations omitted]).
In this case, a chronological outline of the filings in this accounting proceeding and the Supreme Court action should be highlighted. It underscores that the objectants appear to be seeking similar relief in different forums. It shows that they first raised their claims as against Alou in Supreme Court. Insofar as the objectants request for a determination that the Alou deed be "unenforceable, void and/or voidable, and should be vacated," such relief is inextricably connected to the issues in the underlying Supreme Court action.
Petitioners here were compelled to file for judicial settlement of the intermediate accounts of the estate and the trust because the objectants' petition for a compulsory accounting was granted in June of 2020. Approximately one year later, petitioners commenced this accounting proceeding with the citation return date of September 24, 2021. On October 27, 2021, the Plaintiffs, comprised of the objectants, then commenced the Supreme Court action by filing a summons with notice on October 27, 2021, initially naming Alou as the only party-defendant. The Plaintiffs filed the complaint on March 1, 2022, asserting various causes of action against Alou, including a quiet title action pursuant RPAPL article 15. Prior to discovery, Alou filed a motion to dismiss the Supreme Court action on March 23, 2022 predicated on various grounds under CPLR 3211.
While the action was initially commenced in Westchester County, the Plaintiffs and Alou later consented to designate Putnam County as the appropriate venue (see NYSCEF Doc No. 8 stipulation, in Bucchi et al.).
Justice Grossman decided Alou's motion to dismiss in June 2022, sustaining the Plaintiffs' quiet title claim against Alou. The order required the Plaintiffs to join petitioners as defendants. The Plaintiffs did so by naming them as party-defendants in their capacities as preliminary executors of decedent's estate when the Plaintiffs filed a verified complaint on July 20, 2022. Alou filed its answer with counterclaims and cross-claims on August 9, 2022. Petitioners filed what appears to be an amended answer with counterclaims and cross-claims on September 9, 2022.
Petitioners amended answer reflects that it is unverified.
Meanwhile, petitioners did not cite Alou as an interested party in this accounting proceeding where, in contrast, the objectants previously had cited Alou on their petition to compel the accounting. The objectants filed their objections to the accounting on April 5, 2022 - well after petitioners had been directed to file their amended accounting pursuant to this Court's January 2022 order granting the objectants' motion for a more definite statement. The objectants filed this motion seeking partial summary judgment on December 21, 2022. All of this happened when Alou had not been formally joined in this accounting proceeding. Notwithstanding, Alou eventually moved to intervene in March of 2023, whereupon the undersigned held this motion in abeyance, pending a decision on the intervention motion. After its motion was fully briefed, Alou was granted intervention by the undersigned's order dated May 5, 2023. The objectants filed their reply papers to this motion on June 12, 2023, when it was deemed fully submitted.
The Court carefully rehashes all of the significant procedural history in this proceeding and the Supreme Court action to show that the same essential claims relative to the subject premises were first asserted by the objectants in the pending Supreme Court action, not initially in this accounting proceeding. The subject trust is a named plaintiff-party in the action. The Plaintiffs and Alou, in effect, consented to Supreme Court being the proper forum to adjudicate their rights, including the validity of decedent's conveyance to Alou in October 2011. The parties can obtain complete relief in the Supreme Court action where process was first issued and where broader jurisdiction can be exercised. "Allowing both courts to address the issue would result in duplicity of proceedings with the attendant increase in litigation, expense and confusion, would be an open invitation to forum shopping by the bar[,] and would obstruct the orderly administration of justice" (Matter of McNeil v McNeil, 205 A.D.3d 43, 45 [3d Dept 2022] [internal quotation marks, brackets, and citations omitted]). All the necessary parties have been joined in the Supreme Court action.
Indeed, "[t]he Supreme Court and the Surrogate's Court have concurrent jurisdiction over the administration of a decedent's estate" (Cipo v Van Blerkom, 28 A.D.3d 602, 602 [2d Dept 2006]; see NY Const, art VI, § 12[d] ["(t)he [S]urrogate's court shall have jurisdiction over all actions and proceedings relating to the affairs of decedents... administration of estates and actions and proceedings arising thereunder or pertaining thereto... and such other actions and proceedings, not within the exclusive jurisdiction of the supreme court, as may be provided by law"]). The Surrogate's Court also has power to exercise equity jurisdiction as may be provided by law (see NY Const, art VI, § 12 [e]; see also SCPA 209 [3], [4], [10]).
Being mindful of its broad powers, the posture of this case does not present a question as to whether this Court should decline jurisdiction. An answer to that question would require that it is "abundantly clear that the matter in controversy in no way affects the affairs of [the] decedent or the administration of his estate" (Matter of Piccione, 57 N.Y.2d at 288). The undersigned does not answer that query in the affirmative or reach such a conclusion.
What's more, it is important to note that no party moved in the Supreme Court to remove and transfer the action to the Surrogate's Court pursuant to CPLR 325 (e), thus allowing the Supreme Court to exercise its independent power under article VI, § 19 (a) of the New York Constitution (see e.g. Joffe v Widelitz, 134 A.D.3d 766, 766-767 [2d Dept 2015]; see also SCPA 102 ["(t)he CPLR and other laws applicable to practice and procedure apply in the [S]urrogate's court"]). In the absence of a proper motion seeking a transfer, the claims should continue to be litigated and resolved in Supreme Court especially where, as here, no party filed a motion seeking a transfer and removal there (see Matter of Burns, 287 A.D.2d 862, 863 [3d Dept 2001]). Because the issue of legal title to the subject premises was first raised in the Supreme Court action, the validity of the Alou deed should be determined there (see Matter of McNeil v McNeil, 205 A.D.3d at 45; cf. Matter of Rosenblatt [Oglesby], 76 Misc.3d 277, 283 [Sur Ct, Queens County 2022]).
Sometimes, removal of an action from Supreme Court is usually appropriate since "the Surrogate's Court has full general jurisdiction in law and in equity with respect to all matters relating to the estates and affairs of decedents" (Hoffman v Sitkoff, 297 A.D.2d 205, 205 [1st Dept 2002] [noting that CPLR 325 (e) does not contain mandatory language]; see SCPA 501 [1] [a], [b]).
While this Court has broad powers and it could theoretically grant relief like annulling and vacating a conveyance and discharging a mortgage (see e.g. Matter of Marini, 119 A.D.3d at 584-586), the Court finds that the specific claims relative to the subject premises as it relates to Alou are not properly before the Court in this accounting proceeding. Critically, no one filed a petition in the Surrogate's Court explicitly requesting affirmative relief to invalidate the Alou deed and mortgage (see generally Matter of Blango, 56 Misc.3d 1217 [A], *1-3 [Sur Ct, Kings County 2017]; Matter of Bowser, 52 Misc.3d 1215 [A], *2 [Sur Ct, Kings County 2016], affd 167 A.D.3d 1001 [2018]). Absent pleadings with specific relief requesting a determination between the parties relative to the subject premises, the Court cannot grant such relief on a limited record.
In effect, the Plaintiffs (inclusive of the objectants) charted their own course and chose Supreme Court as the forum to litigate the claims between the parties, the trust, and Alou (cf. Matter of Ryan, 212 A.D.3d at 904; Matter of Aaron, 232 A.D.2d 758, 760 [3d Dept 1996]). Given the somewhat sparse record before it concerning Alou and since the essential claims between all of the parties are more properly raised and asserted in the Supreme Court action, this Court declines to entertain and decide that branch of the objectants' motion to make a determination that the Alou deed is "unenforceable, void, and/or voidable, and should be vacated." Thus, that branch of their motion is denied.
To reiterate, the Court determines that decedent contravened Articles VII and XIX of the trust when he purportedly conveyed the subject property by the Alou deed. Given the determinations here and in awaiting disposition of the Supreme Court action, the Court dismisses so much of the objections lodged against Alou and the transaction between it and decedent. Additionally, the Court dismisses the 16 affirmative defenses asserted in Alou's "Reply to Objections" since those are inherently connected to the Supreme Court action.
The Accounting
As a preliminary finding, the record here reflects that there are no issues of fact as to whether petitioners acted as de facto fiduciaries under the trust since after their appointment. They apparently concede that they were substituted as the cotrustees since 2007 (compare Matter of King, 194 A.D.2d 726, 726 [2d Dept 1993]).
"Where a party acts like a trustee and assumes the duties of a trustee, that party will be considered a de facto trustee and held to account for trustee-related activities, the same as a de jure trustee" (Matter of Deyette, 16 Misc.3d 1124 [A], *3 [Sup Ct, Nassau County 2007] [internal citation omitted]). The facts here confirm that petitioners possessed all of the powers of a fiduciary under the trust, and as successor cotrustees, transferred the subject premises to decedent by virtue of the 2011 deed. Accordingly, petitioners were duty-bound to the trust as the de facto fiduciaries from April 2007, when decedent substituted them, including through August 2011, when decedent improperly revoked the trust (see Matter of Sakow, 219 A.D.2d 479, 482-483 [1st Dept 1995]; see generally Matter of Beiny, 2003 NY Slip Op 51139[U], *8 [Sur Ct, Bronx County 2003], appeal dismissed 16 A.D.3d 221 [2005], lvs denied 5 N.Y.3d 710, 711 [2005]).
Turning to the accounting, the objectants contend that petitioners' amended accounting is incomplete and inaccurate, insomuch as it fails to reflect that the subject property was a principal asset of the trust. The objectants assert that the amended accounting is replete with several errors and omissions - including a failure to reflect whether any principal was received, distributed, or remaining in hand, under Schedules A, E, and G, respectively. Also, the objectants fault petitioners for failing to account for the period through and including February 28, 2022, not ascribing any values in the accounting, neglecting to marshal the funds from rental income or the mortgage payments made by Alou under the mortgage, and for failing to account for the remaining trust income consisting of rental payments or any other divided or interest earned on the trust asset.
In opposition, petitioners submit, among other things, affidavits from Tony and Gloria Aloisi, decedent's wife from 1988 until his death. In his affidavit, Tony states that after he was substituted by decedent as the trustee in 2002, he "received no instructions or documents, such as bank statements" from Bucchi. Tony states that he "followed the same procedure/protocol" as Bucchi purportedly did. In essence, Tony confirms that he did not maintain an account of the trust.
Petitioners, in opposition, claim that Bucchi was acting as the trustee "in name only" during the time of her appointment. Petitioners apparently fault Bucchi and Tony for not maintaining an account of the trust from 1999 to 2007, when petitioners were substituted as successor cotrustees. The thrust of petitioners' argument in this regard is that Bucchi did nothing in her fiduciary role as the prior trustee and did not maintain a proper accounting of the trust; and as successor cotrustees, they were only able to obtain partial documentation of decedent's tax records, thereby hindering their capability to provide a full, complete, and accurate accounting from 1999. Petitioners thus maintain that it is "impossible" for them to provide a full and complete accounting, but they did so "to the best of their ability." Petitioners further claim that when they were substituted as the cotrustees in 2007, they created an account from which "all funds were to flow through"; but at that time, the subject property was not generating rental income since there were no tenants residing there and that no monies were deposited.
Of note, Alou does not in any way contest the legitimacy or accuracy of petitioners' amended accounting in its responsive papers. In other words, Alou does not oppose that branch of the objectants' motion in which they seek summary judgment on their claim that petitioners have rendered an inaccurate or incomplete accounting.
In her affidavit, Gloria states that decedent created the trust "to protect" the subject premises, naming Bucchi as the initial trustee; but afterwards, "she changed, [became] elusive," and had "less contact" with her and decedent. Gloria states that decedent removed Bucchi as the trustee because "she had shown the trust" to her mother, Anita Aloisi, who was decedent's ex-wife for about 25 years. Gloria avers that decedent "became very concerned" and felt Bucchi "had behaved in a very unethical manner." According to Gloria, decedent then consulted his attorneys for legal advice -who had previously assisted him in creating the trust - to guide him in removing Bucchi as the trustee in order to substitute Tony. Gloria avers that Bucchi never "collected any rents" during her entire tenure as trustee from 1999 to 2002 and that the rents "were given directly" by the tenant to decedent. Gloria represents in her affidavit that decedent removed Tony as the successor trustee because DeMarco alerted him that she received "several calls[] from creditors... [about] financial issues" that Tony was having, which she believed could "negatively impact" the trust. Gloria states that decedent declined DeMarco's invitation to appoint her the successor trustee because she was "already involved with... [Anita Aloisi's] finances"; and decedent instead designated petitioners as the successor cotrustees.
At her examination before trial, Vigne testified that decedent created the trust for Medicaid planning purposes and it was an "income-only trust," explaining that he was trying to "protect" the subject premises. She testified that when decedent amended the trust in 2007 by naming petitioners as successor trustees, she was not made aware of her role and obligations as a cotrustee, but Vigne still acknowledged she was aware of her duty to account. Vigne testified that petitioners opened up a fiduciary account in or about May of 2011, and it was the only one they used. Vigne further testified that she did not make any distributions of income or file tax returns for the trust reflecting rental income. Vigne also stated that she did not retain counsel for legal advice until after decedent's death. Vigne acknowledged that decedent sold the subject property prior to the revocation and avers she has no knowledge of what he did after the sale. Vigne testified that she believes that decedent probably had a joint bank account with his wife Gloria Aloisi at the time of his death. Vigne explained that she provided all of the requested discovery documents in her possession to the objectants; but she did not request anything from accountants, nor did she conduct a search of her emails or documents in other computers.
The Court is unpersuaded by petitioners' contentions and submissions in opposing that branch of the objectants' motion seeking summary judgment as to their amended account.
We begin with the fundamental principle that accountability is an essential element of all fiduciary relationships (see Matter of Malasky, 290 A.D.2d 631, 632 [3d Dept 2002]; Bauer v Bauernschmidt, 187 A.D.2d 477, 478 [2d Dept 1992]; see generally EPTL 11-1.7). "It is well established that a fiduciary owes a duty of undivided and undiluted loyalty to those whose interests the fiduciary is to protect. In this respect, a fiduciary acting on behalf of an estate is required to employ such diligence and prudence to the care and management of the estate assets and affairs as would prudent persons of discretion and intelligence in their own like affairs. This requires that the fiduciary utilize good business judgment" (Matter of Blaine, 209 A.D.3d 1124, 1126 [3d Dept 2022] [internal brackets, quotation marks, and citations omitted]; see Matter of Carbone, 101 A.D.3d 866, 868 [2d Dept 2012]).
"A fiduciary, as an executor or trustee, is obligated to account for his or her decisions and actions in administering an estate or trust" (Matter of Spacek, 155 A.D.3d 747, 748 [2d Dept 2017] [internal brackets omitted]; accord Matter of Lee, 153 A.D.3d 831, 832 [2d Dept 2017]). Moreover, it is incumbent upon a fiduciary to maintain "clear and accurate records," absent which all presumptions and all doubts are to be resolved against him or her (Matter of Mink, 91 A.D.3d 1061, 1063-1064 [3d Dept 2011]; see Matter of Carbone, 101 A.D.3d at 869). The burden of proof as to the propriety of all claims and expenses is upon the accounting party (see Matter of Shulsky, 34 A.D.2d 545, 547 [2d Dept 1970], appeal dismissed 27 N.Y.2d 743 [1970]).
"Under article 22 of the Surrogate's Court Procedure Act, fiduciaries such as executors... have an obligation to account for their actions. A fiduciary may voluntarily proceed to obtain formal judicial settlement of an account under SCPA 2208. Pursuant to SCPA 2208, a fiduciary may present to the court his [or her] account and a petition praying that his [or her] account be judicially settled and that all necessary and proper parties be required to show cause why such settlement should not be had" (Matter of Holterbosch, 216 A.D.3d 783, 784 [2d Dept 2023]).
The objectants' main argument is that petitioners have rendered an incomplete and inaccurate accounting for each and every schedule thereof by, in essence, failing to include the subject premises (the trust corpus) as the principal asset. In this regard, the objectants assail the accounting insomuch as the property itself is not reflected in the accounting, for petitioners' failure to ascribe any value thereto, no indication of an increase or decrease in the principal, the alleged distribution, monies received, or the history of mortgage payments - which, according to the objectants, was required to be properly reflected in Schedules A, A-1, A-2, B, E, and G.
The objectants urge that the value of the subject premises should be reflected as an asset in Schedule G of Petitioners' amended accounting.
"In an accounting proceeding, the party submitting the account has the burden of proving that he or she has fully accounted for all the assets of the estate, and this evidentiary burden does not change in the event the account is contested. While the party submitting objections bears the burden of coming forward with evidence to establish that the account is inaccurate or incomplete, upon satisfaction of that showing the accounting party must prove, by a fair preponderance of the evidence, that his or her account is accurate and complete" (Matter of Tract, 284 A.D.2d 543, 543 [2d Dept 2001] [internal quotation marks and citations omitted]).
The proponent of the accounting may accompany such with a good faith affidavit (see Matter of Salvati [Goldstein], 75 Misc.3d 1231 [A] at *5). "[T]he objectants have the burden to show with reasonable certainty that the estate has more assets than are accounted for and the accounting party failed to act prudently with regard to handling the administration of the estate" (id.).
"In reviewing the accounting proceeding, it is settled that petitioner's accounting and the objections thereto constitute the pleadings of the parties, defining the issues to be tried. If left uncontested, the account stands proved pro confesso except in as far as it may be patently contrary to law" (Matter of Curtis, 16 A.D.3d 725, 726 [3d Dept 2005] [internal quotation marks and citations omitted]; accord Matter of Johnson, 166 A.D.3d 1435, 1436 [3d Dept 2018]).
Here, the Court finds that the objectants satisfied their prima facie burden of demonstrating that petitioners' amended account is either inaccurate or incomplete. Petitioners failed to rebut that showing. Importantly, the amended account reflects no value for principal received, realized increases in principal, and distribution of principal; lists $38,845 in realized decreases; that $22,300 was paid for creditor claims; that $23,900 was collected in income; and reflects a balance of zero for principal on hand and income on hand as of August 30, 2011. Because the accuracy and legitimacy of nearly all of the objections is apparent from a plain reading of the amended account, there are no material factual issues presented which need to be explored that warrant conducting a hearing. As the cotrustees from 2007 to about August 2011 when the trust was improperly revoked, it was incumbent upon petitioners "to maintain clear and accurate records, absent which all presumptions and all doubts are to be resolved adversely to [them]" (Matter of Carbone, 101 A.D.3d at 869 [internal quotation marks, ellipses, and citations omitted]).
The objectants demonstrated that the trust was not properly administered or accounted for since petitioners were appointed as successor cotrustees in 2007. Despite acknowledging their fiduciary roles, petitioners' accounting omits the trust property as an asset, including before its purported revocation in 2011 (see generally 22 NYCRR 207 ["Accountings"]). At her examination before trial, Vigne conceded that no appraisal was done of the subject premises, that petitioners are unaware of the total value of the trust property and, so, they cannot ascribe any value to it or fully account for principal received. Petitioners also failed to account for an increase or decrease in principal when they purportedly conveyed the subject premises to decedent by virtue of the 2011 deed. Petitioners also did not reflect any distribution in the accounting. The objectants have thus made a prima facie showing of their entitlement to judgment, as a matter of law, with respect to those objections that petitioners failed to fully account for the trust asset vis-à-vis the subject premises or that it could have been undervalued.
In opposition, petitioners failed to raise a triable issue of fact. The arguments made in their opposition papers are conclusory and unsubstantiated, including their supposition that Bucchi did not provide a full accounting to them when they were appointed in 2007. The question of pursuing Bucchi, or Tony, as the predecessor trustees was an exercise of judgment that petitioners made on their own accord (see generally Matter of William M. Kline Revocable Trust, 196 Misc.2d 66, 75-76 [Sur Ct, Monroe County 2003]). Furthermore, "a successor trustee is only responsible for the assets which come into his or her hands, and has no particular legal duty to seek an accounting from his or her predecessors" (Matter of White [Green], 128 A.D.3d 1366, 1368 [4th Dept 2015] [internal quotations, brackets, and citation omitted]).
Here, there is no question that the subject property was still in the trust in 2007 when petitioners were purportedly substituted for Tony as the cotrustees. Moreover, the objectants are correct in their contention that the documentary submissions filed as a part of petitioners accounting make it very difficult to follow what is accounted for, since it appears that the documents and figures are inconsistent. The objectants thus also proved that petitioners did not carefully manage the trust asset (see Matter of Anolik, 274 A.D.2d 515, 515-516 [2d Dept 2000]). Because petitioners failed to raise a triable issue of fact in opposition to the objectants' motion for partial summary judgment, the Court grants that branch of the objectants' motion to sustain so much of their objections to the amended accounting - excluding any purported claims raised therein as against Alou.
The Objectants' Motion to Surcharge the Petitioners
"The Surrogate's Court is governed by principles of equity as well as of law," and "it is not prevented by any legal restriction from doing exact justice to any of the parties" (Matter of Carbone, 101 A.D.3d at 868 [internal quotation marks, brackets, and citation omitted]). Notwithstanding an incomplete or inaccurate accounting, "[t]he Surrogate's Court is empowered to state the account and make such a decree as justice requires" (id.). To that end, where, as here, the objectants satisfy their prima facie burden that the accounting is inaccurate or incomplete, and petitioners, as the fiduciaries, fail to rebut it, the Court may impose surcharges upon petitioners (see Matter of Carbone, 101 A.D.3d at 868-869; Matter of Acker, 128 A.D.2d 867, 867-868 [2d Dept 1987]).
The objectants claim that petitioners be surcharged for failing to submit a complete and accurate account, for breaching their fiduciary obligations concerning the trust, for causing "further losses" that the objectants and the trust have suffered, and for lost gains which they have not fully realized. The objectants assert that the amount of the damages and surcharges should be determined later after an inquest.
Whether a surcharge should be imposed depends on a balanced and perceptive analysis. Generally, "[a] surcharge is warranted where a demonstrated financial loss is suffered as a result of the fiduciary's imprudent conduct" (Matter of Braasch, 140 A.D.3d 1341, 1343 [3d Dept 2016]). "[T]he objectants must show that a financial loss resulted from the trustee's negligence or failure to act prudently" (Matter of JP Morgan Chase Bank, N.A., 133 A.D.3d 1292, 1297 [4th Dept 2015], lv denied 27 N.Y.3d 901 [2016] [internal quotation marks, and citations omitted]).
Here, the objectants' claim a surcharge is appropriate against petitioners, but that it be deferred. As the objectants point out, the Court cannot enter a final judgment judicially settling the accounting since it is inaccurate or incomplete. So, the objectants request to proceed to an inquest on damages and surcharge petitioners. The Court cannot yet proceed to a hearing on damages where there is an overarching dispute between the parties and Alou as to the legal rights of the subject premises. That dispute must now be resolved in the Supreme Court action.
The Court points out that the objectants' motion papers are minimally briefed on this issue. In view of the procedural posture of this proceeding and the undetermined issues in the parallel Supreme Court action involving Alou and the parties, the Court has no occasion to decide the issue of surcharges. A resolution of the issues in the Supreme Court action could later warrant an assessment of a conditional surcharge against petitioners. Given these circumstances, the Court shall defer the issue of whether any surcharges should be imposed upon petitioners (see generally Matter of Elaine Langer Trust, 179 A.D.3d 1061, 1062-1063 [2d Dept 2020]). Of course, the objectants may later renew their motion for surcharges depending on the outcome of the Supreme Court action and should the circumstances warrant such an application.
The Objectants' Request for Attorneys' Fees from the Petitioners
Finally, the objectants request attorneys' fees from petitioners under SCPA 2110 and the Hyde factors based on, inter alia, the alleged breach of their fiduciary duties and for what they believe has been protracted litigation caused by petitioners resulting in substantial time and effort being expended from the objectants and/or their counsel.
The Surrogate's Court has broad discretion under SCPA 2110 to consider a wide range of factors in fixing attorneys' fees. It must consider various factors, including "the amount of time involved, the degree of difficulty of the matter in which services were rendered, the amount of money involved, the extent of the attorney's experience, and the results obtained" (Matter of Wallace, 68 A.D.3d 679, 680 [1st Dept 2009]). "Where the legal services rendered did not benefit the estate but benefitted only the individuals whom the attorney represented, the attorney must seek compensation from the clients individually" (id. at 680-681; see Matter of Baxter [Gaynor], 196 A.D.2d 186, 189-190 [4th Dept 1994], lv denied 84 N.Y.2d 808 [1994]). Generally, "courts will consider: time spent; complexities of the tasks involved; customary fee charged by the Bar for similar services; lawyer's experience and reputation; nature of the services provided; amount of litigation required; and the size of the estate" (Matter of Persaud, 70 Misc.3d 1221 [A], *2 [Sur Ct, Queens County 2021] [internal citations omitted].
In seeking attorneys' fees from petitioners here, the objectants did not supply the Court with any information. Nearly all of the above factors were not squarely addressed with respect to that branch of their motion. For example, the objectants did not detail any of the legal services performed, describe the nature of the services provided, or the numbers of hours spent in connection with this matter. Hence, the Court has very limited information before it regarding their application. Despite the difficulties inherent in this case based on the contested facts and legal issues, the Court declines to make an order fixing the value of legal services and awarding counsel fees to the objectants. At this juncture, the Court is without critical information to apply and balance any factors Consequently, that branch of the objectants' motion requesting an award of attorneys' fees is denied (see Matter of Garrasi, 29 Misc.3d 822, 830-831 [Sur Ct, Schenectady County 2010]; see generally Matter of Bejjani, 2023 NY Slip Op 32302[U], 19-23 [Sur Ct, New York County 2023]).
Petitioners' Commissions
Next, that branch of the objectants' motion to deny petitioners commissions is moot. In their amended accounting, there is no calculation of the commissions sought by petitioners in Schedule I (statement of computation of commissions). Petitioners simply state therein that "[n]o commissions [were] incurred during [their] tenure as Trustees." Accordingly, the Court dismisses, as moot, that branch of the objectants' motion requesting to deny petitioners all commissions (see generally Matter of Hearst Corp. v Clyne, 50 N.Y.2d 707, 714-715 [1980]).
Imposition of a Stay
In the exercise of its broad discretion, this Court shall stay this accounting proceeding in accordance with CPLR 2201 due to the related pending action in Supreme Court (see Matter of Tenenbaum, 81 A.D.3d 738, 739 [2d Dept 2011]; see also Matter of Ryan, 212 A.D.3d at 903).
The Court shall set a control date of January 19, 2024 for status purposes. In this regard, the objectants' counsel is instructed to file a written letter with the Court, well in advance of said date, reflecting the status of the Supreme Court action. Failure to do so may result in an in-person appearance. Further note that this matter will be scheduled for a conference prior to the resumption of any motion practice in this proceeding.
The Court has considered the additional contentions of the parties not specifically addressed herein and finds them to be unpersuasive or without merit. Any other relief requested that is not squarely addressed herein is either rendered academic or denied based on this decision. Accordingly, it is hereby:
Ordered that the motion of the Objectants ANITA DeMARCO and Linda Bucchi (mot. seq. no. 3), requesting an order awarding them partial summary judgment to sustain their objections to the accounting, is granted in part and denied in part, as is more fully set forth herein, and they are awarded partial summary judgment with respect only to the determinations set forth herein; and it is further
Ordered that the objectants are awarded summary judgment on those branches of their motion by this Court's determinations that the 2011 amendment of the trust, the 2011 revocation of the trust, and the 2011 deed reflecting a conveyance of the subject premises from petitioners to decedent, are all void and invalid as a matter of law; and it is further
Ordered that the verified Objections of the objectants to the amended accounting numbered "1(c.)," "7(b.)," "8(b.)," and/or any others that concern ALOU CORP. in the Objections are DENIED and DISMISSED; and it is further
Ordered that the remaining objections of the objectants to the amended accounting are SUSTAINED; and it is further
Ordered that the 16 affirmative defenses asserted by ALOU CORP. in its Reply to Objections filed May 18, 2023 are STRICKEN and DISMISSED for the reasons stated herein given the related Supreme Court action; and it is further
Ordered that that branch of the motion of the objectants, pursuant to Matter of Hyde and SCPA 2110, requesting an award of attorneys' fees as against petitioners is DENIED; and it is further
Ordered that this accounting proceeding shall be STAYED until a final judgment or disposition in the related action pending in Supreme Court, Putnam County under Index No. 500324/2022; and it is further
Ordered that the objectants shall cause a copy of this "Decision and Order" to be served, with notice of entry, within ten (10) calendar days from the date herein; and they shall file proof of such service with the Court.
Proper written notice of its entry should be made in accordance with the CPLR.
The foregoing constitutes the decision and order of this Court.
The Clerk of the Court is respectfully asked to forward a copy of this Decision and Order to the respective counsel and self-represented parties.