Opinion
2013-04-11
In re Stanley S. LASDON, Deceased. In re Jeffrey S. Lasdon, Petitioner–Appellant–Respondent, Michael B. Abrams, et al., Objectants–Respondents–Appellants.
Melvin S. Hirshowitz, New York, for appellant-respondent. Llorca & Hahn LLP, New York (Richard E. Hahn of counsel), for respondents-appellants.
Melvin S. Hirshowitz, New York, for appellant-respondent. Llorca & Hahn LLP, New York (Richard E. Hahn of counsel), for respondents-appellants.
GONZALEZ, P.J., FRIEDMAN, ABDUS–SALAAM, ROMÁN, CLARK, JJ.
Decrees, Surrogate's Court, New York County (Kristin Booth Glen, S.), entered on or about June 8, 2012, which, to the extent appealed from as limited by the briefs, imposed a surcharge of $230,256.57 plus interest on petitioner Jeffrey S. Lasdon as trustee with respect to a trust for objectant Daniel A. Abrams, imposed a surcharge of $397,893 plus interest on petitioner with respect to a trust for objectant Michael B. Abrams, awarded petitioner commissions, legal fees, and costs, and denied objectants' applications for legal fees and costs, unanimously modified, on the law, to eliminate the surcharges and interest, and otherwise affirmed, without costs.
Objectants Michael Abrams and Daniel Abrams, the beneficiaries of two trusts, asked the trustees (including petitioner) to distribute their trusts in kind in 2004 and 2007, respectively. There was a lengthy delay in distribution during which objectants did not ask the trustees to sell stocks held by the trusts. During the delay, objectants each received income from their respective trusts. As a result, the beneficiaries' position is the same as if they had received their stocks back in 2004 and 2007: they own the number of shares to which they are entitled. To be sure, the beneficiaries were deprived of the ability to do what they wanted with the stocks during the period of delay in distribution. However, they did not show that the measure of damages for this deprivation is the difference in the value of the stocks between the date the beneficiaries received them and the date they should have received them; rather, that measure of damages assumes that the beneficiaries would have sold the stocks. Thus, they failed to demonstrate that the imposition of a surcharge (the difference in the value of the stocks on the date they should have been distributed and the date they were actuallydistributed) is warranted ( see Matter of Bankers Trust Co. [Siegmund], 219 A.D.2d 266, 272, 636 N.Y.S.2d 741 [1st Dept. 1995], lv. dismissed87 N.Y.2d 1055, 644 N.Y.S.2d 146, 666 N.E.2d 1060 [1996];Matter of Rothko, 84 Misc.2d 830, 872, 379 N.Y.S.2d 923 [Sur. Ct., N.Y. County 1975] [where there is a breach of duty of fiduciaries of a trust, beneficiaries are entitled to be put in position they would have occupied if no breach was committed], mod. on other grounds56 A.D.2d 499, 392 N.Y.S.2d 870 [1st Dept. 1977], affd. 43 N.Y.2d 305, 401 N.Y.S.2d 449, 372 N.E.2d 291 [1977];Matter of Jacobs, 152 Misc. 139, 143, 273 N.Y.S. 279 [Sur. Ct., Delaware County 1934] [trustee must account to beneficiary in cash for market value of securities in which trust was invested at date of termination of trust unless beneficiary elects to accept trust corpus in kind] ).
It was not an improvident exercise of the Surrogate's discretion ( see Matter of Bushe, 227 N.Y. 85, 90, 124 N.E. 154 [1919] ) to award petitioner commissions. Petitioner did not engage in fraud, gross neglect of duty, intentional harm to the trust, sheer indifference to the rights of others or disloyalty ( see Matter of Armstead v. Morgan Guar. Trust Co. of N.Y., 13 A.D.3d 294, 295, 787 N.Y.S.2d 38 [1st Dept. 2004];see also Matter of Saxton, 274 A.D.2d 110, 121, 712 N.Y.S.2d 225 [3d Dept. 2000] ). Petitioner's failure to keep records of objectants' trusts does not warrant denial of commissions; there is no evidence that this failure resulted in pecuniary loss ( see Matter of Miller, 116 A.D.2d 580, 581, 497 N.Y.S.2d 438 [2d Dept. 1986], lv. dismissed67 N.Y.2d 609, 503 N.Y.S.2d 1025, 494 N.E.2d 458 [1986] ).
Objectants contention that the Surrogate should not have awarded petitioner attorneys' fees due to his misconduct is unavailing ( see Matter of Ducker, 3 A.D.2d 852, 161 N.Y.S.2d 549 [2d Dept. 1957] [attorneys' fees paid out of trust where trustee delayed in distributing assets to beneficiary]; Matter of Dubens, N.Y.L.J., Oct. 28, 1974, at 18, col. 4 [Sur. Ct., N.Y. County 1974] [same] ). In any event, the Surrogate reduced the fees requested ( see Matter of Hawwa A., 9 A.D.3d 362, 365, 779 N.Y.S.2d 578 [2d Dept. 2004] ).
Objectants contend that petitioner is not entitled to annual commissions pursuant to Surrogate's Court Procedure Act § 2309(2) because he failed to render the annual statements required by SCPA 2309(4). With respect to the two-thirds of the commission payable from principal ( seeSCPA 2309[3] ), this argument is unavailing ( seeSCPA 2309[4] [“A trustee shall not be deemed to have waived any commission by reason of his failure to retain them at the time when he becomes entitled thereto; provided however that commissions payable from income from any given trust year shall be allowed and retained only from income derived from the trust during that year ...”]; see also Margaret V. Turano, Practice Commentaries, McKinney's Cons. Laws of N.Y., Book 58A, SCPA 2309).
The Surrogate properly denied objectants' request for reimbursement of their legal fees. As noted above, petitioner did not act maliciously or in bad faith ( see Saxton, 274 A.D.2d at 121, 712 N.Y.S.2d 225;see also Matter of McDonald [Luppino], 100 A.D.3d 1349, 1352, 953 N.Y.S.2d 751 [4th Dept. 2012] ). Moreover, the fact that we have eliminated the surcharge is an additional reason not to require petitioner to pay objectants' legal fees ( see Matter of Goldstick, 177 A.D.2d 225, 247, 581 N.Y.S.2d 165 [1st Dept. 1992], mod. on other grounds183 A.D.2d 684, 586 N.Y.S.2d 490 [1st Dept. 1992] ).
We have considered objectants' remaining arguments and find them unavailing.