Opinion
No. 2010–2469/H.
02-27-2017
Matter of Marjorie S. PRIESTLEY, a/k/a Majorie S. Priestley, Deceased.
McCarthy Fingar LLP, White Plains, Attorneys for Joan C. Priestley. Ron Stokes, Esq., Mohegan Lake, Attorney for Nicholas Teglas.
McCarthy Fingar LLP, White Plains, Attorneys for Joan C. Priestley.
Ron Stokes, Esq., Mohegan Lake, Attorney for Nicholas Teglas.
ROBERT A. ONOFRY, J.
In the above-captioned first proceeding to compel an account in the estate of Marjorie S. Priestly (the "decedent"), brought by Nicholas Miklos Teglas ("Nicholas"), Joan C. Priestly ("Joan"), the administrator c.t.a. of the estate, moves to dismiss the petition. Nicholas opposes the motion. In the above-captioned second proceeding seeking limited letters of administration in the decedent's estate, brought by Nicholas, Joan moves to dismiss the petition. Nicholas opposes the motion.
The motions are decided as set forth below.
The facts relevant to these motions are as follows:
The decedent was married to Henry Priestly, and together, they had one child, Joan. The Teglases were neighbors of the decedent and Henry. Henry died on November 30, 2006, and his will was probated by decree of this court.
On February 26, 2008, the decedent executed an instrument, purporting to be her last will and testament. The instrument provided for general bequests to 10 people. She left her home at 135 Orchard Street, White Plains, N.Y. (the "house") to Nicholas and her residuary estate to Joan. She nominated her attorney, W. Whitfield Wells ("Wells") as her executor.
On February 13, 2009, the decedent executed a power of attorney in favor of Joan.
On March 9, 2009, the decedent executed a codicil to the instrument which eliminated one of the specific bequests.
On October 13, 2009, the house was transferred from the decedent to the Priestley Family Foundation (the "Foundation"). On November 30, 2009, the deed was recorded.
On September 9, 2010, the decedent died at the age of 93. On October 6, 2010, Wells renounced his position as executor. Petitions for probate were filed by Joan and Nicholas.
The proceedings were resolved between the parties by stipulation dated June 15, 2011, in which Nicholas withdrew his petition and consented to Joan serving and Joan "consent[ing] to Nicholas's standing to assert any remedies under General Obligations Law §§ 5–1502[2][a][3] and 5–1510[1] & [2 ]" and waiving the seven month waiting period imposed by SCPA 2208[1][a] if Nicholas was to request an account (the "June 15, 2011 stipulation").
On June 17, 2011, letters of administration c.t.a. issued to Joan.
On June 7, 2012, a summons and a complaint were filed in the Supreme Court action, by Joan, as administrator c.t.a., alleging that (1) Nicholas owed the estate $217,045.54 plus interest; (2) Gordon Teglas owed the estate $92,135.00 plus interest and (3) Rowena Teglas and Csaba Teglas converted two paintings belonging to the decedent.
By citation returnable September 5, 2012, in this court, Nicholas, as a specific beneficiary, requested that Joan, as administrator c.t.a., pursuant to SCPA 2102[4], show cause why she should not turn over the house to him. On September 16, 2012, Joan answered the petition, generally denying the allegations and asserted three defenses (house transferred on October 13, 2009, fraud claim lacks specificity, laches, estoppel and unclean hands).
On October 20, 2012, the Teglases answered the complaint in the Supreme Court action, generally denying the allegations and asserting affirmative defenses (failure to mitigate damages, existence of a confidential relationship between Joan and the decedent, paintings belonged to Nicholas, laches, estoppel, unclean hands, and statute of limitations) and two counterclaims: (1) conversion of personalty (valued at $185,400) belonging to the decedent which was left to the Teglases and (2) monies in the amount of $500,000 were converted by Joan and should be in the decedent's estate.
On November 20, 2012, Joan moved to amend the complaint in the Supreme Court action to (1) increase the damages for the first cause of action from $217,045.54 to $217,847.14; (2) assert a fourth cause of action that Rowena owed the estate $31,648.00; (3) assert a fifth cause of action that Csaba owed the estate $19,446.62; and (4) assert a sixth cause of action against Rowena and Csaba for $10,440.00. The motion was opposed.
By order dated January 3, 2013, the Supreme Court, Westchester County granted the motion to amend the complaint. On January 5, 2013, the Teglases answered the amended complaint, generally denying the allegations, and raising the same affirmative defenses and counterclaims.
On January 14, 2013, the attorneys for the parties executed a stipulation which provided for the removal of the Supreme Court proceeding to this court. On January 18, 2013, the Supreme Court ordered that the Supreme Court action be removed to this court.
Joan then moved for summary judgment to dismiss the miscellaneous petition and the first counterclaim in the Supreme Court action. By decision and order dated July 14, 2015, this court (Walsh, Acting Surrogate) dismissed the miscellaneous petition for lack of standing, holding that Nicholas's remedy was to have served and filed an SCPA 2103 proceeding against the Foundation, which if successful, would cause the house to be returned to the estate and that if the house was not turned over once restored to the estate, he should then institute an SCPA 2102 proceeding. Summary judgment also was granted, dismissing the first counterclaim in the Supreme Court action. The court held that the counterclaim was not properly before the court in that Nicholas should have sought limited letters in Henry's estate and commenced a discovery proceeding there.
By petition dated August 16, 2016, with a citation to Joan, returnable on September 13, 2016, Nicholas instituted this proceeding to compel Joan to account as attorney-in-fact for the decedent. Jurisdiction was complete on August 22, 2016. By answer verified on September 12, 2016, Joan largely denied the allegations in the petition and asserted affirmative defenses (barred by a six year statute of limitations; lack of standing to compel an account as a beneficiary of the decedent's estate; laches, estoppel and unclean hands).
By petition filed September 6, 2016, Nicholas sought limited letters of administration to commence an SCPA 2103 proceeding. An accompanying affidavit of his attorney stated that Joan set up the Foundation and then used her power of attorney to transfer the decedent's home to the Foundation to fraudulently defeat the devise left by the decedent in her will to Nicholas. The citation issued on September 27, 2016, to be returned on October 25, 2016.
The Compel Account Proceeding
As noted above, Joan moves to dismiss the compel account proceeding on the following grounds: (1) Nicholas does not have standing to commence the proceeding; (2) Nicholas is time-barred from bringing this proceeding in accordance with CPLR 3211[a][5] and CPLR 213[8] ; and (3) Nicholas failed to plead fraud with particularity in accordance with CPLR 3211[a][7] and CPLR 3016[b].
In opposition, Nicholas argues that (1) he has standing to commence this proceeding by virtue of the June 15, 2011 stipulation; (2) the six year statute of limitations did not commence to run until the termination of the fiduciary relationship which was at the death of the decedent, (3) the filing and service of this petition was complete within that period; (4) although the statute of limitations was properly complied with, the statute could also be tolled in the presence of fraud; and (5) Joan has no support for her allegation that a CPLR 3016[b] heightened pleading is required on a petition to compel a fiduciary to account.
Standing in an accounting proceeding is determined by various provisions in the SCPA including SCPA 2210 [Voluntary account]. That provision states that "[u]pon a voluntary judicial settlement of the account of a fiduciary, process must issue to * * * all devisees ... except those who by acknowledged release appear to be paid". SCPA 2205 [who may petition for a compulsory account] states that a "person interested" may petition. SCPA 103[39] defines a "person interested" as
[a]ny person entitled or allegedly entitled to share as beneficiary in the estate.... Where this act provides that a ‘person interested’ may apply for relief, a verified allegation of an interest in fact, suffices for the purpose of the application, although the interest may be disputed, unless or until the fact of the interest has been judicially determined and no appeal is pending therefrom.
Based on these provisions, Nicholas has standing to compel Joan to account as attorney-in-fact. It is clear that Nicholas is a devisee under the decedent's will, and the record does not reflect that he executed a release in favor of Joan as administrator c.t.a. In view of the statutory authority, the court need not rely on the terms of the June 15, 2011 stipulation.
On a motion to dismiss a proceeding in accordance with CPLR 3211, a court must take the allegations in the petition as true and resolve all inferences in favor of the petitioner (see Cimino v. Dembeck, 61 A.D.3d 802, 876 N.Y.S.2d 893 [2d Dept 2009] ; Matter of Hiletzaris, 33 Misc.3d 1214[A] Sur Ct Queens Co 2011], affd 105 A.D.3d 740, 962 N.Y.S.2d 623 [2d Dept 2013] ). Furthermore, when the dismissal is sought pursuant to CPLR 3211[a][5] on the ground that it is barred by the statute of limitations, the respondent bears the burden of establishing prima facie that the time in which to sue has expired (see Savarese v. Shaz, 273 A.D.2d 219, 708 N.Y.S.2d 642 [2d Dept 2009] ).
SCPA 301[1] provides that
[f]or the purpose of computing the period of limitation under article two of the civil practice law and rules, a proceeding is commenced upon the filing of a petition, provided process is issued and service is made on the respondent within [120] days after the date of the filing of the petition....
A proceeding to compel an accounting by a fiduciary is governed by a six year statute of limitations (see CPLR 213[1] ; see also Matter of Barabash, 31 N.Y.2d 76, 334 N.Y.S.2d 890, 286 N.E.2d 268, rearg. denied0 31 N.Y.2d 963 [1972] ; Matter of Meyer, 303 A.D.2d 682, 757 N.Y.S.2d 98 [2d Dept 2003] ).
However, CPLR 206[a][1] provides a tolling provision which applies to claims in which a right grows out of the receipt or detention of money or property by a trustee, agent, attorney or other person acting in a fiduciary capacity. When a power of attorney is at issue, the statute commences to run on either of the following: (1) death of the principal (see Ferrentino v. The Dime Savings Bank, 159 Misc.2d 690, 606 N.Y.S.2d 554 [Sup Ct N.Y. Co 1993] ; Matter of Weber, 163 Misc. 81, 296 N.Y.S. 433 [Sur Ct N.Y. Co 1937] ); (2) a judicial accounting by the fiduciary; or (3) an open repudiation of trust by the fiduciary (see Matter of Barabash; Matter of Cipriani, 24 Misc.3d 1204[A] [2009] ). The law requires proof of a repudiation by the fiduciary which is clear and made known to the beneficiaries (see Matter of Barabash; see also Tydings v. Greenfield, Stein & Senior, LLP, 11 N.Y.3d 195 [2008] ). Judge Cardozo wrote in Spallholz v. Sheldon (216 N.Y. 205, 209 [1915] ):
While an express trust subsists and has not been openly renounced, the Statute of Limitations does not run in favor of the trustee. But after the trust relation is at an end, and the trustee has yielded the estate to a successor, the rule is different. The running of the statute then begins, and only actual or intentional fraud will be effective to suspend it.
Here, the fiduciary relationship terminated on September 9, 2010, the date of decedent's death. The proceeding having commenced on August 16, 2016, Nicholas is not time-barred.
The court rejects Joan's argument regarding Nicholas's failure to plead fraud with particularity because this is a petition to compel an attorney-in-fact to account and any allegations of fraud are not what gives rise to Nicholas's standing to commence this proceeding.
Based on the above, the motion to dismiss the compel account petition is denied, the application to compel Joan to account is granted, and she is directed to file an account of her proceedings within 60 days from the date of service upon her of a copy of this order. Joan shall then proceed promptly to have the account judicially settled.
The Limited Letters of Administration Proceeding
In support of her motion, Joan argues that the petition for limited letters of administration should be dismissed in accordance with CPLR 3211[a][5] and [a][7] because the applicable statute of limitations, CPLR 213[8], has run and the petition fails to state a claim upon which relief can be granted.
In opposition, Nicholas argues that the six year statute of limitations did not commence to run until the termination of the fiduciary relationship which was at the death of the decedent, that the filing and service of this petition was complete within that period; that although the statute of limitations was properly complied with, the statute could also be suspended in the presence of fraud; and that Joan has failed to articulate any argument as to why the petition fails to state a claim.
A beneficiary does not have an independent cause of action to seek to recover assets withheld from an estate (see McQuade v. Perot, 223 N.Y. 75 [1918] ). Therefore, an individual must obtain letters of administration before suing on behalf of the decedent's estate (see Brandon v. Columbian Mut. Life Ins. Co., 264 A.D.2d 436, 694 N.Y.S.2d 134 [2d Dept 1997] ).
There is no limitation per se as to the period in which a party is entitled to receive limited letters of administration, therefore, the petition is granted.
Joan's request for dismissal on the grounds of statute of limitations and failure to state a claim is against a pleading that is not before the court. The character of a claim to be asserted governs the time the cause of action accrues (see Matter of McNamara, NYLJ, Oct. 7, 2003, at p21 (Sur Ct Westchester Co] ). Therefore, on this record, the court will not offer an advisory opinion as to whether the statute of limitations will act as a bar or whether the pleading will fail to state a claim upon which relief can be granted.
THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
The papers relied on are as follows:
1. Notice of motion dated November 21, 2016, with affirmation of Robert H. Rosh, Esq., dated November 21, 2016, with exhibits annexed;
2. Amended notice of motion dated November 21, 2016, with affirmation of Robert H. Rosh, Esq., dated November 14, 2016, with exhibits annexed;
3. Affirmation of Ron Stokes, Esq. dated December 28, 2016, with exhibits annexed;
4. Affirmation of Ron Stokes, Esq. dated December 28, 2016, with exhibits annexed;
5. Affirmation of Robert H. Rosh, Esq. dated January 11, 2017;
6. Affirmation of Robert H. Rosh, Esq. dated January 11, 2017;
7. Citation dated August 22, 2016;
8. Compel account petition dated August 16, 2016;
9. Affidavit of mailing dated September 26, 2016; and
10. Answer dated September 12, 2016.