Opinion
No. 2008–2632/E.
08-17-2017
Matter of Accounting by L. Bonnie REIFFEL as Trustee and James A. Reiffel as Successor Trustee of the Hilda Geffen Trust Dated February 15, 1989 for the Period December 1, 2009 to August 31, 2011. Matter of Accounting by L. Bonnie Reiffel as Trustee and James A. Reiffel as Successor Trustee of the Hilda Geffen Trust Dated February 15, 1989 for the Period September 1, 2011 to December 31, 2014.
Michael Friedman, Esq., Lever & Goodman LLP, White Plains. Thomas A. Brown, II, Esq., Morea Schwartz, New York. Frank Streng, Esq., McCarthy Fingar LLP, White Plains.
Michael Friedman, Esq., Lever & Goodman LLP, White Plains.
Thomas A. Brown, II, Esq., Morea Schwartz, New York.
Frank Streng, Esq., McCarthy Fingar LLP, White Plains.
ROBERT A. ONOFRY, S.
Introduction/Factual Background
This Decision and Order, arising from a Limited Issue Hearing ordered by the Court, emanates from, and is a byproduct of, a contested accounting proceeding between Petitioners L. Bonnie Reiffel and James Reiffel (hereinafter sometimes referred to as "Bonnie" or "James" or "Jim"), the co-trustees of the Hilda Geffen Trust dated February 15, 1989 (the "Trust") and Elizabeth R. Grant and Barry R. Grant (sometimes referred to as "Lisa" and "Barry" and collectively as the "Grants"), the Objectants.
This Estate has endured a tortured history, a history, in the main, prompted by continued objections asserted by the Grants during the course of the proceedings.
The history of the Trust, and the Accountings pertaining to same, have likewise included a purported Settlement Agreement entered into by the parties with an effective date of August 19, 2011 (the "Settlement Agreement") which Agreement, by its terms, purportedly settled all claims and objections raised by the Grants up to and including August 19, 2011, and provided for the exchange and distribution of millions of dollars in property, both in cash and in-kind, and included the settlement and payment of approximately One Million Two Hundred Seventy Thousand and No/100 ($1,270,000.00) Dollars in legal fees to the attorneys for the respective parties.
Pursuant to the terms of the Settlement Agreement, and in consideration of the mutual promises, covenants and consideration recited therein, the Grants ("Barry and Lisa") withdrew their objections to the pending Accountings "with prejudice and without costs" and further consented to the Accountings that had been filed by Bonnie and James.
The Agreement, by its terms, further provided for the payment and distribution of substantial assets to the parties, both in cash and in-kind, which included, inter alia, a "special distribution of $475,000.00 to Lisa's family trust (Lisa Grant), of which one-half was chargeable to Bonnie's family trust [2], the distribution of the Scarsdale family house to Bonnie and Jim, at its date of death value of $884,000.00 [3], the distribution of numerous of items of personal property which included two "Salvador Dali Prints" [4–7], and $3,000,000 in distributions to the respective family trusts [$1,737,500 to "Lisa's Family Trust"] and [$1,262,500 to Bonnie's Family Trust"]. ¶ 16.
Relevant to the core issues presented in the current proceeding, and pursuant to 10 of the Agreement, the parties also agreed and consented to the payment of attorneys' fees for services rendered up to the effective date of the Agreement. In relevant part, the Agreement provided for the following:
Bonnie and Jim consent, and Barry and Lisa do not object, to the payment by the Trust of legal fees, accounting fees, together with disbursements of not more than $1,090,000 in the aggregate of the law firms of Orans, Elsen, Lupert & Brown, LLP ("OELB") and Gerald & Lawrence Blumberg, LLP ("GLB") and the accounting firm of Weiser LLP (now known as WeiserMazars LLP) for services and disbursements.... The parties acknowledge that as of the date hereof, OELB has been paid time charges of $556,167.50, GLB has been paid time charges of $423,950.44 and WeiserMazars has been paid time charges of $57,589.00 for their professional services rendered through July 31, 2011, and that the expenses and disbursements of such firms charged to or paid by the Trust shall not exceed $40,000.
The Agreement further provided, pursuant to 9, that the attorneys' fees incurred by the law firm of McCarthy Fingar LLP (MF) (attorneys for the Grants) totaling $180,000, were likewise to be paid from the Trust.
Based upon, inter alia, the foregoing, the Agreement provided that Barry and Lisa (the "Grants") agreed to accept and approve the Accountings as submitted, subject only to the provisions of the Settlement Agreement.
Relevant to the same, 14 of the Settlement Agreement provided for the following:
Barry and Lisa, individually, and as Trustees of the Lisa Grant Family Trust and Lisa Grant GST Trust hereby accept and approve the Accounting and the bring-down accounting, subject to the provisions of this Settlement Agreement, waive the judicial settlement of formal accountings for the Trusts through the date of this Settlement Agreement and agree that this Settlement Agreement shall have the same effect as a court decree or judgment approving all of the actions of the Trustees and Executors from the inception of the Trust[1989] through the date of this Settlement Agreement.(Emphasis supplied).
While the aforementioned Settlement Agreement resulted in the withdrawal and discontinuance of the accounting proceeding at that time, the agreement was never "so ordered" by the Court due, based upon the testimony elicited at the hearing, to Barry and Lisa's refusal to sign a stipulation of discontinuance which had already been signed by respective counsel.
Pursuant to 10 of the Agreement, the parties also provided for a mechanism to address future fee applications made by the Reiffels' then attorney Gerald & Lawrence Blumberg, LLP ("GLB") for prospective legal services to be rendered and which the parties acknowledged would be necessarily incurred in bringing the estate and the Trust to closure.
In relevant part, 10 provided that the Trustees could continue to retain GLB to perform additional legal services, and that GLB would continue to bill the Trust on a monthly basis at its customary billing rate. Copies of the bills were to be provided to the Grants' attorneys inclusive of all billings statements and time records. If no written objection to the bills were made within 14 days of submittal, then the Trustees were authorized to pay the charges for fees and disbursements and such payment would be "deemed approved by Barry and Lisa". If Barry and Lisa objected to the charges, they were required to give a specific reason for such objection. Further, and absent agreement of the parties, GLB was permitted to seek the approval of the Surrogate to the portion of the fees to which Barry and Lisa or Bonnie and Jim, or both, objected.
Notwithstanding the foregoing, and as noted supra, the accounting proceeding was restored to the Court's calendar and has been the subject of multiple decisions, both by former Surrogate Scarpino and Acting Surrogate Walsh.
Relevant to the same, and by Decision and Order dated August 22, 2016 [entered November 28, 2016], then Acting Surrogate Walsh, based in part on the purported Settlement Agreement, denied the Grants' application to compel the Reiffels to turnover extensive discovery, discovery demands which included the period covered by the Settlement Agreement.
By Notice of Appeal dated November 28, 2016, the Grants appealed the aforementioned Decision and Order of August 22, 2016. The appeal has not been perfected and has not been decided. It is that appeal, and the allegations contained in the pre-argument appeal statement, that have prompted the necessity for the Court to conduct this limited issue hearing on the issue of the voluntary nature of the Settlement Agreement and its enforceability.
In the Grants' pre-argument appeal statement, and essentially for the first time [although tangentially mentioned in prior submissions], the Grants asserted that the purported Settlement Agreement was a byproduct of, and emanated from, a pattern of "intimidation and coercion" by the Reiffel's and their attorneys, i.e. that the Grants were forced into signing the Agreement.
In relevant part, the Grants, through their attorney, asserted the following:
The lower court improperly blocked such discovery based upon an alleged settlement agreement without any consideration of the intimidation and coercion by these attorneys in the background of what occurred at the time of the settlement negotiations.
That assertion, as supplemented by the arguments of counsel, necessitated the instant limited issue hearing.
Although the procedural posture leading up to the hearing was summarized in the Court's Decision and Order of June 19, 2017, denying Barry and Lisa's request that the hearing be stayed pending determination of their appeal, a brief summary is nevertheless warranted.
On April 13, 2017, the Court, with respective counsel present, issued an order directing that a limited issue hearing be conducted on July 13, 2017, for the purpose of determining whether the August 19, 2011 Settlement Agreement was voluntarily entered into by the parties, whether it was enforceable in accordance with its terms, or whether it should be set aside as a by-product of coercion and intimidation.
Further, since the hearing could involve, or potentially involve, or result in, or potentially result in, the nullification of the Agreement thus triggering the return and recoupment of the property that had been purportedly transferred and distributed, as well as the attorneys' fees that had been paid, or both, the court determined that the attorneys who negotiated the Agreement [Lawrence Blumberg, Esq. and Frank Streng, Esq.], as well as their respective firms, were disqualified from representing the parties at the hearing. The basis for disqualification was three-fold: (1) that each attorney would be a fact witness who would be testifying as to a material issue in the hearing, i.e. the voluntary nature of the Agreement (Part 1200, Rule 3.7); (2) that the issues would involve, or would likely involve, matters of confidentiality (Part 1200, Rule 1.6); and (3) that the recoupment issues presented [cash, property and attorney's fees] would create an irreconcilable conflict between the attorneys and their respective clients (Part 1200, Rule 1.7).
Bonnie and Jim retained, and appeared through, successor counsel; Barry and Lisa defaulted and did not. They instead relied on their collective affidavit in lieu of their personal appearance. In fact, the July 13, 2017 hearing was preceded by a number of applications and communications from Barry and Lisa, objecting to both the hearing and the necessity for their appearance and testimony, including, inter alia, attempts at ex parte communications with the Court. All of the applications were denied. Indeed, the Court was consistent in its posture that the hearing proceed as scheduled. At the April 13, 2017 calendar, counsel were advised that there would be no adjournments.
The July 13, 2017 Hearing
During the course of the hearing, the Court received into evidence, without objection, the Settlement Agreement at issue and the sworn affidavit of Barry and Lisa, an affidavit they requested be considered in lieu of their personal appearance and testimony. Their collective affidavit, in relevant part, recited the following: "We acknowledge signing the Settlement Agreement dated as of August 19, 2011 (the Settlement Agreement"). In addition, we were not under any mental disability at the time we signed the Agreement. We acknowledge that we willingly entered into the settlement agreement." Grant Affidavit, ¶ 2, ¶ 3. Emphasis supplied. (Transcript, T–5, 6)
Lawrence Blumberg, Esq., provided the only hearing testimony. In relevant part, Blumberg testified that his clients signed the Settlement Agreement, that the Grants did likewise and the signed pages, as is customarily done, were transmitted to each party upon their execution and, although signed in counterparts, was intended as one agreement. (T–16, 17).
He further testified that, the cash, real property and personal property referenced in the Settlement Agreement, and agreed upon to be transferred, distributed and/or exchanged, was in fact done so within a matter of days after the signing of the Settlement Agreement. Furthermore, all attorneys' fees were timely paid.
In sum, he testified that all material provisions of the Settlement Agreement were carried out and implemented, i.e. that the cash and property was distributed and the attorneys' fees paid. (T–17–29).
At the close of the hearing, Attorney Frank Streng, although not testifying as a fact witness, argued, in relevant part, that the prior decisions of the Court, particularly the January 9, 2015 Order by then Surrogate Scarpino, reopened the issue of the totality of the attorneys' fees being paid. However, upon inquiry from the Court, he conceded that, "the agreement says what it says". (T–40).
In his summation, counsel for Bonnie and Jim argued, in substance, that absolutely no evidence had been offered that would support a finding that the Settlement Agreement was a product of coercion or intimidation or that it was not voluntarily entered into by the parties. Thus, he argued, the Settlement Agreement should be declared by the Court to be valid and binding and should be enforced in accordance with its terms.
Based upon the same, and the prior conduct of the Grants, counsel further argued that sanctions should be imposed.
Discussion/Legal Analysis
In rendering its decision, the Court has considered, and relied upon, inter alia, the affidavit of the Grants, the in-court testimony of Attorney Blumberg, and the documentary evidence, i.e. the Settlement Agreement at issue. In addition, the Court has taken judicial notice of all prior proceedings under this file number and the prior decisions and orders of the Court.
The Binding Nature of the Court's Prior Decisions
As a threshold finding, there is nothing in the prior proceedings, or in the prior decisions and orders issued by former Surrogate Scarpino or Acting Surrogate Walsh, as Attorney Streng has argued, that would invoke the application or preclusive effect of the doctrines of collateral estoppel, res judicata, or the "law of the case", thus precluding this Court from determining the voluntary nature and enforceability of the August 19, 2011 Settlement Agreement or its prospective application concerning the manner in which the accounting proceeding, or the discovery related thereto, should unfold or the scope thereof.
For the doctrine of collateral estoppel to apply, two basic conditions must be satisfied: (1) the issue sought to be precluded must be identical to a material issue necessarily decided by the court in a prior action or proceeding; and (2) the parties must have been afforded a full and fair opportunity to contest the issue. Jeffreys v. Griffin, 1 N.Y.3d 34, 769 N.Y.S.2d 184, 801 N.E.2d 404 (2003) ; Tydings v. Greenfield, Stein & Senior, LLP, 11 N.Y.3d 195, 868 N.Y.S.2d 563, 897 N.E.2d 1044 (2008) ; Mavro Realty Corp v. M. Slayton Real Estate, Inc., 77 AD3d 893 [2nd Dept.2010]. Neither condition is present here.
Nor is adjudication precluded under the more expansive preclusive effect of the doctrine of res judicata. Matter of Sherwyn Toppin Marketing Consultants, Inc. v. New York State Liquor Authority, 103 A.D.3d 648, 958 N.Y.S.2d 794 [2nd Dept.2013] ; Matter of Hunter, 4 N.Y.3d 260, 794 N.Y.S.2d 286, 827 N.E.2d 269 (2005).
Equally unavailing is the application of the "law of the case doctrine", which is an intra-action sub-species of the doctrines of collateral estoppel (issue preclusion) and res judicata (claim preclusion). As noted by the Second Department in the case of Ramanthan v. Aharon(109 A.D.3d 529, 970 N.Y.S.2d 574 [2nd Dept.2013] ),
the doctrine of the law of case is a rule of practice, an articulation of sound policy that, when an issue is once judicially determined [within that action or proceeding] that should be the end of the matter as far as judges in coordinate jurisdiction are concerned.... The doctrine applies only to legal determinations that were necessarily resolved on the merits in a prior decision.... Like claim preclusion and issue preclusion, the preclusion under the law of the case contemplates that the parties had a full and fair opportunity to litigate the initial determination [internal citations omitted]. Ramanthan v. Aharon, at 530.(Emphasis supplied).
See also, Brownrigg v. New York City Housing, 29 A.D.3d 721, 815 N.Y.S.2d 681 [2nd Dept.2006] ; Gay v. Farella, 5 A.D.3d 540, 772 N.Y.S.2d 871 [2nd Dept.2004] ; People v. Evans, 94 N.Y.2d 409, 705 N.Y.S.2d 564, 727 N.E.2d 122 (2000).
Furthermore, the law of the case doctrine does not apply to sua sponte determinations made by the court without proper notice to the parties ( Debcon Financial Services, Inc. v. 83–17 Broadway Corp., 126 A.D.3d 752, 5 N.Y.S.3d 478 [2nd Dept.2015] ) or to dicta. See, Liddle, Robinson & Shoemaker v. Shoemaker, 309 A.D.2d 688, 768 N.Y.S.2d 183 [1st Dept.2003].
In sum, while tangential references may have been made to the Settlement Agreement and its effect in the court's prior decisions, the specific issue of the voluntary nature of the Settlement Agreement, its enforceability, or the scope of its application, has never been squarely brought before, or decided by, the Court. Thus, in addition to the Court's fundamental obligation of insuring the integrity of the record, the voluntary nature and enforceability of the Stipulation of Settlement is a proper subject of inquiry and adjudication for this Court.
The Voluntary Nature and Enforceability of the Settlement Agreement
Turning to the merits of, and the core inquiry for, the limited issue hearing, the Court concludes, and so finds, for the reasons hereinafter set forth, that the August 19, 2011 Settlement Agreement was voluntarily entered into by the parties and is binding upon, and inures to the benefit, of the parties as well as their respective distributees, heirs at law, legal representatives, and assigns, the basis for which is both legal and equitable in nature.
Preliminarily, the Court notes that the issue that has been framed comes before the Court in the context of a contested accounting proceeding, and the scope of the discovery related thereto, the central focus of which is the reasonableness of the supplemental attorneys' fees requested by counsel for Bonnie and Jim, fees which have been objected to by Barry and Lisa.
First, and as noted in the prior decisions of the Court, the proper allowance and approval of attorneys' fees for services rendered is a matter that lies squarely within the discretion and expertise of the Surrogate. See, SCPA § 2110 ; Matter of Hobert, 7 Misc.3d 447, 794 N.Y.S.2d 783 (2004). Similarly, and equally applicable here, the court has broad discretion in supervising and regulating pre-trial discovery, discovery which must be tailored to the particular substantive and procedure context in which the issues arise. Lewis v. Hertz, 193 A.D.2d 470, 597 N.Y.S.2d 368 [2nd Dept.1993] ; Allen v. Crowell–Collier Publishing Company, 21 N.Y.2d 403, 288 N.Y.S.2d 449, 235 N.E.2d 430 (1968) ; Friel v. Papa, 56 A.D.3d 607, 869 N.Y.S.2d 117 [2nd Dept.2008].
Here, the Settlement Agreement entered into by the parties in August of 2011, if deemed voluntary and enforceable in accordance with its terms, dramatically changes and limits the scope and nature of the discovery that is required, the discovery that would be deemed reasonable and necessary, and, correspondingly, the manner in which the accounting proceeding will be resolved, both substantively and procedurally.
In addressing the merits, the Court begins its analysis with two well settled and companion principles, to wit: (1) Stipulations of Settlement are contracts; and (2) stipulations of settlement are favored by the courts and will not be set aside absent a finding of unconscionability, fraud, overreaching, mistake or duress. Racanelli Construction Co., Inc. v. Tadco Construction Corp., 50 A.D.3d 875, 855 N.Y.S.2d 645 [2nd Dept.2008] ; Yevgenia v. Shockome, 53 A.D.3d 610, 862 N.Y.S.2d 99 [2nd Dept.2008] ; Katz v. Dotan, 95 A.D.3d 1328, 945 N.Y.S.2d 404 [2nd Dept.2012] ; Matter of Moss v. Moss, 91 A.D.3d 783, 937 N.Y.S.2d 270 [2nd Dept.2012]. "Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake, accident, or duress will a party be relieved from the consequences of a stipulation made during litigation". Hallock v. State of New York, 64 N.Y.2d 224, at 230, 485 N.Y.S.2d 510, 474 N.E.2d 1178 (1984) ; See also, Matter of Frutiger, 29 N.Y.2d 143, 149–150, 324 N.Y.S.2d 36, 272 N.E.2d 543 (1971) ; Matter of Davis, 292 A.D.2d 452, 738 N.Y.S.2d 884 [2nd Dept.2002].
Here, there is no genuine material issue of fact that the Stipulation of Settlement at issue was signed by the parties or that the signing was voluntary. The testimony of attorney Blumberg, as well the affidavit offered by the Grants firmly establishes both to be the case.
In fact, "Barry and Lisa", in their affidavit submitted in lieu of their personal appearance at the hearing, have substantially, if not totally, recanted on their purported claim that the Settlement Agreement was entered into, or was a bi-product of, intimidation or coercion; they concede that they voluntarily signed the Settlement Agreement and were not under any disability when they did so ("We acknowledge signing the Settlement Agreement dated as of August 19, 2011 [the "Settlement Agreement"]. In addition, we were not under any mental disability at the time we signed the Agreement. We acknowledge that we willingly entered into the settlement agreement". Grant Affidavit, 2, 3.).
These admissions and concessions, in turn, trigger certain factual findings and bring into play certain basic contractual principles and legal conclusions.
First, since the Settlement Agreement was in writing and signed by the parties sought to be charged, there are no statute of frauds issues. G.O.L. § 5–701 ; William J. Jenack Estate Appraisers and Auctioneers, Inc. v. Rabizadeh, 22 N.Y.3d 470, 982 N.Y.S.2d 813, 5 N.E.3d 976 (2013). Nor has any party raised such an issue.
Second, a party is under an obligation to read a document before signing it and, absent a finding that the signatory was illiterate, blind, or that the language was foreign to him or her, the signatory cannot avoid the effect of the document or its contents. In sum, absent the exceptions noted supra, a party who signs a document is conclusively bound by its terms. Guerra v. Astoria Generating Co., L.P., 8 A.D.3d 617, 779 N.Y.S.2d 563 [2nd Dept.2004] ; Matter of Augustine v. Bank United FSB, 75 A.D.3d 596, 905 N.Y.S.2d 652 [2nd Dept.2010] ; Cash v. Titan Financial Services, Inc., 58 A.D.3d 785, 873 N.Y.S.2d 642 [2nd Dept.2009].
Third, every contract contains an implied covenant of good faith and fair dealing. The implied covenant of good faith and fair dealing is breached when a party acts in a manner that, although not expressly forbidden by any contractual provision, would deprive the other party of the intended benefits and rights of the contract. Legend Autorama Ltd. v. Audi of America, Inc., 100 A.D.3d 714, 954 N.Y.S.2d 141 [2nd Dept.2014] ; Atlas Elevator Corp. v. United Elevator Group, Inc., 77 A.D.3d 859, 910 N.Y.S.2d 476 [2nd Dept.2010]. The implied covenant of good faith encompasses any promises which a reasonable person in the position of the promisee would be justified in understanding were included in the agreement, and prohibits either party from doing anything which would have the effect of destroying or injuring the rights of the other party or in receiving the fruits or benefits of the contract. Legend Autorama Ltd. v. Audi of America, Inc., 100 A.D.3d 714, 954 N.Y.S.2d 141 [2nd Dept.2014] ; Prakhin v. Fulton Towers Realty Corp., 122 A.D.3d 601, 996 N.Y.S.2d 85 [2nd Dept.2014].
Fourth, when interpreting a contract, the court is required to construe and interpret the contract as a whole and attempt to arrive at a construction that gives fair meaning to all provisions of the contract so that the reasonable expectation of the parties who negotiated the agreement, and who agreed to its terms, can be realized. Katz v. Dotan, 95 A.D.3d 1328, 945 N.Y.S.2d 404 [2nd Dept.2012] ; Bokor v. Markel, 104 A.D.3d 683, 960 N.Y.S.2d 202 [2nd Dept.2013]. In discharging that interpretative function, it is well settled that the fundamental precept of such contract interpretation and construction is that agreements are to be construed in accordance with the intent of the parties, and the best evidence of that intent is what the parties express in their writing. Moreover, the words so utilized are to be accorded their plain and natural meaning, unless an alternate meaning is clearly intended. Goldman v. White Plains Center for Nursing, 11 N.Y.3d 173, 867 N.Y.S.2d 27, 896 N.E.2d 662 (2008) ; Innophos v. Rhodia S. A., 10 N.Y.3d 25, 852 N.Y.S.2d 820, 882 N.E.2d 389 (2008) ; Maser Consulting P.A. v. Viola Park Realty, LLC, 91 A.D.3d 836, 936 N.Y.S.2d 693 [2nd Dept.2012]. Furthermore, the construction and interpretation of an agreement, and whether an ambiguity exists, is not a factual determination, but an issue of law for the court. Maser Consulting P.A. v. Viola Park Realty, LLC, 91 A.D.3d 836, 936 N.Y.S.2d 693 [2nd Dept.2012]. A contract is deemed "unambiguous" if the language so utilized has a definite and precise meaning unattended by the danger of misconception in its import. White v. Continental Casualty Company, 9 N.Y.3d 264, 848 N.Y.S.2d 603, 878 N.E.2d 1019 (2007).
Thus, the court's role in discharging its interpretative function is limited to the interpretation and enforcement of the terms as agreed to, and as written, and the court may not rewrite the contract, ignore the terms as written, or supply additional terms or conditions which the parties failed to insert, under the guise of its interpretative role. Bailey v. Fish & Neave, 8 N.Y.3d 523, 837 N.Y.S.2d 600, 868 N.E.2d 956 (2007) ; Maser Consulting P.A. v. Viola Park Realty, LLC, supra; Matter of Salvano v. Merrill, Lynch, Pierce, Fenner & Smith, 85 N.Y.2d 173, 623 N.Y.S.2d 790, 647 N.E.2d 1298 (1995).
Here, and as noted supra, the record is devoid of any evidence, direct or indirect, that would support a finding that the Settlement Agreement at issue was product of coercion, intimidation or duress. Each party was represented by able, experienced and competent counsel. The mere fact that each side may have utilized, and correspondingly minimized, the strengths and weaknesses of their respective bargaining positions does not support a finding of coercion or intimidation; that's what good negotiators do.
Furthermore, and particularly applicable here, the parties to the Settlement Agreement must clearly be considered sophisticated. Indeed, as noted in the Court's June 19, 2017 Decision, Barry Grant was quick to point out to the court that he was not unfamiliar with matters such as these or Court procedures; "he was a probate judge for 32 years".
Having determined the validity and enforceability of the Settlement Agreement, the Court can discern no compelling reason why the Settlement Agreement should not be implemented and enforced as it was written and as the parties negotiated. The Settlement Agreement was well crafted, addresses a multitude of issues including the attorneys' fees incurred up to that date, obviates the need to reopen any prior Federal or New York Tax proceedings, streamlines the entire accounting proceeding, streamlines discovery, and dramatically enhances the prospect for bringing the estate to closure. In sum, the interests of judicial economy will be greatly served thereby, without corresponding prejudice to any party.
The Applicability and Impact of the Settlement Agreement
Having determined that the Settlement Agreement was voluntarily entered into by the parties and enforceable in accordance with its terms, the Court makes a further finding, i.e. that the terms of the Settlement Agreement are clear, complete and unambiguous.
At the outset, the Court notes that pursuant to the terms of the Settlement Agreement all issues relating to the administration of the Trust including, inter alia, the issue of attorneys' fees and their reasonableness, up to and including the effective date of the Settlement Agreement (August 19, 2011), were settled "with prejudice" and with the same effect as a "court decree or judgment approving all of the actions of the Trustees and Executors from the inception of the Trust through the date of this Settlement Agreement". It is hard to imagine language that could be any more explicit. The provisions and covenants contained in the Settlement Agreement [including the substantial benefits that were to be received] were interdependent obligations and clearly intended to be so.
The Court's determination that the Settlement Agreement is enforceable in accordance with its terms, and that the parties are bound thereby, finds further support on an equitable basis as well. The uncontradicted record establishes that the parties bargained for, and received, over three million dollars in cash distributions and property transfers, distributions and transfers that were an integral part of, and interdependent with, the agreement forged on attorneys' fees, and which served as the predicate for the settlement "with prejudice". As such Barry and Lisa are equitably estopped from seeking to, in effect, rescind, on a selective basis, the material provisions, or a material provision, of the Settlement Agreement.
Equitable estoppel is a doctrine imposed by law in the interest of fairness to prevent the enforcement of rights, which might otherwise be asserted, where such assertion would in effect work, or result in the imposition of, a fraud or injustice upon the person or persons against whom enforcement is sought and who, in justifiable reliance upon the opposing parties' words or conduct, or both, have been misled into acting upon the belief that such enforcement would not be sought. See, Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Management, L.P., 7 N.Y.3d 96, 817 N.Y.S.2d 606, 850 N.E.2d 653 (2006) ; Flushing Unique Homes, LLC v. Brooklyn Federal Savings Bank, 100 A.D.3d 956, 954 N.Y.S.2d 606 [2nd Dept.2012].
Indeed, based upon the testimony elicited at the hearing, the ink was not even dry on the Settlement Agreement when Barry and Lisa refused to sign a routine stipulation of discontinuance which was intended to be filed with the Court to be "so ordered", thus reneging on what can only be described as a routine ministerial provision inserted in all contracts of this nature, i.e. that the parties were required to execute, acknowledge and deliver any and all documents required or reasonably required to effectuate the terms of the Settlement Agreement. See Agreement, at § 23.
Having concluded, on both legal and equitable grounds, that the Settlement Agreement at issue is a valid and enforceable contract, and thus enforceable in accordance with its terms, certain findings and conclusions specific to the current proceeding need to be underscored.
First, any accounting issues which predate the effective date of the Settlement Agreement, including inter alia the issue of attorneys' fees, or their reasonableness, will not be revisited by the parties, nor will discovery be allowed as to the same. Thus, all issues that were previously contested or objected to, or could have been contested or objected to, up to the effective date of the Settlement Agreement will, and are hereby, deemed resolved and settled.
Second, any remaining issues, i.e. those issues arising subsequent to the effective date of the Settlement Agreement, including, but not limited to, any supplemental application for the approval of attorneys' fees, will be received, addressed, and determined by the Court, on the record before it, at such time as the Court deems appropriate.
In that regard, and in exercising its inherent discretion, the Court, in evaluating the reasonableness of any subsequent application for attorneys' fees, will make such determination based upon the submissions of the parties and its consideration of the factors typically considered, i.e. the time and labor expended, the complexity of the issues involved, the lawyers' experience, the customary fees charged for the same or similar services, the results obtained, and the size of the estate. In re Phelan, 173 A.D.2d 621, 570 N.Y.S.2d 202 [2nd Dept.1991] ; Matter of Barich, 91 A.D.3d 769, 937 N.Y.S.2d 112 [2nd Dept.2012] ; In re Askin, 113 A.D.3d 72, 976 N.Y.S.2d 492 [2nd Dept.2013]. Further, and in view of the enforceability of the Settlement Agreement, the Court will consider the amount of attorneys' fees previously agreed to and paid by the parties, as a part of its determination concerning any supplemental award, to insure that the assets of the estate and/or Trust are not unnecessarily dissipated.
Third, in the interest of judicial economy, and pursuant to ¶ 10 of the Settlement Agreement, the Court, in exercising its inherent discretion, will utilize the procedure agreed to by the parties in resolving all future fee disputes and related discovery issues. In sum, the Court, consistent with customary practice and procedure, will adjudicate and resolve all prospective applications and issues relating to the magnitude and reasonableness of all future fee applications, based upon the submissions of the parties and, as an incident thereto, all discovery issues pertaining to the same will be structured and tailored to be consistent with that mechanism.
The Application for Sanctions
Counsel for Bonnie and Jim, based in part on the foregoing, seek the imposition of sanctions upon Barry and Lisa for what they characterize as frivolous and dilatory conduct.
The application is denied, without prejudice to renew in a separate application, on notice to Barry and Lisa and their attorneys. The relief sought is beyond the scope of the limited issue hearing.
Notwithstanding the denial, the Court notes that in instances where the Court determines that litigation is "frivolous", or lacks a reasonable basis for its commencement, counsel or the client, or both, may be subject to the imposition of costs, attorneys' fees and/or sanctions. CPLR 8106 ; Mackey v. Dosiak, 15 Misc.3d 161, 830 N.Y.S.2d 451 (2006) ; NYCRR Part 130–1.1(a).
Frivolous conduct includes, but is not limited to, conduct that lacks a reasonable basis in law and cannot be supported by reasonable argument or where it is undertaken for the primary purpose of delaying or prolonging the case. NYCRR Part 130–1.1(c).
Should any such motion for sanctions be filed, the Court, by necessity, will be required to examine the good faith basis, if any, for the claims which necessitated this limited issue hearing, the prior discovery applications and resulting determinations of the Court, and the extent to which, if at all, the Grants, by their post 2011 Settlement Agreement conduct, have violated the implied covenant of good faith and fair dealing.
Further Proceedings
Based upon the foregoing, the parties, through respective counsel are directed to, and shall, appear for a Status/Discovery Conference on Thursday, September 28, 2017 at 10:00 a.m., at the Westchester County Surrogate's Court, 111 Dr. Martin Luther King, Jr., Blvd., 18th Floor, White Plains, New York.
This constitutes the decision and order of the Court.