Opinion
359-2006.
Decided July 19, 2010.
Peter S. Delman, Esq., P.C. for Ramon Miranda, petitioner.
Marino Chambers, P.C. (John A. Giacobbe, Esq., of Counsel) for Joseph Brignoni, administrator — respondent.
On the return date of an application seeking to compel a fiduciary to account, the court apprised the parties that the application would be treated as one to hold a reserve pursuant to SCPA 1804. As a result, the court granted leave to the petitioner and the respondent to file a supplemental affirmation, answer and reply (see Matter of Brignoni, NYLJ, May 13, 2010, at 38, col 5).
The decedent died on January 29, 2006 at the age of 64. His distributees are two sons and a daughter. Letters of administration subject to the provisions of SCPA 805 (3) with regard to the disposition of any real property issued to one of the sons on June 9, 2006, upon his posting an initial bond in the amount of $3.448 million. Subsequently, on November 28, 2008, the letters of administration were modified to lift the SCPA 805 (3) limitation with respect to one parcel of realty, and to require the posting of an additional bond, for a total bond of $3.888 million.
On December 2, 2008, the petitioner commenced an action against the decedent, individually, in the Supreme Court, Bronx County based on an alleged trip and fall accident that occurred on June 10, 2008 at a premises owned by the decedent at his death. A default judgment was taken against the decedent; however, the administrator claims that, upon his motion, that judgment was vacated by the supreme court. Thereafter, a personal injury action was commenced by the petitioner against the administrator of the decedent's estate. On the return date of the original application brought in this court to compel the fiduciary to account, the attorney for the fiduciary represented that the realty where the alleged trip and fall occurred is not insured, and that the estate is now valued at $7.3 million.
In support of his amended application seeking to hold a reserve of $500,000, the petitioner contends that: (1) there is minimal impact to the estate in setting a $500,000 reserve, which should remain in effect until July 8, 2012, with leave to extend in the event the underlying action does not conclude by that date; (2) should all estate assets be distributed in the interim, the petitioner would have difficulty obtaining personal jurisdiction over the fiduciary who lives in New Jersey; (3) at the time of his death, the decedent had no spouse and all distributees are now adults; and, (4) his underlying cause of action is meritorious and he has an equitable right to ensure that there will be sufficient assets to satisfy any judgment he obtains.
The fiduciary opposes the amended application asserting that: (1) the petitioner lacks standing under SCPA 1804, as that statute extends only to contingent or unliquidated claims existing as of the decedent's date of death, and it does not contemplate the setting of a reserve where the underlying cause of action arose after the date of death; (2) even assuming that standing exists, no reserve is warranted as discovery has not commenced in the underlying action and, therefore, the value of that action is not quantifiable, and in any event, the action lacks merit and the petitioner's contributory negligence is likely to reduce the damages, if any, that he obtains; and, (3) in the alternative, a hearing should be held to determine the amount and character of the assets to be held in reserve in light of the size of the estate and the complexity of issues surrounding its administration and potential tax complications and obligations. The petitioner replies that the fiduciary should not be permitted to deny him recovery on any underlying judgment he obtains, and a reserve is warranted as there is no insurance covering the premises at issue.
SCPA 1804 (1) provides, inter alia, that "whenever at the death of any person there shall be a contingent or unliquidated claim" against the estate, a claimant shall have the right to file with the fiduciary an affidavit showing the facts upon which the contingent or unliquidated liability is based and the probable amount thereof, and there shall be no distribution without reservation of such estate assets as the court shall determine to be adequate to pay the contingent or unliquidated claim when the amount thereof shall become due and payable. In fixing the amount to be held in reserve, the court may determine the value of any security or collateral to which the creditor may resort for payment of the debt, and may thereafter direct the reservation, if necessary, of sufficient estate assets to make up the difference between the value of such security or collateral and the amount necessary to pay the contingent or unliquidated claim (see SCPA 1804).A negligence action is a contingent or unliquidated claim under SCPA 1804 (1) (see Matter of Biel, 103 AD2d 287, 288). A reservation of some estate assets is mandatory once a claim covered by the statute is filed against an estate unless the insurance coverage available suffices to satisfy the claim, in which case no reservation is necessary (see id. at 292-293). Nonetheless, the court has broad discretion to fashion an equitable remedy, taking into account numerous factors when determining the amount of assets to be held in reserve and the length of such retention, so that the remedy "will strike a proper balance between the respective rights of a decedent's beneficiaries and his contingent creditors" (Matter of Biel, 103 AD2d at 293-294).
Here, the threshold issue presented is whether, at the time of the decedent's death, there was a contingent or unliquidated claim against the estate within the meaning of SCPA 1804 (1). The statute permits a reserve only where a contingent or unliquidated claim exists "at the death of any person" (SCPA 1804), and in this case, the petitioner's underlying trip and fall accident at the premises did not occur until more than two years after the decedent's death. As the petitioner's claim was not a contingent or unliquidated claim at the time of the decedent's death, and instead, is a postmortem contingent claim, his application seeking a reservation of estate assets under SCPA 1804 must be denied (see Matter of Leopold, NYLJ, July 14, 2000, at 31, col 5; Matter of Frank, NYLJ, Apr. 21, 2000, at 31, col 5; 4-18 New York Civil Practice: SCPA § 1804.01 [2010]; 6-71 Warren's Heaton, Surrogate's Court Practice § 71.03 [1] [2010]; see also 2-28 NY Practice Guide: Probate Estate Admin § 28.08 [2009]; 1-8 Lexis Nexis AnswerGuide, New York Surrogate's Court § 8.12 [2009]). In applying the plain meaning of the statutory language of SCPA 1804 (1), the court, in the event that the administrator does not retain sufficient assets to satisfy any judgment in the underlying action, does not reach or address any issue relating to whether the administrator, individually, or the distributees, to the extent that they receive a distribution, might ultimately be responsible for satisfying any such judgment.
Accordingly, the amended application pursuant to SCPA 1804 must be denied and the petition dismissed.
Settle decree.
SURROGATE