Opinion
340361.
Decided on December 19, 2007.
This is a discovery proceeding pursuant to SCPA 2103 for the turnover of property. The petitioners, James Devita and Eugene Shalik, are the co-preliminary executors of the estate of Pearl B. Kalkow. The respondents are Edward M. Kalikow, Hewlett Associates, L.P., Stephen M. Breitstone, Esq. and Meltzer, Lippe, Goldstein Breitstone, LLP. The petitioners seek an order directing respondents Stephen M. Breitstone, Esq. and Meltzer, Lippe, Goldstein Breitstone, LLP to turn over to petitioners money received by them and belonging to the estate in the amount of $479,650.48 and directing respondent Edward M. Kalikow to turn over the books and records of Hewlett Associates to the petitioners. The respondents have now moved to dismiss the petition and for sanctions on the basis that this SCPA 2103 proceeding is the same action as an action brought in Supreme Court, Nassau County that has been transferred to this court.
At the time of her death, the decedent owned a 51% interest in Hewlett Associates, LP, a limited partnership. After decedent's death, respondent, Edward Kalikow, as the managing general partner of Hewlett distributed substantial sums of money from Hewlett to himself, as a 25% partner, and to Laurie Platt, as a 24% limited partner. The share representing Pearl Kalikow's 51% interest, amounting to $479,650.48, was distributed to Edward Kalkow's attorneys, Meltzer, Lippe, Goldstein Breitstone's escrow account. In February 2007, petitioners filed a suit against Hewlett, Edward Kalikow, individually and as general partner and a limited partner of Hewlett, and Laurie Platt, individually and as a limited partner of Hewlett. That action seeks to recover over $9 million which was allegedly wrongfully withheld by the defendants from the decedent during her lifetime, for an accounting and for a determination that Hewlett had terminated.
Respondents argue that the petition should be dismissed because there is already an action pending which seeks an accounting and the distribution at issue in this discovery proceeding. Respondents argue that included in the Supreme Court action, which has been transferred to this court, is a fully-briefed motion to compel arbitration of the petitioners' claims, including this claim for $479,650.48 representing the 2006 distribution. That motion has yet to be decided. In addition, respondents note that Justice Galasso of the Supreme Court, Nassau County by order dated May 3, 2007 stayed discovery and the defendants' time to answer. Respondents claim that, although Justice Galasso granted the cross-motion to transfer the lawsuit to the Surrogate's Court, he did not decide the motion to compel arbitration and instead transferred the entire case, including the fully-briefed motion, to the Surrogate's Court for decision. Respondents argue that for those reasons the court should not only dismiss the petition, but award sanctions since the petitioners are in contempt of the order signed by Justice Galasso staying both prosecution of the claim and discovery.
Petitioners argue that the parties involved in the SCPA 2103 proceeding are not the same as in the Hewlett action. The causes of action, they argue, are based upon a different set of facts. According to petitioners, the Hewlett action alleges two causes of action, one for dissolution and one for an accounting. The SCPA 2103 proceeding seeks a turnover of money, records and information. They further claim that the SCPA 2103 action has nothing to do with any disagreement based on the Hewlett partnership agreement. Petitioners claim that if the discovery proceeding is dismissed, the estate would be left without recourse against Meltzer Lippe, since the firm is not a party to the Hewlett action.
CPLR 3211(a)(4) provides that a court may dismiss an action where "there is another action pending between the same parties for the same cause of action in a court of any state or the United States." Courts are empowered with broad discretion in determining whether to dismiss pursuant to CPLR 3211(a)(4). Moreover, the fact that there is a difference in the parties in the two competing lawsuits will not defeat a motion to dismiss ( Ace Fire Underwriters Ins. Co. v ITT Industries, Inc. (14 Misc 3d 1211A [Sup Ct, New York County 2006]).
Discovery proceedings under SCPA 2103 are designed to "provide a vehicle through which the fiduciary can obtain information needed to determine the assets of the estate or the value of the assets of the estate, as well as to effectuate a return of the property to the fiduciary" ( Matter of Laflin, 128 Misc 2d 348 [Sur Ct, Nassau County 1985]; see also Matter of Hendershot, 16 Misc 3d 1125 A, NY Slip Op 51576[U] [Sur Ct, Monroe County 2007]). The first stage of a discovery proceeding is the "inquisitorial" stage and the second stage is the "trial" stage ( Matter of Hendershot, 16 Misc 3d 1125 A, NY Slip Op 51576[U] [Sur Ct, Monroe County 2007]). "[I]n a proceeding brought pursuant to SCPA 2103 petitioners need only set forth allegations sufficient to justify an inquiry, as long as the discovery proceeding itself is not being used for the purpose of discovering or obtaining evidence to be used in another proceeding ( Estate of Boccia, 2/23/2001 NYLJ 24 [col 2]; citations omitted)" ( Matter of Valentin, 2005 NY Misc Lexis 5591 [Sur Ct, Suffolk County 2005).
In the instant case, both the Hewlett action and the SCPA 2103 discovery proceeding involve distributions from Hewlett Associates. The Hewlett action alleges that Hewlett Associates underdistributed to Pearl Kalikow during her lifetime. The SCPA 2103 proceeding alleges that Meltzer Lippe is in possession of a distribution made by Hewlett Associates after the decedent's death and owed to the estate. The respondents have made a motion in the Hewlett action to compel arbitration. If that motion is granted, all of the issues surrounding the decedent's interests in Hewlett will be determined at arbitration. This court previously decided that the question of whether the decedent had the right to transfer her general partnership interest in Hewlett Associates was subject to arbitration (Dec. No. 632, October 13, 2006). It appears that the SCPA 2103 proceeding is being used by petitioners to obtain evidence for the Hewlett action.
The court finds that the SCPA 2103 proceeding is substantially related to the Hewlett action since both involve distributions from Hewlett to the decedent and then her estate. In fact, paragraph 100 of the complaint in the Hewlett action alleges that "Edward Kalikow refuses to distribute to the estate of Pearl Kalikow distributions for 2006 from Hewlett that amount to at least $479,650.48." The court is not persuaded by petitioners' argument that the motion to dismiss should be denied because Meltzer Lippe is not a party to the Hewlett action. Meltzer Lippe is holding the funds as the escrow agent for Hewlett Associates. Accordingly, the motion to dismiss is granted. Petitioners, however, may amend their complaint in the Hewlett action to add Meltzer Lippe as a defendant ( see O'Brien v Town of Huntington, 308 AD2d 479 [2nd Dept 2003], Squicciarini v Squicciarini, 223 AD2d 538 [2nd Dept 1996], Agri Finance v Senter, 105 AD2d 560 [3rd Dept 1984]), app denied 64 NY2d 603).
This constitutes the decision and order of the court.