Opinion
File No. 2001-4485/A
06-09-2022
In the MATTER OF the Application of Maria A. WARING, as Administrator of the Estate of James Arthur Waring, Deceased, for leave to receive and distribute an award for the pain and suffering damages of the decedent awarded by the United States Victims of State Sponsored Terrorism Fund.
Attorneys for Petitioner, Ellyn S. Kravitz, Esq., Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone, LLP, 1 MetroTech Center, Suite 1707, Brooklyn, New York 11201
Attorneys for Petitioner, Ellyn S. Kravitz, Esq., Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone, LLP, 1 MetroTech Center, Suite 1707, Brooklyn, New York 11201
Peter J. Kelly, S. The petition submitted herein seeks to lift the restrictions placed on the limited letters of administration to allow the collection of an award from the United States Victims of State Sponsored Terrorism Fund ("Terrorism Fund"). In addition, similar to a compromise and account proceeding, it also seeks an allocation of the funds to personal injury instead of wrongful death, the approval of attorneys’ fees, the distribution of the net proceeds to decedent's distributes, and the judicial settlement of the administrator's account. The issue presented to the court is whether any of this additional relief is necessary.
By way of background, decedent died intestate on September 11, 2001 in the terrorist attack at the World Trade Center while employed as the Head of Security for a firm located there. Limited letters of administration were issued to decedent's spouse who thereafter retained a law firm to pursue claims for damages against individual defendants who allegedly participated in or supported the terrorist attacks against the United States.
Petitioner became one of numerous plaintiffs in an action filed in the United States District Court, Southern District of New York, captioned Burnett, et al. v. The Islamic Republic of Iran , (S.D.N.Y), seeking damages against the Republic of Iran and other related national entities for their role in aiding and abetting the September 11, 2001 terrorist attacks that resulted in decedent's death. After obtaining a judgment in favor of decedent's estate in the amount of $8,723,406.00, petitioner received a "Notice of Claim" stating that the administrator had an eligible claim against the Terrorism Fund. Petitioner thereafter filed a claim pursuant to the United States Victims of State Sponsored Terrorism Act ("Terrorism Act") ( 34 U.S.C. § 20144 ) and on August 28, 2020 the Terrorism Fund issued a "Notice of Allocated Amount" indicating that, pursuant to the rules of distribution and mandated calculations in the Terrorism Act, the estate was granted a compensatory payment for its claim in the total amount of $41,839.67.
The Terrorism Fund was created by the Terrorism Act in 2015, and its purpose is to provide monetary compensation for persons suffering from acts of intentional state-sponsored terrorism ( 34 U.S.C. § 20144 [c][d][e]). In 2019, the United States Victims of State Sponsored Terrorism Fund Clarification Act ("Clarification Act") (Further Continuing Appropriations Act, 2020 and Further Health Extenders Act of 2019 , P.L. 116-69, 2019 Enacted H.R. 3055, 133 Stat. 1134 at 1140 [eff. Nov. 21, 2019]) expanded the group of claimants eligible to seek payments from the Terrorism Fund to include "9/11 victims," "9/11 spouses" and "9/11 dependents." It is due to the Clarification Act that claims are now being filed with the Terrorism Fund on behalf of estates.
Claims are made by submitting forms to an appointed "Special Master" who, in turn, determines if eligibility requirements are met. For the purpose of this proceeding, a claimant must be a statutorily defined "United States person" holding a judgment from a U.S. District Court against a foreign state that was designated as a state sponsor of terror, and the claim must arise from acts of international terrorism from foreign states determined not to be immune from the jurisdiction of the United States courts ( 34 U.S.C. § 20144 [c]).
If the Special Master determines the claimant is a member of the approved class, payments will be made by the Terrorism Fund at intervals and in amounts according to mathematical ratios and formulas set forth in the Terrorism Act ( 34 U.S.C. § 20144 [c]). If the claimant is deceased, payment is made "to the personal representative of the estate of that person" (Id. ).
Attorneys for 9/11 related victims of state sponsored terrorism who became eligible claimants pursuant to the Clarification Act are limited to fees and costs in the aggregate amount of 15 percent (15%) of the award ( 34 U.S.C. § 20144 [f]). The Terrorism Fund requires that the decedent's personal representative file a certification that awards will be distributed in accordance with the decedent victim's will , the law of the domicile, a ruling by a court of competent jurisdiction or in accordance with the terms of an agreement among all beneficiaries (see U.S. Victims of State Sponsored Terrorism Fund, http://www.usvsst.com/faq.php [as updated through April 14, 2022]).
But cf. Matter of Keough, 196 A.D.3d 160, 150 N.Y.S.3d 449 [4th Dept. 2021] [payment made to a decedent's estate under 34 U.S.C.S § 29144 is not property held by decedent at the time of death; these claim assets acquired after-death are distributed pursuant to the laws of intestacy rather than the will]).
While acknowledging estate claimants in these 9/11 cases are collecting funds due to the death of a family member, the procedural question extant is whether, upon receiving an award, the fiduciary can simply lift the restrictions in the letters and collect the funds or whether a full compromise and account is also required.
In contrast to the procedures set forth in the Terrorism Act, when funds are collected in an action arising out of decedent's wrongful death, they are not obtained pursuant to a precise actuarial formula but, instead, represent compensation for economic loss to various parties in differing amounts and, in some cases, awards for pain and suffering or other amorphous categories of damages impossible of precise calculation. The fiduciary appointed in these cases must bring a compromise proceeding to approve the proposed settlement, fix the attorney fees and expenses including medical bills, funeral costs and other liens against the estate and authorize the allocation of the settlement proceeds between the persons who would take as beneficiaries of the estate and/or those entitled to different amounts from the wrongful death proceeds ( EPTL 5-4.6 ).
The distinguishing characteristic in proceedings brought to permit the collection of payments approved by the Terrorism Fund is that the petitioners are not seeking any relief related to an underlying settlement or judgment in an action for wrongful death. Here, the petitioner's receipt of a claim payment from the Terrorism Fund, approved by the Special Master, is inapposite to the receipt of settlement proceeds or an award of damages in a wrongful death action. Neither the Terrorism Act nor EPTL 5-4.6 requires judicial review and approval of claim awards from the Terrorism Fund and, notably, nothing in the federal statute allows the administrator to dispute or modify the payments, or authorizes the state court to accept, reject, modify or allocate the awards made to the claimant. Neither the Terrorism Act nor EPTL 5-4.1 requires judicial review of the injury or manner of death to determine the allocation of the claim award between eligible parties entitled to recover for wrongful death or from the Terrorism Fund, as would be required in a compromise proceeding. The payment made from the Terrorism Fund is money collected on a claim as approved by the Special Master pursuant to the Terrorism Act ( 34 U.S.C. § 20144 [c] and [d]). It is, in fact, more akin to the collection of a death benefit or insurance claim than recovery in a wrongful death matter. In the same vein, if a personal injury recovery is collected which is not related to decedent's death, those funds can be collected by a lifting of restrictions and distribution without the need of a compromise order.
Similarly, judicial review of attorneys’ fees awarded under the Terrorism Act is unnecessary. Although the Surrogate's Court is empowered to decide what constitutes reasonable legal compensation in proceedings brought before it ( SCPA 2110 ; see Stortecky v. Mazzone , 85 N.Y.2d 518, 626 N.Y.S.2d 733, 650 N.E.2d 391 [1995] ; Matter of Quigley , 172 A.D.3d 1516, 99 N.Y.S.3d 495 [3d Dept. 2019] ; Matter of Vitole , 215 A.D.2d 765, 627 N.Y.S.2d 444 [2d Dept. 1995] ), the attorneys’ fees and costs in question are awarded by the Special Master on the claim presented to the Terrorism Fund, and the total amount allowed for 9/11 victims is set by the Terrorism Act at a rate not to exceed fifteen percent (15%) of the payment made ( 34 USC § 20144 [f]).
Finally, the legislative history of EPTL 5-4.6 does not support the requirement that a compromise proceeding be brought in the Surrogate's Court for payment of claims pursuant to the Terrorism Act. As amended in 2005, its stated purposes were to provide for "the prompt disbursement of settlement proceeds in wrongful death cases" (Senate Introducer's Memo in Support, Bill Jacket, L 2005, ch 719 at 3) and "payment of distributees’ outstanding expenses" (Assembly Sponsor's Memo in Support, A5857A [revised Jan. 23. 2006]). Clearly, requiring a fiduciary to commence a proceeding to compromise a claim awarded by the Terrorism Fund and for allocation and distribution of its proceeds was not contemplated by EPTL 5-4.6 and, in fact, would be contrary to its purpose.
The Court finds that the administrator is statutorily empowered to collect the payment on its claim against the Terrorism Fund without judicial intervention (see EPTL 11-1.1[b][1],[13] ), subject to the limitations set forth in the letters of administration.
Accordingly, the letters of administration shall be modified to the extent that the administrator is authorized to receive and distribute the funds awarded by the Terrorism Fund in the total sum of $41,839.67 in connection with the claim filed on behalf of the decedent.
The remainder of the petition is denied as unnecessary and moot.
The filing of a bond is waived.