Opinion
2018-3321/B/C/D
08-27-2019
In the MATTER OF the ESTATE OF Aida J. COREY, Deceased.
J. MICHAEL LENNON II, ESQ. and JOHN P. DEE, ESQ., Appearing for Petitioner Thomas J. Corey BENGART & DEMARCO, LLP, Appearing for Jeffrey Markello, Esq. Estate Administrator, Steven B. Bengart, Esq., of Counsel GEOFFREY GISMONDI, ESQ., Appearing for Christopher Corey and Olivia Corey JEFFREY R. CARLINO, ESQ. and ROBERT J. FELDMAN, ESQ., Appearing for Rachel and Ryan Heckl
J. MICHAEL LENNON II, ESQ. and JOHN P. DEE, ESQ., Appearing for Petitioner Thomas J. Corey
BENGART & DEMARCO, LLP, Appearing for Jeffrey Markello, Esq. Estate Administrator, Steven B. Bengart, Esq., of Counsel
GEOFFREY GISMONDI, ESQ., Appearing for Christopher Corey and Olivia Corey
JEFFREY R. CARLINO, ESQ. and ROBERT J. FELDMAN, ESQ., Appearing for Rachel and Ryan Heckl
Acea M. Mosey, S. Aida Corey [hereafter, decedent] died on July 8, 2018 at the age of 92. She was survived by three children — Thomas J. Corey [hereafter, Thomas], Olivia Corey [hereafter, Olivia] and Christopher Corey [hereafter, Christopher] — and by Rachel Heckle [hereafter, Rachel] and Ryan Heckle [hereafter, Ryan], the two children of her predeceased daughter, Roseanna Heckle.
Decedent died intestate and her estate has been estimated to be worth approximately thirty million dollars [$30,000,000]. On consent and designation of all decedent's distributees (see SCPA 1001[6] ), letters of administration were issued on August 8, 2018 by this Court appointing Jeffrey Markello, Esq. [hereafter, Markello] as administrator of the estate. Markello has known the Corey family since approximately 2011, and he had previously represented the interests of decedent in various matters.
On April 4, 2019, Thomas filed a petition seeking to have Markello removed as administrator of this estate and to have himself appointed successor fiduciary. That petition has been supported by Christopher and Olivia. Markello opposes the removal application, as do Rachel and Ryan. Also pending before this Court is an application by Markello for approval of interim fiduciary fees, which is opposed by Thomas.
(I)
Thomas' removal petition, essentially joined in by Olivia and Christopher, is grounded principally on the fact that all three of those distributees who together comprise seventy-five percent [75%] of the beneficial interests in the estate have now revoked their consent to Markello acting as estate fiduciary. Those revocations were, so the petition alleges, occasioned because Markello has, in the opinion of Thomas, Olivia and Christopher, exceeded the scope of his fiduciary duties and responsibilities. Markello disputes that claim.
Once an estate fiduciary has been appointed, SCPA 711 provides various grounds for removal, but "courts exercise their power to remove fiduciaries sparingly, typically in cases of serious misconduct or where the safety of funds is endangered" (Turano and Radigan, New York Estate Administration § 14.04[a][1][A], at p. 522 [2019 ed], emphasis added). In seeking removal, a petitioner bears the burden of establishing that a cogent reason to do so exists and that removal is in the best interests of the estate (see, e.g. Matter of Brown, 138 A.D.3d 1191, 1192, 29 N.Y.S.3d 630 [2016] ).
(a)
Thomas' main ground for Markello's removal is that Thomas and his two siblings have now revoked their consent to Markello's appointment. Because letters of administration may be granted to an eligible non-distributee such as Markello only upon the acknowledged and filed consents of all eligible distributees who are entitled to serve as fiduciary, this consent is given at the time of appointment and here was given by all distributees on August 7, 2018. Thomas, Corey and Olivia state that, having now revoked their consent to Markello's appointment, Markello's appointment can no longer stand, and they request that this Court now remove him:
"First, it is undisputed that Mr. Markello was appointed and serves as Administrator of the Estate only because of the consents of the individual beneficiaries.
Second, it is also undisputed that such consents have now been revoked by individuals representing seventy-five percent (75%) of the beneficial interests in the Estate. See Affidavit of Thomas J. Corey, sworn to April 26, 2019 ("T. Corey Affi"), at ¶4; Exhibit A .
It is respectfully submitted that this Court would not have appointed Mr. Markello as Administrator of the Estate upon the consent of individuals representing only twenty-five percent (25%) of the beneficial interests in the Estate (i.e., upon the consent of Rachel Heckl and her brother, Ryan, who together comprise a 25% interest).
The quality of Mr. Markello's services is irrelevant to the effect of the revoked consents.
In other words, the issue is not whether seventy-five percent (75%) of the beneficiaries are incorrect in revoking their consents. Rather, in the absence of their consent, Mr. Markello would not have been appointed and, thus, cannot now continue to serve " (emphasis added).
The argument is that, but for the initial consent of all eligible distributees, this Court could not have appointed Markello as fiduciary. Because 75% of those distributees have now revoked their consent, this Court has no basis to allow Markello to continue to act, noting in this regard, that "[t]he quality of Mr.Markello's services is irrelevant to the effect of the revoked consents." Thomas' argument rests on the assumption that the subsequent revocation by one consenting distributee, whether for "cause" or based on simple whim or caprice, would be sufficient to undo an SCPA 1001(6) appointment duly made by this (or any) Court predicated upon that antecedent consent. I know of no statutory or case law authority which would support such a proposition, Thomas has not directed my attention to any, and I reject such proposition as untenable to the orderly and proper administration of an estate.
(b)
Apparently as a fall-back position for removal, Thomas alleges that consent to Markello was predicated on Markello performing certain specific functions, which included that Markello would (1) prepare a petition, (2) prepare and file all required documents, including an inventory of assets and closing documents, (3) advise in marshaling/collecting assets and closing documents, (4) prepare an accounting, (5) advise regarding the discharge of debts, and (6) prepare and file a New York estate tax return. Thomas says that Markello has only performed one of those items to date, namely the preparation of a petition. Thomas claims that Markello should be removed because he has delved into matters which Thomas believes are outside the "scope of services" and has acted "beyond the scope of the Administrator's responsibilities" as Thomas understands them to be.
This argument for removal amounts to a claim that the actions and scope of responsibility articulated by Markello as he has carried out his fiduciary duties have created a conflict between himself and Thomas and his siblings. However, it is well settled that " ‘a potential conflict of interest between a fiduciary and a party interested in the estate does not warrant...the removal of a fiduciary...Rather, it is actual misconduct, not a conflict of interest, that justifies the removal of a fiduciary’ ( Matter of Shaw, 186 A.D.2d 809, 810, 589 N.Y.S.2d 97 [1992] )" ( Matter of Morningstar , 21 A.D.3d 1285, 1287, 801 N.Y.S.2d 674 [2005] ; see also Matter of Bolen , 166 A.D.3d 1367 [2018] ). Conflict between a fiduciary and the beneficiaries is not, on its own, a ground for removal unless this conflict jeopardizes the interest of beneficiaries and the proper administration of the estate ( Matter of Rad , 162 Misc. 2d 229, 616 N.Y.S.2d 684 [1994] ; see also Matter of Beharrie, 84 A.D.3d 1227, 1229, 924 N.Y.S.2d 451 [2011] ).
Here, on the papers before me, I find nothing which would jeopardize the proper administration of the estate. There is some record material which suggest that Thomas had at one point declined to provide Markello with documents and other information sufficient to marshal and deal with the asset interests of the estate and of all beneficiaries. Indeed, Markello had to seek the earlier intervention of this Court to obtain essential information from Thomas which he had declined to give without a court order. All this was in service of ensuring that all decedent's assets were properly accounted for and that, while decedent was under a period of disability prior to her death, her assets had not been diverted or improperly utilized.
In regard to the period of decedent's disability, there are apparently still guardianship accounting proceedings before Erie County Supreme Court.
(c)
In the end, considering everything submitted to me, I find no basis to remove Markello, and I likewise find no basis even to direct an evidentiary hearing on that issue. (II)
Markello has filed a petition, verified March 29, 2019 , seeking "an advance payment of partial commissions". In that petition, Markello qualifies his request as follows:
Although the petition was denominated an application pursuant to SCPA 2311, I find that, because the relief was not sought on an ex parte basis, the petition falls within SCPA 2310.
--------
"Petitioner since the date of his appointment as Administrator, has received various assets and income of the decedent upon which he would compute his commissions pursuant to SCPA § 2307. At this point in time, it would be impossible to determine an accurate partial commissions to date as Petitioner has not received a Final Account from the decedent's Co-Guardians of her Mental Hygiene Law Article 81 proceeding. The most recent account that exists from the former guardianship is attached 2017 Account that was recently tendered by only Thomas Corey. Please see attached 2017 Account of Thomas Corey as Exhibit A .
Petitioner is not requesting the Court to award him partial commissions pursuant to SCPA § 2307 for the calendar year of 2019, but rather to review his itemized time charges for work performed at an hourly rate. Specifically, Petitioner has maintained regular time charges for all administrative work performed in connection with his role as Administrator of the Estate. Petitioner has applied an hourly rate of $350.00/hour to his time charges which would give him a proposed total partial commission of $93,766.00 for his time expended through December 31, 2018.
* * *
Petitioner believes that based on the intricate issues surrounding the estate administration, the ongoing legal issues attributable to the guardianship matters related to the estate, the multiple business assets and other investment accounts, that by itemizing his time the Administrator has evidenced the true and accurate costs to administer the estate.
Moreover, the Administrator by itemizing his time entries and using a reasonable hourly rate for the time charges, produces a significantly lower partial commission than if he computed his partial commissions pursuant to SCPA § 2307."
The papers before me indicate that, as of their filing date, Markello has collected approximately $11,000,000 in estate assets. If commissions were to be paid on that amount, Markello would be entitled to approximately $137,000 in receiving commissions to the end of 2018.
Under all the circumstances, I find that Markello is entitled to receive the sum of $93,766 as and for advanced receiving commissions, and the same may be taken by him forthwith. (III)
For the reasons stated, Thomas' petition to remove Markello as administrator of this estate must be, and it hereby is, denied in all respects and is hereby dismissed.
And, Markello's petition for an interim award of receiving commissions is, under the circumstances, granted to the extent of awarding Markello the sum of $93,766 at this time .
This decision shall constitute the Order of this Court and no other or further order shall be required.