Opinion
2017-3346/B
06-24-2020
In the Matter of the Estate of Theodore L. McHugh, Deceased.
GEORGE A. RUSK, ESQ. Appearing for Petitioner Kathleen G. McHugh PHILLIPS LYTLE LLP Appearing for Respondent Timothy M. O'Mara Craig R. Bucki, Esq. and Sam Williams, Esq., of Counsel
GEORGE A. RUSK, ESQ. Appearing for Petitioner Kathleen G. McHugh PHILLIPS LYTLE LLP Appearing for Respondent Timothy M. O'Mara Craig R. Bucki, Esq. and Sam Williams, Esq., of Counsel Acea M. Mosey, S.
Theodore L. McHugh [hereafter, decedent] died on August 9, 2017 at the age of 82. Decedent's wife predeceased him and he was survived by three children: Kathleen, Patience, and Patrick. Decedent's Last Will and Testament is dated September 10, 1991 [hereafter, the Will], and it nominated his daughter Kathleen as fiduciary of the estate. This Court [Howe, J.] admitted the Will to probate and letters testamentary were issued to Kathleen on October 14, 2017.
(A)
Decedent was associated with the Buffalo Shooting Club [hereafter, BSC], a not-for-profit business. BSC made arrangements with decedent to store some of the Club's equipment in two trailers on decedent's property. No formal contract was ever signed by either party governing the terms of the storage arrangement, including whether a storage fee would be charged by decedent. The storage period began in the Fall of 2005, and decedent eventually billed BSC for storage costs for the period between late Fall 2005 and December 2008. BSC paid the $39,600 bill despite the absence of a formal contract between the parties.
On or about February 13, 2009, Erie County Supreme Court [Drury, J.] issued an Order [hereafter, the Dissolution Order] dissolving BSC and appointing Timothy M. O'Mara, Esq. [hereafter, the Receiver] as Receiver of all of BSC's assets. As part of its Dissolution Order, Supreme Court provided as follows:
"ORDERED, that all parties interested in BSC be and they are hereby enjoined from in any way using, controlling, interfering with or encumbering BSC's property, and from collecting any debts due BSC, or paying out any money belonging to BSC, until the further order of this Court, and it is further
ORDERED, that this Court shall retain exclusive jurisdiction over all matter involving or related to the dissolution of BSC."
Decedent subsequently billed BSC $85,800 for equipment storage costs covering an additional 78 months [January 1, 2009 through June 30, 2015]. At that point, the storage trailers were removed from decedent's property, but, to date, the Receiver has failed to pay the outstanding bill.
By petition verified October 29, 2019, and citing to SCPA 2103 and 2107, Kathleen now seeks to recover $85,800 from the Receiver based on the estate's storage claim against BSC. A citation was issued by this court on November 27, 2019 directed to the Receiver with respect to that claim. In response, in motion papers dated January 31, 2020, the Receiver seeks pre-answer relief dismissing the estate's petition pursuant to CPLR 3211 (a)(1) [defense based on documentary evidence], (a)(2) [lack of subject matter jurisdiction], (a)(5) [statute of limitations], and (a)(7) [failure to state a cause of action], "or, in the alternative, pursuant to New York Constitution Article VI, §19 (d), transferring it for adjudication by the New York State Supreme Court, Erie County". Kathleen opposes dismissal or transfer and contends that, because this court has jurisdiction over all matters relating to a decedent's estate, this court should retain jurisdiction and determine this claim.
(B)
(i)
The Receiver argues that this court lacks subject matter jurisdiction over the matter at issue because (1) Kathleen's alleged contract claim has been committed to the exclusive jurisdiction of Supreme Court, and (2) that Article VI, §12(d) of the New York State Constitution prohibits any court from addressing matters within Supreme Court's exclusive jurisdiction. The Receiver also says that neither SCPA 2103 nor 2107, cited by Kathleen in her petition as statutory grounds for recovery here, authorizes Surrogate's Court to decide breach-of-contract claims seeking liquidated damages. Finally, the Receiver says that adjudication of the petition in this court would contravene the terms of Supreme Court's Dissolution Order.
The Receiver points out that, with respect to SCPA 2103, Kathleen is not seeking to recover any specifically identifiable property, and that, with respect to SCPA 2107, Kathleen is not seeking any advice and direction about the propriety of an action she might take on behalf of the estate.
In Matter of Young, 80 Misc 2d 937 [1975], the executor initiated an action in New York County Surrogate's Court seeking to recover royalties allegedly owed to the estate by a publisher. The publisher argued that Surrogate's Court lacked jurisdiction because the proceeding was to collect a common debt or contract obligation. Surrogate Midonick, tracing the history of what is jurisdictionally cognizable in Surrogates' Courts, noted as follows:
" 'The mandate of the New York State Constitution is clear and unequivocal: the Surrogate's Court shall have jurisdiction not only over "all actions and proceedings relating to the affairs of decedents" but also over "administration of estates and actions and proceedings arising thereunder or pertaining thereto." Therefore, for the Surrogate's Court to decline jurisdiction, it should be abundantly clear that the matter in controversy in no way affects the affairs of a decedent or the administration of his estate.' " (at 939, quoting Carmody-Wait, New York Practice (2d ed, vol 25, § 149:75, p 69); see also Matter of Piccione, 57 NY2d 278 [1982] and Matter of Brown, 2019 NYLJ LEXIS 2536 [dec. July 19, 2019]).
And, in Goldberg v. HSBC Securities (USA), Inc., 2014 NY Misc Lexis 858, New York County Supreme Court, citing Hoffman v. Sitkoff, 297 AD2d 205 [2002], addressed the propriety of a contract enforcement action in Surrogate's Court:
"[W]hile the Surrogate's Court does not generally have jurisdiction over enforcement of a contract, where 'the agreement in question is inextricably connected with a contested will so that the dispute will necessarily affect the administration of the estate, removal of the action to Surrogate's Court is appropriate since the Surrogate's Court has full general jurisdiction in law and in equity with respect to all matters relating to the estates and affairs of decedents' " (emphasis added; see also Chenkin v. Public Adm'r of NY County, 163 AD3d 410 [2018]).
(ii)
I find that this court has subject matter jurisdiction of the estate's claim to recover from the Receiver for a debt the estate believes BSC owed to it. If successful, the estate would add to the assets available for distribution, clearly an aspect of estate administration. Whether the petition's reference to, and apparent reliance on, SCPA 2103 or SCPA 2107 as a statutory basis to bring such a claim is correct, or whether bringing the claim in this court simply falls within the scope of the fiduciary's duties to marshal assets of the estate, is irrelevant to the subject matter jurisdiction issue.
That said, Supreme Court's February 13, 2019 Dissolution Order directs that all matters related to BSC assets had to be brought exclusively in that Court. Given this understandable retention of exclusive jurisdiction to hear and determine any claims involving the dissolved non-profit corporation, it is appropriate that this court defers jurisdiction in this matter to the Erie County Supreme Court.
Accordingly, and for the reasons stated, I deny the Receiver's pre-answer motion to dismiss, and I hereby, pursuant to Article VI, §19(d), of the New York State Constitution, transfer the within proceeding to Erie County Supreme Court for all further proceedings hereon.
This decision shall constitute the Order of this Court and no other or further order shall be required. DATED: June 24, 2020 Buffalo, New York HON. ACEA M. MOSEY Surrogate Judge