Opinion
File No. 2021-2148
08-02-2022
Matter of Richard J. Griffin II, as Executor of the Estate of Richard J. Griffin, decedent, For Advice and Direction pursuant to SCPA § 2107.
For Estate of Richard J. Griffin: Fitzsimmons, Nunn and Plukas, LLP, John Fitzsimmons, Esq., of counsel. For Objectant Elizabeth Griffin: Richard S. Levin, Esq.
Unpublished Opinion
For Estate of Richard J. Griffin: Fitzsimmons, Nunn and Plukas, LLP, John Fitzsimmons, Esq., of counsel.
For Objectant Elizabeth Griffin: Richard S. Levin, Esq.
Christopher S. Ciaccio, S.
Richard J. Griffin II (Richard II) is the executor of the Estate of Richard J. Griffin (Richard I) by Decree of this court which issued letters testamentary on August 18, 2021. He now brings a proceeding for Advice and Direction under SCPA 2107(1) "as to the propriety, price and manner of sale of property" in which the Estate has a purported interest and located in Canada (the "Canadian property"). He seeks to sell the property for less than fair market value and to himself.
Richard I's ex-wife Elizabeth Griffin, who was divorced from Richard I by a Judgment of Divorce in 2012, has filed an Answer/Objections, and argues that at the time of the divorce she was a joint owner of the property with Richard I and continued as joint owner until Richard I died. Then, under Canadian law, she became the sole owner of the property, notwithstanding the divorce, and thus the Estate has no real property interest in the Canadian property. She also argues that a sale for anything less than the fair market value would not be fair to her and injurious to the heirs, one of whom has filed an affidavit opposing the relief requested.
For the reasons below, the application for Advice and Direction is GRANTED.
The executor is directed to take all appropriate actions to initiate a sale of the property, so that the proceeds of the sale, less any amounts owed to Elizabeth Griffin and other claimants, may be distributed to the heirs of Richard J. Griffin. Those actions may include 1) reaching an agreement with Elizabeth Griffin, the sole owner, to list the property for sale at fair market value, 2) in the event she doesn't agree to a sale, obtaining a judgment against her for one-half the fair market value and executing judgment upon her and against the property, and 3) moving to hold her in contempt for disobeying the 2012 Judgment of Divorce, which decreed that she and her decedent "shall" sell the Canadian property and split the proceeds.
Facts
The undisputed facts are as follows:
Decedent Richard J. Griffin ("Richard") married Elizabeth ("Elizabeth)" Griffin in 1956.
In 2011 she sued for divorce in New York Supreme Court (Monroe County), and in 2012 the parties entered into a "Property Settlement and Separation Agreement" ("Agreement"), the terms of which were incorporated into Supreme Court's "Findings of Fact and Conclusions of Law" and its Judgment of Divorce, both signed by the Honorable Kenneth J. Fisher, J.S.C., on September 28, 2012.
Index number I2011014288
Richard I and Elizabeth had joint interests in two properties. One was their residence at 129 Hilary Drive, Rochester, New York, in which Elizabeth continued to reside after the divorce, and the other, a vacation property on Tucker Island in Beaver Lake, Stone Mills, Ontario, Canada (the "Canadian Property"), which after the divorce Richard I used frequently and maintained in conjunction with his son, Richard J. Griffin II (Richard II).
The Agreement and the Judgment of Divorce state that the parties are the owners, through their living trust, of the Hillary Drive property, and that "plaintiff has exclusive use and occupancy of the residence; that the house shall be sold (emphasis added) and the proceeds from the sale be divided equally among the parities pursuant to the terms in the Agreement."
The Agreement and the Judgment of Divorce further state that the parties are joint owners of the Canadian property and that the "defendant," i.e., Richard J. Griffin, "shall have exclusive use and occupancy of the property subject to plaintiff's right to retrieve personal possessions; that defendant shall be responsible for all bills and expenses related to the Canada property, and that the property shall be sold (emphasis added) and the proceeds from the sale shall be divided equally between the parties pursuant to the terms in the Agreement."
As of 2019, seven years after the Judgment of Divorce and seven years after the parties had been directed by clear and unequivocal language ("the property shall be sold") to sell, the properties had not been sold. In May 2019 an "Agreement of Purchase and Sale" for the Canadian property was drawn up, bearing the names of Richard J. Griffin II and Susan P. Griffin (wife of Richard II), as purchasers, and Richard J. Griffin and Elizabeth A. Griffin, as sellers ("vendors"). The purchase price was to be $CDN 183,746.62, although the record is silent as to how that price was determined or how Richard II and his wife obtained the right to buy the property.
The Agreement is signed by Richard J. Griffin II and is dated May 6, 2019. No one else signed it.
Elizabeth would not sign as it did not reflect fair market value (see Affidavit of Elizabeth Griffin, first [unlettered] exhibit), so in 2019 Richard I brought an Order to Show Cause in New York State Supreme Court requesting that the court order Elizabeth to sign a listing agreement for the Hillary Drive property, and to accept the "Purchase and Sale Agreement" for the sale of the Canadian property for the price of $CDN 183,746.62.
The Honorable Gail A. Donofrio, New York Supreme Court Justice, to whom the case was then assigned, granted the relief requested, by Order dated July 10, 2019, and directed that in the event Elizabeth failed to accept and execute the listing agreement for Hillary Drive, then the "sheriff" shall be authorized to convey the Property pursuant to CPLR § 5107" ("Conveyance by Sheriff").
The Order further provided that if the plaintiff failed to execute the Purchase and Sale Agreement for the Canadian property, then the defendant "shall be entitled" to execute the agreement with the plaintiff and "thereafter be entitled to execute any additional documents, without the need for Plaintiff's signature, in order to convey the Canadian Property...."
Included in the paragraph stating what would happen if Elizabeth failed to "accept and execute" the purchase and sale agreement, Judge Donofrio added, in a handwritten entry, a line directing an appraisal be made of the property, suggesting (to this court) that the price in the unsigned purchase and sale agreement was not fixed but subject to future determination.
No appeal was taken.
Even after the Order, the properties were not sold, because Elizabeth failed to sign the documents necessary to effectuate the sale and conveyance of either property. As she states in her verified Answer/Objections, she did not sign because appraisals of the property (filed as Exhibits) showed the property to be worth far in excess of $CDN 183,746.62.
There is nothing in the record that suggests that the remedy of a "sheriff's sale" was pursued regarding the Hillary Drive property. Nor was the remedy allowing Richard I to sign all documents needed to convey the Canadian property acted upon, presumably because Judge Donofrio's Order allowing one party to sign all transfer documents regarding a property (in Canada, no less) in which another party had a titled interest was useless. No title company would ever insure title such a transfer if a buyer could even be found willing to take title.
Richard I brought another Order to Show Cause dated February 20, 2020, now heard by Supreme Court Justice John Gallagher.
This time Richard I requested that Elizabeth be allowed to retain Hillary Drive, as sole owner (presumably because she was living there), and that he be allowed to retain the proceeds of the sale of the Canadian property to his son for the price of $CDN 183,746.62. He also requested a "money judgment" reflecting the net difference of the proceeds between the sale of Hillary Drive and the sale of the Canadian property.
The court granted, on the basis of "telephone conferences," the relief requested in an undated Order. The Order "awarded" Richard I "exclusive use, possession title and ownership" of the Canadian property, and "authorized" Richard Ito execute any and all documents necessary to complete the transfer of title, notwithstanding that Elizabeth was a joint owner.
Again, no documents were signed, no title changed hands, and no appeal was taken.
Richard I died on May 26, 2021.
His Last Will and Testament was admitted to probate and his son Richard II was granted letters testamentary as the nominated executor. Four of Richard I's children were named as residuary beneficiaries (one child was specifically disinherited).
Richard II brought a motion for contempt in Supreme Court for Elizabeth's refusal to abide by the Order of Justice Donofrio and sign the Purchase and Sale Agreement. The matter was assigned to me, as Acting Supreme Court Justice, no doubt because it was related to this Advice and Direction proceeding. I denied the motion, ruling that Justice Donofrio's Order was not a "lawful order."
Discussion
Richard II now comes before this Court seeking "Advice and Direction" under Surrogate Procedure Act § 2107 "as to the propriety, price and manner of sale of property," i.e., the Canadian property, and requesting that the court "recognize the validity and enforceability of the Supreme Court Orders and authorize the Estate of Richard J. Griffin to sell the Canadian property to my wife and I for the price of $183,746.62 Canadian...." Put another way, the fiduciary, Richard II, wants the court to approve the sale of the Canadian property to himself and for a price that is, as Elizabeth asserts and no one disagrees, hundreds of thousands of dollars less than market value.
It is well-established that it is the duty of the estate representative to exercise his business judgment in the administration of the estate, which in this case necessarily involves the question of time and manner of sale of the Canadian property. "Estate fiduciaries are not mere ministerial agents, and the courts have neither the duty nor the authority to exercise the business judgment which is imposed upon fiduciaries" (In re Estate of James, 27 Misc.2d 312 [Orleans Cnty 1960], citing Matter of Bourne, 22 Misc.2d 681 [NY Cnty 1960]).
This application for advice and direction, although citing to SCPA 2107(1) only, actually "falls into two categories: (1) direction pursuant to SCPA § 2107(1) regarding the sale... (of the subject property), and (2) direction pursuant to SCPA § 2107(2) based on conflict among interested parties regarding the sale.... (In re Tr. under Art. Second of Will of Boyer, 35 Misc.3d 1233(A), 953 N.Y.S.2d 554 [Sur Ct 2012]).
The application is appropriate under either section. The definition of "property" in SCPA 2107(1) is not limited to real property but has been extended in many cases to stocks (Richard J In re Tannebaum's Estate, 20 A.D.2d 808 [2nd Dept 1964]), bonds (In re Garland's Will, 159 Misc. 333 [Westchester Surr. Ct.1936], business interests (In re Schleif's Estate, 169 NYS 814, 814 [Sur Ct 1918]) and with particular applicability here, to an ex-wife's interest in the estate stemming from a payment to be made to her under a Judgment of Divorce (In re MacGregor's Estate, 168 Misc. 557, 559, [New York County Sur Ct 1938]).
And, SCPA 2107 (2) comes into play because there is a dispute between interested parties-here, the heirs to the estate, at least one of whom would like to see the property sold at fair market value; the executor, who wants to buy the property at a price far lower than fair market value which he asserts was negotiated several years ago; and the titled owner, Elizabeth Griffin, who wants her one-half of the fair market value sale proceeds pursuant to her Judgment of Divorce.
Because the executor is asserting a right to buy the property personally, he is not in a position to fairly determine the "propriety, price and manner of sale of" the Canadian real property.
As noted above, the Estate's interest here stems from the Judgment of Divorce which awarded one-half of the proceeds of the sale of the Canadian property. It is not a titled interest to one-half of the Canadian property, because it seems, and no one disagrees, that under Canadian law, the divorce did not convert the joint tenancy into a tenancy in common, so that Elizabeth became, upon Richard's death, the sole owner of the Canadian property.
Elizabeth opposes the sale of the property at the price of CDN $$183,746.62 and asserts several defenses, including that the fiduciary's proposed sale to himself of less than market value is blatant self-dealing; that under Canadian law she is a 100% owner of the Canadian property, under a right of survivorship; that only a Canadian court, where litigation over ownership is pending, has jurisdiction; that Supreme Court lacked "jurisdiction" to transfer the property or to direct a sale of the property with Elizabeth's signature. She also states that the property value has increased dramatically since Judge Gallagher's order was entered, rising perhaps even higher than "$450,000.00" (Canadian?), and that a sale of less than that amount would harm not only her but her other children.
Two children of the decedent have waived and consented to the relief requested in the Advice and Direction proceeding. One has not, and requests that the property be sold for market value.
Thus, it appears that "... the construction that the fiduciary is asserting appears to be beneficial only to himself..., and therefore potentially harmful to the rest of the beneficiaries" (Matter of Scherer, 24 Misc.3d 363, 365 [Yates Cnty 2009]).
Accordingly, the court directs that the be sold at fair market value, which Elizabeth has apparently agreed to do, and the proceeds distributed to Elizabeth and the estate heirs. If Elizabeth refuses or neglects to act, then the fiduciary, as soon as possible, needs to bring a proceeding to secure a judgment here against Elizabeth (over whom New York courts have jurisdiction) and then retain Canadian counsel to bring a proceeding to enforce the judgment against the Canadian property, in an action brought under the law of Canada and Province of Ontario. The fiduciary can also move for contempt for disobedience to Justice Fisher's unequivocal Decree of Judgment of Divorce.
Although not before this court, the Hilary Drive property needs to be sold as well and the proceeds divided between the Estate and Elizabeth equally.
Since the executor Richard J. Griffin II has expressed an interest in retaining the Canadian property, the court directs that he be afforded a right of first refusal to any offer made for the purchase of the property once the property has been listed for sale and a fair market value determined.
SO ORDERED