Opinion
No. 2008–2036/G.
03-08-2016
In the Matter of Samuel J. LEVITIN to Revoke Letters of Trusteeship Issued to Nancy Silberkleit in that Certain Probate Proceeding Involving the Last Will and Testament of Michael I. Silberkleit, Deceased.
Jerold W. Dorfman, Esq., Larchmont, Attorney for the petitioner. Fensterstock & Partners, LLP, New York, Attorneys for the respondent.
Jerold W. Dorfman, Esq., Larchmont, Attorney for the petitioner.
Fensterstock & Partners, LLP, New York, Attorneys for the respondent.
THOMAS E. WALSH II, S.
In this miscellaneous proceeding brought by Samuel J. Levitin (“Samuel”) to revoke letters of co-trusteeship issued to the decedent's wife, Nancy Silberkleit (“Nancy”), for the trusts under the will of Michael I. Silberkleit, Nancy moves for an order granting (1) summary judgment, dismissing the petition and (2) the payment of the bill for services rendered by Dr. Harold Bronheim. Samuel, her co-trustee, opposes the motion and cross-moves for an order (1) granting summary judgment, awarding the relief requested in the petition, (2) declaring Dr. Bronheim's report incompetent; (3) requiring Nancy to submit to a further psychiatric examination before Dr. Andrew Levin and execute HIPPA authorizations; and (4) extending the period to complete discovery. The motions are decided as set forth below.
The facts relevant to these motions are as follows:
The decedent and Richard Goldwater (“Richard”) were engaged in running Archie Comic Publications, Inc. (“Archie”), and each controlled a 50% interest in the company.On May 2, 2008, the decedent executed an instrument which provided for a family trust (Article SEVENTH) and a marital trust (Article NINTH). The Article SEVENTH trust was to be funded from the decedent's estate assets up to his “adjusted exemption equivalent”, and it primarily was to benefit Nancy. On Nancy's death, the remainder of this trust was to be distributed 75% to Alexandria Silberkleit (“Alexandria”) (the decedent's daughter with Nancy) or her descendants and 25% was to be divided among Susan Berkley (“Susan”), Amy Silberkleit (“Amy”) and David Silberkleit (“David”) (the decedent's offspring from his first marriage) when Alexandria reached the age of 40.
The Article NINTH trust, which was to be funded with the decedent's residuary estate, with Nancy to receive the income and discretionary invasions of principal, was never funded. Article SEVENTEENTH concerns some of the powers of the fiduciaries. Specifically, subsection (J)(2) states that if there is a dispute between fiduciaries, Nancy's decision would be controlling. On May 5, 2008, the decedent executed a codicil to the May 2, 2008 instrument.
In early 2008, Richard died. A few months later, on August 5, 2008, the decedent died, and on August 20, 2008, Nancy and Eugene Zuriff (“Eugene”), a friend of the decedent and the nominated co-executor and co-trustee, filed a petition for probate of the instruments dated May 2, 2008 and May 5, 2008, and citations were served on Susan, Amy and David. On August 25, 2008, preliminary letters testamentary were issued to Nancy and Eugene.
The shares constituting his 50% interest were held in the Richard Goldwater irrevocable trust (“RGIT”).
On March 26, 2009, the RGIT sold Jonathan Goldwater (“Jonathan”), Richard's half-brother, 25% of the shares of Archie (½ of what it had), and Nancy became a co-chief executive officer of Archie. Jonathan replaced Richard, and he also became the other chief executive officer. An employment agreement detailed the functions of each.
These agreements expired on December 31, 2013.
On October 29, 2009, Susan filed objections to the probate petition. For nearly four years, extensive discovery was conducted and continued, and motion practice ensued.On July 7, 2011, Archie instituted an action in the Supreme Court, New York County against Nancy, seeking a temporary restraining order (the “TRO”) and a preliminary injunction, prohibiting her from working at the Archie offices and contacting most Archie employees and all Archie vendors. The Supreme Court issued the TRO, and subsequently, it issued an order granting the injunction against Nancy. The issues addressed in New York County and in other related proceedings not in this court were referred for mediation.
On October 11, 2011, Archie filed a petition, verified by Jonathan, requesting that the court modify Nancy's preliminary letters to exclude her from participating in Archie in favor of Eugene as co-executor. By decision and order dated October 17, 2011, the court declined to entertain the petition, stating that Archie did not have standing in the proceeding and that there was “already a proceeding pending in Supreme Court regarding Nancy's conduct in which many of the allegations made mirror those in the petition brought before this court to be entertained ...”.
On January 12, 2012, Eugene commenced a proceeding against Nancy seeking to revoke her preliminary letters and deny her letters of trusteeship and the authority to deal with Archie shares.
On January 17, 2012, a settlement was reached among the parties to the proceedings then pending in this court. As part of that settlement: (1) Susan withdrew her objections, and Susan, Amy and David renounced any contingent interest they had in the Article SEVENTH trust in exchange for $775,000.00; (2) Eugene renounced his appointment as co-executor and co-trustee, withdrew his revocation proceeding against Nancy, and received commissions ($150,000.00); and (3) Eugene's counsel received legal fees ($142,500.00). Noted by Nancy's counsel in colloquy in the record before the court at the allocution of this settlement was that Samuel (the petitioner in this proceeding) would be making an application to the court to be appointed co-trustee in place of Eugene.
The record reflects that, at some point in 2011, Samuel, alleged to be a long-standing friend or associate of Nancy, was consulted by her with respect to assisting her in her business affairs.
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On May 24, 2012, the instruments executed by the decedent were admitted to probate, and letters testamentary issued to Nancy.
In June 2012, as a result of the mediation of the issues relating to the actions in New York County, the parties signed an agreement, detailing the future duties of Nancy and Samuel with respect to Archie. According to both Samuel and Nancy, Samuel was to act as the “de facto liaison” between Nancy and Archie, and he was to “review all financial matters on behalf of [Nancy]”.
Thereafter, Samuel petitioned the court to be appointed co-trustee, and by order dated July 24, 2012, he and Nancy were appointed co-trustee of the trusts.
Five months later, on December 17, 2012, Samuel filed this proceeding requesting that the court revoke Nancy's letters and confirm that she has no authority to act with respect to Archie. In this petition, Samuel alleged that he experienced tremendous frustration in attempting to work with Nancy, and she was unprofessional, abusive, hostile and lacked concentration and ability to understand business matters. He also stated that he had a fiduciary duty to the beneficiaries of the trust to preserve the value of Archie.
Six months after the filing of Samuel's petition, Nancy filed a petition to revoke Samuel's letters based on various breaches of fiduciary duty including waste and misuse of assets.
Issue was joined in both proceedings, and the court issued a comprehensive discovery order. Extensive discovery was conducted in the two revocation proceedings.Samuel was deposed on July 9, 2014. At that time, he testified that his attorney was being paid by Archie and had been paid $70,000 to that point. He recounted that he would tell Jonathan or a Mr. Mooar how much his counsel was owed, then from Archie funds, a check would be drawn to Samuel who would then pay his attorney. This agreement reached with Mr. Mooar and Jonathan was never discussed with Nancy and permission from the court was not sought.
On November 25, 2014, Samuel moved this court for an order directing Nancy to submit to a psychiatric examination by Dr. Ilene Zwirn. The motion was opposed. On May 26, 2015, this court (Everett, Acting Surrogate) issued an order directing Nancy to submit to a psychiatric examination and outlining the procedure by which an independent medical practitioner was to be chosen to perform the examination. When the parties could not agree on a physician to conduct the examination, in accordance with the May 26, 2015 order, the court chose Dr. Bronheim from various curriculum vitae submitted to the court by the attorneys.
On August 26, 2015, the attorneys for Samuel and Nancy sent a joint letter to Dr. Bronheim, outlining the procedures for the examination and stating that the fee for the examination would be paid by Samuel. The examination took place and lasted for 2 & 3/4 hours. Subsequently, Dr. Bronheim rendered a report dated September 21, 2015, which concluded that Nancy was fit to serve as a trustee under the decedent's will and as a CEO of Archie.
As noted above, Nancy now moves for summary judgment, dismissing the petition and ordering the payment of Dr. Bronheim's bill by Samuel, and Samuel cross-moves for summary judgment, granting the relief requested in the petition and for additional relief regarding discovery.
In support of her motion, Nancy submitted the affirmation of her attorney which attached numerous exhibits, and the affidavit of Dr. Bronheim which attached his report previously filed with the court and which stated that he had not been paid by Samuel. Also submitted were the affirmations of Paul D. Jaffe, Esq., Doreen Stephens, Fred Mausser and Theresa Bagley, all of which stated in essence that Nancy has been unfairly treated at Archie by Jonathan and other employees and that she is a person capable of handling the responsibilities of a fiduciary and as a CEO of Archie.
Nancy argues that summary judgment should be granted because based on the fact that Dr. Bronheim has unequivocally stated that she “possesses an understanding of her duties as co-trustee and is sufficiently fit to perform those duties”, there exists no material issue of fact for trial in this proceeding.
In opposition to the motion and in support of the cross motion, Samuel submits the affirmation of his counsel which annexes 119 exhibits, some with subparts, most of which are affidavits and documents submitted in the New York Supreme Court and in proceedings in this court. Also annexed, among other things, are emails, letters and portions of deposition transcripts. Samuel also submits his own affidavit which states that no hearing is required because the voluminous record demonstrates that Nancy's behavior makes her unable to serve as a fiduciary. Finally, in support of the cross motion, Samuel offers the affirmations of Dr. Lawrence Loeb and Dr. Ilene Zwirn both of which state that Dr. Bronheim's report is insufficient in many ways and should not be considered.Samuel argues that there are no material issues of fact because the enormous record demonstrates that Nancy is “disqualified from acting as a fiduciary by reason of her improvidence and want of understanding, and is otherwise unfit for the execution of her office as co-trustee within the meaning of SCPA 711[2] and [8 ]” and that she has violated SCPA 711[3] in failing to respect a court order of the New York Supreme Court and must be removed on that basis as well.
SCPA 711[2] authorizes a change to letters where a fiduciary has wasted estate assets because of “dishonesty, drunkenness, improvidence or want of understanding”. The issue in this section is whether the fiduciary's letters should be altered because of her wasting assets, defined as loss of value on account of failure to use reasonable care (see EPTL 11–2.3 ). The modification is based on facts which demonstrate the effect of the conduct on the assets. For example, as to drunkenness, courts have held intoxication alone might not lead to revocation but that revocation of letters would occur where there was habitual intoxication which rendered a fiduciary incompetent to fulfill his responsibilities (see Matter of Reichart, 34 Misc. 288, 69 N.Y.S. 644 [Sur Ct N.Y. Co 1901] ; see also Matter of Secondino, NYLJ, May 4, 2000, at p. 26, 69 N.Y.S. 644, col 6 [after hearing, evidence insufficient to establish habitual abuse and that substance abuse affected the ability of fiduciary to manage estate affairs] ).
SCPA 711[8] authorizes the modification of letters when a fiduciary does not possess the qualifications to perform the task by reason of “substance abuse, dishonesty, improvidence, want of understanding or being otherwise unfit”. “Want of understanding” has not been defined to mean “insane or a lunatic or that [one] is generally incompetent” but a “ruling that the [individual] has not the requisite understanding of the duties and responsibilities that she would be called upon to exercise in administering an estate [of value]” (see Matter of Phyfe, 115 Misc. 699, 182 N.Y.S. 729 [Sur Ct N.Y. Co 1920] ). Want of understanding also does not necessarily mean a lack of intelligence or educational preparation (see Matter of Kaunitz, NYLJ, June 4, 1969, at 24 [Sur Ct N.Y. Co.] ). It has been construed to mean a failure to comprehend and fulfill the functions and requirements of the office which has a negative effect on the res and the beneficiaries (see Matter of Kaunitz [lack of understanding of his duties was reflected by, among other things, executor's exercise of his personal sense of propriety in providing a tombstone for decedent's mother from estate funds where there was no provision in the will to do so] ).
The removal of a fiduciary is subject to the statutory authority conferred upon the Surrogate (SCPA 711 ; see also Matter of Petrocelli, 307 A.D.2d 358 [2d Dept 2003] ). “Removal of a fiduciary constitutes a judicial ification of the testator's choice and may only be decreed when the grounds set forth in the relevant statutes have been clearly established” (Matter of Duke, 87 N.Y.2d 465 [1996] ). “Accordingly, the rule has long prevailed that courts are required to exercise the power of removal sparingly and to ify the testator's choice only upon a clear showing of serious misconduct that endangers the safety of the estate ...' “ (Matter of Duke ).
Furthermore, the court has discretion to remove a fiduciary without a hearing only where misconduct is established by undisputed facts or concessions (see Matter of Duke ). Examples of such instances are where the fiduciary's in-court conduct causes such facts to be within the court's knowledge (see 2 Warrens Heaton, Surrogate's Court, § 20.11[3][a] ).
Based on the record and the controlling statutory and case law authority, the court requires a hearing, and the motion and cross motion for orders granting summary judgment are denied.
The trial court has broad discretion to supervise and regulate the pretrial discovery process (see Lewis v. Hertz, 193 A.D.2d 470, 597 N.Y.S.2d 368 [2d Dept 1993] ; Duracell Intl., Inc. v. Am. Empl. Ins. Co., 187 A.D.2d 278, 589 N.Y.S.2d 438 [1st Dept 1992] ). The court's determinations will not be disturbed unless there is an abuse of that discretion (see Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 1 A.D.3d 223 [2003], rearg. denied, 2004 N.Y.App.Div. Lexis 1942 [1st Dept 2004] ).
Based on the record which demonstrates that Samuel agreed to pay for the services provided by Dr. Bronheim, that part of Nancy's motion which requested that the doctor's bill be paid, is granted. Those parts of Samuel's cross motion which requested an order declaring Dr. Bronheim's report incompetent; requiring Nancy to submit to a further psychiatric examination before Dr. Andrew Levin and execute HIPPA authorizations; and extending the period to complete discovery, are denied.
Samuel and Nancy will have the opportunity to present all relevant evidence at the hearings (dates to be set) including any expert who may opine on their respective qualities and fitness to continue serving as co-trustees.
Samuel is directed to file a note of issue and statement of issues by April 11, 2016. Nancy may file a counter-statement of issues by April 25, 2016. The court also directs that Nancy file a note of issue and statement of issues in the proceeding which she filed to revoke Samuel's letters by April 11, 2016. Samuel may then file a counter-statement of issues in that proceeding by April 25, 2016. Thereafter, these proceedings will be placed on the trial calendar for hearings.
The court directs that the attorneys for the parties appear for a conference on both matters on May 10, 2016, at 2:00 p.m.
THIS IS THE DECISION AND ORDER OF THE COURT
The papers relied on are as follows:
1. Notice of motion dated October 30, 2015;
2. Affirmation of Evan S. Fensterstock, Esq., dated October 30, 2015, with exhibits annexed;
3. Affidavit of Teresa Bagley, sworn to on December 19, 2015;
4. Affidavit of Fred Mausser, sworn to on December 19, 2015, with exhibit annexed;
5. Affidavit of Doreen Stephens, sworn to on December 21, 2015, with exhibit annexed;
6. Affirmation of Paul D. Jaffe, Esq., dated December 28, 2015;
7. Affidavit of Dr. Harold Bronheim, sworn to on December 15, 2015, with exhibit annexed;
8. Notice of cross motion dated November 30, 2015;
9. Affirmation of Jerold W. Dorfman, Esq., dated November 30, 2015, with exhibits annexed;
10. Affidavit of Samuel Levitan, sworn to on November 28, 2015;
11. Affirmation of Ilene Zwirn, M.D., dated November 23, 2015, with exhibit annexed;
12. Affirmation of Lawrence Loeb, dated October 9, 2015, with exhibits annexed; and
13. Affirmation of Evan S. Fensterstock, Esq., dated December 28, 2015, with exhibits annexed.