Opinion
File No. 2015-752/A B C
07-15-2022
In the Matter of the Estate and Trust of Rosamond M. Najjar, Deceased. v. MARCIA NAJJAR, Respondent. DONNA SANZONE, as Co-Executrix of the Estate of Rosamond M. Najjar, and ROBERT NAJJAR, Petitioners
Adams Leclair LLP, by Paul L. Leclair, Esq. of Counsel, appearing for the Petitioners Robert Najjar, as beneficiary of the Estate of Rosamond M. Najjar, and Donna Sanzone, Co-Executor of the Estate of the Estate of Rosamond M. Najjar. Underberg & Kessler LLP, by David M. Tang, Esq., and Ericka B. Elliott, Esq., of Counsel, for the Respondent Marcia Najjar, co-executor of the Estate of Rosamond M. Najjar.
Unpublished Opinion
Adams Leclair LLP, by Paul L. Leclair, Esq. of Counsel, appearing for the Petitioners Robert Najjar, as beneficiary of the Estate of Rosamond M. Najjar, and Donna Sanzone, Co-Executor of the Estate of the Estate of Rosamond M. Najjar.
Underberg & Kessler LLP, by David M. Tang, Esq., and Ericka B. Elliott, Esq., of Counsel, for the Respondent Marcia Najjar, co-executor of the Estate of Rosamond M. Najjar.
Christopher S. Ciaccio, S.
Petitioners Donna Sanzone and Robert Najjar, children of the decedent Rosamond M. Najjar, commenced a proceeding to compel their sister Marcia to produce an accounting of her activities as executor of their late mother Rosamond's estate and as trustee of an irrevocable trust created by their mother before she passed away in 2015.
Donna and Robert also asserted a cause of action for unjust enrichment and requested a declaration determining ownership of funds in several bank accounts jointly titled at Rosamond's death in her name and in the name of daughter Marcia and now retained by Marcia, as well as the ownership of personal effects (including artworks, jewelry, heirlooms, photographs, and recipes) also retained by Marcia that once belonged to Rosamond and which the petitioners claim should now be brought into the Estate.
The petition also alleges breach of fiduciary duty and sought a surcharge and removal of Marcia as trustee and co-executor (with Donna) for actions Marcia took, namely: (1) failure to sell the Trust's Exxon Mobil Corp. stock on a timely basis; (2) failure to account for and distribute Trust assets on a timely basis; and (3) failure to timely file the New York State tax returns, causing the Estate to incur tax penalties and interest.
Finally, the petition sought an Order directing Marcia to pay her own attorney's fees, which, the petition claims, were unreasonable, excessive, and unnecessary.
Following a determination by the Appellate Division, Fourth Department, that there are questions of fact that precluded summary judgment, this court conducted a non-jury trial on December 6, 7 and 8, 2021.
In Matter of Najjar (Sanzone) (195 A.D.3d 1483, 1485 [4th Dept 2021]), the Fourth Department determined that the statutory presumption created under Banking Law § 675 was inapplicable to two Key Bank accounts and one ESL account for failure to submit signature cards or ledgers that included the required survivorship language.
What follows are the court's Findings of Fact and Conclusions of Law based on the testimony it deems credible and accurate.
During the trial counsel for both parties objected under CPLR 4519 (the "Deadman's Statute") to the admissibility of testimony as to statements made by decedent. It is not necessary to rule on the objections, as the Court finds that all the testimony referencing Rosamond's statements (except for Rosamond's notarized letter of October 30, 201), is not credible and therefore will not be considered by the Court.
Decedent Rosamond Najjar ("Rosamond") died of congestive heart failure on September 5, 2014, less than a month before her ninetieth birthday. She was survived by three children: Donna Sanzone, Robert Najjar, and Marcia Najjar.
The Will
Rosamond executed three Wills. The first was executed on March 16, 1998, which left her estate, including all personal property, to her three children in equal shares.
A second Will was executed in December 2013. It also directed distribution of her estate in equal shares to her children.
A third superseding Will was executed on June 27, 2014, which again directed equal distribution of both personal property and her residuary estate to her three children.
This third Will was admitted to probate on April 15, 2015 and named Donna and Marcia as co-executors.
Marcia's background included a bachelor's degree in physics from the University of Rochester; three Master's Degrees from the New York Chiropractic College; courses in technology and computer science at Rochester Institute of Technology and SUNY Brockport; employment as a teacher and coach in various school districts, and twenty-five years in the computer industry.
The Trust
The Trust was created in 1985 as an irrevocable trust for Decedent's lifetime benefit, and upon her death, the assets of the Trust were to be distributed equally among the three children.
The Trust was amended and restated in December 2013 and again on June 25, 2014.
The Trust provided for distribution of the trust balance to Rosamond's children in equal shares upon her death.
The Declaration of Trust, as amended, named Rosamond as trustee and Marcia as successor trustee.
Marcia became sole Trustee of the Trust in 2014 upon Decedent's resignation.
Power of Attorney
On March 7, 2013, Decedent executed a Power of Attorney ("POA") appointing Robert and Marcia as co-agents to act together on her behalf.
In May of 2014, using his Power of Attorney, Robert transferred $20,000.00 from ESL joint account -6754 to Rosamond's personal account (-6770), following which two electronic checks in the amount of $12,000.00 each were created - one to Donna and one to Robert - and issued from an account maintained by Decedent and Marcia. No check was issued to Marcia in that amount. Marcia closed ESL account -6754 on September 5, 2014.
Rosamond executed a Revocation of Power of Attorney on May 29, 2014, which removed Robert and left Marcia as sole agent. On May 30, 2014, Rosamond executed another Power of Attorney, which appointed Marcia as the sole power of attorney for Decedent.
Decedent's Checking Accounts
At the time of her death Rosamond owned the following bank accounts, with a total account balance at the time of her death, of $310,394.80, which were jointly titled in her daughter Marcia's name:
One additional account, a Chase bank account, containing $2,032.30, was conceded to be a joint account with right of survivorship and is no longer a part of this litigation
1) ESL Federal Credit Union Money Maker Account ending in - 6754;
2) KeyBank Checking Account ending in -1048; and
(1) KeyBank Money Maker Savings Account ending in -1478.
Only Rosamond made deposits made to the three accounts. She initially opened the accounts in her name only.
Key Bank Account ending in -1048
On March 30, 2013, Marcia's name was added to Rosamond's name on KeyBank checking account (-1048). Before, the account was in Rosamond's name, alone.
A form entitled "The Account Express Plan" and bearing the indication of account ending in -1048, was received as Exhibit M. Under the heading "Legal Title of the Account" it lists the names of Rosamond N. Najjar and Marcia Jean Najjar. It is signed by both Rosamond and Marcia and is dated March 29, 2013.
The form states that "I (meaning all signers below) understand that all deposit accounts opened by me will be owned by me (or by us, if more than one person signs below) in the same capacity." Then in parentheses, it states "For example if we open a joint account, all other accounts opened by us under this Plan will be jointly owned by us."
It goes on to state that "I (We) understand that for our joint account(s) 'with rights of survivorship,' when any owner dies, the amounts on deposit in the joint account(s) pass to the surviving owners... This Plan is the signature card for all accounts opened under this Plan."
The form further states that the accounts opened under "this Plan are subject to the Deposit Account Agreement" and that the persons whose signatures are on the forms "acknowledge receiving a copy of the agreement..."
It indicates that the account was opened by one Jan Gremke, a Key Bank officer. She had no recollection of opening an account for Marcia and Rosamond. It was her custom and practice in over 40 years as a bank employee opening accounts to explain to customers what is meant by a "joint account" and the "right of survivorship," which is, that when one account owner dies, the other account owner takes possession of all the money in the account.
A document entitled "Deposit Account Agreement and Funds Availability Policy (effective May 1, 2012)" (Respondent's Exhibit "N") was produced by Marcia, however, nothing in the document referenced its applicability to account number ending in -1048.
The KeyBank -1048 account was Rosamond's primary checking account which she used to pay her bills. Rosamond wrote the checks drafted against that account. Marcia, under Rosamond's direction, occasionally assisted Rosamond in writing checks. Marcia once used this account to pay a student loan, but only after she received Rosamond's permission. The account was not used to pay Marcia's bills.
KeyBank account -1478
Rosamond also maintained a second KeyBank saving account called the "Key Gold Money Market Savings Account," as evidenced by a document entitled "Deposit Receipt for KEY GOLD MONEY MARKET SAVINGS" (Exhibit AA). The document shows the account number (ending in -1478); the "Opening Deposit;" the date opened (June 19, 2013); two names at the top of the document (the account holders) as being "ROSAMOND NAJJAR" and "MARCIA J NAJJAR."
It has one signature, that of Rosamond's, on a line authorizing payment of overdrafts.
It states that "This account is governed by the provisions of the Deposit Account Agreement established by the Bank at which you opened your Account," and among the topics listed as subject matter in the Account Agreement is "joint accounts."
A document entitled Key Center Receipt for account -1478 (Exhibit O) was produced. Under the heading, "Ownership," it stated "joint." It listed Rosamond and Marcia under the heading, "Legal Title of Account." The account opening date is listed as June 19, 2013.
A second version of Exhibit AA was produced, this one unsigned and received as Exhibit Z, but bearing all other information as on the face of Exhibit AA. Additionally, attached to it is a document entitled "Deposit Account Agreement and Funds Availability Policy." The effective date is June 7, 2013. This document was given to Marcia and to Rosamond at the time the account was opened or shortly thereafter.
The Deposit Account Agreement states that "For personal accounts, if there are more than one of you, your Accounts are 'joint accounts.' All deposits in joint accounts are the property of each owner as joint tenants with rights of survivorship." It goes on to say, "For joint accounts with 'rights of survivorship,'. When any owner dies, the amounts on deposit in the joint Account pass to the surviving owners." In the paragraph following, it says, "On all joint accounts, whether or not with 'rights of survivorship,' we may honor checks, orders or requests for withdrawals from the surviving owners after the death of an owner. On joint accounts without 'rights of survivorship,' we may also honor checks, orders, or requests for withdrawals from the personal representative or legal successor of the deceased owner."
KeyBank Joint Account -1478 was a savings account. The account was initially established by Decedent as a savings account ending in -0032, but at Marcia's direction was changed to a money market savings account (ending in -1478) to yield a higher interest rate.
Rosamond funded the KeyBank money market savings account, before and after Marcia's name was put on the account. Marcia was not aware of any withdrawals from that account.
The ESL Federal Credit Union account ("ESL account")
In July 2011 Marcia accompanied Rosamond to an ESL Federal Credit Union branch. The bank officer at ESL presented them with a "Member Account Agreement" (Exhibit "K: 'Savings and Checking Disclosure Terms and Account Agreement") which Marcia and Rosamond signed and dated July 19, 2011.
The Member Account Agreement indicates it applies to an account ending in - 6754. It states that the signers "agree to be bound by the terms in the Savings and Checking or Certificate Disclosure Terms and Account Agreement and the by-laws of ESL, all as may be amended from time to time."
Exhibit L is the ESL "Savings and Checking Disclosure Terms and Account Agreement" (ESL Agreement"). Marcia and Rosamond were given the document upon opening the account.
The ESL Agreement provides: "An account opened by two or more persons is a joint account. Each person designated on the account application is a joint owner of the account. Each joint owner must apply for and be accepted as an ESL member and be an owner of: membership share account. If you have a joint account, your deposit and any additional deposits will become the property of you and all other persons named as joint owners on the account as equal joint tenants with the right of survivorship and not as tenants in common... ESL may treat the account after the death of any owner as the sole property of any surviving joint account owner. This means that when one owner dies, all sums in the account will belong to any surviving owners."
Disbursements and Transfers
Rosamond stopped writing checks sometime around June of 2014.
The money in all three accounts was disbursed according to Rosamond's wishes, except for "[s]ix or seven times" during the summer of 2014, according to testimony of Marcia, which the court accepts as credible.
On April 20, 2013, Robert went to KeyBank with Rosamond to be added to the KeyBank accounts in addition to Rosamond and Marcia. Afterwards, he delivered a note to Marcia informing her that she needed to sign paperwork to permit Robert to be added to the KeyBank accounts. Marcia refused to sign the paperwork.
Rosamond gave each of her children a gift of $200,000.00, and $40,000.00 of each gift was funded from the ESL account. Marcia assisted Rosamond in writing each of the $40,000.00 checks from the ESL account.
In connection with that gift, Marcia sent an e-mail to her siblings on July 18, 2014, which stated:
"Hi Donna and Bob! I wanted to update you both regarding mom's finances. Mom has appointed me as her successor trustee, and she wanted me to let you both know. This has been in the works for some time now, and I have been helping mom sell some stocks so she can complete the $200,000.00 gift she promised to make to us. In order to do this, she has sold her Kraft, Mondelez and 3M stock. She wishes to keep all other stocks and funds intact at this time.
I wanted to touch base to see if you have any preferences about the disbursement, or any concerns. Please contact me!! Also, as you know, Mom is committed to keeping things equal. So please respect her choices and her generosity.
Thank you, Marcia"
Rosamond left no written directive to pass the accounts to Marcia upon Rosamond's death.
Marcia never asked Rosamond to add her or place her on joint bank accounts. She did not ask Rosamond to give her survivorship rights in the accounts or discuss her addition to the accounts with Rosamond.
Marcia neither asked Rosamond to give her survivorship rights in the Accounts nor discussed her addition to the Accounts.
Marcia received an allowance of $1,200.00 per month from Rosamond from 2003 to 2014. During that time Marcia was laid off from RG & E in 2003, and then she went back to school. Rosamond also gave Marcia $15,000.00 for a car in 2012 as well as additional sums for home repairs at Marcia's 208 Hager Road residence, where Marcia lived prior to moving to 147 Vin Gate.
House, Paintings, Jewelry, Photographs and Other Personal Effects
Rosamond transferred title to her house at 147 Vin Gate Drive in Greece, New York to Marcia in 2013.
Marcia took possession of the house at 147 Vin Gate on or about April 6, 2014. Rosamond moved to Fleming Point. Rosamond had given one of Marcia's siblings a freezer, and one of Marcia's siblings a Kerman rug, prior to April 6, 2014.
Marcia sold the property in 2016 for $121,000.00.
As stipulated by the parties, Rosamond made inter vivos gifts of her "china, crystal and other household items from 147 Vingate Drive" to Marcia.
Donna and Marcia agreed to leave certain items of Rosamond's jewelry and other personal property at the 147 Vin Gate home when Rosamond moved to Fleming Point, a senior independent living community, until such time as a decision could be made as to how to dispose of the items.
Donna took four or five paintings from Fleming Point after Rosamond passed.
Marcia took a daffodil picture after Rosamond moved to Fleming Point.
Marcia possesses paintings that Rosamond painted herself.
Marcia possesses an unspecified amount of cash, and items of tangible personal property jewelry, including wedding bands and engagement rings and other heirlooms that belonged to Rosamond or other members of Rosamond's family; other works of art that belonged to Rosamond, including chalk drawings of Donna and Robert as children; and a signed papal benediction and photograph. These have been acknowledged as being Estate property (and it so held here).
Marcia possesses Rosamond's numerous family photo albums and Rosamond's collection of recipes, which includes gifts from friends, Rosamond's own creations, and recipes that have been in the family for generations. These also are estate items.
Marcia assigns a high sentimental value to all the items mentioned above but acknowledged them to be estate assets that have not been distributed.
Rosamond left no note or other written document signifying an inter vivos gift of her jewelry, except a letter, signed by Rosamond, and bearing a notary block, signed and dated October 30, 2013, which states:
To let it be known that I have given to my daughter, Marcia Najjar, in entirety my set of china, crystal and other household items from 147 Vingate Drive, Rochester, NY 14616. These items were transferred to my daughter, Marcia, April 6th, when I moved to Fleming Point, 720 Latta Road, Apt 260, Rochester, NY 14612. None of the above items are mine to give in the future, nor part of my inheritance. This statement supersedes any other statements made by me about gifting my china set, as there may have been some confusion about my wishes.
Marcia possesses a diamond brooch that belonged to Rosamond and which she claims Rosamond gave to her as a gift. She never told Donna or Bob about the gift of the diamond brooch while Rosamond was alive. Rosamond never wrote to Marcia or her siblings to the effect that "Marcia gets Rosamond's diamond brooch." Marcia had the brooch appraised after Rosamond's death. Rosamond never wrote a note to Marcia or her siblings that she gave Marcia all of her [Rosamond's] jewelry.
Of the items depicted in Petitioners' Exhibit A-10, only the Pope Pius Certificate appears on Exhibit "C" based on Marcia's position that the other items were not in Rosamond's possession at the time of her death; they were in Marcia's house, and therefore, belong to her (again, according to Marcia, a position the court rejects, see below).
Exxon stock
As per the trust accounting, on the date of Rosamond's death (September 5, 2014), the Trust held 5,706.423 shares of Exxon Mobil stock with an inventory value of $563,252.48 out of the Trust's combined principal value of $4,174,689.63. Thus, the Exxon Mobil stock comprised approximately 13.5% of the Trust's value.
At the end of September or beginning of October 2014, Marcia inquired as to how Donna and Robert wanted their shares distributed. Donna responded by requesting that Marcia "liquidate as soon as possible... especially the Exxon [stock] at that time." Donna provided two reasons for that request: (1) the "large" amount of Exxon stock; and (2) "news" broadcasts over the preceding few weeks that the stock had been dropping.
As Marcia did not "immediately" sell the Exxon stock, the petitioners retained David Anderson, Esq. of Lacy Katzen LLP to assist with the liquidation. Mr. Anderson wrote to Marcia's counsel at the time, George Gray, Esq. of Gray & Feldman LLP by letter dated November 6, 2014:
"Mr. Najjar and Ms. Sanzone are concerned with market volatility and would like their share of the Trust liquidated as soon as possible absent any significant adverse income tax consequences."
Marcia received the letter November 10, 2014. She executed the necessary paperwork and mailed it out with medallion signatures on December 3, 2014. The sale was executed on December 17, 2014.
During this period Marcia was "incredibly busy." She sold the stock "in manageable chunks." She did not liquidate the Exxon Mobil stock earlier because she was processing other sales, contacting insurance companies, and attending to other estate and trust matters.
The proceeds of Marcia's sale of the Exxon Mobil stock totaled $500,190.89, which Marcia included in the Trust Accounting as a $65,896.54 loss.
Petitioners claim a loss to them by the delay in selling the Exxon stock of $44,964.20, dated from when counsel wrote to her demanding the stock be sold to the date of the sale.
The Estate and Trust Administration
There is a balance of $310,000.00 balance in an account comprised of the three joint accounts that Marcia claims as sole survivor.
Marcia was delayed in expediting settlement of the estate by the time it took to obtain a tax identification number ("EIN").
Marcia incurred penalties and interest relative to Rosamond's 2014 individual State and Federal tax returns, attributable to delays in obtaining Certificates of Sale which showed capital gains amounts. Rosamond's income that year was underreported. By the time that the taxes were paid in full, the difference in the amount owed accrued interest, and penalties were added.
Marcia obtained a partial refund of the penalties associated with interest that was due. Marcia, who does not have experience in tax preparation, used Liberty Tax to prepare the 2014 individual tax return.
A Supplemental Accounting by Trustee, for the period from April 12, 2018, to March 31, 2021, was prepared by Underberg & Kessler and signed by Marcia on May 28, 2021.
The Accounting by Co-Executor was signed by Marcia on April 11, 2018.
The Accounting was received in evidence with the exception of the first page of Exhibit B (3), the first page of Exhibit B (4), and the second page of Exhibit D, which were excluded from evidence.
Exhibit "C" ("Possessions of Rosamond M[.] Najjar at death") to that Estate Accounting lists 12 items of artwork based on her claim that she has been the owner of all the artwork in the house at Vin Gate after Rosamond moved to Fleming Point in 2013.
Similarly, the summary table inventory set forth as Exhibit C to the Accounting by Co-Executor does not reflect all the items of jewelry pictured in Petitioners' Exhibit A-9. Marcia offered the explanation that several pieces of jewelry were given to her during Rosamond's lifetime in 2011 and 2013 (including a diamond brooch with an estimated value of $12,000.00) and, therefore, not part of the estate.
In the execution of her duties as executor and trustee, Marcia planned Rosamond's funeral in Plymouth, Massachusetts; worked with Donna preparing memorials and events in Plymouth; cleaned out Rosamond's apartment; canceled the New York State retirement, social security and health coverage; sold stocks; made cash disbursements to Donna and Robert; and performed record-keeping. Marcia dealt with Estate issues, insurance issues, and attorneys.
In October or November of 2017, Marcia learned that Donna and Robert had filed objections to the prior account. Marcia felt that the accounting for the trust and the estate "didn't make sense."
A Correction Affidavit dated May 3, 2018, was prepared to correct a schedule in the April 2018 Accounting. Exhibit D of the Correction Affidavit was made to correct Schedule E. Schedule E of the Correction Affidavit shows $3,240,178.17 in total distributions of principal to beneficiaries (i.e., Donna, Robert, and Marcia).
Marcia did not engage any financial professional to give her advice on holding or disposing the assets, other than to sell them and deposit the proceeds. Marcia neither obtained tax advice nor sought the counsel of a financial consultant.
Marcia did not receive counseling on tax consequences when liquidating Trust assets.
Marcia prepared and presented to Donna an informal Trust "accounting" that showed assets remaining on hand of $1,140,133.57.
At or about that time, the petitioners retained the law firm of Leclair Korona Vahey Cole LLP (now known as Adams Leclair LLP). Paul Leclair, Esq., counsel for the petitioners, sent a letter dated March 27, 2017, to Marcia's attorney, Michael A. Burger, Esq. The letter stated, in part:
"We cannot understand the basis on which Marcia Najjar continues to withhold the $1.1 million dollars presently held by the trust and estate and refuses to distribute my clients' shares to them. There is no justification to withhold the funds. Please advise what Marcia Najjar's immediate plan is to close out the estate and trust. My clients are entitled to their portions in accordance with Rosamond's wishes. The accounting you provided is still incomplete. My clients were promised an accounting over a year ago... At this stage, my clients must see Marcia immediately finalize and distribute the estate and trust completely and impartially in accordance with the exact terms of the will and trust in order to stave off litigation."
Legal fees
Marcia retained a series of attorneys "in matters relating to estate administration and litigation" in the following order: George H. Gray, Esq. of Gray & Feldman LLP, Lacy Katzen LLP, and Michael A. Burger, Esq. of Santiago Burger LLP (collectively, "prior counsel"). According to Marcia's Supplemental Estate Accounting, "[f]ees and disbursements incurred by [prior counsel] in the total amount of $52,931.05 were paid by Trust funds" until April 12, 2018, when Marcia began to pay attorneys' fees and disbursements from her own personal funds. According to Marcia's Trust Accounting, the Trust paid this $52,931.05 amount to the prior counsel as follows:
a. Gray & Feldman LLP: $23,749.60 for work performed from 09/16/2014 - 11/28/2016.
b. Lacy Katzen LLP: $9,407.50 for work performed from 06/01/2015 - 12/07/2015; and
c. Santiago Burger LLP: $19,773.95 for work performed from 01/20/2016 - 11/28/2016.
In addition to the $52,931.05 that the Trust paid to prior counsel, by March 8, 2018, the Trust paid another $14,925.00 to Underberg & Kessler LLP for legal services.
The Trust paid legal fees for Donna and Robert's lawyers, Lacy Katzen.
Marcia stopped working with George Gray and his law firm with respect to the Trust. He was an estate lawyer and primarily prepared the New York state tax return, which was completed on December 15. 2015. Mr. Gray was not a litigation attorney, so she retained Michael Burger upon receiving the letter from Donna's attorney, Paul Leclair.
Marcia rejected a claim for $7,339.50 in legal fees related to the Santiago Burger office, "because the accounting was not provided in a manner that was legally acceptable and because through his withdrawal from the case [she] had to hire new counsel [Underberg & Kessler]."
The Trust accounting dated April 11, 2018, stated that "it was necessary for Underberg & Kessler to recreate the prior Account from the beginning, which was deemed unacceptable by opposing counsel and the residuary beneficiaries."
Marcia stopped working with Santiago Burger and was without an attorney advising her on the Trust for seven to eight months. She then retained Underberg & Kessler.
Marcia stated in the Trust accounting (Schedule J) that "fees for services rendered to the Trust" by prior counsel (Gray & Feldman and Santiago Burger) and Underberg & Kessler "exceed the amount of fees customarily charged for a Trust of this size."
Account Balances
On the date of Rosamond's death (September 5, 2014), the combined balance of the Trust was $4,174,689.63. Marcia, as sole Trustee, made the following distributions of Trust proceeds to Petitioners:
Trust Distributions to Donna Sanzone
| Date | Amount |
| 11/21/2014 | $395,412.01 |
| 03/30/2015 | $379,505.81 |
| 05/30/2017 | $150,000.00 |
| 07/07/2017 | $150,000.00 |
| Total: | $1,074,917.82 |
Trust Distributions to Robert Najjar
| Date | Amount |
| 11/21/2014 | $395,412.01 |
| 03/30/2015 | $379,505.81 |
| 05/30/2017 | $150,000.00 |
| 07/07/2017 | $150,000.00 |
| Total: | $1,074,917.82 |
According to Marcia's Supplemental Trust Accounting, the Trust had a total of $179,505.01 on hand as of March 31, 2021.
Marcia delayed distribution of personal effects in the Estate and the remaining balance in the Trust in 2017 once a proceeding had been commenced by Donna and Robert.
CONCLUSIONS OF LAW
Unjust Enrichment
Petitioners Donna and Robert Najjar claim that Marcia has been unjustly enriched by keeping possession of 1) the funds in the two Key Bank accounts and the one ESL account, and 2) the personal property that was in Rosamond's house when she passed away, rather than accounting for them as estate assets.
"The elements of an unjust enrichment cause of action are that (1) the defendant was enriched; (2) the enrichment was at the expense of the plaintiff; and (3) it would be inequitable to allow the defendant to retain that which is claimed by the plaintiff (Onewest Bank, FSB v Spencer, 145 A.D.3d 1488, 1489-90 [4th Dept 2016], citing Mandarin Trading Ltd. v Wildenstein, 16 N.Y.3d 173, 182 [2011]; Canandaigua Emergency Squad, Inc. v Rochester Area Health Maintenance Org., Inc., 108 A.D.3d 1181, 1183[4th Dept 2013]).
The Accounts
The Appellate Division, Fourth Department, has ruled that the signature cards for the accounts in question do not contain the necessary survivorship language to invoke the statutory presumption of Banking Law section 675 (Matter of Najjar [Sanzone], 195 A.D.3d 1483 [4th Dept 2021]).
Frankly a ruling of questionable accuracy, at least for Key Bank account ending in -1048. The language on the signature card could hardly be more specific in granting a right of survivorship than to say, "I (We) understand that for our joint account(s) 'with rights of survivorship,' when any owner dies, the amounts on deposit in the joint account(s) pass to the surviving owner... This Plan is the signature card for all accounts opened under this Plan" (see Harrington v Brunson, 129 A.D.3d 1581, 1583 [4th Dept 2015] [dissent by Brian F. DeJoseph, J.]).
Accordingly, the burden is on Marcia Najjar to establish, by clear and convincing evidence, that decedent Rosamond N. Najjar intended, at the time the account was opened, to create a joint tenancy with survivorship rights (Matter of Najjar [Sanzone], 195 A.D.3d 1483, 1485 [4th Dept 2021]; Matter of Seidel, 134 A.D.2d 879, 880 [4th Dept 1987]; Matter of Thomas, 43 A.D.2d 446, 449 [3d Dept 1974]; Matter of Coon, 148 A.D.2d 906, 908 [3d Dept 1989]; Matter of Corcoran, 63 A.D.3d 93, 97-98 [3d Dept 2009]; Matter of Timoshevich, 133 A.D.2d 1011, 1012 [3d Dept 1987]; Matter of Harrison, 184 A.D.2d 42 [3d Dept 1992]; Matter of Stalter, 270 A.D.2d 594, 596 [3d Dept 2000]).
The determinative factor is the "present intention" at the time the account was opened. (Sweetman v Suhr, 126 A.D.3d 1438, 1440 [4th Dept 2015]).
Evidence of intent to establish a joint account with a right to survivorship can include whether the decedent was the sole depositor of the joint account; whether the person claiming right of survivorship had withdrawn funds from the account; the testamentary plan or overall estate planning scheme and whether a joint account with right survivorship would represent a substantial deviation (Harrington v Brunson, 129 A.D.3d 1581, 1582-83 [4th Dept 2015]; Matter of Yaros, 90 A.D.3d 1063 [2d Dept 2011]; Sutton v Bank of NY, 250 A.D.2d 447, 447 [1st Dept 1998]; Matter of Farrar, 129 A.D.3d 1261, 1264-65 [3d Dept 2015]).
Weight is to be given to whether the signature card, although not containing survivorship language on the face of the card, nonetheless references a separate document stating that rights of survivorship are created when obtaining a joint bank account (see Sweetman v Suhr, 126 A.D.3d 1438, 1440 [4th Dept 2015]), and whether testimony and other evidence establishes that the decedent read the provisions in the separate document prior to opening the account or that she was specifically informed by the bank officer that a joint tenancy with survivorship rights was being created (see Matter of Coon, 148 A.D.2d 906, 907 [3d Dept 1989]).
Finally, it has been held that "[a] major factor in determining whether a bank account is opened as a matter of convenience or as a joint account is the conduct and statements of a surviving cotenant" (see Matter of Corcoran, 63 A.D.3d 93, 97 [3d Dept 2009]).
Regarding the bank accounts, a number of factors favor the conclusion that they were convenience accounts. The testamentary instruments distributed Rosamond's assets equally among the three children. The testimony did not establish that Rosamond at any time read the documents that accompanied each account, and which were referenced on each of the signature cards, documents which were very specific concerning the rights of survivorship. All the money deposited in the accounts was Rosamond's. Marcia would help with writing out the checks, but otherwise, all distributions (with one exception) were made at Rosamond's direction.
However, with respect to Key Bank account ending in -1048, the court finds that the evidence is "clear and convincing" that Rosamond intended it to be a joint account with right of survivorship. The court gives considerable weight to Ms. Gremke's testimony that it was her practice to explain the meaning of rights of survivorship upon the opening of any joint account, even though there was no testimony as to whether Rosamond understood the explanation. Rosamond was an extremely accomplished and intelligent woman, as manifested by her many pursuits, and who on her own amassed a considerable sum of wealth. The court rejects any argument that she lacked understanding of the meaning of a joint account with a right of survivorship, when explained to her as Ms. Gremke would do with her account holders. Moreover, although the signature card did not contain the specific language triggering the presumption, it came very close, with references to "joint accounts" and "rights of survivorship" on the face of the card as well as language describing that upon the death of an owner the amounts on deposit would pass to the surviving owners (albeit that it stated only" if" it was a "joint" account).
Even though the account deposits were solely Rosamond's, and the account was used primarily as Rosamond's primary checking account, the account was used to pay off Marcia's student loan. Also, it is conceded that Rosamond had given Marcia substantial gifts over the years, including and most tellingly, the house. Marcia has had an interesting but checkered career, so it is a reasonable inference that Rosamond used at least this account to give Marcia some funds over and above the equal distribution in the testamentary instruments.
As to the remaining accounts, Marcia has not carried her burden of demonstrating that the accounts are joint accounts. There was no testimony comparable to Ms. Gremke's regarding the opening of the accounts. The language on the signature cards regarding the meaning of a joint account is not as descriptive as that on the Key Bank -1048 account but rather is buried in a long single-spaced supplemental document. Only Rosamond's signature appears on one of the forms for Key Bank account -1478. Into that void the testamentary scheme weighs heavily, as does the fact that all deposits and withdrawals for those accounts were for Rosamond's benefit.
Additionally, regarding the ESL account, the inference can be drawn that Rosamond put Marcia on the ESL account because of actions taken by Robert in unilaterally withdrawing money from the account, and that she wanted to ensure that Robert would no longer have access to the account.
Personal effects
Regarding the personal and household effects, the equities of the unjust enrichment claim hinge on whether Rosamond made valid inter vivos gifts of those items to Marcia, as it is hornbook law that unjust enrichment does not lie where there is a valid inter vivos gift.
An inter vivos gift is valid only if the donee establishes by clear and convincing evidence the following elements: (1) intent by the donor to make a present transfer of property, (2) delivery of the gift to the donee, and (3) acceptance (Bader v Digney, 55 A.D.3d 1290, 1291 [4th Dept 2008], citing Gruen v Gruen, 68 N.Y.2d 48, 53 [1986]; Matter of Szabo, 10 N.Y.2d 94, 98 [1961]; Matter of Monks, 247 A.D.2d 922, 922-923 [4th Dept 1998]; Matter of Civiletto, 101 A.D.3d 1585, 1586 [4th Dept. 2012]).
Here, Marcia has failed to carry her burden. The court finds that there is not "clear and convincing evidence" that the decedent Rosamond intended to make an inter vivos gift of all her personal effects, which wherever found upon Rosamond's death, the court declares to be estate assets, except those items refenced in Rosamond's letter of October 30, 2013, i.e., "the set of china, crystal, and other household items."
If Rosamond had intended Marcia to keep all the items in Marcia's possession not listed as estate assets, including the diamond broach, she had the perfect opportunity to list them in the letter. The term "household items" generally refers to kitchen ware, bedding, furniture, etc, in other words, things that get used, not associated with the house, or displayed (see Matter of Wright, 15 Misc.2d 225, 233-234 [Sur Ct, New York County, 1958]; Matter of Will of Frohman, 205 Misc. 913 [Sur Ct, Queens County 1954]; see also Market Business News , https://marketbusinessnews.com/financial-glossary/household-goods [last accessed July 12, 2022]).
A different definition is provided by the Appellate Division, First Department in Matter of Isenberg, 35 A.D.3d 120, 121, 823 N.Y.S.2d 381, 382 [1st Dept 2006], in which on the specific facts of that case a reference in the Will to "household items" was held to have included all artwork in the house. The court declines to give "household items" the meaning afforded by the First Department.
Even though the contested items were in the house that Rosamond gifted to Marcia, there is insufficient evidence of a present intent to make a transfer of the property, given that Rosamond made a notable effort to identify the gifted items in her letter of October 30, 2013. More likely and running counter to any argument that the personal effects came with the house, is that Rosamond, at her advanced age, lacked the capacity to remove all personal effects and artwork and then move them to some other location, not to mention that, judging from her designation of Marcia as power of attorney, she trusted Marcia to distribute personal effects equally.
Breach Of Fiduciary Duty
Donna and Robert request that the court surcharge Marcia because she breached her fiduciary duty as sole trustee of the Trust by 1) paying excessive attorneys' fees, 2) failing to account for and distribute Trust assets on a timely basis, 3) failing to sell the Trust's Exxon Mobil Corp. stock on a timely basis, 4) incurring tax penalties and interest borne by the Trust.
In a proceeding to settle a fiduciary's account, "the party submitting the account has the burden of proving that he or she has fully accounted for all the assets of the estate, and this evidentiary burden does not change in the event the account is contested. While the party submitting objections bears the burden of coming forward with evidence to establish that the account is inaccurate or incomplete, upon satisfaction of that showing the accounting party must prove, by a fair preponderance of the evidence, that his or her account is accurate and complete" (Matter of Pavlyak, 139 A.D.3d 1338, 1339 [4th Dept 2016]).
Donna and Robert have by credible evidence raised objections as to the accuracy of the accounting, so the burden is on Marcia to show by a preponderance of the evidence that the account is "accurate and complete" (Matter of Jewett, 145 A.D.3d 1114, 1115-16 [3d Dept. 2016], and "that any claimed expenditure was necessary, fair and reasonable," Matter of McCranor, 176 A.D.2d 1026, 1027 [3d Dept. 1991]; see also Matter of Pavlyak, 139 A.D.3d at 1339]).
Exxon stock
Donna and Robert claim that Marcia unreasonably delayed the sale of the Exxon stock, even after being specifically asked to sell by counsel for Donna, which resulted in a loss of $44,964.20. That figure reflects the drop in share price from November 6, 2015, the date that David Anderson, Esq., counsel to Donna and Robert, sent a letter to Marcia's attorney asking her to immediately sell the Exxon stock, to the date of the sale on December 17, 2015.
Marcia has by a preponderance of the evidence established that she did not breach her fiduciary duty in delaying the sale of the Exxon stock and that no surcharge is warranted. The court accepts as credible her explanation that she did not receive counsel Anderson's letter until November 10, and that she mailed the instruction packet on December 3. That means that only 23 days elapsed between the time she was requested to sell the stock and the time she completed, on her end, the transaction, a period broken up by three holidays - Election Day, Veterans Day, and Thanksgiving Day - during which she had to arrange to get the medallion signatures and fill out the instructions. Such a brief period does not constitute a "fiduciary's negligent retention of assets" (Matter of Janes, 223 A.D.2d 20, 34 [4th Dept. 1996], affd 90 N.Y.2d 41 [1997]).
Moreover, the court agrees that "Fiduciaries holding stocks in times of economic stress and falling markets are to be shown 'leniency' (Matter of Kopec, 25 Misc.3d 901 [Sur Ct, Monroe County 2009], affd 79 A.D.3d 1732 [4th Dept 2010], quoting Estate of Newhoff, 107 Misc.2d 589, 592 [Sur Ct, Nassau County 1980]).
Losses due to tax penalties
Marcia claims that she filed tax returns late, and thereby incurred penalties, because she was waiting for "documentation to complete the returns," as counsel states in a post-trial memorandum, and that she ultimately received a refund, so that the Estate did not incur a loss. However, she fails to rebut the contention that the refunds, except for $578.13, are not listed in the accounting. Moreover, it is not clear, not by a preponderance of the evidence in any event, what documentation she was waiting for and whether the missing documentation was not related to having neglected to timely administer the estate. Testimony of counsel, who was charged with preparing the returns, may have provided a plausible answer as to why the returns were not filed on time, but that testimony was never presented.
Because the Estate (and Donna and Robert) sustained a financial loss resulting from Marcia's failing "to exercise that degree of care which prudent persons of discretion and intelligence in such matters employ in their own affairs" (Matter of Bankers Trust Co. [Siegmund], 219 A.D.2d 266, 272 [1st Dept 1995]; see also EPTL 11-2.2), Marcia is to be surcharged in an amount equal to the penalties incurred plus interest at the rate of 2%. In setting the interest rate it is noted that whether interest is awarded, and at what rate, is a matter within the discretion of the trial court (Matter of Janes, 90 N.Y.2d 41, 50 [1997]). In submitting the Order counsel shall calculate the total amount of the surcharge.
Delayed distribution of assets
It is well-settled that a surcharge is warranted where the objectant demonstrates that the fiduciary "acted negligently, and with an absence of diligence and prudence which an ordinary [person] would exercise in his [or her] own affairs" (Matter of Shambo, 169 A.D.3d 1201, 1207 [3d Dept 2019] [citations and quotations omitted]).
Here, the petitioners Donna and Robert have come forward with a credible claim that Marcia unreasonably delayed distributing the trust assets. Marcia counters with no excuse for delaying distributions, other than advice of counsel, which the court finds, on the evidence presented (which pointedly did not include the testimony of counsel), not credible.
The court finds that the distributions made on March 30, 2015, May 30, 2017, and July 7, 2017, should all have been made on January 1, 2015 (allowing for some time from the date of Rosamond's death on September 5, 2014 to January 1, 2015 to marshal the proceeds of the Exxon stock and presumably other securities).
Accordingly, Marcia is to be surcharged at the rate of 2%, from the date distributions should have been made and running forward to the date made. In other words, the distribution made on 03/30/2015 in the amount of $379,505.81 shall be surcharged 2% annualized for 89 days, or $1850.74 (4% of $379,505.81 divided by 365 [to get the per day rate] times 89, from January 1, 2015 to March 30, 2015).
The distribution made on 05/30/2017 for $150,000.00 is surcharged for 880 days (January 1, 2015 to May 30, 2017) at 2%, or $7232.87.
The distribution made on 07/07/2017 for $150,000.00 is surcharged at 2% for 928 days, or $7627.00.
The surcharge rate of 2% takes into consideration that Marcia, as judged by her demeanor on the stand and by her rambling, at times non-responsive testimony, as well as by her inconsistent employment history, was not up to the task of being the administrator/trustee of such large and varied assets. Her fault then, is one of inability to perform the duties, not willful neglect let alone self-dealing. Some surcharge is appropriate, though, when one considers that she had enough presence of mind to hire different attorneys for different types of legal matters.
In the case of distributions that have not been made but continue to sit in an estate account, no surcharge is imposed, as it was reasonable to withhold that money to pay for future litigation costs (see Matter of Jewett, 145 A.D.3d 1114, 1116 [3d Dept 2016]).
The Trust and Estate Accountings
It took Marcia more than three years and seven months after Rosamond's death to provide signed Estate and Trust accountings. No excuse deemed valid or credible has been offered for the delay; accordingly, Marcia shall receive no commission for the services she performed. The time spent by her attorneys would suggest that Marcia hardly needed to do anything. Accordingly, her protestations that she was overwhelmed with responsibilities associated with managing the estate are deemed credible, but if that is the case (and her personal difficulties justify a limited surcharge) she should not be allowed to receive past commissions.
Marcia is directed to complete the Trust distribution and finalize the Estate accounting and distribution, including bringing back into the Estate the personal effects and the one Key Bank account and the one ESL account. For this work Marcia will be allowed a partial commission in the amount of $5000.00.
Excessive Attorney's Fees
The court declines to find that the attorney's fees paid by Marcia were unreasonable, as she has established by a preponderance of the evidence that the work done was necessary and incident to her duties as trustee and executor, and that that the amount of the fees, coming in at not even 2% of the total trust and estate value, were not above what has been deemed reasonable by this court for estates and trusts of comparable size and complexity.
Both Gray & Feldman LLP and Underberg & Kessler LLP charged a reasonable hourly rate, the services rendered were by no means simple but involved some degree of complexity; and both firms are highly regarded for their expertise in estate and tax matters (see Matter of Potts, 213 AD 59, 60 [4th Dept 1925], affd 241 NY 593 [1925]).
The work done by Underberg & Kessler LLP, while some of it duplicative of what had been done by Gray & Feldman, was necessary to correct errors in the first accounting. The accounting errors were not the fault of Marcia. The fees paid to Lacy Katzen LLP were also reasonable, again, in consideration of the factors set forth in Matter of Potts and its progeny.
The fees for litigation counsel Michael Burger, of the firm Santiago Burger LLP, were also reasonable in amount and in need. Litigation was contemplated and even threatened. Given that her name was on each of the accounts, Marcia had a credible claim to keeping possession of the money in the three accounts. She had a credible claim as well as the personal effects, as they were in the house when she was given title to the house. The fees she incurred were appropriately paid out of the estate and/or trust (see generally Matter of Thomas, 74 Misc.3d 891, 893 [Sur Ct, Monroe County 2022]). The amount of the fees charged is also reasonable, given the high reputation Michael Burger has in the community and in this court, the complexity of the issues presented, the amount of the claims, and the exposure to his client if she lost.
No allocation should be made among Marcia, Donna, or Robert for payment of fees; all fees shall be borne by the trust and/or estate. Donna and Robert acted in the interest of the entire estate, they stood to benefit (and did benefit, if only partially) from the litigation; all siblings acted in good faith, in the court's view; and there was justifiable doubt as to the actions of the fiduciary Marcia (see Matter of Hyde, 15 N.Y.3d 179, 186 [2010]).
Request for the Appointment of a Referee
The court is not at this juncture going to appoint a referee (and thereby incur additional costs) to oversee the distribution of trust assets, as it is confident (given the limited nature of the work required) that Marcia will, with the assistance of able counsel, see to it that the assets will be distributed immediately. The court directs that a report be provided within thirty days of the date of the filing of this Decision and Order as to the status of distributions. Regarding personal effects, if the distribution of items cannot be agreed upon after thirty days, the court will direct, as requested, that the personal effects be distributed by lottery, or by an impartial referee.
CONCLUSION
The motion for judgment on the petition for a declaratory judgment as to the ownership of disputed trust and estate assets is granted.
The motion for judgment as to unjust enrichment is granted in part and denied in part.
Key Bank account ending in -1048 belongs to Marcia Najjar as decedent Rosamond Najjar intended it to be a joint account with right of survivorship. Key Bank account ending in -1478 and ESL account ending in -6754 belong to the estate.
Personal effects all belong to the estate, including a diamond brooch, except for items listed in the decedent's letter of October 2013, and will be divided by mutual consent, and if no agreement can be reached, by an impartial referee or by lottery.
As noted above, a surcharge of 2% is imposed for the tax penalties. No surcharge is imposed for the delayed sale of Exxon stock or for the payment of attorney's fees.
A surcharge of 2% interest is imposed on the delayed distributions.
Past commissions are denied. A partial commission of $5000.00 will be allowed for future work necessary to finish the administration of the estate.
All attorney's fees shall be paid by the Estate. Counsel shall submit a fee application with attached time billing records within 30 days.
Marcia through her attorneys shall finalize the accounting for the Estate (and Trust) within 60 days. Distribution of remaining assets shall take place upon the filing of the accounting.
Counsel for Donna and Robert shall submit an Order on notice.
SO ORDERED