Opinion
No. 56892/2018 Motion Sequences 1 &2
04-05-2019
ANTHONY M. YANNI and ARTHUR S. YANNI, JR. Individually and as Trustees on behalf of the Joan S. Yanni Irrevocable Insurance Trust, Plaintiffs, v. JOAN S. YANNI and PAUL J. YANNI, Defendants.
Unpublished Opinion
DECISION & ORDER
BLACKWOOD, A.J.S.C.
The following papers (e-filed documents 10-27, 30-50, 53) were read on the E-filed motion by ANTHONY M. YANNI and ARTHUR S. YANNI, JR. Individually and as Trustees on behalf of the Joan S. Yanni Irrevocable Insurance Trust, for an order granting summary judgment on all causes of action contained in the complaint (motion sequence 1); and on the E-filed cross-motion by JOAN S. YANNI and PAUL J. YANNI for an order dismissing the complaint filed against them, or in the alternative, transferring the matter to the Surrogate's Court (motion sequence 2):
Papers
Notice of Motion, Affidavit in Support (Exhibit A); Affirmation in Support (Exhibits 1-13); Memorandum of Law (motion sequence 1)
Notice of Cross-Motion, Affirmation in Support (Exhibits A-L); Affidavit in Support; Memorandum of Law (motion sequence 2)
Affirmation in Opposition to Cross-Motion, Memorandum of Law (Exhibits 1-3) (motion sequence 2)
Affirmation in Reply (motion sequence 2)
Upon reading the foregoing papers it is
ORDERED the motion which seeks an order granting summary judgment in favor of ANTHONY M. YANNI and ARTHUR S. YANN1, JR. Individually and as Trustees on behalf of the Joan S. Yanni Irrevocable Insurance Trust, is denied; and it is further
ORDERED the branch of the motion which seeks the dismissal all causes of action against JOAN S. YANNI and PAUE J. YANNI is denied; and it is further
ORDERED that the defendants' motion pursuant to CPER 325(e) removing and transferring the above-entitled action now pending in this court to the Surrogate's Court of the County of Westchester, and consolidating it with the matter therein under File No. 2005-182 is granted; and it is further
ORDERED that all proceedings currently pending before this court are stayed pending further order of the Surrogate's Court; and it is further
ORDERED that the defendant shall serve a copy of this order with notice of entry upon the Clerk of this Court and all parties; and it is further
ORDERED that the Westchester County Clerk, upon service of a copy of this order with Notice of Entry and payment of the required fees, is directed to transfer its file in this action to the Clerk of the Surrogate's Court of Westchester County, for filing and assignment.
On April 30, 2018, ANTHONY M. YANNI and ARTHUR S. YANNI, JR. Individually and as Trustees on behalf of the Joan S. Yanni Irrevocable Insurance Trust ("plaintiffs") filed a summons and complaint against JOAN S. YANNI and PAUL J. YANNI ("defendants") alleging that the defendants have misappropriated the assets of the Joan S. Yanni Irrevocable Trust ("JY Trust"), of which the plaintiffs arc beneficiaries and trustees. The plaintiffs are seeking damages as a result of the alleged conversion of assets, and are seeking a declaratory judgment against the defendants. On July 13, 2018, the defendants filed an answer to the action, which contains ten affirmative defenses.
Arthur and Joan Yanni were husband and wife and had three sons - Arthur Jr., Paul and Anthony. Shortly after Arthur died in 2004, the Arthur Yanni Trust ("AY Trust") was created under Article Third of his Will. Joan Yanni was the beneficiary of that trust with Anthony Yanni as the trustee. All three sons are remainder beneficiaries of the AY Trust. The AY Trust provided that the trustee would pay to Joan, the beneficiary, all of the net income of the trust in installments and also, that the trustee may also pay to Joan "such portions of the principal of the trust" as necessary for her health, support, and maintenance (Notice of Cross-Motion, Exhibit A). One of the assets of the AY Trust was a 54.9% interest in a 28 unit apartment building located at 127 Riverside Drive, New York, New York ("Riverside Drive Property"), in addition to other income properties.
At the same time that the AY Trust was formed, Joan Yanni created the JY Trust, of which her three sons are beneficiaries and trustees. An asset of that trust is the remaining 45.1% interest in the Riverside Drive Property. In 2012, Joan Yanni deeded additional parcels of income property to the JY Trust, included property located at 45 Westerly Street, Yonkers, New York ("Westerly Property").
In 2014, Joan Yanni filed an action in Surrogate's Court in Westchester County, seeking an accounting of the AY Trust and the removal of the trustee, alleging that the plaintiffs, who were responsible for managing the income properties, were collecting the proceeds from the properties and depositing them into one single account, even though the properties are assets of two different trusts. A decision and order was issued on April 14, 2015, (J. Everett), which ordered an accounting of the AY Trust. An accounting was produced, which showed the commingling of the assets of the two trusts from 2005 to 2015. Notably, the JY Trust bank account was used for all of the income and expenses for all of the properties owned by the two trusts. To dale, the action in Surrogate's Court is pending.
In July of 2015, the plaintiffs learned that Joan Yanni had been collecting rent on the Westerly Property and keeping it. Despite requests from the counsel for the JY Trust to cease and desist her behavior, Joan Yanni, with the assistance of Paul Yanni, continued to collect the rent from the Westerly Property and deposit it into Joan Yanni's account.
The plaintiffs have filed a motion seeking summary judgment, arguing that they have established, prima facie, each of the causes of action contained in the complaint, to wit, that the defendants engaged in conversion, and that while being aided and abetted by Joan Yanni, Paul Yanni breached his fiduciary duty as trustee of the JY Trust. Additionally, the plaintiffs contend that they have shown that they arc entitled to a declaratory judgment removing Paul Yanni has a trustee of the JY Trust and directing the defendants to stop collecting and retaining the rent on the Westerly property.
In opposition, the defendants move for the dismissal of the complaint pursuant to section 3211(a)(4) of the Civil Practice Law and Rules ("CPLR"), arguing that the action pending in Surrogate's Court is between the same parlies for the same cause of action, and therefore, this action should be dismissed. In the alternative, the defendants move to have the current action transferred to Surrogate's Court so that the two matters may be heard jointly. Finally, the defendants urge this court to deny the plaintiffs' motion for summary judgment, arguing that the plaintiffs' mishandling of the income and expenses for the assets of both of the trusts should preclude any accelerated relief for the plaintiffs.
The court finds that the existence of the companion matter to this action in Surrogate's Court precludes this court from granting the plaintiffs summary judgment in the case at bar. The allegations that the plaintiffs have unlawfully commingled the assets of the two trusts creates material issues of fact as to their claims in this complaint. However, despite the fact that the actions are related, the court is unconvinced that they are the same, as contemplated by CPLR 3211(a)(4), It would hardly be fair that simply because the parties are overlapping and the causes of action are related, that these plaintiffs should be deprived of their day in court.
While the dismissal of this matter is unwarranted, the court, in its discretion and pursuant to its authority under the New York Constitution, Article VI, Section 19(a), and CPLR 325(e), orders the transfer of this matter to Surrogate's Court. When it comes to "matters relating to estates and the affairs of decedents," Section 201 of the Surrogates Court Practice Act ("SCPA") sets forth the subject matter jurisdiction bestowed upon Surrogate's Court (SCPA §201). Within that grant of authority, SCPA §209(10) provides that the Surrogate's Court "shall have all of the powers that the supreme court would have in like actions and proceedings including, but not limited to, such incidental powers as are necessary to carry into effect all powers expressly conferred herein" (SCPA §209[10]). To be sure, this litigation involving the JY Trust is inextricably intertwined in the business of the AY Trust and thus, more properly before the Surrogate's Court as it can be described as '"litigation involving the property and funds of a decedent's estate'" (Cipo v. Van Blerkom 28 A.D.3d 302, 302 [2d Dept. 2006], quoting Nichols v. kruger, 113 A.D.2d 878, 878-879 [2d Dept. 1985] citations omitted). Therefore, the Surrogate's Court is authorized to hear this matter and each of the causes of action contained in the complaint, including the cause of action which seeks relief in the form of declaratory judgment (sec In the Matter of Greenwold, 236 A.D.2d 400, 401 [2d Dept. 1997]). Finally, the transfer of this mailer to Surrogate's Court "will foster judicial economy and lead to an expedited settlement of the estate" (Burnax Co., Inc. v. B & S Industries, Inc., 135 A.D.2d 599, 602 [2d Dept. 19871; sec also Goodwin v. Rice. 79 A.D.3d 699 [2d Dept. 2010])
For all of these reasons, the motions for summary judgment are denied, except to the extent indicated above.
This constitutes the decision, and order of this Court.