Court Opinion

ID: 4082439
Source: CourtListenerOpinion
Date Created: 2016-10-07 23:35:13.385107+00
Date Added: 2024-06-11T08:45:10.836741
License: Public Domain

SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

447
CA 14-01992
PRESENT: SCUDDER, P.J., CENTRA, PERADOTTO, VALENTINO, AND WHALEN, JJ.

IN THE MATTER OF THE JUDICIAL SETTLEMENT OF THE
FINAL ACCOUNT OF RORY G. WHITE, AS SUCCESSOR
TRUSTEE OF THE TRUST UNDER ARTICLE SIXTH OF THE    MEMORANDUM AND ORDER
LAURA M. GREEN TRUST AGREEMENT DATED FEBRUARY 15,
1995 FOR THE PERIOD FROM JANUARY 10, 2004 THROUGH
JUNE 23, 2010 BY LAURA M. GREEN, GRANTOR.
--------------------------------------------------
RORY G. WHITE, PETITIONER-APPELLANT,

                    V

KIMBERLY G. VOWELL, OBJECTANT-RESPONDENT.
--------------------------------------------------
IN THE MATTER OF THE JUDICIAL SETTLEMENT OF THE
FINAL ACCOUNT OF RORY G. WHITE, AS SUCCESSOR
TRUSTEE OF THE TRUST UNDER ARTICLE SECOND OF THE
HOWARD C. GREEN TRUST AGREEMENT DATED FEBRUARY 15,
1995 FOR THE PERIOD FROM JANUARY 10, 2004 THROUGH
MARCH 31, 2013 BY HOWARD C. GREEN, GRANTOR.
--------------------------------------------------
RORY G. WHITE, PETITIONER-APPELLANT,

                    V

KIMBERLY G. VOWELL, OBJECTANT-RESPONDENT.
--------------------------------------------------
IN THE MATTER OF THE JUDICIAL SETTLEMENT OF THE
FINAL ACCOUNT OF RORY G. WHITE, AS SUCCESSOR
TRUSTEE OF THE TRUST UNDER ARTICLE THIRD OF THE
HOWARD C. GREEN TRUST AGREEMENT DATED FEBRUARY 15,
1995 FOR THE PERIOD FROM JANUARY 10, 2004 THROUGH
JUNE 22, 2010 BY HOWARD C. GREEN, GRANTOR.
--------------------------------------------------
RORY G. WHITE, PETITIONER-APPELLANT,

                    V

KIMBERLY G. VOWELL, OBJECTANT-RESPONDENT.

PHILLIPS LYTLE LLP, BUFFALO (ALAN J. BOZER OF COUNSEL), FOR
PETITIONER-APPELLANT.

WRIGHT, WRIGHT AND HAMPTON, JAMESTOWN (EDWARD P. WRIGHT OF COUNSEL),
FOR OBJECTANT-RESPONDENT.
                                 -2-                           447
                                                         CA 14-01992

     Appeal from an order of the Surrogate’s Court, Chautauqua County
(Stephen W. Cass, S.), entered February 19, 2014. The order, among
other things, denied the petition seeking an order approving the
payment of reasonable attorneys’ fees and related expenses incurred by
the trusts.

     It is hereby ORDERED that the order so appealed from is
unanimously affirmed without costs.

     Memorandum: Petitioner is the successor trustee of three trusts
established by his grandparents, Laura M. Green and Howard C. Green.
The trusts were established for the benefit of their daughter, Elaine
Green, the mother of petitioner and objectant. Howard Green
predeceased Laura Green, and, upon the death of Laura Green, Elaine
Green succeeded her as trustee. According to article sixth of the
Laura Green trust, upon the death of Elaine Green, in the event that
Elaine Green did not exercise her right to dispose of the remainder of
the trust by her will, the remainder of the trust was to pass to her
children, per stirpes. Elaine Green’s will provided that the
remainder of the trusts be distributed to her children in equal
shares. Upon the death of Elaine Green in 2010, petitioner replaced
her as trustee and, prior to the probate of Elaine Green’s will, he
distributed the assets of the trusts, approximately $1.1 million, to
himself and objectant as directed in the terms of article sixth of the
Laura Green trust, i.e., in equal shares. Approximately 18 months
thereafter, objectant sought an accounting of the disbursements Elaine
Green, trustee, made to herself as beneficiary. Petitioner sought
judicial approval of the accounting, alleging, inter alia, that he
distributed the trust assets at objectant’s request. In objecting to
the accounting, objectant asserted, inter alia, that Elaine Green made
disbursements of the trusts for the benefit of others and that
petitioner failed to attempt to recover assets of the trusts from the
estate of Elaine Green.

     Petitioner filed a petition pursuant to SCPA 2110 (1) seeking
approval of interim attorneys’ fees and, because the trust assets were
previously distributed to the parties as beneficiaries, also seeking
an order requiring that he and objectant each contribute $40,000 to
the trusts for necessary fees and costs associated with the
litigation, and requesting that funds previously returned to the
trusts by the parties be released to pay a portion of the fees
generated by petitioner’s counsel. Surrogate’s Court denied the
petition in its entirety. As a preliminary matter, we conclude that
the Surrogate erred in determining that the fee application “simply
sets forth the time slips” of the attorneys who worked on this matter.
The record establishes that petitioner’s attorney provided, in
addition to the time records, his affirmation setting forth relevant
information with respect to each attorney, including the area of
practice, whether the attorney was a partner or an associate, the
number of years the attorney had been admitted to practice and the
hourly rate charged for each attorney. Further, the Surrogate was
aware of the complexity of the discovery issues, resulting from the
fact that neither of the parties reside in New York State, as well as
                                 -3-                           447
                                                         CA 14-01992

the fact that Elaine Green resided, and died, in New Mexico. We
therefore conclude that the Surrogate had sufficient information upon
which to determine the reasonableness of the request for attorneys’
fees (see Matter of Potts, 213 App Div 59, 62, affd 241 NY 593).

     We nevertheless further conclude that the Surrogate did not abuse
his discretion in denying the application for interim fees without
prejudice at the discovery stage of the proceeding (see generally SCPA
2110 [1]). “[A]n attorney may recover fees from the estate only where
the services rendered benefit the estate” (Betz v Blatt, 116 AD3d 813,
816, lv dismissed 23 NY3d 1028; see generally Matter of Hyde, 15 NY3d
179, 186-187) and, here, the Surrogate did not abuse his discretion in
determining that the application for fees would be determined
following a hearing.

     Although petitioner correctly contends that the Surrogate has the
authority to direct that distributions be returned to the trusts where
the expenses are in excess of the funds contained in the trusts (see
Matter of Dewar, 62 AD2d 352, 355; see also Matter of Allen, 278 AD2d
412), we nevertheless conclude that the Surrogate did not abuse his
discretion in denying that part of the petition seeking an order
directing petitioner and objectant each to reimburse the trusts
$40,000 for future attorneys’ fees and expenses that may be incurred
by petitioner. We note that a successor trustee “is only responsible
for the assets which come into his [or her] hands, and has no
particular legal duty to seek an accounting from his [or her]
predecessors” (Matter of William M. Kline Revocable Trust, 196 Misc 2d
66, 75), in this case, his mother’s estate. Although a successor
trustee may be liable for failure to proceed against a predecessor
trustee for breach of duty to the trust, it is within the discretion
of the successor trustee to determine whether to exercise his or her
power to “ ‘contest, compromise or otherwise settle’ claims in favor
of the trust” pursuant to EPTL 11-1.1 (b) (13) (id. at 76).

     Here, it is undisputed that the predecessor trustee became
severely disabled in 1999. Petitioner identified the funds that the
predecessor trustee paid to herself from the corpus of the trusts;
advised the Surrogate that he is unable to determine specifically how
those funds were used; identified expenses associated with the
disability of the predecessor trustee that exceed the amounts paid
from the trust corpus; and advised the Surrogate that the estate of
the predecessor trustee is insolvent. Objectant, therefore, has the
burden to establish that the predecessor trustee failed to discharge
her duties as trustee (see Matter of Reckford, 307 NY 165, 176, rearg
denied 307 NY 842), and that the accounting is incomplete (see
generally Matter of Taylor, 79 AD3d 766, 767; Matter of Robinson, 282
AD2d 607, 607). In the event that the Surrogate ultimately determines
that costs associated with the litigation are properly charged to the
trusts, the funds may be recouped from the beneficiaries (see Dewar,
62 AD2d at 355).

     Petitioner contends for the first time on appeal that objectant
is judicially estopped from challenging the accounting on the ground
that she requested that he distribute the proceeds of the trusts to
                                 -4-                           447
                                                         CA 14-01992

the two of them, and thus that contention is not properly before us
(see generally Ciesinski v Town of Aurora, 202 AD2d 984, 985).

Entered:   May 1, 2015                          Frances E. Cafarell
                                                Clerk of the Court