Matter of White

[*1] Matter of White 2006 NY Slip Op 50210(U) [11 Misc 3d 1054(A)] Decided on February 10, 2006 Sur Ct, Broome County Peckham, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on February 10, 2006
Sur Ct, Broome County

In the Matter of the Estate of Charles W. White, Deceased.



2004-0297



John H. Hartman, Esq.

Attorney for Estate of Charles W. White

LEVENE, GOULDIN & THOMPSON, LLP

PO Box F-1706

Binghamton, NY 13902

Dirk J. Oudemool, Esq.

Attorney for James White

333 East Onondaga Street

Syracuse, NY 13202

Eugene E. Peckham, J.

James White, son of the decedent and one of the remainder beneficiaries of this estate, has petitioned for the disqualification of Caroline Vadala as attorney for the estate in the Accounting proceeding pending in this Court. A hearing on this matter was held on February 7, 2006. The Court makes the following findings of fact.

FACTS

1.On or about February 11, 2002, James White (hereafter James) filled out a Durable General Power of Attorney form from his father to his brother, William White (hereafter William). The power of attorney was signed by the father and notarized. (Respondent's Exhibit A).

2.The power of attorney did not have the initials of the father in any of the boxes A through Q on the form.

3.On or about April 8, 2004, William, purporting to use the power of attorney executed a deed, prepared by attorney Mark Hubal, from the father to James White and Charles David White (hereafter David) for real property known as 185 Stevens Road, Binghamton, NY

4.The deed was to only James and David because Mr. Hubal advised them that William could not use the power of attorney to transfer the real property to himself. However the brothers had consulted among themselves and agreed that [*2]subsequently the real property would be transferred over into all three names equally.

5.The deed is signed and notarized "Charles W. White by William H. White, his attorney in fact." The deed was recorded in the Broome County Clerk's Office on April 8, 2004 in Book 2066, page 243. (Respondent's Exhibit B).

6.At about the same time, William also used the power of attorney to transfer funds from the father's account to purchase a Met Life annuity in the name of the three sons, James, William and David.

7.William became concerned about using the power of attorney to make these transfers from the father and discussed it with his ex-wife, Diane White, a real estate broker.

8.Diane White referred William to attorney Caroline Vadala (hereafter Vadala).

9.William set up an appointment with Vadala for April 13, 2005. James accompanied William to the appointment.

10.At the meeting, Vadala asked William then James for his address. James responded "I am not with your client. You don't need that information". James admitted on cross examination that he had said this.

11.No retainer agreement or engagement letter was ever prepared by Vadala or signed by either William or James. James never paid Vadala a fee for services rendered.

12.At the meeting, William showed Vadala the power of attorney and discussed with her the transfers of his father's property he had done using the power of attorney. 13.Vadala advised that the power of attorney was not validly executed because there were no initials in the boxes. She also advised that even if it was valid the limit on gifts made with the power of attorney was $10,000.00.

14.The real property has been appraised by one appraiser for $130,000, a second appraiser for $150,000, listed for sale at $179,900 and a purchase offer was received and accepted by David, as executor of his father's estate, for $165,000.

15.A refund of the premium on the Met Life annuity was subsequently received in the amount of $178,476.34.

16.After the meeting with Vadala on April 13, 2004, William and James went to the office of Attorney Mark Hubal. Hubal prepared a correction deed to reverse the real estate transfer and return the property to the father's name. James signed the deed and it was sent to David, who lived in Colorado, for his signature. 17.After David also signed the deed he returned it to Hubal for recording. The correction deed was lost in the Hubal office and never recorded.

18.In November, 2004, Vadala prepared a second correction deed to transfer back the real property at 185 Stevens Road. James refused to sign it.

19.Charles W. White died early in the morning of April 15, 2004.

20.Later on that day, April 15, 2004, William and James again met with Vadala and Albert Kukol, another partner in the law firm.

21.Kukol placed a telephone call to Met Life and spoke to Mark McGinnis, a Met Life representative, to discuss cancellation of the annuity. The Met Life representative advised them the annuity premium could be refunded due to the 10 [*3]day free look back period. (Petitioner's Exhibit 9).

22.At that meeting a letter was prepared to Daniel Lewis, another Met Life representative, requesting a refund of the premium under the 10 day look back. The letter was signed that day by William and James and notarized by Vadala. (Petitioner's Exhibit 1).

23.Vadala testified that on April 15, 2004, she understood William was her client.

24.On or about April 22, 2004, David was in town for his father's funeral and signed the letter to Met Life. His signature was notarized by Vadala on that day.

25.On April 22, 2004, Vadala wrote to Mr. Lewis forwarding the letter requesting the premium refund. (Petitioner's Exhibit 8).

26.At about the same time, Vadala was retained by David, as executor, to represent the estate of his deceased father.

27.On or about April 23, 2004, James came to Vadala's office without an appointment to sign a Waiver and Consent to probate. Vadala advised him he could sign the waiver or if he chose not to do so a citation would be issued. James did not sign the waiver.

28.James told Vadala he did not want to sign the waiver because he objected to David acting as executor and that James wanted to get his own appraisals for all the estate property, both tangibles and real estate, to be sure everything was fairly valued.

29.The question of potential conflicts with his brothers over the estate and because Vadala had met with William and James regarding the refund for the annuity and the power of attorney was also discussed by James on April 23, 2004.

30.On or about June 23, 2004, William received the Met Life premium refund check in the mail. The check was made out to William, David and James. He telephoned David and David told him to take the check to Vadala. William then left the check for Vadala at the front desk of her office. (Petitioner's Exhibit 2).

31.David instructed Vadala to deposit the check in the estate checking account since it was his father's money.

32.The check was marked "For Deposit Only" and deposited on or about June 28, 2004 in the checking account for the Estate of Charles W. White. The check was not endorsed by either William, David or James. (Petitioner's Exhibits 2 and 3).

33.Thereafter in or about August 2004, James objected to the deposit of the check without his consent or endorsement. The Bank placed a hold on the funds in the estate account, but agreed to release the hold so James could receive his one-third share of the check in the amount of $59,492.11 provided he would sign a Release of liability for the Bank. James refused to sign the release. (Petitioner's Exhibits 4 and 6).

34.On June 24, 2005, David filed his Account as Executor of Charles W. White with this Court. Objections to the Account were filed by James on October 4, 2005.

CONCLUSIONS OF LAW

Petitioner, James White, claims that Attorney Vadala should be disqualified from representing David White, as executor of the Estate of Charles W. White, due to a conflict of interest under DR5-105 resulting from her prior representation of him in regard to the [*4]cancellation of the Met Life annuity. DR5-105 provides: "A. A lawyer shall decline proffered employment if the exercise of independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve the lawyer in representing differing interests, except to the extent permitted under DR5-105 (C).""A party seeking to disqualify an attorney or a law firm, must establish (1) the existence of a prior attorney-client relationship and (2) that the former and current representations are both adverse and substantially related (Solow v Grace & Co. 83 NY2d 303 at 308 (1994).

In this case, petitioner has failed to prove either branch of this two part test. There was no prior attorney-client relation between James and Vadala and the actions taken by Vadala to recover assets for the estate were not adverse to James' interests. Therefore the petition to disqualify Vadala and her law firm must be denied.

It is obvious that in order for DR5-105 to apply there must first be an attorney client relationship. In order to establish the relationship there must be an employment agreement, express or implied. 7 NY Jurisprudence 2d 24 "Attorneys at Law" §§66. "It is fundamental that an explicit undertaking to perform a specific task is required to establish an attorney client relationship" Sucese v Kirsch 199 AD2d 718 (3d Dept. 1993).

In the present case James specifically denied at the April 13, 2004 meeting that Vadala was his attorney. Vadala gave credible testimony to that effect. It is confirmed by the admission of James on cross examination that he stated "I am not your client." No retainer agreement was ever signed by James nor did he ever receive an engagement letter (Uniform Rules §1215.1) or pay a fee to Vadala.

On April 15, 2004, the brothers returned to the law office. Their father had died early in the morning of that day. Everyone present at the meeting that day knew of the death. Mr. Kukol placed a call to the Met Life representative and ascertained the annuity could be cancelled by a request under the 10 day free look back period. A letter was prepared and signed by William and James to request the refund of the premium. (Petitioner's Exhibit 1).

Vadala gave credible testimony that she believed that William was her client in regard to securing the refund from Met Life. By his own statement that he was not a client, James had made it clear that he was simply riding on his brother's coat tails. The relationship of attorney and client is not established by the preparation of papers for a client which another person takes gratuitous advantage of. Stout v Smith 98 NY25 (1885). Thus it is held that James was not a client of Vadala.

Even if we assume, arguendo, that the relationship of attorney and client was established by implication when Vadala and her firm undertook to prepare the letter cancelling the annuity for James' signature, in order to disqualify Vadala the interests of James must be adverse to that of his father's estate. DR5-105; Solow v Grace & Co., supra..

It is clear that the power of attorney from the decedent to William was not valid since [*5]none of the boxes A through Q was initialed. The power of attorney form itself as set forth in the General Obligations Law states in large type "If the blank space to the left of any particular lettered subdivision is not initialed, NO AUTHORITY WILL BE GRANTED for matters that are included in that subdivision." Gen. Obligations Law §5-1501. The statute requires that these directions be included on the printed form for it to be valid. GOL §5-1501(1). As a result the power of attorney is not valid. Therefore the gift transfers made by William with the power of attorney are also not valid.

Again, assuming, arguendo, that the power of attorney is valid the holder of the power of attorney is plainly limited to using it to make gifts of no more than $10,000 per person per year. GOL §5-1501(1), Box M. The gift of the funds for the premium on the annuity was $178,476.34 plus the gift of real estate was at least $130,000 and probably $165,000 since a purchase offer was received in that amount. Obviously, the total of these amounts far exceed $10,000 per person. Thus the gift transactions are also invalid as being in excess of the authority purported to be granted by the power of attorney.

After the father died and Vadala was retained by David, as executor, it became her duty to assist the executor to recover these improperly transferred assets for the estate. James himself recognized this fact by signing the letter requesting the premium refund and the first correction deed that was lost.

The will of Charles White provides for the entire estate to be divided equally between his three sons. Thus James will receive the exact same one-third share of the premium refund money and real property as if the gift transactions had been valid. Consequently, it is held that the actions of Vadala, as attorney for the estate, to correct the invalid transactions are not adverse to James' interests.

The only possible difference could be possible small increases in executor's commissions and attorney's fees as a result of the increased size of the estate. In the opinion of the Court these differences are not significant enough to change the result.

What has occurred in this estate is similar to several other cases where disqualification of the attorneys for the estate was denied. In Matter of Dix 11 AD2d 555 (3d Dept. 1960) Elynor M. Dix was named a co-executor of her deceased husband's will. The co-executors retained a firm of attorneys to represent them. Mrs. Dix then decided to withdraw as co-executor and file objections to probate, which she thereafter withdrew. A bank was appointed temporary administrator. The same attorneys continued to represent the temporary administrator of the estate and the remaining co-executor. Mrs. Dix petitioned to disqualify the attorneys. The Court stated "The fact that after the retention of the attorneys Mrs. Dix decided to change her status in these proceedings does not, ipso facto, make the attorneys adverse to her voluntary shifting of positions." The Court denied the petition for removal of the attorneys.

In Estate of Kaufman 83 Misc 2d 846 (Surr. Ct. New York Co. 1973) the widow and her co-executors retained attorneys to represent them in probating the will. The widow then withdrew as co-executor and filed a right of election to take against the will. The widow then petitioned to disqualify the same attorneys that had been retained by the co-executors. The Court held the attorneys were not disqualified, despite the fact the widow had changed her position. See also Matter of Homola 234 AD2d 295 (2d Dept. 1996); Matter of Birnbaum 118 Misc. 2d267 (Surr. Ct. Monroe Co. 1983).

Similarly, in the White estate James agreed at first to cooperate with securing the [*6]premium refund and signing the correction deed back to the estate. Then when the refund check was deposited in the estate account and he did not immediately receive a distribution of his share, he became upset and changed his position. He refused to sign a new correction deed to replace the one that was lost and refused to sign a release for the bank so that he could get his share of the premium refund money. (See Petitioner's Exhibits 4, 6 and 7).

As with the cases cited above, James' shift of position does not mean the attorneys who have represented the executor of the estate throughout these proceedings should be disqualified. This is especially true since James, by his own admission, was not ever a client of Vadala. The petition to disqualify Caroline Vadala as attorney for David White, as executor, is denied.

ENTER

Dated: February 10, 2006____________________________________

Surrogate