Matter of Leo

[*1] Matter of Leo 2006 NY Slip Op 50823(U) [11 Misc 3d 1092(A)] Decided on May 8, 2006 Surrogate's Court, Nassau County Riordan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 May 8, 2006
Surrogate's Court, Nassau County

In the Matter of the Estate of Dorothy Leo, Deceased.



In the Matter of the Accounting by Dorothy Heimlich as the Executrix of the Estate of Eleanor M. Hermann, Deceased.



In the Matter of the Accounting by Dorothy Heimlich as the Executrix of the Estate of Dorothy Leo, Deceased.



In the Matter of the Compulsory Accounting of the Estate of Dorothy E. Leo, Deceased.



In the Matter of the Application for a Compulsory Accounting in the Estate of Eleanor M. Hermann, a/k/a Eleanor Hermann, Deceased.



291187



Dorothy Heimlich, Executrix of the Estate of Eleanor Hermann; Co-executrix of the Estate of Dorothy Leo; Appearing Pro Se. James P. Cronin, Esq., 5510 Merrick Road, Massapequa, NY 11758, Attorney for Marilyn Hermann, co-executrix of the Estate of Dorothy Leo.

John B. Riordan, J.

These are two related estates of Dorothy Leo and her sister Eleanor Hermann, both of which have the same residuary beneficiaries - the two daughters of Eleanor Hermann - Dorothy Heimlich, the executrix of her mother Eleanor's estate and Marilyn Hermann, a co-executor with Dorothy Hermann of the estate of their aunt, Dorothy Leo. Dorothy Leo predeceased her sister Eleanor on June 1, 1995. Eleanor's subsequent death occurred on May 16, 1998.

Marilyn has commenced a compulsory accounting proceeding against Dorothy in both estates and, in turn, Dorothy has petitioned to compel Marilyn to account as co-executrix of the Leo estate. Dorothy, who has appeared pro se, has filed voluminous papers in response to the compulsory accounting petitions but has not objected to filing accountings in each estate. Accordingly, on January 29, 2004, the court ordered Dorothy to file accountings in both estates within 60 days. On June 10, 2005, Dorothy filed a petition and accounting in each estate to which objections have been filed by Marilyn followed by replies by Dorothy. Marilyn has filed an answer to her sister's proceeding to compel her to account in the Leo estate and essentially alleges that since Dorothy Heimlich is in sole possession and control of the Leo estate, she has no information with which to prepare an accounting.

On November 21, 2005, depositions of Dorothy Heimlich under SCPA 2211 were held in both estates and adjourned pending document production by her with the deposition to be continued following such production. A copy of the deposition has been filed and a copy supplied to Dorothy.

While the objections do raise substantive objections, a major part of the objections complain of the inadequacy of the two accountings filed by Dorothy who, at this point, is unrepresented by counsel.

The Office of Court Administration has promulgated an official form of account of executors and administrators with instructions describing the various required schedules of the account and their contents (SCPA 106; Surrogate's Court Uniform Rule 207.4 [b] [22 NYCRR 207.4 (b)]). The format of the account requires Schedule A, as an example, to contain only assets received by the fiduciary at date of death with subsequent increases or income to be reported in Schedule A-1 or A-2 and decreases in Schedule B (Turano & Radigan, NY Estate Administration §6.04 [2006 Ed.]). Here, one or both accounts list "spin-off distributions," "splits" and "exchanges" of various corporations in Schedule A, which, as objected to, should be listed in either Schedule A-1 or A-2. More importantly, no values are assigned specifically to any of these distributions. It is apparent from the number of other deficiencies pointed out in the objections that the accountings lack the formality required which would make an analysis meaningful (see Flaum v BirnBaum, 177 AD2d 170; Matter of Carvel, NYLJ, Apr. 16, 2002, at 23, col 3).

While Dorothy Heimlich's failure to file an acceptable account could subject her to a proceeding to hold her in contempt of court (Turano & Radigan, NY Estate Administration §6.02[c][2] [2006 Ed.]), the 2002 revisions of SCPA 2205 and 2206 added other "related relief" that can be granted in compulsory accounting proceedings, either as demanded by the petition or on the court's own initiative (L. 2002, ch. 457). The related relief includes suspending and/or removing a fiduciary pursuant to SCPA 711 and 719 who fails to appear on the return date of process or fails to file "an account within such time and in such manner as directed by the court; (b) to appoint, immediately, an eligible person to succeed a fiduciary whose letters have been [*2]

suspended or revoked; and (c) to take and state an account on behalf of a fiduciary who fails to account and procure its settlement" (SCPA 2206[1]).

Since the accounts in both estates are not "in such manner as directed by the court" (SCPA 2206[1][a]) or in effect what the Uniform Rules, official forms and instructions require, either suspension or removal would be warranted (Matter of Makowski, 13 AD3d 1210 [2004] [the executor's "Interim Accounting did not meet the minimal legal requirements for an account"]). But there is a much more pressing reality present in these estates supporting such relief.

Schedule E, requiring an itemization of distributions made to beneficiaries, states in both estates that "Residual Distributions to Marilyn Hermann and Dorothy Heimlich have not yet been made." This statement is made notwithstanding the fact that the account in the Leo estate lists cash and securities of $929,031.72 on hand and in the Hermann estate an amount of $812,010.45. Added to this is the fact of Leo's death on June 1, 1995 and Hermann's death approaching eight years ago.

Papers filed by Dorothy reveal that an agreement had been reached in 2002 between her then counsel and counsel for Marilyn for a distribution and winding up of both estates by the end of that year. Upon Dorothy refusing to comply with any distributions except on certain conditions, her attorney resigned. In his letter of resignation dated December 30, 2002 attached to Dorothy's papers, he states in part: "I feel that I have no choice in this regard, since you have refused to follow my advice concerning the distribution of the estate assets. I have continually urged you to terminate both estates by December 31, 2002, as we had agreed at the meeting on January 15, 2002. You have decided not to make a final distribution by this date and against my strong protests, apparently hired a private investigator to prolong this matter."

Dorothy, in her papers, now charges her former attorney with conspiracy in collaborating with her sister's lawyers to subvert her intentions.

When questioned on her deposition as to the cause of her attorney's resignation, she stated, "I wanted to find out what was going on with my sister and her relationship with [her attorneys] and what happened with her lawsuit, and what happened with her property and he didn't want to pursue it. I wanted to hire a private investigator to go up and check what was going on before I made distributions." (p. 24)[FN1] The follow-up question asked: "Q. Do you think that your responsibility as fiduciary to make distributions under the estate is conditioned upon what is going on in [your sister's] life outside the estate? A. Yes, I do. If it is somebody I know very well, yes I do. I would do what my mother wanted, and my mother would do that."

Much of her deposition is replete with charges that her sister is a victim of her attorneys who are "financial predators" (p. 13), that she will not make any distributions until she feels [*3]"comfortable that the estates are not being bilked" (p. 76), her fear being that her sister's attorneys will "take them" after distributions are made (p. 89). This course of conduct she will not deviate from "because she took an oath to protect those assets and to follow my mother's wishes and that is what I will do whatever the cost to me" (p. 53). The same or similar sentiments are dispersed throughout all of her papers.

SCPA 711(2) provides that a fiduciary may be removed who has "wasted or improperly applied the assets of the estate ... or otherwise improvidently managed ... the property committed to his charge ..." An executor is required to wind up and distribute an estate within a reasonable period of time and delays in the administration of an estate alone can form the basis for removal (Matter of Jaffe, 12 Misc 2d 31; Matter of Smith, NYLJ, Mar. 8, 2001, at 25, col 4). As noted, both estates have substantial sums of money and distribution of the estates has been delayed, in the Leo estate for over ten years and in the case of the Hermann Estate, almost eight years. However, not only has there been an inordinate delay in winding up these estates, but Dorothy Heimlich insists, even presently, that she will continue to retain possession of these assets until she is "comfortable" with her sister's situation. "An abiding inertia, indifference or design to thwart or retard the administration of a estate is sufficient cause for removal of a [fiduciary]" (Matter of Boyle, 166 App Div 504 [1915]; Matter of Weinbender,110 NYS2d 895 [1952]). Since Ms. Heimlich's conditions on distributions are totally unacceptable to the court, she is accordingly removed for improvident management of these estates. While normally a hearing would be required prior to removal of a fiduciary, nevertheless, the Court of Appeals has made it clear that removal may be granted without a hearing "where the misconduct is established by undisputed facts or concessions" (Matter of Duke, 87 NY2d 465, 471 [1996]).

As far as the necessity of a substitute fiduciary, Marilyn has received letters as a co-executrix in the Leo estate. In the Hermann estate, the Will names both daughters as executrix and the petition actually requests the issuance of letters testamentary to both of them. For one reason or another, Marilyn has never qualified. Accordingly, letters testamentary will issue to Marilyn in the Hermann estate upon her qualifying according to law. Since the accountings are not in acceptable form, the court on its own initiative directs that a proper accounting be taken and stated in both estates (SCPA 2206 [1][c]). However, "the Surrogate is a stranger to the finances of an estate and can take and state the account of a recalcitrant fiduciary only upon the basis of evidence brought to the court's attention (Matter of Karp, NYLJ, Dec. 2, 1998, at 32, col 4, citing Matter of McCauley, 161 Misc 525 [1936]; 5 Cox-Arenson-Medina, NY Civ Prac SCPA 2206.06[d]). Accordingly, it will be Marilyn and her attorney's obligation to present such evidence including the preparation of acceptable accountings in both estates in connection with hearings to take and state the account.

During Dorothy Heimlich's deposition, Marilyn's attorney requested production of all estate records, a demand which it appears he has been making in correspondence since at least 2002. While Dorothy Heimlich agreed to such production, since there has been no request for a resumption of her deposition, it is safe to assume she has not complied with this request. Accordingly, she is directed to deliver all the papers in both estates to the court on May 16, 2006. Ms. Heimlich should be aware that if records are not supplied, all doubts concerning the amounts with which she is charged as receiving and the amounts to be credited to her will be resolved against her (Matter of Shulsky, 34 AD2d 545 [1970]). [*4]

Settle order.

Dated: May 8, 2006

John B. Riordan

Judge of the

Surrogate's Court

The appearances of counsel is as follows:

Footnotes

Footnote 1:Pages refer to transcript of deposition.