Matter of Schultz
Annotate this CaseDecided on July 26, 2006
Sur Ct, Nassau County
In the Matter of the Estate of Irene G. Schultz, a/k/a Irene Schultz, Irene R. Geiger and Irene Geiger Schultz, Deceased.
341526
Ross & Matza (Attorney for Petitioner)
265 Sunrise Highway
Suite 65
Rockville Centre, NY 11570
Mulholland & Knapp, LLP (Attorney for Respondent)
641 Lexington Avenue
New York, NY 10022
John B. Riordan, J.
In this proceeding, the co-preliminary executrices of the estate sought an order directing Citibank N.A. to turnover the proceeds of the decedent's accounts and for sanctions against the bank. The funds have been released and the application to turnover the account is therefore moot but the issue remains whether Citibank should be sanctioned. Counsel for the estate also requests that this court reject a sur-reply affidavit submitted by the bank. It is this court's preference to decide cases upon the merits. Therefore the court has taken the sur-reply affidavit into consideration. For the reasons that follow, the request for sanctions is denied.
Irene G. Schultz ("Decedent") died a resident of Nassau County on March 12, 2006. Preliminary letters were issued by this court to Celeste Maloney and Michele Andree Pollard on March 30, 2006. On April 10, 2006, as part of marshaling the estate's assets, counsel sent a letter accompanied by a death certificate and a certificate of preliminary letters to Citibank N.A. ("Citibank") requesting "[Citibank's] requirements to change over the [decedent's] two accounts into the estate name. . ."
According to counsel, he received a call the next day from a bank representative informing him that preliminary letters were "no good." Counsel went to the bank and spoke with the representative. According to counsel, she called Citibank's "legal hotline" and was told that preliminary letters testamentary were "not acceptable" to the bank. He then went to see the branch manager who again contacted the Citibank legal hotline and was again told that Citibank did not recognize preliminary letters testamentary as a matter of policy. He was also advised that the bank would not allow the co-preliminary executrices to open new accounts in the name of the estate.
On May 9, 2006, counsel for petitioner submitted the subject order to show cause to this court. The order was signed on May 10, 2006. On May 15, 2006, Citibank's attorney sent the estate's counsel two checks, representing the entire proceeds of the two accounts, payable to the co-preliminary executrices.
In opposition to the application for sanctions, Citibank states that if counsel would have asked for the funds to be withdrawn from the decedent's accounts, rather than trying to convert the accounts into an estate account, that would have been done immediately. The bank further contends that the first time the decedent's accounts were requested to be turned over is when it [*2]was served with the order. The bank immediately complied with that request. In short, Citibank contends "[it] cannot be sanctioned for failing to do what it was not asked to do."
Estate counsel asserts that it was his understanding that Citibank would take no action at all on the two estate accounts until the issuance of full letters testamentary. He alleges that the bank would not have honored the preliminary letters testamentary for any reason whatsoever, either to withdraw money or to set up an estate account. He contends that Citibank's failure to recognize the letters prevented the preliminary executrices from marshaling the two accounts and administering the estate and thus sanctions are appropriate.
22 NYCRR § 130-1 is titled Awards of Costs and Imposition of Financial Sanctions for Frivolous Conduct in Civil Litigation. From the title itself, it is clear that in order for sanctions to be imposed for frivolous conduct in civil litigation, the conduct must have occurred within the context of civil litigation. Here, the estate's counsel is not complaining that the bank or its counsel engaged in frivolous conduct within the context of the litigation. Rather, he argues that the conduct which allegedly generated the litigation, the bank's policy of not opening estate accounts with preliminary letters testamentary, is sanctionable as frivolous conduct. The court disagrees. The bank's conduct did not take place within the context of the litigation and therefore sanctions are not applicable.
This decision constitutes the order of the court and no additional order need be submitted.
Dated: July 26, 2006John B. Riordan
Judge of the Surrogate's Court
The appearance of counsel is as follows:
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