Matter of Marsh

[*1] Matter of Marsh 2006 NY Slip Op 52077(U) [13 Misc 3d 1231(A)] Decided on September 28, 2006 Sur Ct, Westchester County Scarpino, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 September 28, 2006
Sur Ct, Westchester County

In the Matter of the Application of Adrienne Marsh Lefkowitz in the Estate of Irene B. Marsh, Deceased, pursuant to SCPA 2102 (4).



1606/1990



Robert M. Redis, Esq.

McCarthy Fingar LLP

Attorney for Petitioner

11 Martine Avenue

White Plains, NY 10606-1934

Adrienne Marsh Lefkowitz

Pro Se Objectant

323 S. Doheny Drive No.207

Los Angeles, Ca. 90048

Anthony A. Scarpino, J.

In a proceeding pursuant to SCPA 2102 (4) to compel respondent Bank of New York ("BNY"), as executor of the decedent's estate, to pay over certain funds to petitioner, as beneficiary of the estate: (1) the petitioner moves pursuant to CPLR 3212 for summary judgment on the petition; and (2) BNY separately moves pursuant to CPLR 3212 for summary judgment dismissing the petition.

Respondent BNY is the executor of the decedent's estate; petitioner Adrienne Marsh Lefkowitz is a residuary beneficiary of the estate. During its administration of the estate, BNY created a segregated interest-bearing estate account which is the subject of this proceeding ("the subject account"). At various times, BNY has transferred proposed distributions to Ms. Lefkowitz to this account. As of March 31, 2006, the balance in this account was $194,389.36, including $191,903.05 in principal and $2,486.31 in income (Bassett Affidavit, Exhibits 1, 3).

In or about August 2004, BNY commenced a proceeding to judicially settle its final account as executor of the decedent's estate. Therein, BNY has requested, in relevant part, that Ms. Lefkowitz be assessed with legal fees and costs incurred by the estate in the amount of: (1) $200,000.00 in the contested probate proceeding (Accounting Petition, ¶ 21-24); and (2) $60,000.00 in connection with several appeals in which the Appellate Division, Second Department assessed costs against her personally (id., ¶ 25-26). Ms. Lefkowitz has filed objections to the account, and a trial on her objections is anticipated.

By letter dated November 10, 2004, Ms. Lefkowitz demanded that BNY distribute the balance of the subject account to her. To date BNY has refused to do so.

As a result, Ms. Lefkowitz commenced this proceeding pursuant to SCPA 2102 (4) to compel BNY to pay her the funds in the subject account, plus interest at the rate of 9%. In sum, she alleges that BNY created the subject account for her benefit, and that it has no lawful basis to [*2]withhold distribution of the funds from her.

In its verified answer, BNY avers that it has properly retained the funds in the subject account because: (1) Ms. Lefkowitz is potentially indebted to the estate for attorney's fees which BNY incurred on behalf of the estate in various proceedings; and (2) the estate would be rendered insolvent with respect to principal if the subject account were distributed to Ms. Lefkowitz.

Ms. Lefkowitz now moves for summary judgment on her petition. In her affidavit in support of the motion, she repeats the allegations made in her verified petition. As to BNY's claim that it will seek attorney's fees from her based upon past orders or decrees, Ms. Lefkowitz claims that none of those orders or decrees preserved the issue of additional costs or attorney's fees (Lefkowitz Affidavit, ¶ 17). She disputes BNY's assertion that the decedent's estate is insolvent, stating that BNY holds more than $2,000,000.00 for this estate and the estate of Nicholas Marsh, the decedent's pre-deceased husband, and that BNY has made distributions from this estate in 2006.

BNY opposes Ms. Lefkowitz's motion and separately moves for summary judgment dismissing the petition based upon its affirmative defenses. In support of its motion and in opposition to Ms. Lefkowitz's motion, BNY has submitted the affirmation (with exhibits) of Deborah Yurchuk McCarthy, Esq. of McCarthy Fingar, LLP, BNY's counsel in this estate, and the affidavit (with exhibits) of Nancy H. Bassett, BNY's administration officer overseeing the decedent's estate. [Because the papers submitted by BNY on its motion and in opposition to Ms. Lefkowitz's motion are identical, the court will not separately summarize those papers.]

One of the exhibits attached to Ms. McCarthy's affirmation is an affidavit of legal services prepared by Frank W. Streng, Esq., a member of McCarthy Fingar, in connection with the related accounting proceeding. Therein, he, inter alia, sets forth BNY's reasoning for its position that the court should direct Ms. Lefkowitz to pay BNY's attorney's fees incurred in the contested probate proceeding (McCarthy Affirmation, Exhibit 5).

In her affidavit, Ms. Bassett refers to information contained in BNY's supplemental account filed with the court to establish that the estate would be rendered nearly insolvent as to principal if the balance of the subject account is deducted from the principal on hand. That supplemental accounting shows that as of March 1, 2006, the unpaid administration expenses attributable to principal amount to $467,729.29. As of the same date, the principal on hand, excluding the value of tangible personal property, was $668,584.36. Deducting the balance of the subject account from the principal on hand leaves a total of $476,681.31. In her affirmation, Ms. McCarthy states McCarthy Fingar's billing records indicate that the legal fees for the work-in-process exceed $45,000.00. Thus, without the balance of the subject account, the estate would be insolvent with respect to principal by the time McCarthy Fingar's next bill comes due (McCarthy Affirmation, ¶ 15).

Ms. Lefkowitz's affidavit in opposition to BNY's motion contains essentially the same arguments and statements made in support of her own motion for summary judgment. She asserts that BNY has no right to withhold distribution of the subject account to her because she owed no pre-existing debt to the decedent and because any potential claim does not arise out of a breach of fiduciary duty by her to the estate. She further states that there is no basis to assess BNY's attorney's fees incurred in the contested probate or on prior appeals against her personally. [To the extent that Ms. Lefkowitz' affidavit in opposition to BNY's motion merely [*3]repeats what was said in her affidavit in support of her own motion, the court need not repeat those arguments.]

It is well settled that a party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law by offering evidence in admissible form which demonstrates the absence of any material issues of fact (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Zuckerman v City of New York, 49 NY2d 557). If the moving party makes such a prima facie showing, the opposing party can defeat the motion by submitting evidence in admissible form which raises a material issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320; Zuckerman v City of New York, supra).

"Normally legacies are payable seven months after issuance of letters testamentary unless otherwise directed by the testator or required by the circumstances of the estate" (Matter of Usdan, 125 Misc 2d 494, 495 [citations omitted]). After such seven-month period, if a testamentary disposition is not paid upon demand, the person entitled to the disposition may commence a proceeding against the executor to compel payment fo the disposition (EPTL 11-1.5 [c]; see SCPA 2102 [4]; Matter of Grillo, NYLJ Nov. 13, 2002, at 24, col. 6). However, the court will not compel payment where the estate's assets are insufficient to cover the administrative costs or debts (see 5 Cox-Arenson-Medina, NY Civ Prac ¶ 2102.05 [4]). Similarly, under certain circumstances an executor may retain a disposition as a set off of a debt owed by the beneficiary to the decedent or the estate (see Matter of Voice, 38 Misc 2d 779; Matter of Grifenhagen, 168 Misc. 568).

Applying the foregoing to the facts of this case, the court rejects BNY's assertion that it is entitled to summary judgment dismissing the petition on the ground that Ms. Lefkowitz is potentially indebted to the estate. BNY's request in the related accounting proceeding that Ms. Lefkowitz be assessed with $200,000.00 in legal fees and costs incurred by the estate in the contested probate proceeding is improper. In a contested probate proceeding, the court may direct that an unsuccessful contestant pay, in whole or in part, the reasonable counsel fees of a successful proponent "where the court finds that the contest was brought in bad faith" (SCPA 2302 [3][a]). However, any such award for costs or allowances "must be fixed by the court and inserted in the decree or the order" (SCPA 2301 [2]), or "be reserved for supplemental decree to be entered after the time to appeal has expired or if an appeal be taken, after final determination of the appeal" (SCPA 2301 [5]). Thus, BNY should have requested that the court direct Ms. Lefkowitz to pay attorney's fees and costs incurred by it in the contested probate proceeding in that proceeding, not in the accounting proceeding 15 years later (cf. Matter of Ventura, 26 AD3d 334; Matter of Kolarik, 11 Misc 3d 1057 [A]; Matter of Behrendt, 111 Misc 2d 838).

Similarly, the court rejects BNY's contention that Ms. Lefkowitz is not entitled to distribution of the subject account because she is potentially indebted to the estate for attorney's fees allegedly incurred by BNY on various appeals (see SCPA 2302 [5]). Specifically, in her affirmations, Ms. McCarthy refers to two appeals: Matter of Marsh (236 AD2d 404) and Matter of Marsh (212 AD2d 792), in which the Appellate Division, Second Department essentially affirmed decrees of this court and imposed costs upon Ms. Lefkowitz personally.

In neither instance, however, did the Appellate Division determine that, pursuant to SCPA 2302 (5), BNY was entitled to an award of attorney's fees and other expenses incurred on appeal payable by Ms. Lefkowitz (cf., Matter of Karl, 266 AD2d 392, 393). While this court possessed the discretion to direct such an award, even absent such a determination by the [*4]Appellate Division (see Matter of Reimers, 264 NY 62), in such instances the application "for counsel fee and other expenses is an independent proceeding" (id. at 65; see Matter of Acker, 90 AD2d 848). At no point after either of the aforementioned appeals did BNY ever make an application to this court for counsel fees and/or other expenses incurred on appeal. Assuming, without deciding, that BNY may make such an application in the accounting proceeding, BNY's speculation that this court may exercise its discretion and determine that Ms. Lefkowitz must pay its reasonable attorney's fees (not necessarily what it requests) on one or both appeals, when almost 10 years has elapsed since the Appellate Division decided the most recent of those appeals, is insufficient to defeat Ms. Lefkowitz's application to compel payment of her legacy (see Matter of Ehmer, 272 AD2d 542, 543).

As set forth above, however, BNY has established a prima facie case that distributing the subject account to Ms. Lefkowitz would render the estate insolvent with respect to principal upon McCarthy Fingar rendering its next bill for legal services. Further, Ms. Lefkowitz's speculation that the estate would not be rendered insolvent by such a distribution because of the combined balance of the decedent's estate and the estate of her pre-deceased husband is insufficient to raise a triable issue of fact to defeat BNY's motion for summary judgment (see Matter of Sackler, 192 AD2d 536; Matter of Warren, 131 AD2d 681). Ms. Lefkowitz has presented no evidence to suggest that the decedent's estate is entitled to receive any portion of the funds currently being held by BNY in the husband's estate (Lefkowitz Affidavit in Opposition, Exhibit E). Similarly, her conjecture that BNY's attorney's fees are excessive or that it will be surcharged after trial in the accounting proceeding is insufficient to raise a triable issue of fact as to whether BNY should be allowed to retain the subject account to pay administration expenses.

Based upon the history of litigation between the interested parties involved in this estate (particularly BNY and Ms. Lefkowitz), the pending contested proceedings (i.e., the proceeding pursuant to SCPA 2103 and the accounting proceeding), which are in the discovery phase and anticipated to go to trial (and probably appeal), it is not unreasonable to conclude that Ms. Lefkowitz's pro rata share of the additional attorney's fees incurred by BNY will approach the total amount of the subject account. Since BNY is entitled to retain sufficient assets to pay the estate's administration expenses (see Matter of Froehlich, 129 Misc 2d 706, 710), the court concludes that BNY should not be compelled to pay the balance of the subject account to Ms. Lefkowitz. Rather, distribution of the balance of the subject account to Ms. Lefkowitz, after deduction, if any, of her pro rata share of the estate's unpaid administration expenses, should await the outcome of the trial in the related accounting proceeding.

Nevertheless, the court is mindful that BNY has not withheld distributions from the estate's other residuary beneficiaries. In fact, Ms. McCarthy acknowledges that it may have to seek return of a portion of distributions made to the other residuary beneficiaries. Because of the nature of the unpaid administration expenses (i.e., BNY's commissions and attorney's fees), the court directs that BNY shall not use the funds in the subject account for any purpose, except for distribution(s) to Ms. Lefkowitz, without prior court approval.

Ms. Lefkowitz's remaining contentions are without merit.

Accordingly, it is hereby

ORDERED that the petitioner's motion for summary judgment is denied; and it is [*5]further,

ORDERED that the Bank of New York's motion for summary judgment is granted and the petition is dismissed; and it is further,

ORDERED that BNY shall not use the funds in the subject account for any purpose, except for distribution(s) to Ms. Lefkowitz, without prior court approval.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.

The following papers were considered on this application: 1. The Petitioner's Notice of Motion for Summary Judgment, dated June 27, 2006, and all exhibits and papers submitted in support thereof;2. The Affirmation of Deborah Yurchuk McCarthy, Esq., in Opposition to Petitioner's Motion for Summary Judgment, dated July 12, 2006, and all exhibits and papers submitted in support thereof;3. The Affidavit of Nancy H. Bassett in Opposition to Petitioner's Motion for Summary Judgment, dated July 12, 2006, and all exhibits and papers submitted in support thereof;4. The Petitioner's Reply Affidavit, dated July 21, 2006;

5. The Bank of New York's Notice of Motion for Summary Judgment, dated July 18,

2006, and all exhibits and papers submitted in support thereof; 6. The Petitioner's Affidavit in Opposition to the Bank of New York's Motion for Summary Judgment, dated July 26, 2006, and all exhibits and papers submitted in support thereof;7. The Reply Affidavit of Nancy H. Bassett, dated August 1, 2006;8. The Reply Affirmation of Deborah Yurchuk McCarthy, Esq., dated August 1, 2006; and9. The Petitioner's Affidavit Seeking Expedited Resolution of Motions, dated August 3, 2006.

Dated: White Plains, NY

September, 2006

______________________________

HON. ANTHONY A. SCARPINO, JR.

Westchester County Surrogate [*6]

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