Matter of Bennett

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[*1] Matter of Bennett 2009 NY Slip Op 52846(U) Decided on December 21, 2009 Sur Ct, Suffolk County Czygier, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 21, 2009
Sur Ct, Suffolk County

In the Matter of the Application of David White, for Limited Letters of Administration in the Estate of Howard E. Bennett a/k/a WARD BENNETT, Deceased.



2220 P 2004



Twomey Latham Shea Kelley

Dubin & Quartararo, LLP

By: Christopher Kelley

Attorneys for Petitioner

33 West Second Street

P. O. Box 9398

Riverhead, New York 11901

McNulty-Spiess, P.C.

By: James Spiess, Esq.

Attorney for Middleton

214 Roanoke Avenue

P. O. Box 757

Riverhead, New York 11901

Esseks Hefter & Angel, Esqs.

By: William W. Esseks

Attorneys for Sabin

108 East Main Street

P. O. Box 279

Riverhead, New York 11901

Farrell Fritz, P.C.

By: Ilene S. Cooper, Esq. Co-Counsel for Petitioner

1320 RXR Plaza, 13W

Uniondale, New York 11556

John M. Czygier, J.



Before the court is an application for limited letters by the ancillary administrator of captioned estate, a motion to dismiss the application and a motion to intervene. For the reasons set for herein the motions to intervene and to dismiss the petition for limited letters of administration are granted.

Background

Decedent died a domiciliary of the State of Florida on August 13, 2003. His will was admitted to probate in Florida on September 22, 2003, where Peter Bennett was appointed fiduciary, since the nominated fiduciary was not a relative or a Florida domiciliary. This court then appointed David White (petitioner) as ancillary executor on December 10, 2004. Subsequently, White commenced a proceeding pursuant to SCPA 2103 for the purpose of bringing certain realty sold by decedent's agent some time before his death back into the estate.

According to the pleadings in that 2103 proceeding, Robert Middleton "fraudulently transferred" to Andrew Sabin, pursuant to a 1997 power of attorney given to Middleton by decedent certain real property in East Hampton (some 26 acres). In 2002, said property was sold to Sabin by Middleton as attorney-in-fact for $2,000,000. At the same time, according to the papers before the court, the Peconic Land Trust was exploring the possibility of preserving the property and understood it to be for sale for $7,000,000 to $10,000,000. Reference is made in the pleadings to an investigation into whether Middleton received funds "under the table" from Sabin on the sale of the property. It is noted that Middleton also is a 20% beneficiary of subject decedent's estate,

Respondents' answers in the 2103 proceeding raised jurisdictional issues, which the court had asked the parties to brief. It appears that the Florida administration was closed and the fiduciary discharged on February 8, 2005, which was prior to the commencement of the discovery proceeding in April, 2005. According to petitioner, the Florida fiduciary's discharge was [*2]conditioned upon the ancillary executor being able to pursue his remedies in New York. After considering their papers, a decision was rendered by this court on October 12, 2005, which held the discovery proceeding in abeyance pending resolution of counsel's efforts to reopen proceedings in Florida, opining that there was no basis for an ancillary estate administration once the primary proceeding in decedent's original domicile was closed (citing Matter of Stern, 91 NY2d 591).

In the interim, an application to extend the expiring lis pendens from June 24, 2008 to June 24, 2011 was granted.

Arguments

Petitioner advises this court that he has pursued his remedies in Florida, but has been denied leave to reopen proceedings there by the probate court (September 4, 2007), as well as by the appellate court (May 7, 2008). He came here to file an original probate proceeding. Since original probate had been initiated and concluded in another jurisdiction, the court advised petitioner that it could not accept his petition for original probate in New York. He then filed a proceeding for limited letters of administration for the purpose of commencing another discovery proceeding. It is petitioner's contention that he and another estate beneficiary (Evangeline Peterson) specifically reserved their claims against Middleton in the settlement stipulation filed in Florida probate court resolving the issue of tax apportionment. According to petitioner, the language reserving his rights in the Florida settlement allows him to pursue his claims in New York concerning the East Hampton property.

An answer was filed by Middleton denying the claims, asserting that the verification on the petition is a nullity (3 months prior to date of petition), that a primary proceeding in Florida no longer exists, that any claim petitioner may have to the East Hampton property was extinguished by the discharge in Florida (February 9, 2005) and waived by the settlement agreement, and that Sabin is a necessary party to these proceedings. In amended pleadings, Middleton added an affirmative defense of frivolous conduct, arguing that petitioner is trying to obtain relief he has been denied in the proper venue.

Pending before the court herein are Middleton's motion to dismiss and Sabin's motion to intervene, which argues that there is still another proceeding before the court by the same parties for the same relief (the aforementioned 2103), that the issues [*3]raised herein are res judicata, and that the causes of action may not be maintained on grounds of release, petitioner having waived an accounting and agreed to discharge the Florida fiduciary. In short, Middleton claims that the only reason for the application for limited letters is to pursue a cause of action that is not viable.

Sabin moves to intervene as a necessary party; to wit, as the fee owner of the property in dispute (83 Old Stone Highway, East Hampton). He essentially contends that there would be no prejudice and it would conserve judicial resources to allow him to intervene and assert his defenses here rather than wait for a subsequent action. He also joins in the motion to dismiss, arguing that the actions undertaken by the courts in Florida have deprived this court of subject matter jurisdiction to either issue limited letters of administration or entertain the purported claim. He argues that, if, as petitioner claims, the sale to Sabin was the result of fraud or Middleton's breach of fiduciary duty, then the claims are choses in action for intangible personal property that arose with respect to conduct which occurred in Florida.

Petitioner opposes both motions as premature. He claims he is entitled to limited letters upon the discharged fiduciary's failure to pursue the New York assets on behalf of the estate and that the Florida decision specifically reserved petitioner's right to do so. It is his contention that movants seek resolution of the ultimate issues before he is allowed to obtain limited letters. He argues that the only issue before the court is the petitioner's eligibility to serve (citing Estate of Gourary, 7/20/2009 NYLJ 30 (col. 4); Estate of Leistner, 12 Misc 3d 1153(A); Matter of Cooper-Novack, 6/10/98 NYLJ 28 (col. 5)). He also argues that the Florida court specifically held that David White and Evangeline Peterson waived any claims they had against Middleton, but that any claim against Middleton arising during decedent's lifetime could only be pursued by an estate fiduciary (Decision, Circuit Court of the State of Florida, Monroe County 9/4/2007).

Discussion

The more persuasive claim made by Middleton and Sabin concerns the existence of property in New York to be administered. This is not a case where there is realty to be administered in New York. Petitioner maintains that he has a cause of action against Middleton for fraud and breach of fiduciary duty. The acts complained of (the negotiations leading [*4]to sale of the property) by all accounts took place in Florida. Only if petitioner were successful on every aspect of his claim would there be New York assets for him to administer as part of decedent's estate.

Middleton and Sabin interpret the language in the Circuit Court decision differently than petitioner. In fact, they include additional language in their papers which appears to indicate that the court in Florida found that this petitioner waived any opportunity to maintain further proceedings in Florida, which would allow him to pursue ancillary proceedings in New York.

In short, the moving respondents maintain that this court lacks subject matter jurisdiction to issue limited letters to a New York domiciliary where no original probate proceeding and no New York assets exist.

The settlement agreement in the Florida probate proceeding, confirmed by order of the Probate Division of the Circuit Court of the 16th Judicial District of the State of Florida in and for Monroe County dated September 27, 2004, waived any claims and released Middleton with respect to, inter alia, gifts made to Middleton by decedent during his lifetime and all actions taken by Middleton through the exercise of the power of attorney. Paragraph 5 of the agreement, however, reserved certain rights, as follows:

Notwithstanding the foregoing, David and Evageline (sic) do not waive or release any claim or demand they may have against Middleton with regard to any element of Middleton's handling of the real estate transaction, distribution of the sale proceeds, use of the power of attorney to sell Ward's Hamptons Home or any other matter pertaining to the transaction or any of the parties to the transaction.

Approximately three months later, both David White and Evangeline Petersen signed waivers of accounting and consents to discharge the Florida estate representative. In their determination of the application to reopen the Florida probate proceeding, dated September 4, 2007, the Circuit Court of the 16th Judicial District of the State of Florida in and for Monroe County opined that

...while Petitioners David White and Evangeline Petersen may have attempted to preserve any claims they may have held against Middleton with regard to the real estate transaction and the sale of the Hamptons Home, any such claim was extinguished by the [*5]waiver of accounting and acknowledgment of sufficiency of payments, and release of the Personal Representative...

Referring to the ancillary proceeding commenced in this court, the Florida court went on to say:

...(the) claim of fraud against Middleton...has been clearly waived by the written waivers...Petitioner waived a final accounting, and with the waiver, has also given up the opportunity to object to the failure to include this alleged asset in the administration of this Florida Estate, regardless of whether the asset is obtained through ancillary jurisdiction in a New York court, or directly in the Florida court (emphasis added).

This decision was affirmed by the Third District Court of Appeal on May 7, 2008.

SCPA 2103 specifically empowers "a fiduciary" to bring such a proceeding, thus, petitioner would be unable to pursue his claims unless he was acting as a fiduciary on behalf of the estate. Whether the will in question could be admitted to original probate under SCPA 1605(2)(c) is arguable. Under SCPA 702(9), the inquiry on an application for limited letters is, as a rule, limited to whether there is a proper party who could bring the alleged claim (see, Matter of Logan, 3 NY2d 800; see, Estate of McKean, 9/2/98 NYLJ 23 (col. 6)). Under the unique circumstances before the court on this application, however, the court cannot consider the petitioner's eligibility in a vacuum.

Apparently, petitioner argues that any claims he may have released, he could only release such claims as an estate beneficiary, but, notwithstanding said release, should be allowed to pursue them as an estate fiduciary. Whether petitioner understood the effect of his waiver subsequent to the settlement agreement in the Florida proceeding or not, and in spite of all attempts to characterize his situation as a jurisdictional "Catch-22", this court is without authority to override the determination of the Circuit Court of the 16th Judicial District of the State of Florida in and for Monroe County and the Florida Third District Court of Appeals, which is essentially what he is asking us to do. Certainly, the doctrine of full faith and credit dictates that the judgment of the Florida courts cannot be disregarded by the New York courts, even if this court were so presumptuous as to find the Florida decisions erroneous (see Matter of Cassini, 12/15/2009 NYLJ, p. 25 (col. 3); citing Fauntleroy v. Lum, 210 US 230).

[*6]Conclusion

The Florida courts have interpreted the agreements executed in Florida, which are governed by Florida law, to deprive petitioner of any claim in this venue. If the claims were "extinguished" as the Florida Circuit Court held, petitioner's ability to pursue the stated claims does not exist, whether he seeks to do so as an individual or as a fiduciary, particularly since all those interested in decedent's estate on whose behalf he would presumably be bringing these claims signed the same agreements and waivers.

For the reasons set forth herein, it is

ORDERED THAT the motions to intervene and to dismiss the petition for limited letters of administration are granted; and it is further

ORDERED THAT ancillary letters testamentary previously issued to petitioner herein are revoked, upon the closing of the Florida probate proceeding and the discharge of the Personal Representative; and it is further

ORDERED THAT the miscellaneous proceeding brought in this court, pursuant to SCPA 2103, previously held in abeyance is placed on this court's suspense calendar and will be dismissed in six months without further order of the court, if the parties therein fail to restore such proceeding to this court's calendar.

December 21, 2009

___________________________

JOHN M. CZYGIER, JR., Surrogate [*7]

Surrogate's Court of New York.

Suffolk County

In the Matter of the Application of David White, for Limited Letters of

Administration in the Estate of Howard E. BENNETT a/k/a Ward Bennett, Deceased.

No. 2220 P 2004.

December 21, 2009.

Decision

Hon. John M. Czygier, Jr.

Dated: 12/21/09

Before the court is an application for limited letters by the ancillary administrator of captioned estate, a motion to dismiss the application and a motion to intervene. For the reasons set for herein the motions to intervene and to dismiss the petition for limited letters of administration are granted.

Background

Decedent died a domiciliary of the State of Florida on August 13, 2003. His will was admitted to probate in Florida on September 22, 2003, where Peter Bennett was appointed fiduciary, since the nominated fiduciary was not a relative or a Florida domiciliary. This court then appointed David White (petitioner) as ancillary executor on December 10, 2004. Subsequently, White commenced a proceeding pursuant to SCPA 2103 for the purpose of bringing certain realty sold by decedent's agent some time before his death back into the estate.

According to the pleadings in that 2103 proceeding, Robert [*8]Middleton "fraudulently transferred" to Andrew Sabin, pursuant to a 1997 power of attorney given to Middleton by decedent certain real property in East Hampton (some 26 acres). In 2002, said property was sold to Sabin by Middleton as attorney-in-fact for $2,000,000. At the same time, according to the papers before the court, the Peconic Land Trust was exploring the possibility of preserving the property and understood it to be for sale for $7,000,000 to $10,000,000. Reference is made in the pleadings to an investigation into whether Middleton received funds "under the table" from Sabin on the sale of the property. It is noted that Middleton also is a 20% beneficiary of subject decedent's estate,

Respondents' answers in the 2103 proceeding raised jurisdictional issues, which the court had asked the parties to brief. It appears that the Florida administration was closed and the fiduciary discharged on February 8, 2005, which was prior to the commencement of the discovery proceeding in April, 2005. According to petitioner, the Florida fiduciary's discharge was conditioned upon the ancillary executor being able to pursue his remedies in New York. After considering their papers, a decision was rendered by this court on October 12, 2005, which held the discovery proceeding in abeyance pending resolution of counsel's efforts to reopen proceedings in Florida, opining that there was no basis for an ancillary estate administration once the primary proceeding in decedent's original domicile was closed (citing Matter of Stern, 91 NY2d 591).

In the interim, an application to extend the expiring lis pendens from June 24, 2008 to June 24, 2011 was granted.

Arguments

Petitioner advises this court that he has pursued his remedies in Florida, but has been denied leave to reopen proceedings there by the probate court (September 4, 2007), as well as by the appellate court (May 7, 2008). He came here to file an original probate proceeding. Since original probate had been initiated and concluded in another jurisdiction, the court advised petitioner that it could not accept his petition for original probate in New York. He then filed a proceeding for limited letters of administration for the purpose of commencing another discovery proceeding. It is petitioner's contention that he and another estate beneficiary (Evangeline Peterson) specifically reserved their claims against Middleton in the settlement stipulation filed in Florida probate court resolving the issue of tax apportionment. According to petitioner, the language reserving his rights in the Florida settlement allows him to pursue his claims in New York concerning the East Hampton property. [*9]

An answer was filed by Middleton denying the claims, asserting that the verification on the petition is a nullity (3 months prior to date of petition), that a primary proceeding in Florida no longer exists, that any claim petitioner may have to the East Hampton property was extinguished by the discharge in Florida (February 9, 2005) and waived by the settlement agreement, and that Sabin is a necessary party to these proceedings. In amended pleadings, Middleton added an affirmative defense of frivolous conduct, arguing that petitioner is trying to obtain relief he has been denied in the proper venue.

Pending before the court herein are Middleton's motion to dismiss and Sabin's motion to intervene, which argues that there is still another proceeding before the court by the same parties for the same relief (the aforementioned 2103), that the issues raised herein are res judicata, and that the causes of action may not be maintained on grounds of release, petitioner having waived an accounting and agreed to discharge the Florida fiduciary. In short, Middleton claims that the only reason for the application for limited letters is to pursue a cause of action that is not viable.

Sabin moves to intervene as a necessary party; to wit, as the fee owner of the property in dispute (83 Old Stone Highway, East Hampton). He essentially contends that there would be no prejudice and it would conserve judicial resources to allow him to intervene and assert his defenses here rather than wait for a subsequent action. He also joins in the motion to dismiss, arguing that the actions undertaken by the courts in Florida have deprived this court of subject matter jurisdiction to either issue limited letters of administration or entertain the purported claim. He argues that, if, as petitioner claims, the sale to Sabin was the result of fraud or Middleton's breach of fiduciary duty, then the claims are choses in action for intangible personal property that arose with respect to conduct which occurred in Florida.

Petitioner opposes both motions as premature. He claims he is entitled to limited letters upon the discharged fiduciary's failure to pursue the New York assets on'behalf of the estate and that the Florida decision specifically reserved petitioner's right to do so. It is his contention that movants seek resolution of the ultimate issues before he is allowed to obtain limited letters. He argues that the only issue before the court is the petitioner's eligibility to serve (citing Estate of Gourary, 7/20/2009 NYLJ 30 (col. 4); Estate of Leistner, 12 Misc 3d 1153(A); Matter of Cooper-Novack, 6/10/98 NYLJ 28 (col. 5)). He also argues that the Florida court specifically held that David [*10]White and Evangeline Peterson waived any claims they had against Middleton, but that any claim against Middleton arising during decedent's lifetime could only be pursued by an estate fiduciary (Decision, Circuit Court of the State of Florida, Monroe County 9/4/2007).

Discussion

The more persuasive claim made by Middleton and Sabin concerns the existence of property in New York to be administered. This is not a case where there is realty to be administered in New York. Petitioner maintains that he has a cause of action against Middleton for fraud and breach of fiduciary duty. The acts complained of (the negotiations leading to sale of the property) by all accounts took place in Florida. Only if petitioner were successful on every aspect of his claim would there be New York assets for him to administer as part of decedent's estate.

Middleton and Sabin interpret the language in the Circuit Court decision differently than petitioner. In fact, they include additional language in their papers which appears to indicate that the court in Florida found that this petitioner waived any opportunity to maintain further proceedings in Florida, which would allow him to pursue ancillary proceedings in New York.

In short, the moving respondents maintain that this court lacks subject matter jurisdiction to issue limited letters to a New York domiciliary where no original probate proceeding and no New York assets exist.

The settlement agreement in the Florida probate proceeding, confirmed by order of the Probate Division of the Circuit Court of the 16th Judicial District of the State of Florida in and for Monroe County dated September 27, 2004, waived any claims and released Middleton with respect to, inter alia, gifts made to Middleton by decedent during his lifetime and all actions taken by Middleton through the exercise of the power of attorney. Paragraph 5 of the agreement, however, reserved certain rights, as follows:

Notwithstanding the foregoing, David and Evageline (sic) do not waive or release any claim or demand they may have against Middleton with regard to any element of Middleton's handling of the real estate transaction, distribution of the sale proceeds, use of the power of attorney to sell Ward's Hamptons Home or any other matter pertaining to the transaction or any of the parties to the transaction.

Approximately three months later, both David White and Evangeline Petersen signed waivers of accounting and consents to discharge the Florida estate representative. In their determination of the [*11]application to reopen the Florida probate proceeding, dated September 4, 2007, the Circuit Court of the 16th Judicial District of the State of Florida in and for Monroe County opined that

...while Petitioners David White and Evangeline Petersen may have attempted to preserve any claims they may have held against Middleton with regard to the real estate transaction and the sale of the Hamptons Home, any such claim was extinguished by the waiver of accounting and acknowledgment of sufficiency of payments, and release of the Personal Representative...

Referring to the ancillary proceeding commenced in this court, the Florida court went on to say:

... (the) claim of fraud against Middleton...has been clearly waived by the written waivers...Petitioner waived a final accounting, and with the waiver, has also given up the opportunity to object to the failure to include this alleged asset in the administration of this Florida Estate, regardless of whether the asset is obtained through ancillary jurisdiction in a New York court, or directly in the Florida court (emphasis added).

This decision was affirmed by the Third District Court of Appeal on May 7, 2008.

SCPA 2103 specifically empowers "a fiduciary" to bring such a proceeding, thus, petitioner would be unable to pursue his claims unless he was acting as a fiduciary on behalf of the estate. Whether the will in question could be admitted to original probate under SCPA 1605(2) (c) is arguable. Under SCPA 702(9), the inquiry on an application for limited letters is, as a rule, limited to whether there is a proper party who could bring the alleged claim (see, Matter of Logan, 3 NY2d 800; see, Estate of McKean, 9/2/98 NYLJ 23 (col. 6)). Under the unique circumstances before the court on this application, however, the court cannot consider the petitioner's eligibility in a vacuum.

Apparently, petitioner argues that any claims he may have released, he could only release such claims as an estate beneficiary, but, notwithstanding said release, should be allowed to pursue them as an estate fiduciary. Whether petitioner understood the effect of his waiver subsequent to the settlement agreement in the Florida proceeding or not, and in spite of all attempts to characterize his situation as a jurisdictional "Catch-22", this court is without authority to override the determination of the Circuit Court of the 16th Judicial District of the State of Florida in and for Monroe County and the Florida Third District Court of Appeals, which is essentially what he is asking us to do. Certainly, the doctrine of full faith and credit [*12]dictates that the judgment of the Florida courts cannot be disregarded by the New York courts, even if this court were so presumptuous as to find the Florida decisions erroneous (see Matter of Cassini, 12/15/2009 NYLJ, p. 25 (col. 3); citing Fauntleroy v. Lum, 210 US 230).

Conclusion

The Florida courts have interpreted the agreements executed in Florida, which are governed by Florida law, to deprive petitioner of any claim in this venue. If the claims were "extinguished" as the Florida Circuit Court held, petitioner's ability to pursue the stated claims does not exist, whether he seeks to do so as an individual or as a fiduciary, particularly since all those interested in decedent's estate on whose behalf he would presumably be bringing these claims signed the same agreements and waivers.

For the reasons set forth herein, it is

ORDERED THAT the motions to intervene and to dismiss the petition for limited letters of administration are granted; and it is further

ORDERED THAT ancillary letters testamentary previously issued to petitioner herein are revoked, upon the closing of the Florida probate proceeding and the discharge of the Personal Representative; and it is further

ORDERED THAT the miscellaneous proceeding brought in this court, pursuant to SCPA 2103, previously held in abeyance is placed on this court's suspense calendar and will be dismissed in six months without further order of the court, if the parties therein fail to restore such proceeding to this court's calendar.



JOHN M. CZYGIER, JR., Surrogate

NCAS

In re Bennett