Matter of Rand

[*1] Matter of Rand 2012 NY Slip Op 51224(U) Decided on July 5, 2012 Sur Ct, Bronx County Holzman, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 5, 2012
Sur Ct, Bronx County

Estate of Maiken Rand, Deceased



2011-1314



Reddy, Levy & Ziffer, P.C., (Jay H. Ziffer, Esq., of counsel) for Bonnie Gould, Public Administrator, Bronx County, petitioner

Erik Veski, pro se, respondent

Loeb & Loeb, LLP, (Helen Gavaris, Esq., of counsel) for Bank of America, N.A.

Laura Werner, Esq., Assistant Attorney General for Eric T. Schneiderman, Attorney General

Lee L. Holzman, J.

In this estate, pending before the court are a probate proceeding and a separate proceeding by the Public Administrator seeking to disqualify the nominated executor and the issuance of letters of temporary administration to herself. On the last adjourned date all of the interested parties agreed that the petition by the Public Administrator also would be deemed a motion for summary judgment. The nominated executor, a disbarred attorney who is proceeding pro se on the eligibility issue, opposes the disqualification motion and was afforded additional time to submit additional papers; however, that time has now expired without any additional papers being filed.

The propounded instrument dated July 10, 1996 nominates two executors, one of whom is a banking institution that renounced, leaving only the nominated executor who is the subject of the disqualification motion, without any nominated successor executors. The instrument provides for the payment of legacies to three named cousins or their issue and three charities, the payment of the proceeds of the sale of the decedent's house to three Estonian charities and the payment of the residuary estate to a revocable inter vivos trust dated May 23, 1996. The trustees of the May 23, 1996 trust were the decedent and the same banking institution that renounced in the probate proceeding. That trust directs the creation of a separate trust with a specified sum for the payment of a fixed sum of income to a "devoted companion" of the decedent who is under a disability and for whom a guardian ad litem was appointed. A separate guardian ad litem was appointed for the decedent's unknown distributees.

In his underlying probate petition the nominated executor also seeks a declaration both that the decedent revoked the trust and the lifetime income beneficiary under the trust is not the decedent's spouse. Although it appears that these branches of the probate proceeding are also contested, they are not the subject of the instant motion. [*2]

The Public Administrator, the banking institution as trustee, and the Attorney General of the State of New York all oppose so much of the probate petition as seeks the appointment of the nominated executor. The Public Administrator also requests the issuance of letters of temporary administration. In support of her motion the Public Administrator notes that the nominated executor was suspended from the practice of law for three years and directed to pay $427,625.07 in restitution after being found guilty of professional misconduct and a violation of former Disciplinary Rule 1-102 (a) (4) for conduct involving dishonesty, fraud, deceit or misrepresentation (see Matter of Veski, 29 AD3d 250 [2006]). Thereafter, the nominated executor was disbarred for wilfully engaging in the unauthorized practice of law in violation of that order of suspension, upon his default (see Matter of Veski, 42 AD3d 122 [2007]). The banking institution as trustee makes the same argument, adding that in his affidavits in support of the petition for probate and for other relief, the nominated executor never advised the court that he was disbarred and concealed the reason why he no longer is admitted to practice law.

In opposition to the Public Administrator's motion and application for temporary letters, the nominated executor asserts he is honest and trustworthy with good standing in the same Estonian community in which the decedent was involved, and he disputes the findings made by the Appellate Division, First Department in suspending and then disbarring him from the practice of law. He then requests that, in lieu of the appointment of the Public Administrator, the court appoint a residuary beneficiary to serve with him as executor or to act as sole fiduciary, if necessary.

Generally, a testator enjoys the right to determine who is most suitable to settle his affairs and execute the provisions of the will, and a testator's solemn selection should be nullified only when statutory grounds for disqualification are clearly established (see Matter of Duke, 87 NY2d 465, 473 [1996]; Matter of Leland, 219 NY 387 [1916]; Matter of Gottlieb, 75 AD3d 99 [2010], lv denied 16 NY3d 706 [2011]). With certain exceptions, pursuant to SCPA 707 letters testamentary may issue to a natural person or a person authorized by law to be a fiduciary; however, the exceptions bar the issuance of letters testamentary to one who does not possess the qualifications required of a fiduciary by reason of, inter alia, substance abuse, dishonesty, improvidence, want of understanding or who is otherwise unfit for the execution of the office (see SCPA 707 [1] [e]; see also Matter of Gottlieb, 75 AD3d at 107). In order for a nominated fiduciary's improvidence to preclude appointment, it must be demonstrated that the habits of mind and conduct of the fiduciary have become such a part of his character as to " render him generally, and under all ordinary circumstances, unfit for the trust or employment in question'" (Matter of Gottlieb, 75 AD3d at 107, quoting Matter of Flood, 236 NY 408 [1923]). For dishonesty to warrant disqualification, "[t]he dishonesty contemplated by the statute must be taken to mean dishonesty in money matters from which a reasonable apprehension may be entertained that the funds of the estate would not be safe in the hands of the executor" (Matter of Gottlieb, 75 AD3d at 107; quoting Matter of Latham, 145 App Div 849 [1911]; see also Matter of Krom, 86 AD2d 689, 690 [1982], appeal dismissed, 56 NY2d 505 [1982], citing Matter of Flood, 236 NY at 408).

Here, although not convicted of a felony, the nominated executor was suspended in a proceeding commenced by a collateral estoppel petition based on a separate jury verdict and judgment entered against him in a fraud action brought by two of his former clients (see Matter of Veski, 29 AD3d at 251). Among the findings of the jury were that the nominated executor made false representations to induce the clients to loan him $222,964.29 for a real estate venture, the [*3]representations were intended to deceive the clients and the clients justifiably relied on the misrepresentations in lending him the money (see id.). After being suspended for three years and being directed to make monetary restitution to the clients of $427,625.07, the amount of the judgment plus interest, just over eight months later the nominated executor was found guilty of engaging in the unauthorized practice of law by holding himself out as an attorney, and to have misused his attorney escrow account while under suspension (see Matter of Veski, 42 AD3d at 124).

Based on the evidence presented, the court finds that the Public Administrator met the burden of establishing the dishonesty of the nominated executor in money matters, from which a reasonable inference might be drawn that the funds of the estate would not be safe in his hands and, therefore, pursuant to SCPA 707 (1) (e), he is disqualified from serving as a fiduciary (see SCPA 707 [1] [e]; Matter of Pullman, 89 AD2d 608 [1982]; see also Matter of Flood, 236 NY at 408; Matter of McNair, 16 Misc 3d 1102 [A], 2007 NY Slip Op 51223 [U]). The same evidence is also sufficient to support a finding of improvidence sufficient to preclude appointment (see SCPA 707 [1] [e]; see also Matter of Flood, 236 NY at 408; Matter of Gottlieb, 75 AD3d at 107). The attempt by the nominated executor to collaterally attack the findings of the Appellate Division, First Department, made in connection with his suspension and disbarment, must be rejected (see e.g. Pollack v Barton, 17 AD2d 802 [1962], affd 13 NY2d 658 [1963]). Furthermore, under these circumstances, he clearly does not have the right to nominate anyone to serve as a fiduciary with him or in his place.

Accordingly, the motion of the Public Administrator to disqualify the nominated executor from serving as fiduciary is granted and, in the absence of any other opposition, her petition for letters of temporary administration is also granted. The Public Administrator shall settle a copy of this decision and an order on all parties who appeared in both proceedings. The revocation of the trust issue and other issues raised in the pending probate proceeding are adjourned without date, to be restored to the calendar upon two weeks' written notice to the court and all parties who appeared in the proceedings.

Settle order.

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SURROGATE