Matter of Rella

[*1] Matter of Rella 2006 NY Slip Op 52081(U) [13 Misc 3d 1231(A)] Decided on October 31, 2006 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 31, 2006
Sur Ct, Bronx County

In the Matter of the Estate of Grace T. Rella, Deceased.



536-P/97



Howard W. Rachlin, Esq., for Gilbert F. Rella and Marie Ann Sedacca, co-executors

Harry Amer, Esq., for Vincent Rella and Anthony Rella, objectants

Lee L. Holzman, J.

The following applications are pending in this accounting proceeding: 1) the executors' attorney seeks an order granting the payment of legal fees of $25,020 for services rendered from July 3, 2003 to January 17, 2006, plus disbursements of $130.13, and for permission to amend Schedule C of the amended accounting dated August 4, 2003 to reflect these payments; 2) the executors, Gilbert S. Rella and Marie Ann Sedacca, move pursuant to CPLR 3126 to strike the objections of Anthony Rella and Vincent Rella, based upon Anthony's failure to disclose information which allegedly this court ordered him to disclose, and seek to impose sanctions against Anthony pursuant to 22 NYCRR 130-1.1 for his behavior; and 3) the objectants move pursuant to CPLR 3124 for an order directing the production of documents and depositions of both executors. The co-executors and the objectants are four of the decedent's children.

The decedent died on April 15, 1997, and her estate has been plagued with litigation from its inception. The principal protagonists are her sons, Anthony and Gilbert. Anthony and the decedent's husband Angelo, who died in 1992, both had an interest in J.E.T. Ventures, Inc. (JET) and Gilbert and Angelo both had an interest in Coliseum Fuel Distributors, Inc. (Coliseum). The decedent acquired her interest in both JET and Coliseum from her husband's estate. In an SCPA 2103 proceeding, the executors seek a recovery against Anthony arising from the manner in which he operated JET and liquidated its assets. In this proceeding, the objectants seek to surcharge the executors for failing to account for the estate's 50% interest in Coliseum. Gilbert contends that the decedent gifted her interest in Coliseum to him. These issues were previously explored in both the probate proceeding and in a proceeding by Anthony, who had limited letters to pursue the claim against Gilbert, but the latter proceeding by Anthony was withdrawn without prejudice to the same issues being raised in the accounting proceeding. Numerous applications have been made in the various proceedings.

Counsel for the executors seeks a legal fee of $25,020 for services rendered in the accounting proceeding. Counsel states that a request for legal fees for services rendered in other proceedings will be the subject of a separate application. The affidavit of legal services reflects that most, if not all, of counsel's efforts were expended as a result of the objections filed to the account. SCPA 2307(1) provides that the executors, upon the judicial settlement of their account, will be allowed the reasonable and necessary expenses actually paid by them, including legal fees. Moreover, inasmuch as the executors are not acting as their own attorneys, they may pay counsel fees from estate assets without application to the court (SCPA 2111). However, there is a problem with fixing the legal compensation to be charged to the estate at this time. This is so because, until the issues [*2]in the accounting proceeding are tried, the court cannot determine whether the legal services rendered to the executors were in the defense of a proper account and, consequently, should be charged to the estate, or were rendered with respect to acts for which the executors should be surcharged. In the event that the executors are surcharged, the portion of the legal fee incurred for the defense of their improper acts must be paid ultimately by the fiduciary, and not by the estate (Matter of Newhoff, 107 AD2d 417, 423 [1985], lv. denied 66 NY2d 605 [1985], citing Matter of Hildreth, 274 App. Div. 611, aff'd 301 NY 705; Matter of McDowell, 202 App. Div. 568; Matter of Chiesa, 23 AD2d 562; see also Matter of Thron, 139 Misc 2d 1045 [1988]).

Here, as there has been no prima facie showing that the requested legal fee would be improper, the executors, in the exercise of their discretion, may pay the same from estate assets and reflect the payment in an amendment to their account. However, should the executors opt to make such payment at this time, they should realize that the court is not presently making a determination as to the reasonableness of the requested fee, or as to whether such fee or any portion thereof should be charged to the estate or to the executors, individually.

The executors' motion to strike the objections arises from depositions of Anthony that were conducted on January 16, 2004, May 15, 2005 and September 27, 2005. At his first deposition, Anthony took the position that he could not be more specific with respect to his "Coliseum objections" until both executors had been deposed. Gilbert was deposed prior to Anthony's second deposition. During Anthony's second deposition, he refused to answer any questions about JET, apparently taking the position that the executors had fully questioned him about these transactions in the SCPA 2103 proceeding.

The parties, purportedly to avoid unnecessary motions, requested a conference with the court to obtain guidelines with respect to whether Anthony had to answer any questions about JET. The court furnished such guidelines. Specifically, because Anthony appeared to contend the decedent lacked the capacity to make a gift of her Coliseum interest to Gilbert in November, 1996, the court stated that it was appropriate for the executors to inquire about any transactions between Anthony and the decedent during that period, including JET transactions. The conference and the court guidelines were, essentially, on an informal basis, as no party had made a motion, requested an on-the-record conference, or submitted an order based upon the guidelines. Unfortunately, Anthony's last deposition terminated when the parties were unable to agree upon the guidelines formulated by the court. Apparently, Anthony's counsel contended that Anthony was required to answer questions only about conversations with the decedent regarding JET, while the executors' attorney asserted that Anthony had to answer questions not only about conversations but also about any type of transaction between himself and the decedent involving JET.

The record does not support granting the executors' motion to strike the objections, as this would be tantamount to granting summary judgment in their favor. In the applications presently pending before the court, each side parsed statements made by the other, or recited events out of context, which has caused an obfuscation rather than a clarification of the issues. Assuming, arguendo, that Anthony's failure to follow the court's guidelines warranted striking his objections, this would not justify striking Vincent's objections. Moreover, the drastic remedy of striking the pleadings is not appropriate with respect to either of the objectants particularly where, as here, the executors failed to invoke the simple remedy of asking the court to direct Anthony to respond to the questions posed. Accordingly, the court finds no basis either to strike the objections or impose sanctions upon Anthony. In reaching this determination, the court is not ruling that Anthony was [*3]justified in refusing to answer the questions posed at his last deposition. To the contrary, in the event that the executors still desire to conduct a further deposition of Anthony, he shall answer all questions about his transactions with the decedent during the relevant time period, including oral or written communications with the decedent about JET.

The objectants' motion for an order directing the production of documents and the examination before trial of both executors remains to be determined. The objectants contend that they need the requested documents and depositions to ascertain the value of the decedent's interest in Coliseum and whether she should have received any distributions from that interest. The executors counter that the motion is another example of the objectants' dilatory tactics. They contend that in light of the fact that a note of issue and certificate of readiness was filed in this proceeding on March 8, 2005, the time to seek additional disclosure has long since expired.The objectants' prior motion to strike the note of issue and certificate of readiness was resolved by a stipulation providing that the note of issue would not be struck but that there would be a further deposition of Anthony followed by a deposition of the co-executor, Marie. The court rendered a decision and order on May 10, 2005, directing that the parties proceed in accordance with their agreement. As the objectants previously failed to request any relief with respect to either the production of documents now sought or a further examination of Gilbert, it is now too late to request further discovery with respect to those matters. Consequently, to the extent that the objectants' motion seeks the production of documents or a further examination of Gilbert, it is denied. Nontheless, as the executors previously consented to a deposition of Marie notwithstanding the filing of the note of issue and certificate of readiness, and they failed to set forth a valid basis to renege on this agreement, the branch of the objectants' motion seeking to depose Marie is granted.

The time has certainly come to conduct a hearing in each of the pending proceedings. The parties previously stipulated that the SCPA 2103 proceeding is to be tried first, and a pretrial conference in that proceeding is scheduled for November 13, 2006. Should the executors still seek a further deposition of Anthony in the accounting proceeding or should the objectants still seek to depose Marie, those depositions shall not constitute a basis for delaying the hearing in the SCPA 2103 proceeding.

Given the difficulty which the parties have had historically in arranging depositions, all further depositions shall be conducted in accordance with the procedures set forth below. All depositions shall be held at the court beginning at 10 a.m. on the date to be agreed upon by the parties or set by the court in the order to be settled. Any objections to questions posed shall be made known to court personnel at the time, and a referee will be designated to make rulings as necessary, but within the time constraints imposed by other court business. Unless the parties consent to Marie's deposition being conducted first, it shall be conducted last pursuant to the prior agreement of the parties. However, the executors shall not be heard to complain in the event that the objectants rely on Marie's deposition testimony in support of a particular objection notwithstanding that Anthony did not make reference thereto in his deposition for the obvious reason that his deposition was conducted first.

Once the deposition dates have been set, no adjournment of a deposition will be permitted without prior permission of the court for good cause shown. If the cause is medical in nature, an affidavit from the treating physician will be required. Relief for failure to attend the deposition will not be granted after the fact, unless there is credible proof that a medical condition arose on the date [*4]of the scheduled deposition which justified the failure to appear at the deposition.

Settle order.

SURROGATE