Matter of Cheng Ching Wang

[*1] Matter of Cheng Ching Wang 2010 NY Slip Op 50253(U) [26 Misc 3d 1225(A)] Decided on February 23, 2010 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 23, 2010
Sur Ct, Westchester County

In the Matter of the Petition of Betty Kheng Ngoh Phillips, Petitioner, Pursuant to SCPA 1809 to Determine the Validity and Enforceability of a Claim Against the Estate of Cheng Ching Wang, Deceased.



2006-2422/A



Andrew W. Heymann, Esq.

Solomon Blum Heymann & Stich LLP

Attorneys for Claimant, Betty Kheng Ngoh Phillips

40 Wall Street, 35th Floor

New York, NY 10005

Beth Weinman, Esq.

Leslie Gordon Fagan, Esq.

Paul, Weiss, Rifkind, Wharton & Garrision LLP

Attorneys for Executors, Kenneth Wang, Vera Wang Becker and Oded Aboodi

1285 Avenue of the Americas

New York, NY 10019-6064

Anthony A. Scarpino, Jr., S.

In this proceeding to determine the validity of a claim, petitioner Betty Kheng Ngoh Phillips (petitioner) moves for an order compelling respondents, Oded Aboodi (Oded), Kenneth Wang (Kenneth) and Vera Wang Becker (Vera) as the executors of the estate of Cheng Ching Wang (decedent) (collectively the respondents), to disclose documents and information (CPLR 3124). Petitioner seeks to compel discovery as follows: i) bank records, corporate documents and financial information related to An Cheng Group, Inc. (An Cheng), Newtrades Ltd. and King Investments Ltd.; ii) drafts and correspondence pertaining to a letter dated July 15, 2004; iii) documents listed on respondents' privilege log prepared by a non-party Josephine Donato; and iv) telephone records for a line maintained by decedent dedicated to petitioner. In addition, petitioner seeks an order striking reference to documents she maintains were withheld by respondents and produced following the completion of discovery.

Decedent died testate on September 14, 2006 survived by two children, Kenneth Wang and Vera Wang Becker. His wife, Florence, predeceased him on January 17, 2004. Decedent's will dated January 25, 2005 was admitted to probate and letters testamentary issued to Respondents. [*2]Under his will, decedent disposed of his estate to his children and grandchildren.

Petitioner resides in Singapore. Decedent was a businessman with offices in Singapore, Hong Kong and China. It is undisputed that each year decedent spent considerable time in Asia on business. Petitioner alleges that she and decedent maintained a domestic partnership for some thirty years. Her claim is that decedent orally agreed to establish funding sources (referred to as the "fund") for her benefit in consideration of her continued commitment to him. Decedent allegedly agreed to establish a fund for petitioner in an amount sufficient to provide her with an outright disbursement of $10 million, to be made during his lifetime, and $150,000 annually for her life. There is no written agreement. Petitioner maintains that decedent partially performed the agreement during his lifetime by making lump sum and annual payments to her from certain sources, in particular An Cheng. On May 11, 2007, petitioner served her claim upon the executors. Thereafter on August 2, 2007, respondents rejected the claim.

Respondents maintain that the claim is unenforceable on several grounds including the statute of frauds. In the event an agreement is found to exist, then respondents contend that petitioner waived any claim she had by executing a letter agreement dated July 15, 2004 (the July, 2004 letter). The July, 2004 letter from decedent, provides, in part, as follows: I have already adequately provided for you financially and there will be no further financial transfers from me to you. Please confirm that you waive any claim of any kind or nature against me, my family or estate . . . I would appreciate your signing the copy of this letter indicating your agreement to the foregoing.

Petitioner contends that she signed the letter under duress. She has sought the production of any drafts of the letter prepared by an attorney in order to ascertain decedent's intent. Respondents oppose the request on the ground of the attorney-client privilege.

Discovery of An Cheng documents

Petitioner believes that An Cheng was established by decedent to create a resource for her financial support. She requires information about the company to assist in establishing her claim. Respondents oppose the motion arguing that decedent did not own An Cheng, therefore as his executors they have no control over its books and records and no obligation to produce the same. However, following the filing of this motion, respondents produced information about An Cheng which they attached to their responsive papers. The documents, which includes correspondence from decedent, reveal that he transferred An Cheng's assets to petitioner.

Respondents report that after the motion was filed they conducted an inquiry about An Cheng. They allege that An Cheng was owned by decedent's sister, Elizabeth Chang (a/k/a Tee Chen Wang). Ms. Chang recently died domiciled in Canada. According to respondents, in 1998, Ms. Chang transferred ownership of An Cheng to a trust under which respondents Kenneth and Vera are the remainderpersons. The trustees, Richard Chen and Chung-Yen Wang, liquidated An Cheng in 2007. Respondents recently obtained documents from the trustees which reveal that in 2004 gifts totaling $4,000,000 were made by Ms. Chang to Kenneth and Vera. The documents also reveal that in 2006, additional gifts of trust assets were made to Kenneth and Vera equal to $1,550,000.

According to respondents, Ms. Chang appointed decedent her "attorney" and authorized him to borrow funds from An Cheng. Respondents turned over redacted records of An Cheng which reveal that during the years 2003, 2004 and 2005, decedent directed the transfer of nearly $3 million [*3]to petitioner. They received a claim dated November 6, 2009 from the former trustees of An Cheng for the amounts decedent transferred to petitioner.

Petitioner speculates that the trustees' claim for repayment of the "loans" is merely a strategic move by respondents to avoid having to produce documents related to the company and to prevent the trust assets from being included in decedent's estate. She maintains that such documents demonstrate that decedent, whose estate is in excess of $120 million, was for all intents and purposes the owner of An Cheng. Numerous documents have been produced which lend some support to petitioner's contentions.

Clearly, decedent utilized An Cheng assets for the purpose of transferring money to petitioner. Among the documents now produced are two letters, one dated February 16, 2005 and the other dated July 5, 2005. By the February, 2005 letter, decedent wrote to Mr. JH Cheng, U.S. Summit Company Ltd (one of decedent's companies), indicating his pleasure that Mr. Cheng received remittance of $2 million to the account of An Cheng Group and directed him to pay over $300,000 to petitioner. Thereafter, on July 5, 2005, decedent hand wrote a letter to the trustees instructing them to distribute money to petitioner, as follows: This is to confirm Richard's visit to Shanghai's J.W. Marriott Hotel and our discussion regarding to [sic] transfer U.S. dollars $1,000,000 to Betty [petitioner] as compensation for our relations of thirty years. Upon receipt of this letter, please transfer all $1,000,000 from the a/c of An Cheng Fund. Thank you for the arrange [sic] of transfer. Cheng Ching Wang C.C. Wang.

Below the foregoing letter, are the following handwritten notes: [t]elephone instruction from Mr. C.C. Wang on July 10, 2005 at 11:40 AM, the amount be increased to two million. Copy of bank draft and acknowledgment to be sent to Mr. Wang after Betty [petitioner] acknowledged receipt of the remittance.

Respondents are correct that they may not be compelled or sanctioned for failing to produce information which is not in their possession (Sagiv v Gamache, 26 AD3d 368 [2006]). However, the failure of respondents to produce information that is in their possession, or in the possession of someone under their control, will preclude them from offering any proof regarding such information at trial (Sagiv v Gamache).

At this time, it seems that respondents do not have an affirmative obligation to obtain information from An Cheng. The information concerning the funding and operation of An Cheng however appears central to a determination of petitioner's claim. Respondents have an obvious conflict as such information may not support their position. Under these circumstances, the court will entertain a proceeding, pursuant to SCPA 702 (10), by petitioner for the issuance of limited letters of administration to herself and a designee who resides in New York, to enable her to seek information about An Cheng in the appropriate jurisdiction.

Additionally, respondents are directed to produce any and all files they have in their possession, or in the possession of any person over whom they have control, which relates to An Cheng, Newtrades Ltd. and King Investments Ltd. Petitioner may reopen the examinations of respondents to inquire as to the circumstances related to the documents recently produced.

The July 15, 2004 letter [*4]

Respondents maintain that the attorney-client privilege protects from disclosure information concerning the preparation of the July, 2004 letter. The letter was prepared by an attorney, Ralph Lerner, Esq., who has submitted an affidavit stating that at the time he drafted it he believed he was representing the Wang family with regard to "the family's assets." Mr. Lerner did not obtain a retainer agreement for services related to the preparation of the July, 2004 letter.

It is not clear whether decedent, or respondents, requested that Mr. Lerner prepare the July, 2004 letter. Nor is the purpose of the letter clear if, as respondents argue, decedent had not obligated himself to support petitioner. Kenneth testified that he believed the letter contained his father's words, however he offers no basis for such speculation. He was uncertain who gave Mr. Lerner instructions, he did not know who saw drafts of the letter, or who typed the letter. Kenneth was also unable to recall whether he or his sister brought the letter to decedent's house in Southampton for presentation to petitioner. Kenneth did however acknowledge that his father was physically incapacitated in July, 2004. Decedent was recovering from a stroke and required a wheelchair to get around.

Respondents assert a variety of defenses to preclude production of drafts of the letter. They argue that the common interest privilege extends the attorney-client privilege to a third party, e.g., the executors, who shared an "interlocking relationship" with the client, e.g., decedent, in order to develop a joint litigation strategy. The asserted "common interest" here is the threat that petitioner might file a claim against decedent's estate.

The common interest rule protects against disclosure only those communications made in the course of an ongoing common enterprise and intended to further the enterprise (see United States v Schwimmer, 892 F.2d 237 [1989] ). To be applicable, it is necessary that there be actual litigation in progress (United States v Schwimmer). The rule does not apply here. Kenneth testified that he had no recollection who provided the instructions to Mr. Lerner. While Kenneth thought the letter expressed decedent's wishes, at his examination he suggested to petitioner's attorney that such information should be obtained from Mr. Lerner. Clearly, in July, 2004 there was no common enterprise among decedent and respondents.

Petitioner also argues that respondents should not be permitted to use the letter as a sword, e.g, defense to her claim, and at the same time shield the circumstances surrounding its preparation. The court agrees. Respondents seek to rely upon the letter as constituting a waiver by petitioner of her claim against decedent's estate. Yet, at the same time, respondents seek to withhold the underlying communications between decedent and/or themselves with the drafter. By asserting the privilege, respondents have deprived petitioner of information which may be vital to a determination of her rights. Based upon the foregoing, the court finds an implied waiver of the attorney-client privilege (see Matter of Kislak, 24 AD3d 258 [2005]; Matter of Puckett, 9 Misc 3d 1116[A] [2005]).

Accordingly, petitioner shall serve a subpoena upon Mr. Lerner for the production of any and all drafts of the agreement and related document(s) and may seek to examine him concerning such services (Matter of Kislak; Matter of Puckett).

Other open disclosure issues

With regard to the documents produced by respondents shortly after a deposition, petitioner may reopen the relevant examination(s) for purposes of conducting an inquiry as to the facts and circumstances surrounding such documents.

Concerning decedent's telephone records, respondents shall produce any such records they [*5]have in their possession, or in the possession of any person over whom they have control, which pertain to a telephone line(s) maintained by decedent dedicated to petitioner and identify the telephone company(ies) which issued such line(s).

Based upon the foregoing, the proceeding to determine the validity of a claim and related discovery is stayed pending the commencement of a proceeding by petitioner for the issuance of limited letters of administration. The return date of such proceeding shall also be the next return date for the proceeding to determine the validity of a claim. A final discovery order in the claim proceeding will be issued on such return date.

This decision constitutes the order of the court.

Dated: White Plains, NY

February, 2010

________________________________HON. ANTHONY A. SCARPINO, JR.

Westchester County Surrogate

To:Andrew W. Heymann, Esq. Solomon Blum Heymann & Stich LLP

Attorneys for Petitioner 40 Wall Street, 35th FloorNew York, NY 10005Beth Weinman, Esq.

Leslie Gordon Fagan, Esq. Paul, Weiss, Rifkind, Wharton & Garrision LLP

Attorneys for Respondents 1285 Avenue of the AmericasNew York, NY 10019-6064