Matter of JonesAnnotate this Case
Decided on March 31, 2011
Supreme Court, Kings County
In the Matter of the Final Accounting of Ray A. Jones, and Elaine Lantigua as Co-Guardians of the Person and Property Management of Roy W. Lantigua, Jr., An Incapacitated Person
For the petitioner, movant
Ray Alfred Jones, Esq. Pro se
1143 Dean Street
Brooklyn, New York 11216
For Cross Movant
Kathryn O. Greenberg Esq.
By: Francine Vlantes, Esq.
135 W. 95th Street No.2
New York, New York 10025
(201) 747-8009, (646) 755-8339
Betsy Barros, J.
Presently before the court are: 1. A motion by the former co- property guardian /co- trustee Ray Jones, Esq.(hereinafter movant)[FN1] for settlement of the final account, award of guardianship commissions and counsel fees; 2. Movant's application for trustee commissions, extraordinary commissions, and/or legal fees for the time and effort he expended in overseeing extensive home renovations; and 3. A cross-motion by successor co-property guardian/co-trustee Kathryn O. Greenberg (hereinafter cross-movant ) for a surcharge against movant. For purposes of this decision the motions and cross-motion are consolidated.
Movant is denied commissions as co-trustee and co-property guardian and is denied legal fees and any extraordinary commissions for oversight of the renovations of his ward's real property and shall be surcharged.
This matter was first assigned to the Honorable Leonard Scholnick, then to the Honorable Michael Pesce, and in 2007 to this Court.
To fully understand this Court's decision requires a lengthy exploration not only of the movant's various defalcations during his five year tenure in this matter, but also of his abuse of his various fiduciary roles in the related case of In re the Conservatorship of Mary Dick, Sup Ct, Kings County, Index No. 99008/91 (hereinafter referred to as the Mary D. Conservatorship).
PROCEDURAL HISTORY AND FACTS
The Guardianship Petition
The instant guardianship was commenced in 1999 by Elaine DeJesus (hereinafter referred to as "the mother" or as "Elaine"), mother and natural guardian of then seven (7) year old Roy W. Lantigua Jr. (hereinafter referred to as Roy). The mother was twenty-five (25) years old, had a three (3) year old son in addition to Roy, and was estranged from her husband. She petitioned to be Roy's personal and property guardian and to be trustee of his Supplemental Needs Trust.[FN2]
In 1999, Roy had received a lump sum net settlement of $684,700.00 on his wrongful life action. Roy was born with devastating bodily deformities. He had no arms, hands, or fingers. His legs wereshortened; he lacked a toe; his feet were clubbed. His torso was stunted and compromised. Attempts to fit Roy with prosthetic limbs had failed. At age seven (7) he weighed only thirty (30) pounds and had been hospitalized four (4) times.
Roy uses his shoulders to operate a specially equipped wheelchair, without which he must drag himself along the floor in order to get about. To obtain maximum independence, Roy needs surroundings that require specialized alterations tailored to his unique physical limitations and to his dependence on his wheelchair.
Roy's cognitive abilities are fully intact. He is able to speak, read, and has normal intelligence. He is personable, charming, well spoken, and displays remarkable fortitude and grace in coping with and overcoming his physical disabilities. For example, Roy has developed [*2]remarkable dexterity in his feet, frequently using them for tasks typically performed with one's hands, such as operating a computer.
The court entertaining the wrongful life case directed a guardianship proceeding to protect Roy's estate.[FN3]
In the petition, the mother outlined her plan to preserve Roy's medicaid and his SSI, and to eventually buy a home in Nassau County close to Roy's School, the Henry Viscardi School. The school is equipped with specialized handicapped kitchens, and devices and accouterments to provide training in independent living. (See verified petition of Elaine Lantigua a/k/a Elaine DeJesus dated January 26, 1999 at P 3.)[FN4]
The guardianship court, pursuant to M.H.L. 81.09, appointed movant, Ray Jones, Esq., as the court evaluator to investigate and report to the court.
The Guardianship Hearing
On February 10, 1999, the court conducted the guardianship hearing and the mother testified that her immediate plan was to rent an apartment and to acquire a handicap-accessible van. She outlined a very simple basic plan. She was not yet ready for the responsibilities of home ownership she decided, but planned to eventually have a home near Roy's school so as to reduce his two-hour daily commute and to become more active at the school.( Transcript dated February 10, 1999 P 11 L 7 -14.) The mother's understanding of Roy's infant compromise award was likewise simple and basic. At one point she guessed he was to receive $10,000.00.
Movant, as court evaluator, suggested that the mother would benefit from the appointment of someone to assist her to make sure all her filings were in order. (Transcript dated February 10, 1999, P 20 L 12-17.) She agreed to the appointment of a co-property guardian.
(Transcript dated February 10, 1999, P. 22 L. 20 through P 23 L. 15.)
The court appointed the mother's guardianship attorney, Mr. CharlesRobert, Esq., as co-property guardian and co-trustee and stated that in the event that Mr. Robert, Esq. declined the appointment, Mr. Jones, Esq., the court evaluator, was to be appointed .[FN5] Mr. Robert, Esq. [*3]declined the appointment and in the order and judgment dated April 8, 1999, the court appointed the movant and the mother as co-property guardians/co-trustees; the mother was appointed personal needs guardian. The co-property guardians/co-trustees filed the ordered bond of $690,000.00 and obtained their commission on May 25, 1999.
PURCHASE OF 1079 STERLING PLACE
OnDecember 6, 1999, movant, in his capacity as co-property guardian/trustee, bid on a house located at 1079 Sterling Place, Brooklyn, New York (hereinafter referred to as "the house"). The house was owned by the estate of Mary Dicks and was sold by her conservator and nephew, Henry Kelly, pursuant to a court auction. At the time of the auction movant had held multiplefiduciary relationships in the Mary D. Conservatorship, as well as three fiduciary relationships in the instant matter.
Movant served as the court appointed guardian ad litem [FN6]in the Mary D. Conservatorship. As guardian ad litem movant was privy to the details his ward's estate. He reported that his ward had been removed from her house because it was uninhabitable due to years of debris and garbage accumulation. [FN7] Some eight (8) years after movant's appointment as guardian ad litem, movant as attorney for Henry Kelly, filed an order to show cause to sell said house. On November 4, 1999, the court signed movant's order to show cause. The order to show cause had annexed to it an original contract of sale between Mr. Kelly and one Eziekiel Barnett. The contract price was $25,000.00 andmovant was named as Mr. Kelly's closing attorney and escrow agent .
It was at this juncture that the movant embarked on the course of conduct, the hallmark of which was to promote his self interest at the direct expense of the people he was entrusted to protect. Unbeknownst to the Mary D. ConservatorshipCourt, but abundantly clear to this Court now, Eziekiel Barnett, a contractor, is and was, a neighbor and business associate of the movant/seller's attorney.[FN8] Nowhere in the request to sell the house is the relationship ever disclosed; there is no record that Mr. Kelly was informed of the conflict of interest or that Mr. [*4]Kelly waived the conflict of interest on behalf of his ward upon full disclosure.[FN9]
As guardian ad litem movant had attested that Ms Dick's estate consisted of a house as well as $16,000.00 in liquid assets. As conservator, Mr. Kelly had never paid any court ordered fees and had not filed any mandated accountings. In support of the sale, movant explained away Conservator Kelly's delinquency by affirming that Ms. Dick had no liquid assets. In effect, movant rehabilitated his client as a conservator to allow the house to be sold to his business associate Eziekiel Barnett. Said $16,000.00 has remained unaccounted for to this day.[FN10] At this point movant's representation of Mr. Kelly should have been barred by the glaring conflicts of interest.
The Court overseeing the sale of the house refused to approve the $25,000.00 contract and appointed an appraiser. The house appraised for $101,000.00.In the interim, movant submitted a second affirmation with an annexed contract for $75,000.00. The prospectivepurchasers were himself as co-guardian/co-trustee and Roy's mother in the same role. In contract, movant was the seller's attorney, as well as, the guardian/buyer and the attorney for the buyer.[FN11] Movant urged this second contract be approved forthwith, because the house was in deplorable condition, in danger of collapse, and needed to be sold before the ravages of winter set in. Movant attached numerous pictures to his affirmation which fully corroborated his position that the home was in deplorable condition.
At this point movant should have brought a separate petition, on Roy's behalf, in Roy's guardianship case, for approval of the purchase.[FN12] Said motion, if properly made, would have prompted judicial scrutiny of the purchase, consistent with Roy's best interests. [FN13] By circumventing the required procedures, movant avoided the judicial scrutiny designed to protect Roy. Since the only matter before the court was the Mary Dick application to sell property, judicial scrutiny was limited to Ms Dick's needs and whether her estate received the highest price— in direct conflict with Roy's interest which was to purchase the property at the lowest possible price, if to purchase at all. [*5]
At auction held on December 6, 1999, movant bidone hundred and eleven thousand dollars ($111,000) on behalf of Roy's estate — thirty six thousand dollars ($36,000.00) more than movant had just sworn the house was worth. At the auction movant bid as Roy's co-guardian/co-trustee and also appeared as the seller's attorney. Movant as Roy's co-guardian/co-trustee was high bidder and Mary Dick's estate was authorized to sell the house to movant and his co-guardian. On January 26, 2000, movant as co-property guardian closed on the narrow limestone row house.
On or about May 2000, again without benefit of court order, in violation of the order and judgment, movant contracted withnone other than his business associate, Eziekiel Barnett owner of Speedy Construction Co., to renovate the house for $121,800.00. Movant paid out $75,000.00 within five months of signing the contract [FN14]; and paid another $25,000.00 in February 2001. Additionally, many thousands were spent on roof repair; the installation of a chair lift and elevator, plumbing etc., all pursuant to contract with other contractors and all without priorapplication for court approval of said contracts.[FN15] Movant finally sought an order permitting renovations of the home, but not until July 2, 2001, some nineteen (19) months after the purchase of the home and some fourteen (14) months after the first payment to Mr. Barnett.
On or about April 2000, during the house renovations, movant rented from his neighbor, business associate, and hired contractor, Eziekiel Barnett, for his ward and his ward's family, a basement/ground floor apartment .[FN16]Again in violation of the order and judgment, which limited Roy s monthly rent contribution to $300.00, the $1,200.00 per month rent was paid exclusively from Roy's estate. (Order and judgment dated April 8, 1999 P 6.)
The mother complained repeatedly to movant about the apartment, to wit: it did not accommodate Roy's special needs, was infested with vermin, and had been flooded. She also complained that the renovations were taking too long, that she had been assured the renovations would be complete in three to four months, that movant was not sharing information with her, and that the movant was making excuses for Mr. Barnett for the construction delays After getting no response from movant, the mother on May 17, 2001 wrote to Justice Leonard Scholnick asking for help.[FN17] On or about July 2002, Roy and his family finally moved into the [*6]house.
During the construction, the house was cited for building code violations which were never cleared and remain on file to this day. The violations are for incomplete work on the boiler room, for work without a permit, and for open holes made in the first and second floor so as to accommodate an elevator. The elevator was supposed to allow Roy access to all the floors of his house. However, it was never fully installed and lacked adequate electrical service and remains inoperable.[FN18]
On or about September 1999 without benefit of prior court order, movant purchased a handicapped-equipped van for Roy for $39, 118.00. Roy's mother found it too difficult to drive and park the van. She dented it and received numerous parking tickets. Given her circumstances, location and the size of the vehicle, she should have had a parking spot. The movant, in response to said tickets, took possession of the van on or about September 2001, and garaged it until he was succeeded as co-guardian/co-trustee in 2004.While the van was garaged, Roy had no use of it. His estate, however, paid between $210.00 to $230.00 per month to warehouse it. Again, movant made expenditures without the express authorization of the court. The van was sold in 2005 by the successor co-guardians/trustees . [FN19]
LOSS OF ROY'S BENEFITS
Movant's accountings demonstrate that Roy lost his medicaid and SSI income.[FN20] The entire purpose of the supplemental needs trust was to insure that Roy would, despite his infant's compromise award, maintain maximum eligibility for all government entitlements. The movant improperly marshaled Roy's liquid assets into a guardianship account, not in the trust, and took title to the house as guardian rather than as trustee, effectively nullifying estate planning provided by the trust.[FN21] Roy's benefits were not restored until the successor co-property guardians/co-trustees filed a correction deed and properly settled and funded the trust.
On January 7, 2003, Roy was the subject of a New York Times feature article of the [*7]neediest cases, The Neediest Cases; From a Boy's Frail Body, An Intellect Bursts Out. It is incomprehensible that a child with $684,700.00 in 1999 and a professional co-guardian/co-trustee became so neglectedthat he was one of the hundred neediest cases featured by the New York Times in 2003. It is the intent of the infant's compromise order and the Special Needs Trust that Roy be well provided for — not dependent upon charitable donations.
MOVANT'S DECEPTIVE CONDUCT
The movant's behavior toward the Court was replete with deception.
One month after the mother wrote the Court complaining about the movant and the home renovations, the movant filed two orders to show cause seeking approval of large expenditures he had already made, to wit: home renovations, and purchase of a van.
In support of the applications, the movant affirmed that he had had experience in renovating four (4) Brownstone type row houses in the past ten (10) years, that he would be implementing a barrier-free floor plan and installing both a outdoor chair lift and inside elevator, and that he had solicited other bids. (See Ray Jones affirmation dated June 25, 2001.)
On July 19, 2000, movant retained the servicesofMichael Tubridy Contracting and Consulting Barrier Free Modifications, Alterations and Renovations located at 163 Beach 121st Street, Rockaway, New York 11694. On September 30, 2000, floor plans were allegedly provided to the movant with a projected cost of $190,000.00 to $230,000 to make the home handicapped-accessible. The ostensible purpose of this assessment was to accommodate Roy's special needs. But closer examination reveals that this assessment was mere window-dressing to assure that the movant secured an order permiting the renovations and wasnever intended to help Roy. The contract with Mr. Barnett does not incorporate any of the details contained in the assessment because the contract predates the assessement by several months; and moreimportantly the work thereunder was well underway before the assesment was even done. Moreover, the assessment even had it been implemented was of questionable utility. The assessment failed in many ways to address Roy's unique disabilities and youth. For example, it recommended such modifications as grab bars, of possible use to the elderly but of no use to Roy. Clearly this assessment was a waste of Roy's money and was meant to mislead the Court into thinking that movant was making the home handicapped-accessible for Roy.
At no time did movant reveal that he had a business relationship with Eziekiel Barnett [FN22], the contractor with whom he had already contracted or that his ward had been paying rent to Eziekiel Barnett.
The papers for approval of the purchase of the van were likewise vague and did not include the actual contract under which movant purchased the van.[FN23]
[*8]FIRST APPLICATION TO SURCHARGE MOVANT
On January 6, 2004, the Court signed an order to show cause filed by the mother seeking the following relief: (a) removal of Ray Jones as co-guardian for breach of fiduciary duty, (b) authorizing discovery to determine if movant should be surcharged for losses incurred by the IP.
On February 5, 2004, the motion was decided without a hearing. Following an extensive conference and on consent, an order and judgment dated April 6, 2004 was issued, appointing Kathryn O. Greenberg Esq. and Yvonne Gardener, Esq. as successor co-trustees/ co-property guardians to succeed movant and the mother. The successor co-trustees /co-property guardians were granted authority to complete the renovations for a sum of up to $10,000.00 anddirected to seek prior court approval for any additional home renovation expenditures. The movant and the mother were to serve their final accounting . Elaine Dejesus' stipend was reduced from $1,000.00 to $400.00 per month. [FN24]
DELAYS AND PROBLEMS WITH FINAL ACCOUNTING
On November 1, 2004, the Court issued an order permitting movant and mother to file their final accounting [FN25]. Said order appointed Gopaljee Jaiswal, Esq , who is also a CPA, as guardian ad litemto protect the interests of the IP in the final accounting proceeding. Gopaljee Jaiswal, Esq. , however, by letter dated February 12, 2007, informed the Court that he wished to be relieved of his appointment, because, despite repeated attempts in the years 2005, 2006 and 2007 he had been unable to obtain the receipts and back-up documentation to substantiate the final account. Mr. Jaiswal, Esq. stated that without the backup documentation, he would be unable to execute his responsibilities. Mr. Jaiswal, Esq. also complained that movant wanted to be present during the audit and that he (Mr. Jaiswal) would not be able to complete his task with the movant hovering over him.[FN26]
The Court by decision and order dated February 14, 2007, allowed Mr. Jaiswal, Esq. to [*9]resign his appointment as guardian ad litem and appointed Adam C. Wilner, Esq. as counsel to review the final account and to appear for and protect the interests of Roy in the final account proceeding. Despite glaring irregularities, the report on the final accounting recommends approval of the final account and commissions for the co-guardians and claims all backup documentation was provided. .[FN27]
On February 24, 2010, movant made a motion for co-trustee commissions, legal fees and expenses. On September 1, 2010, Kathryn O. Greenberg, Esq., filed a cross-motion requesting sanctions and surcharge against the movant.
After many attempts to settle this matter, this matter was set down for a hearing.[FN28]
The hearing lasted one day and only the cross-movant called witnesses.The bond company did not appear at the hearing.
ROY L'S TESTIMONY
Roy gave compelling testimony. The movant never inquired about Roy's abilities or the training he received at the Henry Viscardi School.[FN29] The movant's modus operandi was to make the decisions and then present same to Roy's mother as a fait accompli.
Roy had been led to believe that his home would be renovated to accommodate his special needs. However, instead of having a handicapped-accessible home, he now has a home in which he cannot function independently.
The lift to bring his heavy motorized wheelchair into the home has only worked three (3) months in the entire time Roy has lived in the home.[FN30] Without his special motorized wheelchair, equipped with a shoulder operated joy stick, Roy is a prisoner in his home, unable to come and go as he pleases, unable to bathe independently, to use the toilet independently, or to prepare his own meals.
Because Roy's heavy wheelchair must be left outside the house, stray cats urinate and spray its seat. Roy described the humiliation he endured because his wheelchair reeked of cat [*10]urine.In response to movant's cross examination designed to elicit testimony that Roy could not live independently, Roy described how he had been taught to perform activities of daily living at his school. For example, Roy was trained to use his feet to cook in a truly handicapped-accessible kitchen and used such a kitchen in his school-mate's home. The kitchen in his own home, in stark contrast, had none of the handicapped-friendly features he needed or had expected.[FN31]The van was used for only about a year and half, at which time it was taken away by the movant and garaged. The family used and enjoyed the van a great deal in the short time they had it, but once it was garaged, Roy was deprived of its use.
In sum, Roy's testimony demonstrated that the movant had squandered and wasted Roy's limited estate. His testimony also poignantly revealed movant's complete failure to discern and consider his ward's special needs and the impact this had on Roy's life.[FN32]
ELAINE DEJESUS' TESTIMONY
Elaine DeJesus' testimony was also credible. She was a young single parent caring for eight (8) year old Roy and his four(4) year old brother, Kenneth.Prior to the purchase of the home, she had lived with various relatives.
Subsequent to the guardianship, she began looking for a home, using a realtor movant had recommended. Her search was unsuccessful. Movant recommended that Roy's guardianship purchase 1079 Sterling Place.
The movant assured Elaine that the home could be renovated to accommodate Roy's handicaps and that for the few months needed to complete the renovations she and her family could rent an apartment located in a rooming house owned by Eziekiel Barnett.
Despite the home's horrible condition, she trusted the movant's promises that the renovations would be done properly and would accommodate Roy's special needs. In response to why she invariably agreed to so many of movants decisions, Elaine replied:
I felt like since the court is appointing him, it can't be bad. There is no way that someone appointed by the court .... is going to try to steer me in the wrong way or make my son's life miserable.
( Transcript dated October 1, 2010 P 91 L 19-23.)
Ms. Dejesus played no active role in the purchase of the house, the selection of the contractor, the renovation of the home, and the renting of the apartment. She was uninformed about the process for obtaining permits for the construction and for the elevator.
The apartment was infested with water bugs and mice. Despite her repeated complaints to the movant and her immaculate housekeeping, the infestations persisted. Mr.. Barnett, the contractor/landlord, had the premises exterminated only once.
The family lived in the premises for approximately two and half years. Elaine repeatedly complained to the movant who, to the best of her knowledge, did nothing to expedite the [*11]renovations. Movant always made excuses for Mr. Barnett: Mr. Barnett had other jobs, these things took time, and so on. Ms DeJesus finally wrote a letter to the judge presiding over the guardianship case about the length of time the renovations were takingand about the movant's disregard of her position as co-guardian/cotrustee.
A van was purchased and after about a year and a half, the movant took possession of it, because Elaine frequently received tickets due to her inability to find a parking spot. Once the van was garaged, movant effectively prevented the family from using it. The van had been a great source of pleasure and convenience for Roy and his family.
When the family finally moved into the home, the renovations were incomplete. There was no way to get from the first floor of the home to the backyard. After the family had lived in the house for approximately one year, a staircase to the backyard was finally installed. Roy, unable to use the backyard staircase, has no access to his backyard.[FN33]
The outdoor wheelchair lift in the front of the home hardly worked because flooding in the basement of the home had so weakened the foundation that it was impossible to properly anchor the pulley mechanism for the wheelchair lift. The indoor elevator has never worked.
Roy suffers in his home. He is a prisoner. He is dependant on others. Roy's home as renovated is devoid of any accommodation to his particular needs.
Movant appeared pro-se and provided limited information in response to questions posed by the Court. However, he refused to answer any questions under oath and refused to respond to cross-movant's questions, stating that his decision was based upon advice of counsel. He was cautioned that his refusal to answer questions would result in a negative inference being drawn therefrom.
Movant stated that prior to mentioning the house to the mother, he had planned to put a deal together to sell Mary Dick's house:
THE COURT: What was your relationship to that case after you where (sic) the GAL?
Mr. JONES: At some point Mr Kelly was contacted, I am not sure by who, for the purposes of seeing whether or not we could sell the house. The house had remained vacant. And he agreed, he hired counsel and that's how we put the deal together for the house." (Emphasis added)
THE COURT: So you were involved in what capacity?
Mr.. JONES: Again, putting the deal together to sell the house.
THE COURT: On behalf of?
Mr.. JONES: Just putting it together to see if the house would be sold. ( Transcript dated October 1, 2010 P 167 L 9-25.)
Movant failed to explain why he had submitted an affidavit that the house should be sold for $75,000.00 and then purchased the home for Roy for $111,000.00— $36,000.00 more than he affirmed it was worth.
He never fully explained his relationship with the contractor, Eziekiel Barnett. The [*12]movant admitted that he had a business association with Mr. Barnett who had worked on other projects with him, but denied that they were partners. Movant also denied that he was Mr. Barnett's attorney on the $25,000.00 contract between Mr. Barnett and Mary Dick's conservator.
Despite movant's claim of expertise in home renovantion, movant admitted that he never verified if Mr. Barnett had a home improvement contractor's license. Movant also maintained that he had told the family the renovations would take two (2) years.
Movant's statements were vague, evasive, and are belied by his filings on behalf of Henry Kelly in the Mary D. Conservatorship, as well as by his filings in this matter. The court finds him patently incredible.
It is well settled that fiduciaries are entitled to compensation in the form of commissions. In Matter of Roth, 58 Misc 2d 1066. The calculation of commissions for trustees and executors is regulated by statute so as to set a known rate of compensation so that parties accepting fiduciary appointments will be able to reasonably anticipate their compensation.[FN34] ( See SCPA 2307 and 2309.) Despite the fact that the calculation of commissions is codified, commissions are not to be awarded as of right. If a fiduciary has deliberately failed to fulfil his obligations, commissions must be denied, (In the Matter of Newhoff, 107 AD2d 417, 422 citing Matter of Sharp, 140 Misc. 427.) The hallmarks of a fiduciary relationship are un-compromised loyalty and fidelity on the part of the fiduciary and the repose of trust on the part of the ward/beneficiary. (Newhoff, Supra, )
In the instant matter, the order and judgment specifically states "that the compensation to the Co-Guardians for Property Management and Co-Trustees shall be "fixed by the Court and shall be based upon the services actually rendered but shall not exceed the standards set by Section 81.23 of the Mental Hygiene Law;" ( Order and judgment dated April 8, 1999 P 11.) At the time the order and judgment was signed MHL 81.23 made specific reference to SCPA 2307 and 2309 for the calculation of commissions. The order and judgment clearly contemplates an award of guardian/trustee commissions based upon quantum meruit, not to exceed the commissions calculated using either SCPA 2307 or SCPA 2309.
Movant occupied three fiduciary positions vis a vis Roy and his estate, as trustee, as guardian, and as counsel.[FN35]
It has long been held that a guardian is charged with the highest possible fiduciary responsibility toward his ward and will be judged under the strictest standards. "Guardianship is a trust of the most sacred character. From the guardian the law exacts absolute fidelity and will [*13]be satisfied with nothing less." In the Matter of Bond, 251 A.D. 651, 654, In the Matter of Vega, 205 Misc 684.
A guardian is charged with this highest fiduciary responsibility because a ward, by virtue of incapacity, is absolutely reliant upon his or her guardian. The expansive powers delegated to guardians must be exercised with the soundest of judgment and it is solely the ward's best interest that must inform that judgment. This standard is incorporated in the order and judgment appointing the movant co-guardian/co-trustee:
ORDERED AND ADJUDGED THAT ELAINE LANTIGUA A/K/A ELAINE DEJESUS and RAY JONES, ESQ., as Co-Guardians for Property Management and ELAINE LANTIGUA A/K/A ELAINE DEJESUS, as Guardian of the Personal Needs of Roy L. shall:
a. exercise only those powers that the Guardians are authorized to exercise by order of this court
b. exercise the utmost care and diligence when acting on behalf of ROY W. L JR
c. exhibit the utmost degree of trust, loyalty and fidelity in relation to ROY W. L JR. .....
e. afford the incapacitated person the greatest amount of independence and self-determination with respect to property management and personal needs in light of ROY W. L. JR.'S functional level, understanding and appreciation of his functional limitations and personal wishes, preferences and desires with regard to managing the activities of daily living; ....
ORDERED AND ADJUDGED THAT ELAINE LANTIGUA A/K/A ELAINE DEJESUS and RAY JONES, ESQ., as Co-Guardians for Property Management andshall have the following powers pursuant to 81.21 of the Mental Hygiene Law
a. to manage the property and financial affairs of ROY W. LANTIGUA, JR. Including the creation of A Supplemental Needs Trust Fund for ROY W. LANTIGUA, JR. with the discretion to invest funds pursuant to the Prudent Investor's Act for fiduciaries...;
b. to provide for the special needs of ROY W. LANTIGUA, JR. by supplementing the government entitlements of ROY W. LANTIGUA, JR.;
c. enter into contracts, including the purchase of a home subject to prior court approval... (See order and judgment dated April 8, 1999. at pgs 4-5).
CONTENTIONS OF MOVANT AND CROSS MOVANT
Movant contends that he is entitled to ordinary statutory commissions calculated upon his expenditures during his tenure as co-guardian/co-trustee, and to legal and extra-ordinary fees for his oversight of the renovations.[FN36] The cross-movant, however, contends that Mr. Jones has so [*14]fundamentally breached his fiduciary duties to his ward and to his ward's estate as to warrant denial of all commissions and surcharge.
This court must agree with the cross-movant. It is abundantly clear that the movant never acted in Roy's best interest. The hallmarks of movant's tenure as co-guardian/co-trustee are self-dealing, a cavalier disregard of Roy's abilities and disabilities, a contemptuous attitude toward and direct contravention of the Court's orders and authority, and a breakneck pace of expenditures, the lion's share of which lie in the risky business of home renovation [FN37].
Movant's failures to preserve Roy's property are profound and in violation of his duty to follow the Prudent Investor Rule. (See order and judgment dated April 8, 1999 at p. 4.) Despite all the money paid to renovate it, the house is not handicapped-accessible. It does not have sufficient electrical service or distribution. The outdoor chair-lift is inoperable. The indoor elevator is without proper permits and never worked. The pipes have not been replaced and the foundation is shifting and settling. The roof has been leaking since before the house was purchased. The house has open building department violations. The property has not sold despite being on the market for over a year.[FN38]
To deliberately purchase a home which was little more than a pile of rubble with the hopes of retro-fitting it for a disabled child was reckless and speculative in the extreme. It was only undertaken because movant was putting together a deal to sell the house and his business associate wanted the contracting work.
Movant's argument that Roy has not suffered any economic damages as result of the home purchase and its subsequent renovation because the house recently appraised for $600,000.00 is unpersuasive. The house is entirely unsuitable for Roy and he now owns and has to maintain an asset that ill suits him and that apparently cannot be sold.[FN39] The end result is that [*15]Roy spent all too many of the most formative childhood years in a place totally unsuited to his needs.
Movant's contention that the current co-guardians/co-trustees should have completed the renovations is likewise without merit. The one-family home's shifting/damaged foundation which is attributable to its age was and will always be too expensive for Roy's limited estate to maintain and to make handicapped-accessible. The home's narrow design, narrow doorways, and multiple floors rendered it ill-suited for Roy, who relies so extensively on his wheel chair. The kitchen counters are too high for the IP (now over eighteen years of age), the bathtubs and toilets are not suited for Roy's particular disabilities, and an entire second outdoor chair lift would have to be installed for Roy to access his back yard. The elevator and chair lifts would require enormous expense, not merely in installation, foundation shoring, and electricity use, but in maintenance and repairs. Clearly, Roy's estate was never large enough to finance such an undertaking.
The record is replete with examples of the movant being engaged in self-dealing, and conflicts of interest, and all the while hiding same from the co-guardian and the court. Most significantly, movant made no effort to select a contractor with the requisite expertise, or any expertise, to build handicapped-accessible homes. On the contrary, movant selected Mr. Barnett, his business associate as the contractor, to foster his own self interests. Movant never once called Mr. Barnett to task in Court or elsewhere for his failures as a contractor and as a landlord, because movant's loyalty to his business associate, Mr. Barnett, took precedence over his duty to Roy.
Movant's argument that he should receive commissions and be awarded extraordinary fees because the purchase of the real estate and the more than two hundred thousand dollars ($200,000.00) spent on the renovations were approved by the appointing court is of no moment. The approval for the renovations was sought nearly two years after the transactions and was not granted nunc pro tunc. And more importantly, the record is devoid of any indication that the court knew of the overwhelming self-dealing by the movant in the purchase and renovation of the home at the time theorder approving the renovations was granted. Hence, the approval must be set aside sua sponte pursuant to CPLR 5015 (a) 3. Movant's contention that he had a valid order allowing him to purchase 1079 Sterling Place as Roy's guardian and thus said purchase is commissionable is untenable. There is no notice, petition, hearing, and corresponding order in the ROY W. LANTIGUA, JR. Index No. 107034/99, allowing for the purchase of a home.
The Court overseeing Roy's case would have been constrained to deny the application to purchase the home for $111,000.00 had the Court been apprised of all the relevant facts: 1. Movant had advocated that the home be purchased for $25,000.00 by his business associate, but was willing to have his ward pay $111,000.00; 2 Movant represented both sides in the home's sale/purchase; 3. That the $111,000.00 home would require a minimum of $180, 000.00 in renovations; 4. Movant would ensure that his business associate, a man with dubious un-verified credentials, would renovate the home. Based on all of the above this court sua sponte must vacate any order allowing for the renovation of this home.(See CPLR 5015 (a) 3.)[FN40] [*16]
Based upon the foregoing, this Court must deny commissions and surcharge the movant
This Court is satisfied that the surcharge motion is made solely against the movant and not Roy's mother. It is patently clear that vis a vis all property decisions, Roy's mother's appointment was purely de jure. Ms. DeJesus made no property decisions, but instead was ignored, swayed, and otherwise sidestepped by the movant/professional guardian appointed to help her navigate the guardianship/trustee filing requirements. The mother did everything she could to have movant removed from his appointments in this case, once she realized that movant had violated his obligations to her son. The mother first wrote a letter to Justice Scholnick in 2001. In 2004, with the assistance of Ms. Greenberg, retained pro bono counsel to advocate for the removal of her co-guardian and to investigate if he should be surcharged for financial losses arising from undisclosed conflicts of interest with Eziekiel Barnett.The surcharge shall be for expenditures that were wasteful, that were the result of self dealing, that violated the order and judgment, or that were made without required prior court approval. The surcharge shall also include those monies lost through inexcusable non-feasance. The surcharge is as follows: 1. Rent paid to business associate Eziekiel Barnett; 2. Expenditures on all renovations that have been made without prior court order, and that have resulted in a home unusable for Roy; 3 Amount paid for the house in excess of the $75,000.00, the amount movant had affirmed it was worth; 4. Projected cost of curing the DOB violations which shall be deposited with the Court and disbursed upon proof presented by the guardians'of same;
5. All costs of the van;[FN41] 6. Costs incurred and income lost because entitlments lapsed; 7. Legal fees incurred to re-instate entitlements.
Accordingly, it is hereby:
ORDERED, sua sponte pursuant to CPLR 5015 (a) 3., that the orders dated July 25, 2001 for the purchase of a van for the IP and home renovations for the IP at the property known as 1079 Sterling Place, Brooklyn New York are vacated ; and it is further
ORDERED, sua sponte pursuant to CPLR 5015 (a) 3. and 5., that the order dated March 22, 2004 confirming an accounting covering the period of April 8, 1999 until May 31, 2001 is vacated; and it is further
ORDERED, that the motions of the trustee/guardian for commissions, compensation for extraordinary services and legal fees is hereby denied in its entirety; and it is further
ORDERED, that the cross-motion by co-guardian/co-trustee Greenberg for surcharge is granted and Ray Jones trustee/guardian is surcharged as follows:
Renovations: $207,545.41 [*17]
Purchase of House: $36,000.00
Loss of entitlements: Home care: $13,170.00, repair of wheelchair: $517.00, Lost SSI benefits: $31,020.00 (60 months at $517.00/month)
Yvonne Gardner, Esq.'s fees for correcting trust, deed, dealing with van, and re-establishing entitlements and correcting other errors created by Ray Jones: $4,185.00 (27.9 hrs at $150.00/hr.)
Building maintenance, real estate and water taxes, home owners insurance and utilities: $16,302.51
Rent paid to Mr. Barnett: $31,200.00
Unauthorized disbursement to or on behalf of the mother: $2,700.00
Money to remove department of building violations and money representing the decreased sale price on the home due to poor renovations: $100,000.00, which shall be deposited with the Court and withdrawn upon further order of this Court upon presentation of proof of cost to correct the outstanding building department violations, complete construction, and decreased sales price.
All of the above amounts are to be entered as judgment with the calculation of interest at 9% from April 8, 2004 [CPLR 5001 (a) and (b)]; and it is further
ORDERED, that Ray Jones is hereby surcharged the sum of $501,425.67 plus interest calculated at 9% from April 8, 2004 ; and it is further
ORDERED, that May 5, 2011 at 10:00 am, Part 76G, is set as a control date and Kathryn O. Greenberg, Esq. and Yvonne Gardener, Esq. shall appear and provide a status report.
A separte order detailing the particulars of the enforcement of the surcharge shall issue forthwith.
This constitutes the decision and order of the Court.
Dated: Brooklyn, New York
March 31, 2011ENTER:
Honorable BETSY BARROS
Justice of the Supreme Court
Footnote 1: The final account is also submitted for the co-property guardian/co-trustee Elaine Lantigua a/k/a Elaine DeJesus, the mother of the Incapacitated Person (hereinafter IP) and his current personal needs guardian. Elaine Lantigua a/k/a DeJesus is not requesting commissions.
Footnote 2:A supplemental needs trust is a vehicle to maximize an IP's receipt of government entitlements.
Footnote 3:The infant compromise order in Lantigua v. Konigsberg, et. al., Sup Ct, Kings County Index No. 5394/92, Clemente J., Index No. 5394/92 fully incorporates the April 8, 1999 guardianship order and judgment of Justice Scholnick.
Footnote 4: Roy eventually graduated from the Henry Viscardi School "...which has an enrollment of approximately 184 students and a staff of highly trained educators, physical and occupational therapists, speech teachers, a school nurse, psychologists and social workers. The Henry Viscardi School is a teaching community of students, parents and teachers, staff, and volunteers dedicated to empowering students with physical disabilities and health impairments to enable them to be active, independent, self sufficient participants in society." (Emphasis added) (See http:www.hvs.k12.ny.us.[ accessed March 3, 2011.] )
Footnote 5:.At the time of movant's appointment as co-guardian there was no Part 36 Rule of the Chief Judge that restricted appointments of court evaluators as guardians. Currently, however, under Part 36.2. ( c)(10) "No person serving as court evaluator shall be appointed as guardian for the incapacitated person except under extenuating circumstances that are set forth in writing and filed with the fiduciary clerk at the time of the appointment". The record contains no extenuating reason for movant's appointment as co-guardian.
Footnote 6:The Mary D. Conservatorship was brought under the former M.H.L. Art 77 (Repealed L. 1992, c 698 1, eff. Apr.1 1993) for the appointment of a conservator. A conservator is a surrogate property management decision maker for one unable to take care of his or her property. A guardian ad litem was appointed to protect his ward's interest if the ward was unable to attend the hearing. See M.H.L. 77.07(b) .
Footnote 7: . When asked if she would like to return home Ms Dick replied "Yes but it will have to be fixed up first." See guardianad litem report of Ray Jones dated March 28, 1991in Mary D. Conservatorship.
Footnote 8:See petition of mother, verified December 30, 2003 at ¶¶ 7-13, 16-18.See movants statements, Transcript dated October 1, 2010 P173 through P186.
Footnote 9: The sale price of $25,000.00 suggests that movant used his influence as attorney for Mr. Kelly to obtain a "steal" for his associate/friend Mr. Barnett at the expense of his client and his former ward.
Footnote 10: The client, Henry Kelly, who sold Roy the house in his capacity as guardian for Mary Dicks, absconded with the proceeds from the sale to Roy and was subsequently surcharged for the full amount by Justice Pesce. The bond company covered the loss.
Footnote 11:In the closing statement Eileen Edwards, Esq. was named attorney for Henry Kelly, Conservator ( Aff. Ray Jones dated September 26, 2007, exhibit annexed thereto.)
Footnote 12:The order and judgment appointing him as guardian specifically only authorized two expenditures, a $1000 stipend to Roy's mother and a $300.00/ month contribution to rent
Footnote 13:Given the buildings' dilapidated condition, Roy's age and disabilities, and the finite amount of his estate, it is likely that the court would have denied said application.
Footnote 14:The contract called for a payment schedule in five parts. The payments from the estate were made in advance of the contract provisions for the scheduled payments , to wit: $75,000.00 due when the renovations were half complete. Considering that the job took over two years and was in fact never completed, payment for half the work performed within five months of signing the contract was highly imprudent.
Footnote 15:On July 25, 2001, the movant obtained an order authorizing payment of $40,000.00 to Mobility and Elevator Lift Co. and $140,000.00 to Speedy Construction Co.
Footnote 16: The apartment was four houses down from movant's office address.
Footnote 17:Approximately one month after the mother's letter, movant made two applications for court approval of the home renovations and the purchase of a handicapped-equipped van , purchased in 1999.
Footnote 18:As per one estimate an additional $6,850.00 would be required to make the elevator operational and this estimate is not inclusive of work on the actual shaft and does not include bringing upgraded electrical service to the house. (Vlantes Aff. dated July 23, 2010, Exhibit K letter form Mobility Elevator and Lift. Co. dated March 4, 2010)
Footnote 19:From the record an anonymous donor, motivated by a desire to help Roy and his school, gave $15,000.00 to the Viscardi School to purchase the van from Roy's estate.
Footnote 20:Roy's mother was able to obtain health care for Roy despite his loss of medicaid at a free clinic.(The Neediest Cases; From a Boy's Frail Body, An Intellect Bursts Out New York Times, Jan. 7, 2003; Vlantes Aff. dated July 23, 2010 at exhibit "Z".)
Footnote 21:At the time the original order to show cause was filed, Roy received $517.00 per month in Supplemental Social Security Income.
Footnote 22: Mr. Jones signed Mr. Barnett's name to the lease when the mother stated she needed proof of residence to enroll her younger son Kenneth in school. ( Aff. of Elaine DeJesus, dated December 30, 2003 at ¶ 8.)
Footnote 23:The papers did not clearly indicate that the van had been purchased two years earlier nor did it contain the actual contract or other proof of the amount, date and other details regarding said purchase. Instead three vague and incomplete estimates were attached, one which reflects an estimate for a 2001 vehicle when in fact the vehicle actually purchased was a 1998 vehicle of a different make and model.
Footnote 24: On March 22, 2004 the court issued an order confirming the report of Louis Goldstein, Esq, court examiner, for the period of April 8, 1999 to May 31, 2001. Said order is sua sponte vacated pursuant to CPLR 5015(a)2.,3., and 5. Said order approving the accounting is internally inconsistent as well as contradicted by the supporting papers annexed thereto. The order is internally inconsistent because it approves the accounting in toto- , but withholds commissions and directs a final accounting- clear indications of non-approval. Moreover, the referee's report, upon which the order is based recommended surcharge against the guardians for an unaccounted deficit of $18,000.00 and counseled that the spending in the guardianship was depleting the estate at an alarming rate, and that prompt action was required before the estate was completely exhausted. Therefore the final accounting and the surcharge motion covers the period of April 8, 1999 until to April 6, 2004— the movant's entire tenure as guardian/trustee.
Footnote 25:It would appear that the order dated April 4, 2004 would have been sufficient to allow the filing of the account and an order appointing a referee to review same was all that was required.
Footnote 26: Mr. Jaiswal, Esq., stated that movant wanted to be present during the auditing, a request without precedent and implied that this request might be a veiled attempt to unduly influence him. He also expressed fear that " he is up to something which would put me in trouble". (Vlantes Affirmation dated September 1, 2010 exhibit Y. )
Footnote 27: The final accounting as examined by Mr.Wilner for the period of June 1, 2001 through June 10, 2004 reveals that in fact movant had exceeded his 2001order for renovation costs , exceeded the court approved rental contributions, disbursed $6,860.00 in parking fees without court order, and made a host of other unauthorized disbursements. The legitimacyof the backup documentation is suspect, given that movant did not provide same to Mr.. Jaiswal, Esq. in a timely, forthright manner and in light of the close association between movant and Mr. Barnett. For instance, some of the backup documentation merely consists of receipts for construction materials with the name Lantigua written on it.
Footnote 28:As part of the settlement process there was a suggestion that the movant would arrange to have the renovations completed, but movant did not complete the renovations. Additionally, there have been unsuccessful attempts to have the home sold.
Footnote 29: The allegation that Mr. Jones did not visit with Roy despite the requirement of at least four visits a year is corroborated . (See affidavit of Elaine DeJesus dated December 30, 2003 at ¶ 6. )
Footnote 30:From July 2002 till this day.
Footnote 31:Roy learned how to use his feet to operate the stove and was taught many other such skills at the Viscardi School.
Footnote 32:The court is mindful that Roy was eleven years old when he moved into the home and has lived there for his entire adolescence. Due to the configuration and construction of the home, Roy's privacy and his sense of dignity were continually violated .
Footnote 33:The barrier free assessment plan had included installation of the indoor elevator at the rear of the building to provide Roy access to his backyard, said elevator was installed in the center of the home instead.
Footnote 34:The rate of compensation for a trustee or executor can be changed from the statutory rates in either the will or trust appointing the fiduciary.
Footnote 35:The movant was also, as stated herein above, the court evaluator assigned in this matter and thus in at least a quasi confidential relationship with the mother as petitioner and Roy as the subject of the proceedings. Additionally the court evaluator is also seen as a quasi judicial role and as such any self dealing must be disallowed to avoid the appearance of impropriety and the use of the appointment to promote the court evaluator's self-interest.
Footnote 36:Movant claims that overseeing extensive renovations is a duty that exceeds what is typically expected of a property guardian/trustee. And while that proposition may be true, to the extent that extraordinary repairs are not permitted of a fiduciary without prior court approval, it ill behooves the movant to ask for extra-ordinary fees for unauthorized work that was done so poorly and thoughtlessly and that was patently self-serving. The New York Legislature has specifically disallowed fiduciaries, including guardians , the authority to make improvements or extraordinary repairs. That prohibition envisions a case where the ward already has title to property and the property has deteriorated. The prohibition does not even consider the far more speculative act engaged by the guardian/trustee herein to wit: purchasing a home so deteriorated that it had an unsafe building violation, significant leaks, and water and structural damage, and then renovating same at a cost well in excess of the purchase price. Moreover, given the precise language of the appointing order and judgment it was incumbent upon the guardian to seek the court's permission, with full disclosure of the facts, before purchasing such a home and undertaking the massive renovations.See 6-11 New York Civil Practice: EPTL p11-1.1[c] No degree of self dealing will be tolerated. 6-11 New York Civil Practice: EPTL p11-1.1[s].
Footnote 37: Commissions under SCPA 2307 and 2309 are calculated on expenditures and this court is mindful that said calculation may have been a motivation for the rapid and excessive expenditures movant made.
Footnote 38:On November 2, 2009 this court authorized the successor trustees to hire a duly licensed building inspector to provide a written report on the IP's home. In summary the inspection found that the building is in fairly poor condition due to settlement and shifting of the front facade and foundation, needed repair to the roof flashing at parapet walls, water damage to the plaster, insufficient door openings for wheelchair accessibility, high door saddles in bathrooms, insufficient toilet bowl clearance in lavatory, needed increase in electrical service and distribution, incomplete boiler enclosure. Again Roy's limited estate cannot afford to correct these problems.
Footnote 39:The court assigned real estate broker has told the Court the home is difficult to sell because of its non-working indoor elevator, and odd re-configuration from its renovation.( Vlantes aff. dated October 18, 2010 exhibit "L".)
Footnote 40:All the surcharged amount contained herein are sustainable as waste and/or self-dealing . Although the orders are vacated sua sponte, the nature of a sucharge and review of final account necessitates a strict scurtiny of all prior orders and proceedures; otherwise the order settling final account would be little more than a rubber stamp. Given the vulnerability of IPs to exploitation , the court is required to act as Parens Patrie. In re Newkirk, 42 Misc 2d 1067
Footnote 41:(footnote 40 cont) Likewise this court must surcharge the movant for each and every expenditure he made on the van, i.e purchase price, insurance, garage parking tickets, as all the expenditures were made without prior court order. If movant were to contend that the van was ultimately sold to an unnamed benefactor for $15, 000.00 and that said $15,000.00 should offset the surcharge, the court would disregard such an argument. The unnamed benefactor clearly meant to give Roy a gift and not a gift to movant. There is no reason that a gift intended for Roy's benefit, should benefit the movant instead.