Randy Stone Rubinberg v Stone Jupiter Trust
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Randy Stone Rubinberg v Stone Jupiter Trust 2013 NY Slip Op 33094(U) December 4, 2013 Supreme Court, Suffolk County Docket Number: 13-13386 Judge: Jerry Garguilo Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] COPY, MEMORANDUM SUPREME COURT, SUFFOLK COUNTY I.AS. PART 47 ----------------------------------------------------------------)( RANDY STONE RUBINBERG, By: Garguilo, J.S.C. Dated: November 22, 2013 Petitioner, Index No. 13-13386 Mot. Seq.# 001 - MD; CDISPSUBJ - against STONE JUPITER TRUST, Return Date: 6-4-13 Adjourned: 9-25-13 Respondent. ----------------------------------------------------------------)( BAINTON LYNCH, LLP Attorney for Petitioner 7 Muchmore Lane East Hampton, New York 1193 7 ARENT FO)( KINTNER PLOTKIN Attorney for Respondent 1675 Broadway New York, New York 10019 In this special proceeding pursuant to CPLR Article 77, the petitioner Randi Stone Rubinberg seeks to compel her mother, Nancy Stone (Stone), as trustee of the respondent Stone Jupiter Trust, to render and settle an account of her actions as trustee. It is undisputed that the petitioner is a beneficiary of the Stone Jupiter Trust which was created by a written declaration of trust made by Stone's mother and the petitioner's grandmother, Ruth Drucker, on October 19, 1998. It is also undisputed that the Stone Jupiter Trust's assets consists of: (1) a 1/8 beneficiary interest in the Jupiter Master Trust, an entity that has a 99% ownership interest in Efficiency Leasing of Florida LLC (EL Florida), which owns commercial real estate in Tampa Florida; and (2) a 1/8 ownership interest in Efficiency Leasing of Maryland LLC (EL Maryland), a limited liability company that owns commercial real estate in Maryland. In addition, the parties do not dispute the following facts: The extended family of Ruth Drucker conducts a family business which operates in several states and is run through a closely-held corporation, Sunbelt Holding Inc. (Sunbelt). The Jupiter Master Trust (Master Trust) was created as part of an estate plan by the older generations of the extended family to benefit future generations. As a result, Ruth Drucker created the Stone Jupiter Trust (Trust). Stone's children, the petitioner and her brother, Chad Stone, are income beneficiaries of the Trust, and Stone's grandchildren are the residual beneficiaries. Chad St<me has two minor children, and the petitioner has no children. Stone's brother, Steven Drucker, the original trustee of the Trust resigned on March 12, 20 l 0, and Stone has served as the trustee as of that date. The petitioner now seeks an order compelling Stone to render a formal accounting regarding the Trust. In support of her application, the petitioner submits, among other things, correspondence from her attorney to the former trustee and legal representatives of the Trust requesting an accounting, [* 2] Rubinberg v Stone Jupiter Trust Index N o. 13-13386 Page No. 2 correspondence from the Trust' s legal representatives, and a copy of the Agreement of Trust. The petitioner alleges that, on April 9, 2013, her attorney recei ved a fully executed copy of a confidentiality agreement w hich Sunbelt insisted upon, and that an accounting has not been provided. This proceeding was commenced by order to show cause on May 17, 2013 seeking an order "requiring Nancy Stone, as trustee, to render and settle an account of her proceedings as such trustee ... " In opposition, Stone submits the affirmation of her attorney, who indicates that she transmitted an "accounting" from the accountant for the Trust to the attorney for the petitioner which contained the financial statements of EL Florida and EL Maryland for 201 O; balance sheets of EL Florida and EL Mary land for 20 1 1 and 2012 ; profits & loss statement of EL Florida and EL Maryland for 2011 and 2012 ; 20 10 and 20 11 Federal Tax Returns for the Master Trust; 2010 and 2011 Federal Tax Return for the Trust; and Federal Tax Returns for EL Florida and EL Maryland for 20 I 0, 20 11 and 2012 . Counsel for Stone contends that, based on this transmittal, the petitioner has received the relief requested in this proceeding. That is, an accounting for the Trust during the years that Stone has served as trustee. A t a hearing held in this proceeding on August 14, 2013 , Stone agreed to provide information for the period that Steven Drucker was trustee for the Trust "to the extent that it was readily available. " On August 30. 2013, counsel for Stone prov ided the petitioner with financial information regarding the subj ect entiti es for the period from 2002 to 2009, with some sl ight exceptions. Counsel for Stone indicates that this is the information "that was readily available to ... the accountant for the [Trust]. " Said informati on is now before the Court for in camera review and includes, among other things : Federal Tax Returns for the Trust for 2002 through 2009, Federal Tax Returns for EL Florida and EL Maryland for 2002 through 2009, Federal Tax Returns for the Master Trust for 2002 through 2009, and financ ia l statements for EL Florida and EL Maryland for 2005 through 2009. 1 The petitioner now contends that the information is inadequate as a "substitute accounting" because the documents (a) do not cover the entire period of the Trust; (b) are not submitted under oath; (c) do not reflect the "fair value" ofreal estate assets, but instead reflect depreciated book values; (cl) do not show unrealized gains and losses of the Trust's principal; (e) do not show the opening principal balance of the Trust, and are incapabl e of showing whether the trustee (and her predecessor) has achieved a reasonable rate of return on the principal of the Trust or to otherwise provide information to enable the petitioner to evaluate the trustee's performance; (f) do not explain the details of loans to related parties so that the propriety of such transactions can be evaluated; (g) do not explain the details of luans from rel ated parties so that the propriety of s uch transactions can be evaluated ; (h) do not disclose the terms of the leasing of the real property to re lated parties so that a determination can be made as to whether the terms of such leases are fa ir and reasonabl e; (i) do not disclose the trustee ' s interest in the entities wi th \Vhich the T rust has engaged in transactions that have resulted in losses year after year; and (j) do not explain why the trustee has permitted th e Trust to lose money year after year by engaging in 1 By letter dated November 6, 201 3, th e respondent submits additional materia ls for in camera review after the submi ss ion da te of thi s petiti on and without leave of cow1. However, it appears that th e submiss ion is made with the consent of th e petitioner. Regardless, a rev iew of the materia ls reveals that they consist of financia l reports for the Trust and the subject trust assets fo r the years 2011 and 20 12. Nothing there in , or in the subsequent con espondence by the parties regarding th e doc uments, changes the find ings here in . [* 3] Rubinberg v Stone Jupiter Trust Index N o. 13-13386 Page N o. 3 related party transactions without taking action to remedy such losses. In her sur-reply 2, Stone submits four affidavits and a memorandum of law. In her affidavit, Stone swears to many of the undisputed facts herein. She states that she became the trustee of the Trust on March 12, 20 l 0, that an accounting was not conducted at that time because it was determined that the ex pense would undul y burden the trust, and that the information provided to the petitioner often refers to the N anc y St(me Jupiter Trust, which is merely a "clerical error. "3 Stone further swears that she does not have a personal interest in the Master Trust, and that she does not have a membership interest in EL Flo rida or EL Maryland . In addition, she has not been employed by or had any m anagement or control over those two entities. fn his affidavit, Chad Stone swears that he and his sister are beneficiaries of the Trust, that he has .. significant experience with financial and accounting-related issues" in his employment in the family business , and that he has familiarity with the assets of the Trust. He states that those assets are "indirect interests in non-income producing real estate," and that he is satisfied with the information provided by Ston e . Chad Stone further swears that he is opposed to the relief requested by the petitioner as it would unduly burden the Trust and adversely impact the financial interests of himself and his children. William McMullan (McMullan) swears, in his affidavit, that he prepared the Trust at the direction of Ruth Drucker, that the Trust was created for the benefit of future generations, and that the Trust \Vas created with "nominal consideration." He states that, for this reason, schedule A attached to th e trust document was intentionally left blank. McMullan further swears that, reflecting the purpose of the Trust, the petitioner and Chad Stone are income beneficiaries and the corpus will pass to the children, if any. of the two lifetime beneficiaries. In her affidavit, counsel for Stone swears, among other things, that she transmitted the additional information to the attorney for the petitioner on August 30, 2013. Here, it is determined that Stone has furnished information to adequately apprise the petitioner of th e assets and proceedings of the Trust. It is undisputed that the Trust's assets are a small percentage of the Master Trust and a real estate holding corporation which are part of a larger family estate plan. The majority of the petitioner' s contentions (items c, d, and f - j , above) involve matters in which the petitioner does not have an interest, or actions which do not lie within Stone ' s ability to control. The pe titioner 's remaining contentions do not merit burdening the trust with the cost of a judicial accounting . Under the circumstances, the determination of the application for an accounting rests in the discretion of court (se e eg. Pollock v Manufacturers & Traders Trust Co., 154 Misc 67, 276 NYS 363 [Sup Ct, New York County 1934]). The petitioner has failed to indicate any reason to require a formal accounting, or that the benefit to her by undertaking such an endeavor would outweigh the resulting cost and expense (s ee eg Zamax Mfg. Co. v Grossman , 102 NYS2d 833 [Sup Ct. Rockland County 1951]; see also c T he und ersigned granted Stone permi ss ion to submit a sur-reply to the petition er' s contention s on September 9, 20 I ~. ; Th e petitioner rai ses the qu es tion whether the infonnati on provided refers to anoth er tru st entity. The affidavit of St.one reso lves the issue. [* 4] Rubinberg v Stone Jupiter Trust Index No . 13-13386 Page No. 4 Tooley v Exempt Firemen's Benevolent Assn. of City of Yonkers, 13 AD2d 685, 213 NYS2d 937 [2d Dept 196 I ): Ball Motors v Orange County Trust Co., 13 AD2d 531 , 213 NYS2d 503 [2d Dept 1961 ]). Nonetheless, the petitioner additionally argues that the information provided raises questions and indicates a lack of diversity in the Trust's investment portfolio pursuant to EPTL 11-2.3 (b) (2) . EPTL l 1-2.3, the Prudent Investor Act, provides in pertinent part: (b) Prudent investor standard. *** (2) A trustee shall exercise reasonable care, skill and caution to make and implement investment and management decisions as a prudent investor wou ld for the entire portfolio, taking into account the purposes and terms and provisions of the governing instrument. (3) The prudent investor standard requires a trustee: *** (C) to diversify assets unless the trustee reasonably determines that it is in the interests of the beneficiaries not to diversify, taking into account the purposes and terms and provisions of the governing instrument; *** (4) The prudent investor standard authorizes a trustee: *** (B) to consider rel ated trusts, ... The Trust document executed on October 19, 1998 provides as fo llows : FOU RTH: In addition to .. . the powers conferred by law ... the Trustee hereunder shall have he powers hereinafter enumerated ... in the Trustee ' s absolute discretion: 1. To purchase or otherwi se acquire, and to retain, .. . any and all stocks, bonds, .. . or any vari ety of real or personal property ... and to make or retain any such investment without regard to degree of diversification .. . Investments need not be di versified and may be made or retained with a v iew to a possibl e increase in value. Under the Prudent Investor /\ct, the trustee must diversify assets unl ess the trustee reasonably determines that it is in the interests o f the beneficiaries not to diversify , taking into account the purposes, term s. and provisions of th e governing instrument (EPTL 11 -2 .3 [b] [3] [CJ). It has been held that a [* 5] Rubinberg v Stone Jupiter Trust Index No. 13-13386 Page No. 5 deci sion not to diversify in order to sustain a closely-held corporation as a family business is appropriate (Matter of Hyde , 44 AD3d 1195, 845 NYS2d 833 [3d Dept 2007]). Here, considering the relationship of the Trust to the Master Trust, the express language of the Trust, and the nature of the assets held by the Trust the petitioner' s contention is without merit. /\ccorclingly, the petition is denied and the proceeding is dismissed. Submit judgment.
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