Trusts and Estates – Page 16 – New York Appellate Digest

SURVIVING PLAINTIFF IN THIS MEDICAL MALPRACTICE ACTION DID NOT TIMELY MOVE TO SUBSTITUTE A REPRESENTATIVE FOR THE DECEDENT PURSUANT TO CPLR 1021, ACTION PROPERLY DISMISSED (SECOND DEPT).

The Second Department determined the medical malpractice action brought on behalf of a deceased plaintiff by the surviving plaintiff was properly dismissed for failure to timely substitute a representative for the decedent pursuant to CPLR 1021:

“A motion for substitution pursuant to CPLR 1021 is the method by which the court acquires jurisdiction” over a deceased party’s successors in interest, and such motion “is not a mere technicality” … . CPLR 1021 provides, in pertinent part, “[i]f the event requiring substitution occurs before final judgment and substitution is not made within a reasonable time, the action may be dismissed as to the party for whom substitution should have been made.” “The determination of reasonableness requires consideration of several factors, including the diligence of the party seeking substitution, the prejudice to the other parties, and whether the party to be substituted has shown that the action or defense has potential merit” … .

Here, the record does not support a finding that the surviving plaintiff diligently sought to substitute a representative for the decedent. The proffered explanation for the surviving plaintiff’s delay in obtaining letters of administration was unsubstantiated and insufficient to constitute a reasonable excuse. Moreover, the surviving plaintiff failed to submit an affidavit of merit by a medical expert and did not rebut the defendants’ allegations that they had been prejudiced by the delay in substitution. Contrary to the surviving plaintiff’s contention, the underlying pleadings and verified bill of particulars, standing alone, do not establish the potential merit of the medical malpractice action. Green v Maimonides Med. Ctr., 2019 NY Slip Op 03573, Second Dept 5-8-19

May 8, 2019

Family Law, Insurance Law, Trusts and Estates

WIFE’S STATUS AS A BENEFICIARY OF AN ANNUITY PAID TO THE HUSBAND WAS REVOKED BY OPERATION OF THE ESTATES, POWERS AND TRUST LAW (EPTL) UPON DIVORCE (THIRD DEPT).

The Third Department determined an annuity paid to the husband in settlement of a medical malpractice action was not payable to the former wife (Malizia), as a beneficiary of the annuity, because her status as a beneficiary was revoked upon divorce, pursuant to the Estates, Powers and Trust Law (EPTL):

EPTL 5-1.4 (a) provides that, “[e]xcept as provided by the express terms of a governing instrument, a divorce . . . revokes any revocable (1) disposition or appointment of property made by a divorced individual to, or for the benefit of, the former spouse.” Malizia’s argument that EPTL 5-1.4 does not apply to the annuity is unavailing. Although an annuity is not specifically identified as a governing instrument by EPTL 5-1.4 (f) (5), the statute expressly indicates that the list is illustrative and not exhaustive. An annuity is a testamentary substitute that operates similarly to the examples of governing instruments that are specifically named in the statute by providing for the disposition of property at death … . In that regard, the annuity specifically provided for payment of the monthly installments to decedent during his lifetime, and the beneficiary designation constituted a disposition of a property interest to the named beneficiary at decedent’s death, i.e., the right to receive any guaranteed payments required to be made after his death. The statute was enacted to prevent the inadvertent disposition of such property to a former spouse following termination of a marriage by creating a conclusive and irrebuttable presumption that any revocable disposition of property to a former spouse is automatically revoked upon divorce … . United States Life Ins. Co. In The City of New York v Shields, 2019 NY Slip Op 02593, Third Dept 4-4-19

April 4, 2019

Attorneys, Trusts and Estates

ATTORNEY WHO DRAFTED THE 2005 WILL APPOINTING THE ATTORNEY AS EXECUTOR WAS REQUIRED TO HAVE THE TESTATOR ACKNOWLEDGE THE TESTATOR HAD BEEN INFORMED THAT FAILURE TO COMPLY WITH THE DISCLOSURE REQUIREMENTS WOULD RESULT IN THE ATTORNEY-EXECUTOR’S ENTITLEMENT TO ONLY ONE-HALF THE STATUTORY EXECUTOR’S COMMISSIONS (SECOND DEPT).

The Second Department, resolving a split among Surrogate’s Courts, determined that the attorney who drafted the 2005 will appointing himself as executor was required to have the testator sign an acknowledgment the testator had been informed that the failure to comply with statutory disclosure requirements would result in the attorney-executor being entitled to only one-half of the statutory executor’s commissions:

The 2004 amendment [of Surrogate’s Court Procedure Act (SCPA) 2307-a] was intended, as reflected in both its text and in its legislative history, to require that the testator be informed that, absent the testator’s acknowledgment of receipt of the required disclosures, the attorney-executor would receive only one-half of the commissions otherwise payable. That the Legislature inadvertently included this fourth disclosure requirement only in model forms and not in the subdivision dealing directly with the required disclosures was an oversight, as is confirmed by the 2007 amendment and its legislative history … . …

At bar, the instrument signed by the testator in 2005 did not include an acknowledgment that he had been informed that the failure to comply with the disclosure requirements would result in the attorney-executor being entitled to only one-half of the statutory executor’s commissions. Therefore, we agree with the Surrogate’s Court’s determination that the petitioner is entitled to only one-half of the statutory executor’s commissions … . Matter of Brier, 2019 NY Slip Op 02516, Second Dept 4-3-19

April 3, 2019

Civil Procedure, Evidence, Medical Malpractice, Negligence, Trusts and Estates

DECEDENT’S CONSENT TO SURGERY SUBMITTED IN SUPPORT OF SUMMARY JUDGMENT IN THIS MEDICAL MALPRACTICE ACTION DID NOT VIOLATE THE DEAD MAN’S STATUTE, THE CONSENT WAS AUTHENTICATED BY THE MEDICAL RECORDS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the medical malpractice and wrongful death actions should have been dismissed. With respect to the “lack of informed consent” cause of action, the court held that the submission of the informed consent form by the defendant did not violate the Dead Man’s Statute:

The plaintiff contends that Meyerson [defendant surgeon] cannot rely upon the portion of his expert’s affidavit which states that the decedent was aware of the risks of the procedure because he signed a consent form for a similar procedure in 2012, because this evidence would be inadmissible pursuant to CPLR 4519, the so-called Dead Man’s Statute. CPLR 4519 “precludes a party or person interested in the underlying event from offering testimony concerning a personal transaction or communication with the decedent” … .

While evidence excludable at trial under CPLR 4519 may be considered in opposition to a motion for summary judgment so long as it is not the sole evidence proffered … , such evidence “should not be used to support summary judgment” … . However, the statute does not bar “the introduction of documentary evidence against a deceased’s estate. . . . [A]n adverse party’s introduction of a document authored by a deceased does not violate the Dead Man’s Statute, as long as the document is authenticated by a source other than an interested witness’s testimony concerning a transaction or communication with the deceased” … . Inasmuch as the expert’s affidavit as to the decedent’s execution of the form was predicated upon the medical records, which contained the decedent’s consent form for the prior surgery and on which the expert relied, and the records were properly authenticated and submitted on the motion, Meyerson properly relied upon the expert opinion to support his motion … . Wright v Morning Star Ambulette Servs., Inc., 2019 NY Slip Op 02381, Second Dept 3-27-19

March 27, 2019

Trusts and Estates

THERE WAS NO SHOWING THAT THE ALLEGEDLY DISABLED PERSON WAS NOT COMPETENT IN 2015 WHEN THE SHORT FORM POWER OF ATTORNEY WAS EXECUTED, THEREFORE THE ATTORNEY-IN-FACT HAD THE AUTHORITY TO CREATE A SUPPLEMENTAL NEEDS TRUST FOR THE ALLEGEDLY DISABLED PERSON (SECOND DEPT).

The Second Department, reversing Surrogate’s Court, determined the short form power of attorney executed in 2015 by Delaney, an allegedly disabled person, was valid and allowed the attorney-in-fact, Pacchiana, to set up a supplemental needs trust for Delaney:

To be valid, a statutory short form power of attorney must “[b]e signed and dated by a principal with capacity, with the signature of the principal duly acknowledged in the manner prescribed for the acknowledgment of a conveyance of real property” (General Obligations Law § 5-1501B[1][b] … ). “Capacity” is defined as the “ability to comprehend the nature and consequences of the act of executing and granting, revoking, amending or modifying a power of attorney, any provision in a power of attorney, or the authority of any person to act as agent under a power of attorney” (General Obligations Law § 5-1501[2][c]). “A party’s competence to enter into a transaction is presumed, even if the party suffers from a condition affecting cognitive function, and the party asserting incapacity bears the burden of proof'” … . “The incapacity must be shown to exist at the time the pertinent document was executed” … . Such incapacity was not shown here … .

Pacchiana, as Delaney’s attorney-in-fact, had the authority to commence a proceeding in the Surrogate’s Court for the creation of a supplemental trust in Delaney’s behalf (see General Obligations Law § 5-1502H …). Matter of Delaney, 2019 NY Slip Op 02090, Second Dept 3-20-19

March 20, 2019

Attorneys, Trusts and Estates

$1 MILLION ATTORNEY’S FEE REQUEST CUT IN HALF BY SURROGATE’S COURT AND REDUCED A FURTHER $100,000 BY THE FIRST DEPT CITING EXCESSIVE CHARGES FOR IN-FIRM DISCUSSIONS AND UNNECESSARY WORK (FIRST DEPT).

The First Department determined Surrogate’s Court properly reduced by half the $1 million attorney’s-fees request, which represented 1/3 of the estate and trust assets. First Department further reduced the fees by another $100,000:

Respondent’s counsel sought approval for legal fees in the amount of $1,037,183 for their representation of respondent. The amount requested represented 33.7% of the estate and trust assets. The Surrogate noted that the fees were far in excess of a typical fee for the services performed by respondent’s counsel, concluded that the fees were excessive, and fixed the fees in the total amount of $520,000.

Although the Surrogate reduced the fees from the exorbitant amount originally requested, we conclude that the fees as reduced are still excessive given the size of the estate … . While there is no set formula for fee awards, upon our review of counsel’s time records and in the exercise of discretion, we conclude that a further reduction in the amount of $100,000 is warranted. This additional reduction is necessary to properly account for excessive charges for inter-office communications and discussions amongst members of the firm, and unnecessary work performed … . Matter of SR, 2019 NY Slip Op 01343, First Dept 2-26-19

February 26, 2019

Trusts and Estates, Workers' Compensation

EMPLOYEE’S ESTATE ENTITLED TO THE AMOUNT OF THE SCHEDULE LOSS OF USE AWARD THAT ACCRUED UP UNTIL THE EMPLOYEE’S DEATH, NOT THE ENTIRE SLU AWARD (THIRD DEPT).

The Third Department determined that the employee’s estate was entitled to the portion of the schedule loss of use (SLU) award that had accrued up until the time of the employee’s death:

In our view, the 2009 statutory amendments did not alter the longstanding rule that, where an injured employee dies without leaving a surviving spouse, child under 18 years old or dependent, only that portion of the employee’s SLU award that had accrued at the time of the death is payable to the estate, along with reasonable funeral expenses… . Nor did, as claimant contends, the amendments alter the rate at which an SLU award accrues to an injured employee who is posthumously awarded SLU benefits. Absent clear statutory language or an indication of statutory intent, we cannot conclude that, in granting the option of a lump-sum payment, the Legislature intended for the employee’s estate to collect any portion of the posthumous SLU award that had not accrued prior to death. Accordingly, claimant was not entitled to the entirety of decedent’s SLU award. Matter of Estate of Youngjohn v Berry Plastics Corp., 2019 NY Slip Op 01290, Third Dept 2-21-19

February 21, 2019

Contempt, Mental Hygiene Law, Trusts and Estates

COURT ORDER WAS AMBIGUOUS AND ERRONEOUS AND COULD NOT THEREFORE BE THE BASIS OF A CONTEMPT FINDING AND SANCTIONS (THIRD DEPT).

The Third Department, reversing Supreme Court, in a proceeding concerning the guardianship and trust assets of a disabled person, determined the trustee should not have been held in contempt based upon an ambiguous and erroneous court order and sanctions against the trustee were not justified in light of the ambiguity of and error in the order:

… [W]e find that, however uncooperative and dilatory the trustee was, [the court evaluator] did not demonstrate by clear and convincing evidence that the trustee violated a “lawful, clear and unequivocal order” when he did not pay the fee award from the unfunded, unexecuted 2006 SNT [supplemental needs trust] as directed in the ex parte order and when he instead cross-moved to vacate that order … . Moreover, given that the ex parte order referred to an incorrect SNT, which was not funded or executed, an error of which Supreme Court was made aware, the court should have granted the trustee’s motion to vacate the ex parte order … . …

A court may, in its discretion, award any party or counsel in a civil matter “costs in the form of reimbursement for actual expenses reasonably incurred and reasonable [counsel] fees, resulting from frivolous conduct” and “may impose financial sanctions upon any party or attorney” for frivolous conduct … . … However, such sanctions and costs may be imposed “only upon a written decision setting forth the conduct on which the award or imposition is based, the reasons why the court found the conduct to be frivolous, and the reasons why the court found the amount awarded or imposed to be appropriate” … . … [G]iven … the fact that the court orders were ambiguous or directed payment out of an incorrect, unfunded SNT, the trustee’s conduct in response to those orders, much of it based upon the advice of counsel, was not shown to be frivolous … . Matter of James H., 2019 NY Slip Op 00170, Second Dept 1-10-19

January 10, 2019

Consumer Law, Trusts and Estates, Workers' Compensation

GENERAL BUSINESS LAW 349 CAUSE OF ACTION AGAINST A WORKERS’ COMPENSATION LAW TRUST SHOULD NOT HAVE BEEN DISMISSED (THIRD DEPT).

The Third Department determined that a General Business Law 349 cause of action against a Workers’ Compensation Law trust should not have been dismissed. The trust was taken over by the Workers’ Compensation Board and was found to have a deficit of $220 million. Several lawsuits were brought by members of the trust alleging breach of contract, fraud, breach of a fiduciary duty, etc.:

… [W]ith respect to the General Business Law § 349 cause of action [we] disagree with Supreme Court’s reasoning that the alleged misconduct was not consumer oriented.

“The threshold requirement of consumer-oriented conduct is met by a showing that the acts or practices have a broader impact on consumers at large in that they are directed to consumers or potentially affect similarly situated consumers” … . The amended complaint alleged that “[d]efendants aggressively marketed and advised the [t]rust and self-insurance trusts to the public at large in general as a safe and less expensive alternative to traditional insurance” and that “the information disseminated by [d]efendants was likely to mislead reasonable employers.” The amended complaint further alleged that defendants’ actions “injured and harmed [p]laintiffs, other members of self-insured trusts and the general public” and have “jeopardized the workers’ compensation benefits of New York employers and their employees.” Construing these allegations liberally, as we must, we find that plaintiffs sufficiently alleged that the misconduct at issue was consumer oriented … . Belair Care Ctr., Inc. v Cool Insuring Agency, Inc., 2019 NY Slip Op 00015, Third Dept 1-3-19

January 3, 2019

Civil Procedure, Trusts and Estates

MOTION TO SUBSTITUTE THE ADMINISTRATRIX OF PLAINTIFF’S ESTATE FOR THE DECEASED PLAINTIFF PROPERLY DENIED BECAUSE THE DELAY IN SEEKING SUBSTITUTION WAS NOT EXPLAINED, THE MERITS WERE NOT DESCRIBED, AND THE EXISTENCE OF PREJUDICE WAS NOT REBUTTED, HOWEVER THE ACTION COULD NOT BE DISMISSED ABSENT THE SUBSTITUTION OF A LEGAL REPRESENTATIVE (SECOND DEPT).

The Second Department agreed with Supreme Court’s denial of a motion to substitute plaintiff’s daughter, as administratrix, for the deceased plaintiff in an action because the delay in seeking substitution was not explained, the merits of the action were not described, and the presumption of prejudice was not rebutted. But the Second Department noted that the action should not have been dismissed because the plaintiff’s stayed all proceedings pending substitution:

CPLR 1021 provides, in part, that “[a] motion for substitution may be made by the successors or representatives of a party or by any party.” Although a determination rendered without such substitution will generally be deemed a nullity, determinations regarding substitution pursuant to CPLR 1021 are a necessary exception to the general rule, and the court does not lack jurisdiction to consider such a motion … . Here, the Supreme Court had jurisdiction to consider those branches of the motion which were pursuant to CPLR 1015 for leave to substitute the plaintiff’s daughter as the plaintiff and, upon substitution, to restore the action thereafter (see CPLR 1021). On the merits, we agree with the court’s determination to deny those branches of the motion given the failure to provide any detailed excuse for the delay in seeking substitution, the failure to include an affidavit of merit demonstrating that the claim against Rehab was potentially meritorious, and the failure to rebut Rehab’s claim of prejudice stemming from the delay … .

However, since the plaintiff’s death triggered a stay of all proceedings in the action pending substitution of a legal representative … , the Supreme Court should not have directed dismissal of the action pursuant to CPLR 3404, as the order was issued after the plaintiff’s death and in the absence of any substitution of a legal representative … . Medlock v Dr. William O. Benenson Rehabilitation Pavilion, 2018 NY Slip Op 08922, Second Dept 12-26-18

December 26, 2018