Free Essay

Scpa 2103 Proceedings

In:

Submitted By gfreidman
Words 3673
Pages 15
SCPA 2103 Discovery Proceedings
By: Gary B. Freidman, Esq.1

The Procedural Law Persons Entitled to Institute the Proceeding. Only a fiduciary. SCPA 2103(1). Since the only permissible petitioner is a fiduciary defined in SCPA 103 (21), the proceeding cannot be brought prior to the issuance of letters - either preliminary, temporary or permanent. If there are multiple fiduciaries, any of them is empowered to commence the proceeding, even if out-voted by the majority. Matter of Levine, 189 Misc. 976, 72 N.Y.S.2d 806 (1947). Fiduciaries who refuse to join in the petition should be named as additional respondents. A fiduciary may maintain a discovery proceeding against one of his co-fiduciaries. Matter of Hare, 123 Misc.2d 266, 473 N.Y.S.2d 334 (1984). Where the fiduciary will not commence a proceeding under 2103 or cannot due to a conflict of interest, the Court may issue limited letters of administration (SCPA 702[9]) for the purpose of commencing the proceeding. Matter of Davidson, 177 Misc. 2d 928. Since the statute speaks in terms of an estate, the proceeding may be commenced not only by an executor or administrator, but by a trustee of either a testamentary trust or a lifetime trust, as a trust in included within SCPA 103's definition of an estate. Subject of the Proceeding. The proceeding may be instituted against any person having possession or control or knowledge or information about money or, other personal property or the proceeds or value thereof to which the fiduciary is entitled. [SCPA 2103 (1)]. Not only can a discovery proceeding be used to recover property alleged to belong to an estate but to gain information needed by the fiduciary in the administration of the estate. SCPA 2103 provides that a fiduciary may present a petition, stating upon knowledge or information and belief that personal property as defined or the proceeds or value thereof which should be paid to the fiduciary, is either:

Mr. Freidman is a member of the firm of Greenfield Stein & Senior, LLP. 600 Third Avenue, New York, NY 10016 - gfreidman@gss-law.com.

1

File ID:F:\Clients\GBF - Misc\Articles\SCPA 2103 Proceedings.wpd

(a) in the possession or control of a person who withholds it from him, whether possession or control was obtained prior to creation of the estate or subsequent thereto, or (b) within the knowledge or information of a person who refuses to impart knowledge or information he may have concerning it or to disclose any other fact which will aid the petitioner in making discovery of the property, or (c) he has reason to believe, in the possession or control of a person described in subparagraph (a) of this subdivision or within the knowledge or information of a person described in subparagraph (b) of this subdivision and praying that an inquiry be had respecting it and that the respondent be ordered to attend and be examined accordingly and to deliver the property if in his control. Under the New York State Constitution and the SCPA, the Surrogate's Court has jurisdiction over virtually all actions and proceedings relating to the affairs of decedents, probate of wills, administration of estates, and actions and proceedings arising thereunder or pertaining thereto, guardianship of the property of minors, and such other actions and proceedings, not within the exclusive jurisdiction of the supreme court. New York State Const., Art. 6, §12; SCPA 201. Bank accounts: Matter of Southmayd, 59 A.D.2d 956, 399 N.Y.S.2d 382 (1977); Matter of Dziadzio, 31 Misc.2d 125, 225 N.Y.S.2d 823 (1977). Life insurance proceeds: Matter of London, 90 Misc 2d 351, 399 N.Y.S.2d 395 (1977); Matter of Robles, 72 Misc 2d 554, 339 N.Y.S.2d 171 (1977). Contract Claims: Matter of Young, 80 Misc 2d 937 (1975). Shareholders Agreements: Matter of Breitman, 114 Misc.2d 248, 450 N.Y.S.2d 985 (1982) Title to real property or rents or possession of realty: Matter of Rungo, 74 Misc 2d 239 (1973); Matter of Hall, 54 Misc 2d 923 ((1969); Matter of Piccione, 57 N.Y. 2d 278 (1982). Property obtained by fraud or undue influence: Matter of Rogers, NYLJ, 3/1/88, p. 12; Matter of Finkle,, 90 Misc 2d 550, aff’d 59 A.D. 2d 862 (1977); Matter of Reiner, 86 Misc 2d 511, 383 N.Y.S.2d 504 (1976); Matter of Friedman, 64 A.D. 2d 70, 407 N.Y.S.2d 999 (1977). SCPA 2103 was amended in 1993 to expressly include “real property” and "choses in action," along with money and personal property. Several older cases had denied SCPA 2103 jurisdiction over certain claims such as contract disputes.

-2File ID:F:\Clients\GBF - Misc\Articles\SCPA 2103 Proceedings.wpd

A discovery proceeding can also be used to obtain information necessary for the proper administration of the estate, such as the valuation of estate assets. Matter of Granowitz, 150 A.D.2d 446, 541 N.Y.S.2d 55 (1989); Matter of Laflin, 128 Misc.2d 348, 490 N.Y.S.2d 102 (1985). However, a discovery proceeding may not be used to determine whether a claim for wrongful death exists. Matter of Wallace, 239 A.D.2d 14, 667 N.Y.S.2d 768. The Pleadings The Petition General requirements - SCPA 302-304. The petition should establish prima facie entitlement to the relief sought and may be accompanied by an affidavit or other written evidence to support it. SCPA 2103(1). A petition is subject to dismissal if it fails to enumerate the specific property belonging to the estate that is sought to be recovered. Matter of Lowe, 148 Misc. 107, 265 N.Y.S. 420 ( 1993). An allegation that the respondent is in possession of “household furniture, jewelry, silverware and wearing apparel” is insufficient. Matter of Babcock, 85 Misc. 256, 147 N.Y.S. 168 (1914), aff’d, 169 App. Div. 903, 154 N.Y.S. 1105, aff’d, 216 N.Y. 717 (1915). The court in its discretion may either entertain the proceeding, decline to entertain it, or may reserve it for determination in another appropriate proceeding. All proceedings are deemed entertained unless rejected by the court in writing within 15 days of submission. SCPA 2101 (1)(b). Inquisition v. Turnover — Deposition v. Replevin action. If the petitioner wants to first examine the respondent (the inquisitorial phase of the proceeding), he must serve a certified copy of the Order to Attend and tender the statutory witness fee. SCPA 2103(5). Subpoena fee (CPLR 8001). Failure to serve certified copy of order or to tender witness fee is jurisdictional. Matter Benowitz, N.Y.L.J., 3/9/77, p. 12, col. 2. An inquisition can only be had of a respondent who is served within the State of New York, as the Order to Attend is akin to a subpoena. The “inquisitorial examination” is essentially an examination before trial which may be continued even after an answer has been filed. SCPA 2104(l). Great latitude and even

-3File ID:F:\Clients\GBF - Misc\Articles\SCPA 2103 Proceedings.wpd

a "fishing expedition" is be permitted. Matter of Kevill,, 166 Misc 230 (1938). However there are limits. Where the inquiry will not produce facts necessary to establish a cause of action or if the fiduciary is seeking information which is not to be used in the administration of the estate, the Court will dismiss the proceeding at the inquisitorial stage. Matter of Habib, NYLJ, 7/20/2007, p. 38, col. 4. (Sur. Ct. Queens Co.). The respondent may be questioned about personal communications or transactions with the decedent without waiving the provisions of the "Dead Man's" statute (CPLR 4519). At this stage, only the examinations directed in the Order to Attend are permitted. The respondent cannot yet examine the fiduciary; nor is a respondent entitled to obtain production of documents. Matter of Lukas, 79 Misc.2d 24, 360 N.Y.S.2d 549 (1974). Respondent must wait until issue has been joined to obtain disclosure from petitioner. The Turnover Phase or Proceeding If the petitioner wants to utilize long arm jurisdiction, or substituted service, or does not need the inquisition of the respondent before seeking a turnrover, a citation (no witness fee required) instead of an Order to Attend should be served upon the respondent. SCPA 2103(3). Estate of O'Brien, NYLJ, 11/6/76, p. 8, col. 1. Remember, even though the Surrogate’s Court has subject matter jurisdiction, you still need a basis for personal jurisdiction over the respondent. Although the cases hold that the “long-arm” provisions of SCPA 210 are broader than CPLR 302, jurisdiction may not be acquired unless the respondent has the requisite minimum contacts with New York. Matter of O'Brien, 54 AD 2d 880 (1976); Matter of Katz, 81 AD 2d 145 (1981). It has been held that the Surrogate’s Court has jurisdiction to determine title to out of state realty. Matter of Carr, 113 Misc.2d 818, 450 N.Y.S.2d 141 (1982). Except under unusual circumstances, legatees, creditors or other persons interested in an estate are not proper parties to a discovery proceeding and will not be permitted to intervene therein. Matter of Frobisher, 21 Misc.2d 1041, 199 N.Y.S.2d 31 (1960). Answering the Petition When an issue of title is raised, the respondent should file a verified answer. The proceeding will then continue as any other litigated matter (CPLR Art. 31 discovery, motion practice, etc.). SCPA 2104. If the respondent does not claim title to the property at issue, but in her possession, the court may enter an interim decree directing the delivery of property not claimed by the respondent. SCPA 2104(3).

-4File ID:F:\Clients\GBF - Misc\Articles\SCPA 2103 Proceedings.wpd

Defenses Statute of Limitations: If the relief sought is a turnover, then the Statute of Limitations for a replevin action controls - 3 years from the making of a demand for the return of the property. For other forms of relief, then the nature of the claim determines the applicable Statute of Limitations, e.g. 6 years for a contract claim, etc. Note: Where the relief sought is information only, not recovery of property, the Statute of Limitations has been held not to apply. Matter of Bellingham, 132 A.D.2d 973, 518 N.Y.S.2d 502 (1987). Matter of Laflin, 128 Misc.2d 348, 490 N.Y.S.2d 102 (1985). If a fraud was involved, the Statute of Limitations is 6 years or 2 years when the fraud was or should have reasonably been discovered. CPLR 213(8). Gift: Although normally, the burden of proof is on the petitioner if the respondent in effect interposes a "general denial" that he has any property which should be delivered to the fiduciary. However, if a gift is claimed then the respondent assumes the burden of proof. Matter of Rabinowitz,, 5 Misc 2d 803 (1957); Matter of Bever, 3 Misc 2d 819 (1956); Matter of Van Alstyne, 207 NY 298 (1913). The Trial Either party may demand a jury trial if otherwise entitled to trial by jury. Matter of Schneier, 74 AD 2d 22, 26 citing: Matter of Comfort, 234 App. Div. 19; Matter of Pritchard, 227 App. Div. 105; Matter of Nutrizio, 211 App. Div. 8. Unlike Supreme Court practice, the petitioner can request a jury trial in his petition; respondent must make his demand for jury trial at the time an answer is filed. If petitioner did not initially demand a jury, he may file a demand within 6 days after the answer has been served. SCPA 502(2). The Surrogate may relieve a party of a failure to timely demand a jury. The court will look to the criteria under CPLR 4102(e) which permits a late jury demand "if no undue prejudice to the rights of another party would result". Matter of Mirsky, 81 Misc 2d 9 (Sur. Ct. New York Co. 1975), where the objectant was excused from filing a late demand where the delay was "short, the original omission inadvertent and the other party unprejudiced." Evidentiary Issues The principal evidentiary issue that arises in a discovery proceeding is CPLR 4519 - "The Dead Man's Statute" The statute prevents any person "interested in the event" from testifying to a "personal transaction" with the deceased unless the representative of the deceased has waived the protection of the statute by testifying himself or introducing the testimony of the decedent into evidence at trial. Matter of Wood, 52 N.Y.2d 139 (1981).

-5File ID:F:\Clients\GBF - Misc\Articles\SCPA 2103 Proceedings.wpd

The test of the interest of a witness is that he will either gain or lose by the direct legal operation and effect of the judgment, or that the record would be legal evidence for or against him in some other action, It must be a present, certain and vested interest, and not an interest uncertain, remote or contingent. Hobart v. Hobart, 62 N.Y. 80 (1875). The witness must have a direct interest at the time of testifying. Wallace v. Strauss, 113 N.Y. 238 (1889); Herrmann v. Jorgensen, 263 N.Y. 348 (1934). NOTE: The size of the interest is insignificant as long as it is direct. Matter of Radley, 239 N.Y.S.2d 45 (3rd Dep't 1930). A spouse of an interested party is not disqualified. Lake v. Krystek, 261 N.Y. 126 (1933); Matter of Mead, 129 A.D.2d 1008, 514 N.Y.S.2d 581 (4th Dep't 1987). By statute, a stockholder or officer of a banking corporation is not an interested party. The courts have consistently held that an officer or director of a corporate party is not an interested party under CPLR 4519 unless he is also stockholder in the corporation. Friedrich v. Martin, 294 N.Y. 588 (1945); Griggs v. Renault Selling Branch Inc., 179 App. Div. 845 (1st Dep't 1917); Matter of Payson, NYLJ, July 26, 1978, p. 14, col. 3 (Sur. Ct. Nassau Co.). CPLR 4519 may be asserted or waived only at the time of trial and does not bar consideration of interested testimony on a summary judgment motion because the privilege may be waived at trial. Phillips v. Joseph Kantor & Co., 31 N.Y.2d 307 (1972). Thus, evidence which would may be excluded at trial, may be considered in denying a motion for summary judgment. Phillips v. Joseph Kantor & Co.; Matter of Sheehan, 51 A.D.2d 645 (4th Dep't 1976); Stone v. Stone, 76 A.D.2d 833 (2d Dep't 1980); McEvoy v. Garcia, 114 A.D.2d 401 (2d Dep't 1985); Matter of Heller, NYLJ, February 9, 1994, p. 25, col. 2 (Sur. Ct. Nassau Co.). Waiver of CPLR §4519 Testimony otherwise incompetent by the statute may be waived by a failure to assert the privilege affirmatively at trial. Evidence once received, without objection, cannot be stricken. Matter of Maijgren, 193 Misc. 814 (Sur. Ct. 1948); See also, Sofer v. Emerson-New York, Inc., 95 F.Supp. 980 (S.D.N.Y. 1951). Opening the Door: "[Where] the executor questions his adversary as to all or part of a personal transaction with the decedent, he has 'opened the door' as to that transaction and otherwise incompetent testimony is admissible to fully explain the personal transaction in issue . . .. The purpose of this rule is to place the parties insofar as is practical in light of the policy embodied in the statute, in relatively equal positions, vis-a-vis the same transaction. This prevents the unfair use of the statute as a sword rather than a shield." Matter of Wood, 52 N.Y.2d 139 (1981); see also, Matter of Annooshian, 13 A.D.2d 626 (1st Dep't 1961).

-6File ID:F:\Clients\GBF - Misc\Articles\SCPA 2103 Proceedings.wpd

The introduction by the plaintiff of an examination before trial of the deceased defendant was sufficient to constitute a waiver of the statute. Matter of Radus, 140 A.D.2d 348 (2d Dep't 1988); Tepper v. Tannenbaum, 65 A.D.2d 359 (1st Dep't 1978). Can former testimony of an interested party that was received at trial 1 without objection be admitted at trial 2, over a CPLR §4519 objection, on the grounds that it is "former testimony" under CPLR §4517? No. Matter of Boney, NYLJ, May 18, 1994, p. 22, col. 4 (Sur. Ct. New York Co.) At Trial 2, [The testimony from trial 1 is subject to all evidentiary objections (including CPLR §4519). Any waiver of the protection of CPLR §4519 operates only at the trial at which it occurs and the protection can be reclaimed at any subsequent trial]. The Substantive Law Gifts Donative intent Did the decedent have sufficient mental capacity to make the gift? Presumption of competency - The level of impairment necessary to invalidate a gift. Matter of McNulty, NYLJ, (Sur. Ct. Nassau Co.). Fraud and undue influence - If a confidential relationship existed between the donor and donee, not only does the donee have the burden of proving the gift by clear and convincing evidence, she must also show that the transaction was not the result of fraud, mistake or undue influence. Cowell v. Cornell, 75 N.Y. 91 (1878). Delivery - Constructive delivery Did the donor surrender possession and control - the cases hold that the delivery must be as perfect as the nature of the property and the circumstances and surroundings of the parties will reasonably permit. Delivery was found where corporate stock was transferred on the books of the corporation to the donee, even though after death the old stock certificate was found in the donor’s safe deposit box. Matter of Caroll, 100 A.D.2d 337, 474 N.Y.S.2d 340 (1984). Where the donor retained a life interest in certain artwork, but transferred the remainder to his son, letters from the donor to his son detailing the gift were sufficient to establish constructive delivery of the gift. Gruen v. Gruen, 68 N.Y.2d 48, 505 N.Y.S.2d 849 (1986).

-7File ID:F:\Clients\GBF - Misc\Articles\SCPA 2103 Proceedings.wpd

Acceptance The easiest element to prove because it is generally implied from the fact that a gift is beneficial to the donee. The respondent must establish every element of a valid gift by clear and convincing evidence. Matter of Kennedy, 36 AD 2d 549 (1968); Matter of Kaminskv, 17 AD 2d 690 (1962); Estate of Lefft, 44 N.Y. 2d 915 (1978). Bank Accounts Banking Law §675 - the opening of a joint bank account in proper statutory form is prima facie evidence of title in the survivor, and the burden of proof in refuting such prima facie evidence is upon the one challenging the title of the survivor. The statutory presumption arises by words of survivorship appearing on the signature card and the title of the passbook is not controlling. Matter of Fenelon, 262 N.Y. 308 (1933); Matter of Coon, 148 A.D. 2d 906 (1989). A prima facie cases usually attempted to be rebutted by establishing the account was really a "convenience account" or that it was opened as a result of undue influence, fraud or lack of capacity. Stalter v. Stalter, 270 A.D. 2d 594. Concerning the competency of decedent or the genuineness of the decedent's act - Matter of Creekmore, 1 N.Y.2d 284. If a confidential relationship is present - the burden of going forward shifts to the respondent. Gordon v. Bialvstoker Center, & Bikur Cholim, Inc., 45 N.Y.2d 692.

-8File ID:F:\Clients\GBF - Misc\Articles\SCPA 2103 Proceedings.wpd

Reverse Discovery Proceedings - SCPA 2105 This proceeding is commonly referred to as a reverse discovery because essentially it permits a claimant to specific money or personal property or the proceeds to institute a proceeding against a fiduciary under those circumstances in which a fiduciary could institute a discovery proceeding. The proceeding is most frequently utilized to recover the proceeds of joint bank accounts, totten Trust accounts and other property which passes by operation of law, but is in the possession of the fiduciary. Matter of Nova, 23 AD2d 820. Unless the court otherwise directs, the only necessary parties are the claimant and the fiduciary. SCPA 2105(2). Petition showing specific money or personal property or proceeds which the fiduciary should deliver to the claimant. SCPA 2105(1). An answer is served upon the return of process or at such later date as directed by the Court. SCPA 302. Although there is no inquisitorial examination, the parties may utilize the usual disclosure devices. Although prior case law held that since petitioner elected the equitable remedy of a reverse discovery proceeding, only the fiduciary could demand a jury trial; the present trend is to permit either side to demand a jury if the issue involved is one which, at common law, would entitle the parties to a trial by jury. Matter of Schneier, 74 AD 2d 22; Matter of Wisniewski, 88 Misc 2d 76. The matter is tried as any other litigated matter and the Court determines the respective interests of the parties in the property or the proceeds or value thereof and makes a decree accordingly. The factors to be considered in determining whether to institute reverse discovery or to wait for an accounting or other appropriate proceeding. Advantages No waiting period as in an accounting proceeding. Faster trial date and less time in hearings because usually don't have the multitude of issues that arise in a contested accounting proceeding. Avoid the risk of an insolvent fiduciary distributing the estate prior to an adjudication of the claim.

-9File ID:F:\Clients\GBF - Misc\Articles\SCPA 2103 Proceedings.wpd

Disadvantages Petitioner bears the cost of instituting the proceeding. If there is a question as to whether the estate has sufficient assets to honor the claim, an ultimate determination might have to be postponed until an accounting proceeding.

Dated: September, 2007

- 10 File ID:F:\Clients\GBF - Misc\Articles\SCPA 2103 Proceedings.wpd

Similar Documents