X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Decedent died at age 92 on July 7, 2020, survived by his wife, Donna, and seven children. Preliminary letters were issued on November 30, 2020 to Thomas C. D’Agostino, Esq. and Michael J. McGuire, the nominated co-executors under decedent’s June 12, 2017 Will (with November 28, 2018 Codicil). Decedent’s Will (with Codicil) was admitted to probate without objection on March 24, 2021, and full letters were issued to the executors. By petition efiled August 12, 2021, the executors seek advice and direction from this Court pursuant to SCPA 2107 with respect to the sale of various estate assets: (1) 2733 Wehrle Drive, Lancaster, New York [vacant land]; (2) Niagara Delaware, Inc. [decedent's 50 percent ownership interest thereof]; (3) 4585 Group, Inc. [decedent's 50 percent interest thereof]; (4) Mohawk Group LLP and Mohawk Group, Inc. [decedent's 12.37 percent interest in each entity]. The executors state that they have received offers to purchase each of the within estate assets and that they wish to accept such offers. The executors indicate that, based upon potential estate tax liabilities and other concerns, the sale of the assets listed in their petition for the prices proposed may leave an “insufficient” amount in the estate to satisfy fully all the bequests in decedent’s Will. They ask that this Court now approve all such sales. For the reasons which briefly follow, I decline to entertain the executors’ SCPA 2107 petition. As our Court of Appeals said long ago in Matter of Leopold, 259 NY 274, 277 [1932]: “The administration of a decedent’s estate requires the exercise of judgment and discretion. The Surrogate has power to review that discretion, but not to substitute [her] own discretion for the discretion of those upon whom the duty has been cast of settling the affairs of the estate.” And, as our Appellate Division pointed out in Matter of Grawe, 32 AD3d 1309, 13091310 [2006]: “[T]he exercise of discretion by the executor is limited by his absolute duty of impartiality to the beneficiaries of the estate (see Matter of Muller, 24 NY2d 336, 341 amended on other grounds 24 NY2d 1029 [1969]” (see also Matter of Menitskiy, 2009 NY Misc LEXIS 6500, 2009 NY Slip Op 33102 [U] [dec. Dec. 24, 2009] ["The executor must act in the best interests of the estate as a whole"]). Nassau County Surrogate Judge Bennett, in Matter of Osterndorf, 75 Misc 2d 730, 730 [1973], dealing with the potential sale of estate real property, noted that “EPTL 11-1.1 gives administrators broad powers and accordingly proceedings under SCPA 2107 for advice and direction should be exercised only in extraordinary situations (Matter of Tannenbaum, 20 AD2d 808, aff’d 15 NY2d 829; Matter of Ebbets, 130 Misc 250)” (emphasis added). Judge Bennett, further noting that the issue then before him was “one of business judgment and not law” (id., emphasis added), and, while indicating that the Court could “appreciate the administrator being cautious” (id.), then held as follows: “However, since the statute provides the administrator with the authority to sell the real property, he should make the business judgment and utilize the powers afforded to him. In cases such as these, petitioning for said relief and being denied same on the grounds set forth herein may be enough of a protection of a fiduciary. If courts encourage the use of proceedings under SCPA articles 19 and 21 concerning the sale of real property and said sections were used other than in extraordinary situations, this may have a tendency to unduly create in the minds of some a limitation of the powers afforded to fiduciaries under EPTL 11-1.1 and place unnecessary clouds on title” (id., at 730-731, emphasis added). Provided estate fiduciaries exercise “good business judgment”, their decisions are effectively immune to subsequent challenge. Only if the fiduciaries can be shown to have “acted negligently, and with an absence of diligence and prudence which an ordinary [person] would exercise in [his or her] own affairs” (Matter of Lovell, 23 AD3d 386, 387 [2005] [internal citations and quotation marks omitted]) is a surcharge possible. In Lovell, the Appellate Division, Second Department, had before it an appeal where the Dutchess County Surrogate Court had entertained an SCPA 2107 application and had cancelled a real estate sales contract entered into by the estate executor. In finding that the Surrogate Judge had “erred in effectively cancelling the contract in the absence of any evidence, inter alia, of fraud, duress, overreaching or unconscionability (see Jablonski v. Jablonski, 275 AD2d 692 [2000])” (id., at 387), the Appellate Division also pointed out that the SCPA 2107 petition should not even have been entertained: “SCPA 2107 does not empower the Surrogate’s Court to substitute its judgment for that of the executor, especially when the executor is exercising a specifically-granted power, and to cancel a contract it deems inadvisable (see Matter of William M. Kline Trust, 196 Misc 2d 66, 76 [2003]). Indeed, SCPA 2107 was not even properly invoked, as the record does not demonstrate the required “extraordinary circumstances” needed to warrant relief under that section (see Matter of Tannenbaum, supra; Matter of Romano, supra; Matter of William M. Kline Revocable Trust, supra; Matter of Osterndorf, 72 Misc 2d 730; Matter of McCormack, 4 Misc 2d 646)” (id., at 387-388, emphasis added). And, in Matter of Tannenbaum, 20 AD2d 808 [1964], aff’d 15 NY2d 829 [1965], the Appellate Division, Second Department, said the following with respect to the estate executors’ sale of decedent’s stock in a corporation: “Since the decedent did not own all, or substantially all of the shares of stock in the corporation, and since his will did not specifically empower the executors to continue the corporation’s business (cf. Matter of Stulman, 146 Misc. 861), the disposition of his interest in the corporation was wholly a matter of business judgment on the part of the executors, and the advisability of any such disposition was not a question properly determinable by the Surrogate’s Court (Matter of Ebbets, 139 Misc. 250; Matter of Pulitzer, 139 Misc. 575, affd. 237 App. Div. 808). Hence, the executors’ failure to make application for the court’s direction as to the disposition of the decedent’s 38 shares of stock, under section 215 of the Surrogate’s Court Act; and the executor’s judgment to embark on their own plan of liquidation, under which such shares were deemed to be without good-will value, constituted no unauthorized assumption of authority on their part (Matter of Pulitzer, supra). Moreover, resort to said section 215, under settled case law, was available only in extraordinary circumstances, not here shown (Matter of Bernstein, 13 AD2d 743; Matter of Bourne, 11 AD2d 128; Matter of Wolfensohn, 138 NYS 2d 718; 3 Warren’ Heaton, Surrogates’ Courts [6th ed], §251 par. 4, subd. [b], p. 290)” (at 810, emphasis added).1 Because my review of the executors’ petition now before me discloses no “extraordinary circumstances” which would warrant the invocation of SCPA 2107 and this Court’s review of potential estate asset sales, I conclude that it would not be proper to entertain the petition on the merits, and I, therefore, decline to do so. This decision shall constitute the Order of this Court and no other or further order shall be required. Dated: August 25, 2021

 
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

Premium Subscription

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now

Team Accounts

Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now

Bundle Subscriptions

Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now

Consulting Top 25 Consultants Awards 2021

December 09, 2021
New York, NY

Consulting Magazine identifies consultants that have the biggest impact on their clients, firms and the profession.


Register

GlobeSt. Multifamily Spring 2022 (Formerly APTS)

February 22, 2022 - February 23, 2022
Hollywood, FLA

Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!


Learn More

ASSOCIATE: M&A Transactional

Newark, New Jersey, United States

ASSOCIATE: M&A Transactional Newark The Newark office of Epstein Becker & Green is seeking a M&A transactional attor...


Apply Now ›

OGC Meloy Law Fellow

New York, New York, United States

Overview The OGC Meloy Law Fellow is a competitive position for a recent law school graduate or junior attorney interested in a one-year as...


Apply Now ›

EXPERIENCED LITIGATION ATTORNEY ONLY

Brooklyn, New York, United States

Full time for Brooklyn Commercial law office. Must be admitted to NY State and Federal courts. Candidate must be willing to work in offi...


Apply Now ›

O'TOOLE SCRIVO LLC

11/29/2021
NJLJ Web

O Toole Scrivo LLC would please to announce the Elavation of Laura Studwell to Partner


View Announcement ›

LEVINSON AXELROD

11/29/2021
NJLJ Web

LEVINSON AXELROD personal injury lawyers welcomes new attorneys to the firm


View Announcement ›

REID & RIEGE, PC

11/23/2021
NYLJ Web

Reid & Riege Attorneys pleased to announce the recent addition of three new attorneys.


View Announcement ›