Category: objections

Can you file a counterclaim in Surrogate’s Court?

NY SCPA 302(1) expressly limits the types of pleadings allowed in Surrogate’s Court.  Unless directed by the court, the only pleadings allowed are a petition, answer, objections, and an account. 

What about a counterclaim?  Do you need permission from the court to file it?

Matter of Eshaghian, 144 AD3d 1155 (2d Dept 2016) briefly addressed this issue.  There, the court held that counterclaims had been properly asserted in the case, citing to the CPLR and SCPA in support of its conclusion.  Essentially, the court impliedly held that SCPA 302 is not specific enough to preclude a counterclaim and that the courts may therefore rely on CPLR 3011 to supplement the definition of an answer, which expressly provides that an answer may include a counterclaim.

Matter of Zalaznick, 84 Misc 2d 715 (Sur Ct, Bronx County 1975) also provides some guidance on this issue.  There, the court considered the issue of whether a cross-petition was permissible.  The court held that “[i]mplicit in a ‘petition’ being a proper pleading is the right of an adverse party to utilize a cross petition … in the same proceeding[.]”  The court was particularly concerned about a contrary holding, which would promote piecemeal litigation in different forums and cause significant delay.

While these cases provide authority for a party to interject a counterclaim in Surrogate’s Court, there is a counterargument to be made.  Among other things, SCPA 302 and CPLR 3011 both describe the types of pleadings permitted.  Insofar as SCPA 302 does not expressly permit answers to contain counterclaims, one could argue that the contrary provision of CPLR 3011 is inconsistent to the procedure set forth by the SCPA and should not be applied.   

Indeed, Matter of Eshaghian may have failed to consider the ramifications of relying on CPLR 3011.  Where counterclaims are included in an answer, that provision expressly requires a reply to a counterclaim.  Allowing respondents to interject counterclaims in a case based on CPLR 3011 would therefore mandate and expand the types of pleadings permitted in Surrogate’s Court so as to include a reply.  This in turn would arguably expand the types of pleadings permitted by SCPA 302(1) and arguably be inconsistent with the procedures set forth in the SCPA.   

Another argument against permitting counterclaims is based on the provisions of SCPA 2402, which sets forth the fees required for parties to file a pleading.  Whereas some petitions may cost up to $1,250 for the filing fee, the filing fee for an answer is only $75.  Arguably, the intent of this provision is to collect as much revenue as possible.  Allowing an answer to interject a counterclaim for only $75 would arguably be inconsistent with the procedures of the SCPA. 

What is a constructive trust?

Parties often request a constructive trust during estate litigation and family disputes over real property and other assets. This claim generally seeks to recover property from someone who has obtained it unfairly. 

A constructive trust is an equitable remedy “erected whenever necessary to satisfy the demands of justice” (Latham v Father Divine, 299 NY 22, 27 [1949]; see also Beatty v Guggenheim Exploration Co., 225 NY 380 [1919, Cardozo, J.]).  It may be imposed “‘[w]hen property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest’” (Sharp v Kosmalski, 40 NY2d 119, 121 [1976], quoting Beatty, 225 NY at 386).

There are four elements of a constructive trust: (1) a confidential or fiduciary relationship; (2) a promise; (3) a transfer in reliance of such promise; and (4) unjust enrichment (Sharp, 40 NY2d at 121).  However, these elements have been referred to as merely “factors” (Simonds v Simonds, 45 NY2d 233, 241 [1978]).

In a proper case, the court may impose a constructive trust even if all the elements are not established (see id.; Rowe v Kingston, 94 AD3d 852, 853 [2d Dept 2012]; Cruz v McAneney, 31 AD3d 54, 59 [2d Dept 2006]).  The flexibility of the claim “is limited only by the inventiveness of men [and women] who find new ways to enrich themselves unjustly by grasping what should not belong to them” (Simonds, 45 NY2d at 241 [internal quotation marks and citations omitted]).

What is the fiduciary tolling rule?

In Estate of Mathai Kolath George, the Appellate Division, Third Department applied the fiduciary tolling rule to a constructive trust claim in a case involving a fiduciary’s misconduct and her removal.  There, after the decedent passed away, the estate’s fiduciary terminated the decedent’s contract for the purchase of a mansion and entered into a new contract to purchase the property on behalf of an LLC, an entity in which she was the managing member, for the remaining purchase price left on the decedent’s contract.  The then-fiduciary also allegedly used estate funds to pay the remainder of the purchase price left on the contract.    

Several years later, following a trial, Surrogate’s Court removed the fiduciary from her position as executrix and revoked her letters testamentary, finding that she violated her fiduciary duty to the estate by, among other things, failing to identify or account for the estate’s assets, engaging in self-dealing, and commingling the estate’s assets with her personal assets.

A petition was later filed in the estate seeking, among other things, the imposition of a constructive trust on the mansion.   The LLC and another entity filed motions seeking to dismiss the case based on the statute of limitations defense. 

The court concluded that a constructive trust is subject to a six-year statute of limitations and accrued on the date on which the former fiduciary cancelled the decedent’s contract and entered into the contract to purchase the property on behalf of the LLC.

The Court held as follows:

“Under the fiduciary tolling rule, a claim alleging wrongful conduct by an individual in his or her fiduciary capacity does not accrue until there is an open repudiation of the fiduciary obligation or a judicial settlement of the fiduciary’s account ….  This rule tolls the statute of limitations for all misconduct committed by the fiduciary prior to repudiation of its obligation or termination of the fiduciary relationship ….  since, absent either repudiation or removal, the aggrieved parties were entitled to assume that the fiduciary would perform his or her fiduciary responsibilities …, and it is highly unlikely that a sitting fiduciary would assert a constructive trust claim against himself or herself” (internal punctuation marks omitted).

Under this rule, the toll continued until a successor fiduciary was appointed.  The Court found that the statute of limitations was tolled from the date the fiduciary received letters testamentary, until her removal and continuing until letters were granted to a successor fiduciary for the estate, a total toll of four years, five months and 14 days.  Taking this tolling into account, the Court concluded that Surrogate’s Court should not have dismissed the claim based on the statute of limitations defense.

Does SCPA 2110 Authorize Payment of a Beneficiary’s Legal Fees from the Estate?

“Under the general rule, attorneys’ fees and disbursements are incidents of litigation and the prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties or by statute or court rule” (A. G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 5 [1986]).  This rule limits this court’s discretion and authority to award fees to a beneficiary payable from an estate (see Matter of Urbach, 252 AD2d 318, 321 [3d Dept 1999] [“all parties to a controversy, the victors and the vanquished, [must] pay their own counsel fees”]; see also Matter of Rodken, 2 AD3d 1008, 1009 [3d Dept 2003] [“An attorney may be compensated from estate funds only for services that benefit the estate”]; Matter of Baxter [Gaynor], 196 AD2d 186, 190 [4th Dept 1994]).  

To be compensated for legal fees from an estate, the “legal services [must] have been rendered for the benefit of the estate as a whole, resulting in the enlargement of all the shares of all the estate beneficiaries” (Matter of Burns, 126 AD2d 809, 812 [3d Dept 1987]; Matter of Wallace, 68 AD3d 679, 680 [1st Dept 2009]; Matter of Baxter [Gaynor], 196 AD2d at 190; see also Matter of Kinzler, 195 AD2d 464, 465 [1st Dept 1993]; Matter of Carver, 19 Misc 3d 1110[A], 1110A, 2008 NY Slip Op 50632[U], *3 [Sur Ct, Essex County 2008] [citing cases]).

On the other hand, “where the legal services rendered did not benefit the estate but benefitted only the individuals whom the attorney represented, the attorney must seek compensation from the clients individually” (Matter of Wallace, 68 AD3d at 680; see also Matter of Rodken, 2 AD3d at 1008; Matter of Baxter [Gaynor], 196 AD2d at 190).

Appellate Court Victory: Matter of Gordon

In a 3-2 split decision, the Appellate Division, Third Department reversed an order of the Surrogate’s Court of Albany County (Maney, S.), which had denied our motion seeking to disqualify the other side’s counsel. 

The appellate court agreed that opposing counsel was disqualified from representing the other side in the case based on opposing counsel’s prior participation in the same estate as a former judge.  The full decision is available at, http://decisions.courts.state.ny.us/ad3/Decisions/2021/529943.pdf

court room

What should you ask the drafting attorney during the SCPA 1404 Examination?

If you are considering objecting to a will, the Surrogate’s Court Procedure Act provides you with the right to question the drafting attorney.  But what should you ask?  

The questions for each specific case will vary.  However, in most cases you should ask questions about the attorney’s background and qualifications, the attorney’s prior interactions with the decedent and beneficiaries, the attorney’s prior legal representation of the decedent and beneficiaries, the existence of prior wills, the names of the decedent’s prior attorneys, who referred the decedent to the drafting attorney, who initiated the first contact for the services, where they met, who was present, what was discussed, the extent to which decedent discussed his family members and assets, what occurred during the will ceremony, the contents of the attorney’s notes and billing entries, whether the decedent was driven to the appointments, whether the decedent explained why he/she wanted to change his/her will, and any subsequent interactions between the decedent and the drafting attorney. 

Sample List of Questions

When were you admitted to practiced law in New York?

How long have you done estate planning?

When did you first meet the decedent?

When did you first perform any legal services for the decedent?

When did you first meet the beneficiary/named executor?

Have you ever performed any legal services for the beneficiary before?

Did the decedent have a prior will/estate plan?

How was it different than the will you drafted for him?

Do you know the name of the prior drafting attorney?

Did someone refer the decedent to you?  Who?

Who arranged for the first meeting between you and the decedent?

How did the decedent get to your office?

Who was present?

What did the decedent tell you?

What did you discuss with the decedent?

What did you discuss with the beneficiaries?

Did the decedent say anything about his family/assets?

Did the decedent ever tell you why he/she wanted to make the change to the will?

What is the basis for your conclusion that the decedent was of sound mind?

Did you prepare an engagement letter for the services? 

How much did you charge for your legal services? 

Who paid?   

Who signed check?

Who wrote out the check?

Do you have any (other) invoices or billing records to reflect the services performed?

Did you take any notes? 

Do you have any other notes other than these?

Did you send the decedent any letters/correspondence?

Did the decedent give you any writings/letters?

Did you have any other/subsequent interactions with the decedent?

Do you know the names of the decedent’s banks?  Medical providers?  Pharmacy?  Cell phone number and provider?

Do you know if the decedent made any beneficiary changes to any of his/her non-probate assets during such and such time period?

Do you know if the decedent had any Powers of Attorney?  Who was named as the agent?  Do you know if the decedent had any joint accounts with the beneficiaries?

The Top 5 Types Of Documents to Request Prior to the SCPA 1404 Examination

When representing clients looking to challenge a will, we like to take full advantage of pre-objection discovery.  It is particularly helpful to review as much information about the decedent as possible prior to conducting the SCPA 1404 examination. We like to request and review the following types of documents:

Drafting Attorney’s Case File.  The best source for cross examination will be the drafting attorney’s case file.  We are particularly interested in the billing records, the attorney notes, and the correspondence.

Medical Records.  If we have the medical and financial records, we will use them to test the witnesses’ knowledge of the decedent’s health.  We will ask the drafting attorney and the attesting witnesses about their interactions with the decedent and whether they were aware of any physical or mental conditions suffered by the decedent.  Often, these witnesses may have been completely ignorant of significant underlying conditions, thereby calling into question the reliability of their opinions about the decedent’s capacity and the lack of undue influence.

If we do not have medical records in time for the exam, however, we may still proceed without the medical records to avoid delay.  To account for this, we will ask the witnesses about their knowledge of the decedent’s health and what the decedent told them about it.  We will then later compare the answers to the records we later obtain to see if the answers are accurate.

Phone Records.  If we have the phone records, we can determine how many times the decedent called the law office, the beneficiaries, and anyone else.  We may compare the records to the witnesses’ answers about durations of calls and the number of calls.  If the decedent told the witness that he or she did not have communications with our clients, we will check the phone records to see if the statement was accurate.

Prior Estate Planning Documents.  We look to prior estate planning documents to see if there was a deviation in the decedent’s estate plan and how long the prior plan existed.  We often ask the witnesses about their knowledge of a deviation and the reason given by the decedent for it.

Financial Records and Credit Card Statements.  We look to financial records and beneficiary change forms to see if the decedent gifted any funds to the beneficiaries and if any power of attorney was used to transfer funds on the decedent’s behalf.  Again, we ask the witnesses if they were aware of any of these circumstances when the will was executed. 

We also look to credit card statements to see where the decedent was at or around the time of the will execution and who the decedent may have been communicating with.  We also try to compare this information to other sources, such as the decedent’s emails, appointment book, calendar, and contact lists.

Preparing for the SCPA 1404 Exam: Case Study

Prior to filing objections to the validity of a decedent’s will, we conduct a thorough investigation into the facts of the case.  This requires us to examine the estate case file, the fiduciary’s records, and the decedent’s personal papers and communications.  We review the drafting attorney’s work product, criticize it, and try to tear it apart.  At the end of the day, our goal is to provide our clients with answers and advice about whether to file objections.

            In one particular case, we were confronted with a situation where the decedent disinherited his family members and left the bulk of his estate to someone he had met on the internet and knew for a very short period of time.  Sadly, the decedent ended up committing suicide shortly after. 

            We conducted a very thorough investigation into the facts of this case to prepare for the 1404 exam.  We first served an extensive document demand on the estate.  We requested items such as the estate’s case file and the decedent’s medical records, financial information, and written communications.  As in every case, we were particularly interested in communications between and among the decedent, the drafting attorney, the fiduciary, and the beneficiaries.

            We also served subpoenas on third party entities to obtain records, including the decedent’s phone records, emails, internet dating messages, and social media communications.  We were also able to obtain the case file of the police investigation into the decedent’s suicide.

            In this case, we went a step further than we normally do.  We hired a computer forensic examiner to examine the decedent’s computer.  As a result, we were able to view snapshots of emails and messages, as well as numerous word documents, PDFs and photographs that were located on the computer.  We were also able to view a list of the internet sites the decedent visited, the internet searches he conducted, and the places he may have driven based the addresses he typed into Google maps.

            By the time we got to the 1404 exam, we had a wealth of information to use for cross examination.

Can You Admit a Lost or Destroyed Will to Probate?

An estate practitioner may be faced with a situation where the original will of the decedent cannot be found after his or her death. Don’t worry, at least not just yet.  In such a case, SCPA 1407 provides the procedure for admitting a lost or destroyed will to probate. The first hurdle is to establish that the will has not been revoked.  However, this is no easy task.

“If a will, shown once to have existed and to have been in the Decedent’s possession, cannot be found after [his or her] death, the legal presumption is that the [decedent] destroyed the will with the intention of revoking it” (Matter of Demetriou, 48 AD3d 463, 464 [2d Dept 2008]). “The burden of proof is on the will proponent to show, by facts and circumstances, that the testator did not destroy the will with the intent to revoke it; mere speculation or suspicion is insufficient” (Matter of DiSiena, 103 AD3d 1077, 1078 [3d Dept 2013]).

We had the opportunity to litigate this issue at the Appellate Division, Third Department. In the case, the record contained evidence that the decedent had disinherited one of her sons in several wills and a revocable trust, including the most recent will offered for probate. The son had left the family business and created his own competing business. The decedent therefore left her estate (including the family business) to her remaining children who had worked for the family business and contributed to its growth. The decedent also twice fought the disinherited son in court, once to preserve her rights to remove him from her will and another time to prevent him from obtaining an interest in her business.

At the Surrogate’s Court, the disinherited son sought summary judgment dismissing the probate petition. The disinherited son argued that the lost or destroyed will created a presumption of revocation and that the record evidence was insufficient to overcome the presumption.

The Surrogate’s Court ruled in favor of the disinherited son and granted summary judgment dismissing the probate petition. The Surrogate held that the proponents of the will did not overcome the presumption, relying on the strong presumption of revocation.

On appeal, we did not dispute the heavy burden imposed on a proponent of a lost will. Rather, we focused on the record evidence and argued that there was sufficient evidence to create a question of fact on the issue.

The appellate court agreed with us and reversed the summary dismissal of the case (Matter of DiSiena, 103 AD3d 1077 [3d Dept 2013]). It determined that the record evidence amounted to more than mere speculation or suspicion about the decedent’s lack of intent to revoke her will. The record, for example, contained evidence of the prior lawsuits and the several wills of the decedent disinheriting her son. Evidence also existed that the decedent had her estate attorney store her codicil for her until her death. The decedent also met with her estate attorney in her hospital room shortly before her death to discuss further estate planning. At that time, she instructed her estate attorney to create an irrevocable trust gifting her remaining interest in the family business to the identical beneficiaries named in her prior wills and revocable trust. The decedent also signed a power of attorney appointing her three children other than respondent as her agents. An unsigned copy of the irrevocable trust documents, which expressly state that respondent is not a beneficiary, was included in the record, and the estate attorney indicated that decedent died before he was able to meet with her to sign the trust documents.

While the case turned out successfully for our clients, we would not have been able to win the appeal without a sufficient record. A practitioner should be familiar with the numerous relevant factors considered by the courts on this issue and develop the record in case to avoid summary dismissal of the probate petition.

To learn more about relevant factors and case law, feel free to contact the experienced trust and estate planning attorneys at TRK Law.