ESTATE OF INES J. FONTI, Deceased (709/C/10) — The decedent, Ines J. Fonti, died on September 22, 2007, survived by three children, Gregg Fonti, Maureen Fonti, and Robert Fonti. A petition seeking probate of an instrument dated April 14, 1961 was filed on July 13, 2010. Temporary Letters of Administration were first issued to Gregg Fonti on August 10, 2010. Letters of Administration c.t.a. were finally issued to Gregg Fonti on March 8, 2011, and remain in effect to date.
Following a petition by Robert Fonti to compel an accounting, Gregg Fonti filed an interim accounting on October 13, 2011. The parties are in the midst of discovery, although no objections have been filed to date. Gregg Fonti was examined pursuant to SCPA 2211 on July 23, 2012.
On August 15, 2012, Respondent served upon JP Morgan Chase a nonjudicial subpoena duces tecum, in which the first demand sought "statements, cancelled checks, deposit slips and documentation for all activity for the Chase account in the name of Fonti and Fonti...for the period September 22, 2004 to date." Respondent sent a second subpoena dated August 30, 2012, accompanied by a cover letter where he noted his withdrawal of the first subpoena and requested the same information from the account for the dates September 22, 2007 through December 31, 2010. The account from which the records are sought is a business account for the Law Firm of Fonti & Fonti, whose partners Gregg Fonti and Maureen Fonti are the authorized signatories.
The within motion was filed by Gregg Fonti (hereinafter "Petitioner") to quash the first demand of the nonjudicial subpoena dated August 15, 2012. Opposition papers were filed by Robert Fonti (hereinafter "Respondent"). Oral argument on the motion was heard on September 12, 2012 at the conclusion of which, decision was reserved. Participating in oral argument were: Steven R. Finkelstein, Esq., attorney for Petitioner and David C. Jacobson, Esq., attorney for Respondent.
Petitioner argues that the subpoena must be quashed because the subpoena was not served as required by law. Pursuant to CPLR §§2302 and 2303(a), a subpoena may be issued without a court order and is served in the same manner as a summons commencing an action. Service of process upon a corporation can be effected by making personal delivery to "an officer, director, managing or general agent, or cashier or assistant cashier or to any other agent authorized by appointment or by law to receive service" (CPLR §311[a]). If such service is impracticable, a party may serve a corporation in another manner upon motion without notice (CPLR §311 [b]). Respondent served J.P. Morgan Chase by overnight Federal Express mail and fax, not personally. Respondent's service upon J.P. Morgan Chase does not satisfy CPLR §311 because there was no prior motion to the Court to serve the subpoena in a manner other than those specified under CPLR §311 (a).
Assuming arguendo that proper service was made, however, the motion to quash must be granted. Article 31 of the CPLR sets forth those items for which disclosure may be sought. Generally the test for disclosure under CPLR 3101 is whether the information sought is "material and necessary." This test is one of "relevance, usefulness and reason" (Allen v. Cromwell-Collier Publ'g. Co., 21 NY2d 403 ).
An application for a motion to quash a subpoena must be made pursuant to CPLR §2304. A party has standing to contest a subpoenas duces tecum served on a non-party which seeks his or her personal records and the motion to quash "may be made on behalf of a non-party witness by the witness or the witness' lawyer, or by one of the parties or a party's lawyer" (In re MacLeman, 9 Misc.3d 1119(A) [N.Y. Sur. Ct. 2005]).
The standard to grant a motion to quash a subpoena is "only where the futility of the process to uncover anything legitimate is inevitable or obvious, or where the information sought is utterly irrelevant to any proper inquiry" (Id). The burden of establishing that the requested records are utterly irrelevant is on the person being subpoenaed" (Morano v. Slattery Skanska, Inc., 18 Misc. 3d 464, 469 [N.Y. Sup. Ct. 2007]).
Respondent argues that the bank records are sought to determine whether any estate funds were used or deposited for purposes other than administering the estate of Ines J. Fonti, or were commingled with Fonti & Fonti law firm assets. First, Respondent claims that the deposit of checks from the Teacher's Retirement System of the City of New York into the Fonti & Fonti law firm account establishes that estate funds were indeed deposited into a non-estate account. However, upon closer examination, it is apparent that these funds are from a retirement account made payable to Gregg Fonti and Maureen Fonti as named beneficiaries. Therefore, the funds are not estate assets and their deposit into the Fonti & Fonti account does not evidence a commingling of estate and non-estate assets.
Second, Respondent seeks discovery of the bank records to discover how estate loans were used by the Petitioner. On January 9, 2008 and April 15, 2009, Petitioner signed promissory notes in his capacity "as an heir of law and next of kin of Ines J. Fonti" in the amounts of $150,000 and $100,000, respectively. Respondent is in possession of checks and deposit slips which show that the $150,000 loan proceeds were deposited into the Fonti & Fonti law firm account. However, Respondent does not know where the $100,000 loan proceeds were deposited and is seeking the bank account records to determine whether they were also deposited into the Fonti & Fonti law firm account. Further, Respondent claims that the ledger provided by Petitioner in his accounting to document estate expenses paid from the Fonti & Fonti account is missing check numbers and therefore indicates that the Petitioner is attempting to conceal an improper use of the borrowed funds. Accordingly, Respondent's subpoena seeks copies of all checks written from the Fonti & Fonti account.
Petitioner counters that the subpoena should be quashed as no estate funds were ever deposited into the Fonti & Fonti bank account, and therefore the bank records "cannot possibly result in the disclosure of relevant evidence, nor is it reasonably calculated to lead to the discovery of information bearing on the issues in this proceeding" (Petitioner's Motion at 7 [c]). Initially, Petitioner notes that Respondent is seeking records dated prior to his appointment as a fiduciary, and prior to the date the loans were taken. Further, Petitioner claims that he has fully disclosed and produced copies of all records relevant to the Fonti & Fonti account, insofar as some administration expenses and claims against the estate were paid out of the law firm account. Petitioner provided a ledger that listed estate expenses paid from the law firm account, including the date, check number, amount, payee, account number and comments for each payment. Petitioner claims that no additional information would be required from any other creditor of the estate, and therefore no additional information regarding the loans taken to pay estate administration expenses should be permitted here. Disclosing the requested information would divulge private business information that does not relate to the estate and should not be permitted by the Court.
In an accounting proceeding, the fiduciary is obligated to make a complete and full disclosure of all the relevant data pertaining to the estate, including his or her conduct as the fiduciary, and his or her collection of estate assets (Matter of Fenton, 23 Misc.2d 1074 [Sur. Ct. Nassau Cty. 1960). In the instant case, Petitioner's accounting and subsequent disclosures pursuant to discovery requests provided a thorough summary of all such information, including a detailed breakdown of how funds loaned to pay estate expenses were expended.
Additionally, Petitioner has met his burden of establishing that all of the Fonti & Fonti bank records requested are irrelevant to any inquiry regarding the collection of estate assets or administration of the estate. The requested information would undoubtedly reveal confidential information regarding the law firm that has no bearing on the pending accounting proceeding. In cases where the personal records of a fiduciary were successfully subpoenaed (see, e.g., Matter of Rutherford, 26 Misc.3d 1235(A) [Sur. Ct. N.Y. Cty. 2010]; Matter of MacLeman, 9 Misc.3d 1119(A) [Sur. Ct. N.Y. Cty. 2005]), there were allegations of undue influence in probate proceedings, where the relationship between the decedent and the account holder of the records sought was questioned. Review of such personal banking records would provide insight as to whether funds were improperly transferred prior to the decedent's death. Here, no such allegations are at issue. Accordingly, Petitioner's motion seeking to quash the Respondent's subpoena pursuant to CPLR §2304 is granted.
Petitioner has not met his burden, however, of establishing that copies of the checks written from the Fonti & Fonti law firm account to pay estate expenses are irrelevant to the accounting proceeding, or, that any records evidencing the deposit of the loan proceeds into the Fonti & Fonti account are irrelevant to the accounting proceeding. Although the detailed ledger provided is thorough and may satisfy the parties in some accounting proceedings, Respondent requested further proof of such expenses and the Court finds this request reasonable.
Therefore, in the interest of fairness, and in an effort to move the discovery phase of this proceeding to a conclusion, the Court directs that Petitioner provide Respondent with copies of all canceled checks for the estate expenses paid from the account subpoenaed, and copies of any bank statements evidencing the deposit of the proceeds from the two loans for which he signed promissory notes.
This matter is restored to the Court's calendar of January 9, 2013 for purposes of scheduling any further discovery which may be needed.
The Court wishes to express its appreciation to Liza Kabariti, Esq., a recent graduate from Hofstra University School of Law, for her assistance in the research and drafting of this decision.
This decision shall constitute the Order of the Court.