MICHAEL RECANTI AND IRA J. STATFELD, AS FAMILY TRUSTEES AND MEL M. IMMERGUT, AS INDEPENDENT LEGAL TRUSTEE, DANIEL PEARSON, AS INDEPENDENT ADVISOR TRUSTEE, AND ALASKA TRUST COMPANY, AS ADMINISTRATIVE TRUSTEE
MICHAEL RECANTI AND IRA J. STATFELD, AS FAMILY TRUSTEES AND MEL M. IMMERGUT, AS INDEPENDENT LEGAL TRUSTEE, DANIEL PEARSON, AS INDEPENDENT ADVISOR TRUSTEE, AND ALASKA TRUST COMPANY, AS ADMINISTRATIVE TRUSTEE (2011/3777) — Before the court is a motion, by a potential objectant to an accounting, to vacate a default and extend the time to appear and file obiections in this accounting proceeding. Petitioner in the underlying accounting proceeding opposes the motion. For the reasons set forth herein, the motion is denied.
At issue herein is a voluntary accounting filed by the former independent trustee of an inter vivos trust, referred to in the underlying accounting petition as the "STAREC Trust," established in 2002. The record reflects that, upon the return date of citation in the accounting proceeding, movant failed to appear and jurisdiction was deemed complete.
Subsequently, a decision of this court issued on January 20, 2012 which granted the relief requested by said petition for judicial settlement of the account, with the caveat that, in the absence of opposition, the court did not specifically approve the legal fees sought. The court, in its decision, also noted that the petitioner had requested the approval of certain unpaid attorneys' fees, and that it would not approve legal fees for services that have not yet been rendered. Further, the decision stated that any application for the approval of additional legal fees may be considered upon notice along with the decree which was directed to be submitted.
Petitioner then submitted to the court a decree, on notice to the interested parties, as such decree contained a request for the approval of additional legal fees. Movant then submitted to the court a counter-decree, objecting to the additional legal fees requested, as well as filing the instant motion to vacate her default in the underlying accounting proceeding. A decree has not yet been signed by the court.
The record before the court consists of the pleadings, to wit, the accounting petition, the account and supporting exhibits, the motion with exhibits, the opposition with exhibits, and the reply.
Movant seeks to set aside her default and the decision of this court dated January 20, 2012 and permit her to file objections to the accounting. Movant contends that she incorrectly understood the time frame within which she may file objections; that the accounting is incomplete and incorrect; and, that to allow movant to file late objections would not prejudice petitioner and would only require him to justify his commissions and fee requests, which is required of an accounting party. Further, movant argues that it was always her intention to object to petitioner's account, but that she does not practice in Surrogate's Court and she relied on a conversation with petitioner's attorney wherein she agreed to accept service for an interested party. Movant states that it was her understanding from this conversation that the court would, on the return date of citation, send out a notice setting the date by which objections were due. Movant states that she was not misled by petitioner's attorney, but that she did not correctly understand the procedure for the filing of objections. In support of that claim, she attaches a series of emails between her and petitioner's attorney that discuss service of process. It was not until movant was served with a Notice of Settlement of Decree, on or about February 1, 2012, that she became aware of the court's decision dated January 20, 2012.
In addition, movant objects to petitioner's request to approve additional legal fees that was submitted with the proposed decree. Movant claims that by requesting approval of additional legal fees, petitioner has essentially reopened the proceeding. To allow the court to consider a request for additional legal fees without allowing her to take issue with any other provision in petitioner's proposed decree would be unfair.
Movant further states that, given the cost that would be incurred to correct any errors in petitioner's account, she waives her right to object to any aspect of petitioner's accounting other than the trustee's commissions, and certain legal fees. Specifically, movant objects to the legal fees paid to the law firm of Brick & Patel LLP. Movant argues that Brick & Patel served not as legal counsel, but rather as a de facto co-trustee with petitioner. Further, movant argues that there is no affidavit of legal services for the work performed by Brick & Patel, and that such work also includes services provided for the preparation of the accounting, for which petitioner's current attorney, Farrell Fritz, has also charged fees. Movant objects to the attorneys' fees to Farrell Fritz, stating that the accounting that was prepared and filed by Farrell Fritz was unnecessary, that she had been willing to waive an accounting. Movant requests that the legal lee for Farrell Fritz be capped at a sum not to exceed $7,491.
Petitioner, in opposing the instant motion, argues that movant's assertion that she was not familiar with Surrogate's Court practice is not a reasonable excuse. Petitioner states that movant is an attorney, licensed to practice law in New York State, has been practicing law for more than twenty years, is a partner at a law firm that lists Surrogate's Court litigation as one of its practice areas, and has voluntarily undertaken to serve as a trustee of a trust with a value of over one-hundred million dollars.
Further, petitioner argues that the accounting citation contained clear language, to wit: "If you fail to appear it will be assumed that you do not object to the relief requested." Despite this language, respondent did not appear on the return date of citation, did not take any action with respect to the proceeding for more than forty-five days after the return date, and did not seek an extension of time to file objections until after the court issued its January 20, 2012 decision.
Petitioner argues that in addition to failing to provide a reasonable excuse, movant has not established a meritorious claim concerning petitioner's accounting. It is petitioner's contention that given movant's statement in her motion papers, "the Objectants waive the accounting and request that the Court award only reasonable commissions and compensation of professionals under the circumstances," she must therefore have no meritorious objections. Thus, petitioner alleges that, any objections put forth by movant are unsubstantiated, conclusory allegations and speculation. With regard to the legal fees of Brick & Patel, petitioner asserts that movant has no basis for her claims that the law firm acted is a de facto co-trustee, and that the limits on those legal fees is not justified. Further, petitioner has attached an Affirmation of Legal Services detailing the services provided by the law firm and asserts that these legal fees are justified under the "Potts-Freeman" standard. In addition, petitioner argues that the legal fees of Farrell Fritz were supported by an Affirmation of Legal Services filed in December of 2011 and also fall under the "Ports-Freeman" standard.
Finally, petitioner, relying on Matter of Drier, (245 AD2d 787) argues that respondent has failed to proffer any evidence of petitioner's misconduct amounting to dereliction, complete indifference or other comparable acts of misfeasance that would justify a reduction of his commissions. Petitioner asserts that the record before the court shows that he acted reasonably in carrying out his duties as Independent Advisor Trustee of the Trust, and s therefore entitled to full commissions.
CPLR 3012 (d) provides that the court may extend the time to plead upon a showing of reasonable excuse for the delay or default. CPLR 2004 allows the court "to extend the time fixed by any statute, rule, or order for doing any act, upon such terms as may be just and upon good cause shown, whether the application for extension is made before or after the expiration of the time fixed." The court may grant a motion to vacate a default upon the showing of both a reasonable excuse for a default and a meritorious defense, which is not established by allegations in conclusory form (Stewart v. Warren, 134 AD2d 585; Matter of Maxwell, 13 AD3d 630, at 631; Matter of Boyce, 158 AD2d 422; Estate of Jordan, 2/29/2008 NYLJ 35 (col. 5)). This court may vacate a default in the exercise of its inherent power and control over its own proceedings where it appears that substantial justice will be served and injustice prevented thereby (Matter of Efros, 19 Misc3d 1113 (A); citation omitted). It is the preference of this court to resolve disputes on the merits (see, Estate of Kruk, 8/25/2003 NYLJ 26 (col. 5); Matter of Pingpank, 134 AD2d 263; Matter of Esteves, 31 AD3d 1028).
These stated goals must also be balanced with the mandate from the Court of Appeals, which, in seeking to enforce statutory law, to lessen the disruption of trial calendars, and to maintain the orderliness and efficiency in state court practice, has stated that "statutory time frames - like court - ordered time frames - are not options, they are requirements to be taken seriously by the parties" (Miceli v. State Farm Mutual Automobile Insurance Company, 3 NY3d 725 at 726; see also One Brill v. City of New York, 2 NY3d 648).
The court will first examine the reasonableness of movant's stated excuse for her default. To that end, the court finds the itself out on its website as familiar with Surrogate's Court litigation; 2) that movant has agreed to serve as an independent trustee of a very significant trust; 3) that movant has indicated in her papers that in addition to representing herself, she is acting as the attorney for the other trustees in this matter1; and 4) that the accounting citation contained the following language, "[i] f you fail to appear it will be assumed that you do not object to the relief requested." Given these stated facts, the court finds that movant's failure to file objections, or even appear before the court on the return date of citation, a most basic function of Surrogate's Court practice, due to purported unfamiliarity with this court, is not a reasonable excuse. The Court can only conclude that movant is, or at least should be, familiar with the procedures of this court.
In addition, movant has failed to establish a basis for her objections other than certain allegations made in conclusory form. It appears from the pleadings that movant is seeking to object only to the legal fees and trustee commissions. The stated reasons for the potential objections to the attorneys' fees is that the law firm of Brick and Patel, LLP was not acting as legal advisor, but rather was serving essentially as a co-trustee. Movant asserts that petitioner's motivation was to protect his own interests and to protect himself. Movant further argues that the trustee did not need to file the accounting as it was clear that the trustees would have waived an accounting and provided petitioner with a receipt and release. Finally, movant objects to that portion of Brick and Patel, LLP's fees charged in connection with the preparation of the accounting asserting that the law firm of Farrell Fritz PC has also charged fees for the preparation of the accounting.
Other than her own conclusory assertions that the law firm of Brick and Patel served as a de facto trustee, movant has failed to submit to the court any other evidence to support her potential objections to the legal fees incurred. While the court notes that the legal fees incurred by petitioner in a short period are noteworthy, these fees must he considered in relation to the size of he trust, and given the size o this trust, the total legal fees to which movant would object constitutes an amount equal to.0006 percent of the trust. Movant also does not dispute petitioner's assertion that there was, at the time of petitioner's tenure as trustee, ongoing litigation between the settlers.
As to the stated potential objections to the trustees commissions, movant lists various examples that she asserts demonstrate that petitioner was derelict in his duties. However, other than her own conclusory assertions that petitioner was derelict in his duties, movant has failed to submit to the court any other evidence to support her potential objections.
Finally, it appears that, in this case, given the potential for litigation, and the time that would be involved in the extensive review and preparation for this dispute, substantial justice would not be served by granting the instant motion (Matter of Efros, supra). However, as movant did not default in her objection to the attorneys fees requested in connection with the services rendered subsequent to the court's January 20, 2012 decision, the court will allow movant to address these additional legal fees and only these additional fees.
To that end, an interim decree will be signed and counsel will be allowed to submit memoranda/appropriate documentation in support of fees incurred for services rendered subsequent to the court's January 20, 2012 decision with their proposed final decree and/or counter-decree.
Accordingly, for the reasons set forth herein, it is
ORDERED that the motion to vacate movant's default is denied; and it is further
ORDERED that the court will allow counsel, should they desire, thirty days to submit the additional documentation allowed herein in support of or in opposition to fees incurred for services rendered subsequent to the court's January 20, 2012 decision with their proposed final decree and/or counter-decree. In the event counsel opt not to provide such a submission, the court will sign an appropriate decree fixing the final amount of legal fees.
In the meantime, the proposed decree has been signed, but will be denominated as an "interim decree" in accordance with the terms of this decision/order. The matter will next appear on this court's calendar on October 17, 2012 as a control date for the submission (s) contemplated herein.
The foregoing decision constitutes the order of the court.
Dated: November 06, 2012
1. The court notes that despite the claim in her papers that movant is representing the other trustees in this matter, no notice of appearance has been filed herein on their behalf.