Estate of Bernard T. Cusak
Securities and Federal Corporate Law | Trusts and Estates
- Surrogate's Court, Suffolk County
- Surrogate John M. Czygier
- For Plaintiff: Attorneys for Petitioner: Jaspan Schlesinger, LLP, By: Lori A. Sullivan, Esq., Garden City, New York.
- For Defendant: Attorney for Respondent: James E.., Babylon, New York. Clark, Esq.
Cite as: Estate of Bernard T. Cusak, 321P2009/A/B, NYLJ 1202586452762, at *1 (Surr., SUF, Decided July 16, 2012)
Surrogate John M. Czygier
Decided: July 16, 2012
Attorneys for Petitioner: Jaspan Schlesinger, LLP, By: Lori A. Sullivan, Esq., Garden City, New York.
Attorney for Respondent: James E.., Babylon, New York. Clark, Esq.
Before the court are a motion and a "cross-motion" to dismiss the petition and to seek affirmative relief against the petitioner in the underlying proceeding. For the reasons set forth herein, both applications are denied.
Captioned decedent died testate on April 2, 2008 survived by his spouse (respondent in the underlying proceeding to compel payment of a legacy) and a daughter. Petitioner in the proceeding to compel payment of a legacy is one of the decedent's four step-children, who was given an option to purchase decedent's shares of stock, rights and title to the business held by A-1 Sewer & Drain Service, Inc. under decedent's last will and testament. A petition for probate of decedent's will was filed on February 26, 2009. The will was admitted to probate by decree of this court on March 5, 2009, whereupon letters testamentary issued to decedent's surviving spouse, Mary Ann Cusak. Pursuant to the terms of the will, decedent's entire estate devolves upon his surviving spouse, except for the option to purchase contained in Article Third, as follows:
I hereby give, devise and bequeath a first option to purchase all of my shares of stock in my business which is held by the corporation entity A-1 Sewer & Drain Service, Inc., as well as all of my rights title and interest in all other property and assets in such business to my stepson John L. Duignan. The terms of the option to purchase shall be as follows:
(a) The purchase price of the shares of A-1 Sewer & Drain Service, Inc., as well as all of my rights title and interest in all other property and assets in such business shall be the fair market value of said business at the time of my death. The purchase price shall be paid by a note with a term of Ten (10) years to be paid in one hundred and twenty (120) equal monthly installments. Said note shall bear interest at a rate of seven and one half percent (7.5 percent) and shall be self amortized.
(b) My stepson shall have one hundred and twenty (120) days to exercise this option; and if he does exercise such option he shall do so in writing to my named executrix.
According to the papers before the court, the executor obtained an appraisal, dated March 31, 2009, valuing the business at $206,400. Petitioner advised the executor and her attorney by letter, dated June 17, 2009, that he wished to exercise his option to purchase. Since that time, petitioner, who has worked at A-1 Sewer & Drain Service, Inc. since 1982, has continued to operate the business and paid the executor a salary. Within the last few months, respondent and another one of her sons (Timothy Duignan) have obtained access to the property twice and changed the locks in an attempt to deny petitioner access. Petitioner then brought the underlying proceeding by petition and order to show cause in order to restrain respondent executor and her agents from taking any action with respect to A-1 Sewer & Drain Service, Inc., including entering the premises upon which the business is located. Instead of serving a responsive pleading, respondent served and filed a pre-answer motion to dismiss and a separate application denominated as a "cross-motion" for affirmative
In support of her applications, respondent argues that petitioner's purported exercise of the option to purchase was untimely, that she was responsible for continuing the business as executor of the estate, and that, since she relies on the business for income, she asked petitioner to continue as an "at will" employee. She also alleges that petitioner may have misappropriated estate assets, and that she terminated him and asked her son Timothy to help her when petitioner did not acknowledge his termination. Respondent makes the argument that the March, 2009 appraisal was obtained "solely for estate tax purposes" (Cusak Affidavit in Support, p. 5, ¶27) and that $137,600 was deducted from the preliminary value of $344,000 for a "lack of marketability" adjustment (Cusak Affidavit in Support, p. 5, ¶30), which would be added back to constitute market value. In response to petitioner's contention that he has made payments to her since 2009, which would come to a total of $257,300, respondent maintains that these are her "draws…as the owner" (Cusak Affidavit in Support, p. 6, ¶35).
As part of her application, respondent asks the court to declare that John Duignan is no longer an employee or agent of A-1 Sewer & Drain Service, Inc., that he is not authorized to act on its behalf and to restrain him from taking any action with respect to the business.
In opposition to the applications before the court, petitioner argues that they are procedurally defective and that no specific grounds under CPLR 3211 have been recited.
Petitioner notes that only his and decedent's names have appeared in the company's minutes since 1968. In fact, petitioner began working for the decedent before he married petitioner's mother, and claims that his brother Timothy worked there for a time but proved to be unreliable. He asserts that the will is silent as to when the one hundred twenty (120) days would begin to run and that respondent is taking this path in order to force petitioner to include Timothy Duignan in the business. He maintains that he was not an "at will" employee and that he was never terminated.
In reply, respondent argues that the "cross-motion" is proper and argues that the one hundred twenty (120) days should be calculated from the decedent's date of death; that she is the owner of the company and can hire or fire whomever she chooses; that petitioner stopped sending her a weekly salary in the Spring of this year; and that, had the appraiser been aware of the existence of a specific buyer with an option to purchase, the aforementioned "lack of marketability" discount would have been eliminated.
In short, based upon the papers before the court, while the enunciated issues may include the timeliness of the purported exercise of the option to purchase and the parties' respective rights concerning A-1 Sewer & Drain Service, Inc., the resolution of their issues concerning the purchase price may resolve the other issues raised herein.
Initially, the court will address the procedural arguments. The underlying proceeding was initiated by a petition with attached order to show cause. This does not constitute a motion capable of being addressed by a cross-motion.
Litigation in the Surrogate's Court is commenced by special a proceeding (SCPA 203), which may be served with a citation or an order to show cause ((SCPA 306, CPLR 403(d)) in order to obtain personal jurisdiction over the respondent(s). Thus, the commencement of a special proceeding by order to show cause is the equivalent of the institution of a plenary action by summons and complaint in the Supreme Court (see In re Pavese, 195 Misc2d 1). The response to such a pleading takes the form of an answer or a pre-answer motion to dismiss. Although this court does not accept cross-petitions for filing, the relief sought by respondent in her "cross-motion" would more properly be the subject of a separate plenary proceeding or a counter-claim in her answer. Accordingly, the relief requested in respondent's cross-motion is denied.
The motion to dismiss does not contain specific reference to a sub-section of CPLR 3211, however, given the tenor of the arguments herein, the court is treating it as a motion to
dismiss for failure to state a cause of action, pursuant to CPLR 3211(a)(7). As such, the pleading is afforded a liberal construction and petitioner is accorded every favorable inference; the only determination for the court to make is whether the facts alleged fit within any cognizable legal theory (see In re Lee, ___AD2d___, 2012 NY Slip Op. 05000; citing Leon v. Martinez, 84 NY2d 83, 87-88; Rovello v. Orofino Realty Co., 40 NY2d 633; see also Morone v. Morone, 50 NY2d 481). Ultimately, the primary question to be determined herein is whether petitioner exercised his option to purchase in a manner which would satisfy the terms of Article Third of decedent's last will and testament. The pleading before the court is sufficient to put respondent on notice for that purpose.
The remaining issues raised for the court's consideration on this motion will be determined after issue is joined and the parties have had an opportunity to conduct their discovery in this matter.
Accordingly, it is
ORDERED that respondent's applications for dismissal of the petition and for affirmative relief are denied; for the reasons set forth herein; and it is further
ORDERED that respondent shall have twenty (20) days from the date of this decision and order within which to serve and file an answer in this proceeding, with the appropriate filing fee. Upon receipt of same, the court will place the matter on its reserve trial and hearing calendar, and schedule a conference for the purpose of scheduling CPLR Article 31 discovery and a trial/hearing on the issues raised by the pleadings.