Cite as: Matter of Norma Reynolds, 1614P2008/H, NYLJ 1202588423633, at *1 (Surr., SUF, Decided August 31, 2012)

Surrogate John M. Czygier

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Decided: August 31, 2012

ATTORNEYS

Attorneys for Petitioner: By: John R. Morken, Esq., and Robert M. Harper, Esq., Farrell Fritz, P.C., Uniondale, New York.

Attorneys for Respondents: By: William L. Blum, Esq., Solomon Blum Heymann, LLP, New York, New York.

Co-Counsel for Verdi By: Harvey B. Besunder, Esq., Bracken Margolin & Besunder, LLP, Islandia, New York.

Co-Counsel for Verdi By: Joseph M. Donegan, Esq., Scarinci & Hollenbeck, LLC, Lyndhurst, New Jersey.

DECISION/ORDER

 

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Before the court is respondents' motion to dismiss the captioned construction proceeding and a cross-motion for an order indemnifying Robert Verdi for damages sustained as a result of the aforementioned construction proceeding. For the reasons set forth herein, the motion to dismiss is granted.

Background

The premise of the underlying petition is that by entering into a settlement stipulation settling a contested proceeding with Robert Verdi concerning the decedent's Quogue, New York property (executor Edward Reynolds, Robert Verdi) and by agreeing to be bound by such stipulation (Victoria Reynolds) on December 16, 2009, Edward Reynolds, Robert Verdi and Victoria Reynolds breached the in terrorem clause in decedent's will.

Captioned decedent died on August 13, 2008, survived by her spouse, Robert Verdi ("Verdi") and four adult children (petitioner Melanie Reynolds, Gregory Reynolds, Edward Reynolds and Victoria Reynolds). Her last will and testament was admitted to probate on October 2, 2008, whereupon her son, Edward Burger Reynolds, Jr., was appointed executor, pursuant to its terms. The will also bequeathed Verdi $75,000 and a Decision Estate of Norma Reynolds, Deceased

 

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$300,000 marital trust for his benefit, the balance to be distributable to the decedent's issue upon Verdi's death. The residue was distributed among the decedent's issue equally, except for an interest in certain Westhampton Beach property to Victoria Reynolds and a 25 percent reduction of Melanie Reynolds' share in said property. Article Third disposed of realty with the language "I request but I do not direct" that the executor sell the decedent's residence at 21 Quantuck Bay Lane "as soon as reasonably practical" but not if it would result in a sale at below 10 percent of the fair market value.

Article Ninth of the decedent's last will and testament states as follows:

If any person named as a beneficiary herein shall file, or cause to be filed, objections to, or in any other manner contest this Will or any codicil hereto, in part or in whole, or attempt to prevent the probate thereof, or, directly or indirectly, institute or prosecute any action of (sic) proceeding to invalidate or set aside this Will or any of its provisions, then I direct that any such person shall receive nothing under this Will and all provisions for or in favor of such person or persons shall be revoked and I direct that that (sic) all legacies and devises for the benefit of such person or persons shall become part of my residuary estate, except that, if such person shall be entitled to share in my residuary estate then the share of such person shall be disposed of as if such person had predeceased me without leaving issue surviving me.

In December, 2008, the executor brought a proceeding for an order directing Verdi to pay the ongoing expenses of the Quogue (21 Quantuck Bay Lane) property, including but not limited to taxes, maintenance expenses, interest on mortgages encumbering the property, insurance and utilities. It was alleged that Verdi's interest as a life tenant in the property derived from a prenuptial agreement with subject decedent, executed on or about May 13, 1993, which obligated him to make these payments and that he refused to do so. Verdi's answer in that proceeding acknowledged receipt of a life estate in the Quogue property, and indicated that he was paying for the utilities, landscaping, etc., but contested his obligation to meet all the ongoing

 

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expenses of the premises.

During the trial of the matter, the parties settled. As a result of the settlement, it was agreed that Verdi would continue to have the exclusive use, occupancy and enjoyment of the property located at 21 Quantuck Lane, Quogue, New York, subject to certain conditions. Verdi also waived any claims he had to the $300,000 marital trust created under the will for his benefit, and the parties agreed to exchange general releases. The executor also represented that he had the right to bind Gregory Reynolds to the agreement and would indemnify Verdi in the event Melanie Reynolds failed to execute and abide by its terms. The court noted during the course of hearing the terms of the stipulation that not all of the parties mentioned were in the courtroom. Subsequent to the allocution of the executor and Verdi, it was noted that Victoria Reynolds was in the courtroom. At the request of counsel for the executor, she expressed her consent on the record to the terms of the agreement. After discussing whether the beneficiaries under the will would all consent to the parties' agreement, the court commented that "If they have a problem with him (the executor), they'll get him in the account…" (Transcript of Settlement Stipulation, 12/16/2009, p. 43, ll 1-2).

A contested accounting of the executor's estate account is pending. Melanie Reynolds has now commenced a construction proceeding, wherein she asks the court to determine that the foregoing actions undertaken by the executor, Verdi and Victoria Reynolds triggered the in terrorem clause under Article Ninth.

Respondents Edward Reynolds and Victoria Reynolds have moved to dismiss the petition seeking a construction, pursuant to CPLR 404(a) and for failure to state a cause of action (CPLR 3211(a)(7)). Respondent Verdi has cross-moved for an order directing the executor to indemnify Verdi for any damages sustained as a result of this construction proceeding, pursuant to the terms of the December 16, 2009 stipulation.

Arguments

In their motion to dismiss, respondents argue that the proceeding commenced in December, 2008 was a good faith effort to resolve a potential conflict between the decedent's last will and testament and the prenuptial agreement Norma Reynolds had entered into with Verdi. It was not an attack on the expressed testamentary plan, but a reasonable exercise of the executor's

 

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authority in an effort to protect the estate's primary asset (the Quogue property). It is their claim that the executor was fulfilling his fiduciary responsibility, and that all Victoria Reynolds did was waive any objection she could have had to the terms of the settlement.

In opposing the motion, petitioner's counsel refers to the complaints expressed in the accounting proceeding and to the executor's 2211 testimony. Primarily, counsel argues that the settlement agreement set aside certain provisions of the decedent's will. Petitioner's position appears to be that any action at any time, including a court-sanctioned settlement, that alters a dispositive testamentary provision triggers an in terrorem clause.

The respondents also oppose Verdi's cross-motion on his cross-claim for indemnification. It is their argument that no damages are sought from Verdi, therefore he is not entitled to indemnification.

Verdi counters that this violates the clear intent of the agreement, to protect him from claims in the event Melanie Reynolds did not agree with the December, 2009 settlement.

Discussion

The premise of CPLR 404(a) refers to "objections in point of law" and is interpreted to mean those objections which may result in summary dismissal, for example, failure to state a cause of action (McKinney's Practice Commentaries, CPLR 404, By Vincent Alexander, 2010). As such, it is comparable to CPLR 3211(a)(7), which dictates that the pleading must be 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).

Petitioner's pleading herein asks the court to construe the in terrorem clause in decedent's will as requiring the forfeiture of the executor's beneficial interest, and that of his sister Victoria, as a result of their above-described actions. Such a question is capable of summary resolution (see Matter of Kalikow, 23 Misc3d 1107(A), citations omitted)

 

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Governed by EPTL 3-3.5, in terrorem clauses allow a testator to include language prohibiting or forestalling a probate contest. As the paramount consideration in construction proceedings is the testator's intent, in terrorem clauses are certainly enforceable, but they are "not favored and [must be] strictly construed" (Estate of Pilchman, 6/21/2011, NYLJ p. 25, (col. 3), citing Matter of Singer, 13 NY3d 447). After testamentary bequests to her surviving spouse, the decedent in this case divided her estate more or less equally (with the above-noted exceptions) among her four children. The probate of the will was not contested. The actions of the Reynolds executor may be, and indeed are, challenged in the contested accounting currently pending in this court, but his actions as fiduciary, and his actions and that of his sister in agreeing to settle the aforementioned contested proceeding, which ultimately sought the ejectment of Verdi for his alleged failure to pay the carrying charges on the Quogue property to the estate, do not require forfeiture of their shares of this decedent's estate.

The propounded argument that settlements which vary dispositive provisions require forfeiture of the settling parties' interest under a will with an in terrorem clause would appear, as respondents suggest, to violate public policy. It most certainly would violate the long-standing tradition of this and most other Surrogate's Courts, which seek to find a resolution of the parties' disputes as a preferred outcome to a trial or summary determination. In fact, had the executor failed to commence the proceeding complained of in order to resolve issues concerning the preservation and protection of the estate's primary asset, a persuasive argument could have been made that he was shirking his fiduciary obligations.

Accordingly, this court finds that petitioner has failed to state a cause of action upon which relief may be granted, there being no cognizable legal theory under which the actions complained of may be construed as violating the in terrorem clause under captioned decedent's will.

With respect to the cross-claim asserted by Verdi for indemnification, his counsel correctly argues that the indemnification language in the December, 2009 stipulation is broad. However, as the allegations underlying the cross-claim appear to be derived from the claims made in the petition, it cannot survive dismissal of the within petition (see Richardson

 

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v. Lindenbaum & Young, 14 Misc3d 1226(A), aff'd, in part, dism'd, in part, 56 AD3d 645).

Accordingly, upon the papers before the court, it is

ORDERED that respondents' motion for an order dismissing the petition for construction is granted, pursuant to CPLR 404(a) and CPLR 3211(a)(7); and it is further

ORDERED that Verdi's cross-claim for indemnification is dismissed, without prejudice.