Aoki v. Nootenboom (In re Aoki)
| Decision Date | 17 July 2012 |
| Citation | 948 N.Y.S.2d 597 |
| Parties | In re WILL OF Rocky H. AOKI, etc., Deceased. Keiko Ono Aoki, Petitioner–Respondent, v. Kana Aoki Nootenboom, et al., Objectants–Appellants, Jennifer Crumb, Objectant, Devon Aoki, et al., Respondents. In re Estate of Rocky H. Aoki, etc., Deceased. Keiko Ono Aoki, Petitioner–Respondent, v. Kana Aoki Nootenboom, et al., Respondents–Appellants, Devon Aoki, et al., Respondents. |
| Court | New York Supreme Court — Appellate Division |
Holland & Knight LLP, New York (Brian P. Corrigan, Joseph P. Sullivan, Faith L. Carter and Charles F. Gibbs of counsel), for appellants.
Rosenberg Feldman Smith, LLP, New York (Richard B. Feldman, Michael H. Smith and McKenzie A. Livingston of counsel), for Keiko Ono Aoki, respondent.
PETER TOM, J.P., LELAND G. DeGRASSE, HELEN E. FREEDMAN, ROSALYN H. RICHTER, NELSON S. ROMÁN, JJ.
TOM, J.P.
Children of the late restauranteur Rocky Aoki contest those provisions of his will bequeathing to his wife, petitioner Keiko Ono Aoki, all of decedent's global interest in the Benihana restaurants and franchises held by his wholly-owned corporation, Benihana of Tokyo, Inc. (BOT), a major owner of the shares of the publicly-traded Benihana, Inc. Chiefly, Kana, Kevin, Echo and Kyle Aoki (objectants) contend that the will should not have been summarily admitted to probate because issues of fact exist with respect to both the testator's mental capacity and their stepmother's exertion of undue influence. Kana, Kevin and Kyle, in their capacity as trustees of the Benihana Protective Trust, which was created to hold decedent's interest in BOT, and their fellow trustee Kenneth Podziba, assert that they were improperly required to turn over the assets of the trust to Keiko. This Court concludes that the record contains no evidence that Rocky was cognitively impaired at any time remotely contemporaneous with the signing of the instrument and that his disposition of the property was an exercise of free will. Thus, we affirm the orders of the Surrogate in all respects.
In 1959, decedent Rocky Aoki, founder of the Benihana restaurant chain, came to the United States from Japan with the Japanese wrestling team. He enrolled in the School of Restaurant Management at New York City Technical College in Manhattan. He made a living by washing dishes, driving an ice cream truck, and working as a tour guide. In 1963, Rocky took his savings of $10,000, borrowed $20,000 more, and opened the first Benihana restaurant on West 56th Street in Manhattan, which proved to be successful, and the rest is history.
Prior to June 1998, Rocky's wholly-owned company, BOT, owned 50.9% of the public restaurant company Benihana Inc., which owns an extensive chain of Japanese restaurants and franchises throughout the United States, the Honolulu Benihana restaurant, and joint interests in Benihana restaurants in foreign countries. Until mid–1998, Rocky was the CEO of BOT and the Chairman of the Board of Benihana Inc.
In 1998, Rocky was convicted of insider trading, a felony, which prompted the formation of the Benihana Protective Trust. State statutes prohibit felons from owning any entity with a liquor license or from serving as an officer, director or manager of a restaurant that holds a liquor license. As a result, Rocky was obligated to resign as CEO and Director of BOT, and as Director and Chairman of Benihana, Inc. and to transfer his interest in BOT (which then held 50.9% of the stock in Benihana, Inc.) to the trust. The value of the stock Rocky owned in Benihana Inc. through BOT and the trust was stated in 2006 to be over $50 million. Rocky appointed three of his children to serve as trustees (objectants Kana, Kyle, and Kevin), together with his attorney and longtime friend, Darwin C. Dornbush, Esq. To remain involved with the business, Rocky entered into a consulting agreement with Benihana, Inc.
In addition to Kana, Kyle, and Kevin, Rocky's offspring included Steven, Devon, and Echo, whom he acknowledged, and a nonmarital child, objectant Jennifer Lynn Crumb. Rocky's children Kana, Kevin and Steven are from his first marriage to Chizuru Kobayashi, which ended in divorce in 1981. Kyle, Echo and Devon are from his second marriage to Pamela Jane Hillberger, which also ended in divorce in 1991. Until his death, Rocky and his six marital children were the income beneficiaries of the trust, receiving an annual income at the sole discretion of the nonfamily trustee, attorney Dornbush, who continued to serve in his long-standing role as Rocky's counsel. In that capacity, Dornbush (or his firm) drafted a 1998 will leaving Rocky's entire estate to his six marital children. There's a saying that "many men can make a fortune but very few can build a family." Thus, while Rocky's restaurant empire was flourishing, his problems within his family were beginning to mount and subsequently spiraled into an irreconcilable feud pitting Rocky and Keiko against Rocky's children from his two prior marriages in a contentious struggle for control of the Benihana empire.
Keiko, a successful businessperson with her own company (Altesse Co., Ltd.), began to date Rocky in 2000, arousing considerable apprehension among his children. In July 2002, the couple were secretly married. Keiko was Rocky's third wife. Rocky informed a close friend, Ken Podziba, of his intention to seek a postnuptial agreement and purportedly instructed Kevin and Kana to obtain one from Keiko, but she refused to comply. Dornbush recalled that in approximately September 2002, Rocky met with Kevin and Kana to discuss, among other things, whether to plan his estate to pass the corpus of the trust to his six marital children. That same month, Rocky was presented with an action plan, drafted by Dornbush's partner, Norman Shaw, Esq. Rocky agreed to the plan and Shaw prepared an instrument—an irrevocable partial release of his power to designate the beneficiaries of the trust corpus upon his death, which limited the beneficiaries to his marital descendants. On or about September 24, 2002, Rocky signed his first partial release.
In 1998, Rocky made a will that left his entire estate to his six marital children. The will was drafted by Dornbush, or Dornbush's firm. A second partial release of his power of appointment over the trust was executed in December 2002 which, while maintaining the essential terms of the first partial release, was more tax efficient. It further limited Rocky's power to designate the beneficiaries of the principal and income to those of his descendants who were lawful residents. Rocky did not inform Keiko that he had signed the second partial release.
In October 1998, Rocky executed a codicil to his 1998 will. Since the amended 1998 will did not exercise Rocky's power of appointment under the trust, its disposition left the division of the corpus in equal shares among his six marital children.
However, Rocky exercised his testamentary power of appointment under the trust agreement in a codicil dated August 4, 2003, which left Keiko 25% of the corpus in fee simple with the remainder to be held in trust and passed on to any of his offspring whom Keiko (in her discretion) might designate. Keiko maintained a life estate in the remainder, to be passed to Rocky's children. The codicil was drafted by Keiko's regular counsel, Joseph Manson of Piper Rudnick in Washington D.C., and the firm was recommended by her. Asked by Manson to review the August 2003 codicil, Dornbush drafted a legal opinion letter stating that it was invalid in light of the irrevocable partial releases Rocky had executed. It was at this time that Rocky, while acknowledging his awareness that the releases left the Benihana stock to his children, asserted he had no knowledge that the releases were "irrevocable." To this end, Rocky executed an affidavit dated September 23, 2003 and appeared in a videotaped recording, in which he stated that he had never intended to irrevocably limit his power of appointment over the trust corpus and disavowed knowledge that the releases contained such language. While the validity of the releases remains unresolved, the controversy only exacerbated the rift between Rocky and his children.
Meanwhile, Keiko increased her involvement in Rocky's business affairs by providing consulting services through Altesse, prompting the move of BOT's offices, located in Miami for the past 20 years, to Keiko's New York City apartment. In response to her growing influence, Kevin is alleged to have informed management at Benihana, Inc. that, upon Rocky's death, Keiko would assume control of the company and current management would be terminated. Rocky blamed Kevin for initiating a series of transactions involving the issuance of additional shares, diluting BOT's controlling interest in the corporation from 50.9% to 36.5%. A July 2004 suit, brought at Rocky's insistence, challenging BOT's loss of control of the corporation's affairs was unsuccessful in rescinding the transactions (see Benihana of Tokyo, Inc. v. Benihana, Inc., 891 A.2d 150 [Del.2005], affd. 906 A.2d 114 [Del.2006] ). In a May 2005 letter to Kana, Rocky expressed his disappointment in Kevin, stating that his children, in their capacity as trustees, were acting out of self-interest and against his interests and those of the trust and the business he had "struggled hard for 41 years to create." He explained that he would leave it to Keiko to decide which of his children would receive the other 75% of trust assets after his death, while adding that he would be "happy" to leave "seven equal shares to my wife and six kids after I die if everyone can get along." Kana responded by blaming Keiko for poisoning Rocky against his children and proposed that Rocky meet with his children alone. Following a July 2005 meeting, Rocky wrote to Kana reaffirming his confidence in Keiko to distribute the trust assets upon his death.
In February of the next year, Kevin, Kana and Kyle, as trustees, sold 100,000 shares of BOT's...
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