In re Duell, 2022-30812

CourtNew York Surrogate Court
Writing for the CourtRITA M. MELLA, JUDGE
PartiesIn the Matter of Accounting of Benjamin Duell, as Executor of the Will of Irene Duell, as Co-Trustee of Fund B and of the Fund B Subtrust for the Primary Benefit of Andrew Duell, under the Will of MANNY E. DUELL, Deceased.
Decision Date06 April 2022
Docket Number1977-4835/G/H,2022-30812

In the Matter of Accounting of Benjamin Duell, as Executor of the Will of Irene Duell, as Co-Trustee of Fund B and of the Fund B Subtrust for the Primary Benefit of Andrew Duell, under the Will of MANNY E. DUELL, Deceased.

No. 2022-30812

No. 1977-4835/G/H

Surrogate's Court, New York County

April 6, 2022


Unpublished Opinion

DECISION

RITA M. MELLA, JUDGE

The following papers were considered in deciding this motion: Numbered

Notice of Motion for Summary Judgment, dated June 1, 20211

Memorandum of Law in Support of Motion, dated June 1, 2021 2

Affirmation of Peta Gordon, Esq., in Support of Motion, dated June 1, 2021, with Exhibits 1 to 67 3

Memorandum of Law in Opposition to Motion, dated July 8, 2021 4

Affirmation of Thomas E. Butler, Esq., in Opposition to Motion, Dated July 8, 2021, with Exhibits A to X 5

Affidavit of Gary B. Rosen in Opposition to Motion, sworn to July 7, 2021 6

Reply Memorandum of Law in Further Support of Motion, dated July 30, 2021 7

Affidavit of Allan D. Povol in Further Support of Motion, sworn to July 30, 2021 8

Statement of Peta Gordon, Esq., in Further Support of Motion, dated July 30, 2021, with Exhibits 1 to 17 9

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This is an accounting proceeding commenced in 2012 by Irene Duell, as co-trustee of the residuary trust known as Fund B under the will of her predeceased husband, Manny Duell, and of the Fund B subtrust for the primary benefit of their son, Andrew Duell.[1] Irene died in 2014 and her younger son, Benjamin Duell, as the executor of her estate, has been substituted for Irene as Petitioner in this proceeding. Andrew[2] filed objections and amended objections to the account. Before the court is Benjamin's motion for summary judgment dismissing Andrew's amended objections.

Background

Andrew's subtrust was created by a decision of this court dated May 14, 1998, which divided Fund B into separate parts, one for the primary benefit, respectively, of each of decedent and Irene's three children. The proceeding to split the Trust arose from the longstanding hostilities between Andrew and his siblings, Thea and Benjamin, and between Andrew and Irene, over management of the Trust properties and other matters.

The undivided Fund B consisted entirely of income-producing residential, commercial, and mixed-use real estate in Manhattan. Irene and the three children, including Andrew, initially were beneficiaries of specific portions of the income (rents) from the undivided Fund B. After the Trust division and following protracted litigation, the individual properties were allocated and distributed among the three subtrusts. At that point, Andrew's and Thea's income interests had terminated.[3] In accordance with the Fund B terms as applied to the subtrusts, Andrew and

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Thea each received an outright (then overdue) distribution of a portion of the principal. On the death of Irene, Andrew and Thea became entitled to the principal balance of their respective shares. In Andrew's case, the remainder consisted of two buildings as originally allocated to his subtrust, referred to as "Building 29" and "Building 100." It is undisputed that Andrew received these properties outright and free of encumbrances.

This account consists of two parts. The first part encompasses the period from May 1, 1997, to December 31, 1998, and covers transactions prior to the division of Fund B. The second part encompasses the period from January 1, 1999, to December 31, 2011, and covers the transactions in the subtrust for Andrew's benefit.

Andrew and Irene were initially appointed as co-trustees of the undivided Fund B, but Andrew was removed after a four-day trial by order dated September 15, 1997. The order noted his "deceitful and malicious" behavior toward Irene and Thea, and his "animosity and hostility" toward Irene and the other beneficiaries. In a May 1998 order, Andrew was appointed again as co-trustee with Irene of his subtrust, "with the expectation that he will cooperate with his mother." He accepted his appointment and formally qualified in June 1998.

Andrew's Objections[4]

Commissions and Management Fees

Andrew objects to Irene's failure to pay him annual trustee's commissions as provided by SCPA 2309, including those allowed in subdivision 7 thereof for managing and collecting rents

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from real property.[5] Central to these objections is Andrew's claim that Irene "froze him out" of the day-to-day management. She had transferred the two properties allocated to his subtrust into limited liability companies while she was the sole trustee of Fund B. The companies hired a management firm (Duell LLC) to handle the buildings' operations. Irene controlled both the limited liability companies and the management firm. Andrew alleges that Irene refused to meet or communicate with him and withheld relevant documents.

As to the subsection 7 compensation for real estate services, Andrew acknowledges that Duell LLC was employed and paid a fee to manage the properties and collect the rents for all the subtrusts. He conceded in a deposition that he did not perform any real estate management services. Because he did not actually perform such services, Andrew is not entitled to the additional commissions (Matter of Smothers, 309 NY 487, 495 [1956] ["[T]he Legislature clearly intended - and so indicated - that the extra compensation for management can be retained only 'for such services', i.e., for the active performance of the duties and obligations connected with the real property" (decided under SCPA former 285-a, predecessor to SCPA 2309 [7])]).

By contrast, eligibility for the commissions allowed by SCPA 2309 (2) is not similarly limited. They are generally payable in the absence of "bad faith, fraud, or personal enrichment" (Matter of Blodgett, 261 A.D. 878, 878 [4th Dept 1941], affd 286 NY 602 [1941]; Matter of JP Morgan Chase Bank, N.A., 133 A.D.3d 1292, 1295 [4th Dept 2015]). Here, the court has made no such adverse findings against Andrew in connection with the administration of his subtrust. Further, the court is mindful that in Matter of Faulkes (4 A.D.2d 954 [2d Dept 1957]), a co-executor was allowed statutory commissions despite having performed no services to the estate,

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where his co-fiduciary took possession of all...

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