In re Grossman, 2022-30882

CourtNew York Surrogate Court
Writing for the CourtHON. SARA W. McGINTY JUDGE.
PartiesIn the Matter of the Estate of SALLY GROSSMAN, Deceased. In the Matter of the Estate of ALBERT B. GROSSMAN, Deceased. File No. 86130T
Decision Date22 March 2022
Docket NumberIndex 2021-207/A,2022-30882

In the Matter of the Estate of SALLY GROSSMAN, Deceased. In the Matter of the Estate of ALBERT B. GROSSMAN, Deceased. File No. 86130T

No. 2022-30882

Index No. 2021-207/A

Surrogate's Court, Ulster County

March 22, 2022


Unpublished Opinion

Nathan M. Courtney, Esq. (NYS Office of the Attorney General, Charities Bureau), statutory party

Sean J. Denvir, Esq. (Ryan, Roach & Ryan, LLP), attorney for petitioner/beneficiary American Institute of Indian Studies

Joshua N. Koplovitz, Esq. (Wapner, Koplovitz & Futerfas), attorney for executor Anna Megan Buehler

Gerard F. Parisi, Esq. (Parisi, Coan &Saccocio, PLLC), attorney for trustee Peter M. Hoffman

DECISION/ORDER

HON. SARA W. McGINTY JUDGE.

Sally Grossman's last will and testament was accepted for probate and letters testamentary were issued to her nominated executor on May 13, 2021. In her will, Grossman ("decedent") exercised a power of appointment reserved to her in a testamentary marital trust ("Trust") created by her predeceased husband, Albert B. Grossman. Until her death, the decedent had served as co-trustee of the Trust with Peter M. Hoffman ("Hoffman"), having

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been appointed in that capacity on March 12, 1986. Hoffman also served as executor of Albert Grossman's estate.

Albert Grossman managed the early careers of many of America's preeminent folk and rock artists, including Bob Dylan, Peter, Paul & Mary, Janis Joplin and The Band. The Trust continues to be funded by commissions from the sale or licensing of their work. During decedent's lifetime, she received distributions from the Trust in excess of $14, 500, 000.

Decedent's will directed that the principal of the Trust be paid to the American Institute of Indian Studies ("AIIS"), an IRC 501 (c)(3) organization associated with the University of Chicago. Counsel to AIIS apparently reached out to Hoffman, then the Trust's sole trustee, regarding distribution of Trust assets to his client. Hoffman rejected AIIS's overture. He "did not recognize" the decedent's exercise of the power of appointment because she had exercised her power of appointment without "consulting" him (a requirement not found in the Trust) and because her choice of AIIS would cause "[Albert Grossman] to roll over in his grave" (a condition subsequent not found in the Trust).

Counsel to AIIS then filed a petition for relief against a fiduciary under SCPA 2102 on September 27, 2021, seeking turnover of the Trust's assets and an accounting by Hoffman. An order to show cause was issued by the Court to Hoffman. Petitioner's affidavit of service of the order to show cause was accompanied by a USPS Priority/Express Mail "proof of delivery" at Hoffman's long-time residence in Los Angeles on September 30, 2021.

A Teams invitation was sent to all parties for a virtual conference on the return date, October 6, 2021. All parties, including Hoffman, appeared virtually. He requested and was granted a 30-day adjournment to obtain counsel. The Court issued an order dated October 13,

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2021 setting November 3, 2021 as the new return date on the AIIS motion to remove him as trustee. Hoffman was ordered to protect and preserve the assets of the Trust pending further order of the Court.

On October 21, 2021, the Court received information from petitioner's attorney which established that Hoffman had been convicted in 2018 after an 11-day trial in federal court of wire and mail fraud and conspiracy and had been disbarred as an attorney in California in 2017 (United States v. Hoffman, 901 F.3d 523 [5th Cir 2018]). Because Hoffman failed to advise this Court of his conviction for such crimes - which disqualified him from acting as a fiduciary under SCPA 707(1)[d] and [e] - the Court sua sponte ordered that he be removed as trustee and his letters of trusteeship be revoked (SCPA 719[6], [10]; 711 [8], [10]). He was ordered to turn over all assets of the Trust and to file an accounting by November 30, 2021.

Later that same day (October 21, 2021) Hoffman efiled a Notice of Removal of this proceeding to the U.S. District Court for the Northern District of New York. Citing the "probate exception" to its federal diversity jurisdiction, the Northern District remanded the case back to this Court by its Memorandum Decision and Order dated December 8, 2021.[1]

This proceeding having been restored to its calendar, the Court thereafter issued its December 10, 2021 order requiring turnover, transfer or assignment of Trust assets to the Court for safekeeping by December 15, 2021 and adjourned the deadline for Hoffman's accounting to January 17, 2022. On December 15, 2021, Hoffman deposited $3, 385.80 with the

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Ulster County Commissioner of Finance, as required. Hoffman then filed a motion to dismiss AIIS's SCPA 2102 petition, arguing that the Court lacked both subject matter jurisdiction and personal jurisdiction over him and seeking to stay this Court's December 10 order until adjudication of his motion.

On January 20, 2022, Hoffman filed a petition for judicial settlement of his account. The account covered the period March 25, 1999 to December 20, 2021, as required under the terms of the December 10 order.

Hoffman Motion to Dismiss.

The Court finds that personal jurisdiction was obtained over Hoffman by service of the September 28, 2021 Order to Show Cause, which was effected in accordance with its terms.[2] The affidavit of service created a presumption that proper service was completed (De Leonardis v. Gaston Paving Co., 271 A.D.2d 839, 840 [3d Dept 2005]) and Hoffman has offered no evidence to rebut this presumption (see, also, Strober King Bldg. Supply Centers, Inc v Merkley, 266 A.D.2d 203 [2d Dept 1999](a "sworn affidavit of service ordinarily constitutes prima facie evidence of proper service").

Subject matter jurisdiction over these proceedings is conferred on this Court by operation of New York State Constitution Article VI Section 12(d) and SCPA 201(3): the petition for relief against a fiduciary relates to the "affairs" of two decedents, Albert Grossman and Sally Grossman, as described in Matter of Piccione, 57 N.Y.2d 278 [1982]("forthe Surrogate's Court to decline jurisdiction, it should be abundantly clear that the matter in controversy in no way affects the affairs of a decedent or of the administration of his estate.")

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The dispute before the Court relates to (1) the conduct and qualifications of a testamentary trustee nominated in a will accepted for...

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