In re Levitin

• Decision Date: 26 May 2015
• Citation: In re Levitin, 48 Misc.3d 908, 14 N.Y.S.3d 619, 2015 N.Y. Slip Op. 25184 (N.Y. Surr. Ct. 2015)
• Parties: In the Matter of Samuel J. LEVITIN to Revoke or Suspend Letters of Trustees hip Issued to Nancy Silberkleit in that Certain Probate Proceeding Involving the Last Will and Testament of Michael I. Silberkleit, Deceased.
• Court: New York Surrogate Court

48 Misc.3d 908

14 N.Y.S.3d 619

2015 N.Y. Slip Op. 25184

In the Matter of Samuel J. LEVITIN to Revoke or Suspend Letters of Trustees hip Issued to Nancy Silberkleit in that Certain Probate Proceeding Involving the Last Will and Testament of Michael I. Silberkleit, Deceased.

Surrogate's Court, Westchester County, New York.

May 26, 2015.

Jerold W. Dorfman, Esq., Larchmont, Attorney for petitioner.

Fensterstock & Partners, LLP, New York, Attorneys for respondent.

Opinion

DAVID F. EVERETT, J.

In this miscellaneous proceeding to revoke letters of co-trusteeship issued to Nancy Silberkleit (Nancy) for the trusts under the will of Michael I. Silberkleit, petitioner Samuel J. Levitin (Samuel), Nancy's co-trustee, moves for an order directing that she submit to a psychiatric examination. Nancy opposes the motion. The motion is granted for the reasons, and to the extent, set forth below.

The decedent and his business partner, Richard Goldwater (R. Goldwater), were engaged in running Archie Comic Publications, Inc. (Archie Comics), and each controlled a 50% interest in the company.

On May 2, 2008, the decedent executed an instrument which provided for a family trust (Article SEVENTH) and a marital trust (Article NINTH). The Article SEVENTH trust was to be funded from the decedent's estate assets up to his “adjusted exemption equivalent,” and its primary purpose was to benefit Nancy. On Nancy's death, the remainder of this trust was to be distributed 75% to Alexandria Silberkleit (Alexandria), the decedent's daughter with Nancy, or to Alexandria's descendants, and 25% was to be divided among Susan Berkley (Susan), Amy Silberkleit (Amy) and David Silberkleit (David), the decedent's offspring from his first marriage, when Alexandria reaches the age of 40. Susan, the decedent's eldest child, is 37 years older than Alexandria.

According to court records, the Article NINTH trust—which was to be funded with the decedent's residuary estate, with Nancy to receive the income and discretionary invasions of principal—was never funded.

Article SEVENTEENTH concerns some of the powers of the fiduciaries. Specifically, subsection (J)(2) states that if there is a dispute between fiduciaries, Nancy's decision would be controlling.

The instrument also included an in terrorem clause. On May 5, 2008, the decedent executed a codicil to the May 2, 2008 instrument.

The decedent died on August 5, 2008. On August 20, 2008, Nancy, together with Eugene Zuriff (Eugene), a friend of the decedent and the nominated co-executor and co-trustee, jointly filed a petition for probate of the instruments dated May 2, 2008 and May 5, 2008, and citations were served on Susan, Amy and David. On August 25, 2008, preliminary letters testamentary were issued to Nancy and Eugene.

On March 26, 2009, Nancy became a co-chief executive officer of Archie Comics. Jonathan Goldwater (Jon Goldwater) replaced R. Goldwater (who had died shortly before the decedent) and became a co-chief executive officer. An employment agreement, setting forth, among other things, the duties and responsibilities of Nancy as Co–Chief Executive Officer of Archie Comics, expired on December 31, 2013.

On October 29, 2009, Susan filed objections to the probate petition, and for nearly four years, the parties pursued discovery and engaged in motion practice.

On July 7, 2011, Archie Comics instituted an action against Nancy in Supreme Court, New York County, under New York County index No. 651859/11. As part of that action, Archie Comics moved, by order to show cause, for a temporary restraining order (TRO) and preliminary injunction prohibiting Nancy from working at the Archie Comics offices, and from contacting most of Archie Comics's employees and all of Archie Comics's vendors. On July 11, 2011, the Honorable Shirley Werner Kornreich granted the order to show cause to the extent of temporarily enjoining and restraining Nancy, pending a hearing on the motion, from:

“(a) harassing, yelling at or abusing anyone at the Company's offices ... (b) from attending the industry ComCon' trade show in San Diego, California scheduled for July 20 to 24, 2011 on behalf of the Company in any manner other than educational panels and issues; and (c) from contacting or otherwise communicating with the Company's vendors for any purpose whatsoever ...”

(notice of motion, exhibit 13).

During the hearing, which was held on August 16, 2011, Justice Kornreich stated, in relevant part:

“As far as I can see, if in fact, Ms. Silberkleit stays, the company will probably be destroyed, which she doesn't seem to care. But it seems to me this should be a dissolution action, not a case where we are dealing with employment. And if we are only dealing with the employment, then it should be an action to terminate her employment for cause because there is clearly cause here. Unfortunately, even though Ms. Silberkleit really had no real skin in the game in terms of the company, she has managed to be in control, although there is a co-executor and I would suggest he is breaching his fiduciary duty by sitting on the sidelines. That is my suggestion, and it might be brought to the Surrogate's attention”

(id. exhibit 19, tr. at 14–15).

The court reserved decision on the motion, but expanded the scope of the TRO, and added specific terms pertaining to Nancy's conduct and involvement with Archie Comics. Nancy cross moved for an order, pursuant to CPLR 3211(a)(7), dismissing the complaint. By decision and order dated November 28, 2011, Justice Kornreich denied Nancy's cross motion, finding, in relevant part, that Archie Comics had stated a cause of action against Nancy, and that it was entitled to a preliminary injunction “on the ground that [Archie Comics] has demanded and would be entitled to a judgment restraining [Nancy] from the commission or continuance of an act, which, if committed or continued during the pendency of the action, would produce injury to [Archie Comics]” (id. exhibit 15 at 10). Justice Kornreich also granted the requested preliminary injunction through the pendency of the action, and expanded the scope of the restrictions enjoining Nancy's conduct and contacts. Less than a month later, on or about December 22, 2011, Archie Comics moved, by order to show cause, for an order holding Nancy in contempt of court based on her failure and refusal to comply with the court's November 28, 2011 order. After a hearing on January 24, which continued on February 2, 2012, Justice Kornreich issued an order holding Nancy in civil contempt (see id. exhibit 18).

Prior to the hearings, Jon Goldwater commenced a separate action against Nancy, by filing a summons and complaint in the office of the New York County Clerk on January 17, 2012, seeking to remove her as a director and co– CEO of Archie Comics. Jon Goldwater's action, under New York County index No. 650133/12, was also assigned to Justice Kornreich.

The salient issues in both New York County actions were then referred to mediation. In accordance with the terms and conditions set forth in the Memorandum of Understanding dated May 30, 2012, and executed by Archie Comics, Nancy, Samuel and Jon Goldwater, the parties mediated and settled all claims, defenses, cross-claims, and counterclaims raised between and among the parties in the New York County actions. The Memorandum of Understanding clarified, among other things, the duties of Nancy and Samuel with respect to Archie Comics. It was agreed that Samuel would act as the “de facto liaison” between Nancy and “all things Archie,” and that Sam would “review all financial matters on behalf of [Nancy].” Stipulations of discontinuance were executed with respect to the New York County actions.

While the parties were litigating in the Supreme Court, New York County, on October 11, 2011, Archie Comics filed a petition in Westchester County Surrogate's Court, verified by Jon Goldwater, requesting that the Court issue an order modifying Nancy's preliminary letters to exclude her from participating in Archie Comics, in favor of Eugene as co-executor. By decision and order dated October 17, 2011, Surrogate Anthony Scarpino, before whom this matter was then pending, declined to exercise authority under SCPA 719, and denied the petition. In his decision, Surrogate Scarpino found that Archie Comics has no interest and no standing in the estate proceeding, and stated, in relevant part, that there was already an action pending in Supreme Court, New York County “regarding Nancy's conduct in which many of the allegations made mirror those in the petition brought before this court to be entertained.”

On January 12, 2012, co-executor/co-trustee Eugene commenced a proceeding, here in Surrogate's Court against Nancy, seeking an order: (1) revoking her preliminary letters; (2) denying her letters of trusteeship; and (3) revoking her authority to deal with Archie Comics shares.

On January 17, 2012, a settlement was reached among the parties to the proceedings in this court. As part of the settlement: (1) Susan withdrew her objections, and Susan, Amy and David renounced any contingent interest they had in the Article SEVENTH trust in exchange for $775,000.00; (2) Eugene renounced his appointment as co-executor and co-trustee, withdrew his revocation proceeding against Nancy, and received commissions in the amount of $150,000.00; and (3) Eugene's counsel received legal fees in the amount of $142,500.00. During the allocution of the settlement, Nancy's attorney advised the court that Samuel (the petitioner in this proceeding) intended to make an application to the court to be appointed co-trustee in place of Eugene.

On May 24, 2012, the instruments executed by decedent were admitted to probate, and letters testamentary were issued to Nancy. As indicated above, the Memorandum of Understanding was executed approximately one week later, on May 30, 2012.

Thereafter, Samuel petitioned the Surrogate Court to be appointed co-trustee, and by order dated July 24, 2012, Surrogate Scarpino...