In re Schulte

• Decision Date: 23 November 2022
• Docket Number: 2005-4582/C
• Citation: 2022 NY Slip Op 34000 (U)
• Parties: In the Matter of the Application of SANDRA SCHULTE, as Co-Trustee with Fiduciary Trust Company International of the Marital Trust Created for the Benefit of Sandra Schulte under Article V of the Trust Agreement dated April 8, 2002, as Restated and Amended by DAVID A. SCHULTE, JR., Deceased, as Settlor, for an Order Compelling the Estate of David A. Schulte, Jr., to Distribute Certain Assets and for Other Relief.
• Court: New York Surrogate Court

2022 NY Slip Op 34000(U)

In the Matter of the Application of SANDRA SCHULTE, as Co-Trustee with Fiduciary Trust Company International of the Marital Trust Created for the Benefit of Sandra Schulte under Article V of the Trust Agreement dated April 8, 2002, as Restated and Amended by DAVID A. SCHULTE, JR., Deceased, as Settlor, for an Order Compelling the Estate of David A. Schulte, Jr., to Distribute Certain Assets and for Other Relief.

No. 2005-4582/C

Surrogate's Court, New York County

November 23, 2022

Unpublished Opinion

DECISION AND ORDER

Rita Mella, Judge.

The following papers were considered in determining two motions before the court:

Papers Considered Numbered

On Motion to Amend Cross-Claim:

Notice of Motion to File Second Amended Answer and Cross-Claim by Sandra Schulte, as Limited Administrator CTA, with Affirmation of Elliot J. Coz, Esq., and Affidavit of Sandra Schulte, Attaching Exhibits 1,2,3

Memorandum of Law in Support of Motion to Amend 4

Affirmation of Scott S. Greenspun, Esq., in Opposition to Motion to Amend, Attaching Exhibits 5

Memorandum of Law in Opposition to Motion to Amend 6

Reply Affirmation of Elliot J. Coz, Esq., in Support of Motion to Amend, Attaching Exhibits, Reply Affidavit of Sandra Schulte 7, 8

Reply Memorandum of Law in Support of Motion to Amend 9

Sur-Reply Letter of Scott S. Greenspun (allowed as part of record) 10

On Motion for Summary Judgment:

Notice of Motion for Summary Judgment Dismissing Answer and Cross-Claim by Respondent 1125 Park Avenue Corp., with Affirmation of Scott S. Greenspun, Esq., Attaching Exhibits, and Affidavit of Steven A. Rosenblum 1,2, 3

Memorandum of Law in Support of Motion for Summary Judgment 4

Affirmation of Alan M. Goldberg, Esq., in Opposition to Motion for Summary Judgment, Attaching Exhibits 5

Memorandum of Law in Opposition to Motion for Summary Judgment 6

Reply Affirmation of Scott S. Greenspun, Esq., Attaching Exhibits 7

Reply Affidavit of Steven A. Rosenblum, Attaching Exhibit 8

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Papers Considered (cont.) Numbered

Affidavit of Daniel Wollman, Attaching Exhibits 9

Reply Memorandum of Law in Further Support of Motion for Summary Judgment 10

This is a proceeding involving a claim that a cooperative corporation, 1125 Park Avenue Corporation ("1125 Park"), denied, in bad faith, the transfer of shares appurtenant to a residential apartment to a trust benefiting Sandra Schulte ("Sandra"). She is the surviving spouse of decedent David Schulte, who established the marital trust for her lifetime benefit (the "Trust").

At the call of the April 13, 2021 calendar, the court denied the motion by Sandra, as Limited Administrator CTA of decedent's estate, to amend the estate's cross-claim against 1125 Park. The court also granted the summary judgment motion of 1125 Park to dismiss the estate's cross-claim which alleges that 1125 Park acted in bad faith and breached its fiduciary duties by failing to approve the transfer of the shares to the Trust in accordance with the terms of decedent's will. Sandra's motion to amend sought to add new factual allegations of purported bad faith to the cross-claim, including instances where 1125 Park's Board had demonstrated personal animus and dislike of Sandra.

This proceeding has a lengthy and somewhat complicated history that need not be fully recounted here. For present purposes, the following is relevant.

Sandra, as co-trustee of the Trust, commenced the underlying proceeding against decedent's Executor, his daughter from a prior relationship, and against 1125 Park to compel the transfer of the cooperative shares to the Trust. The Executor then cross-claimed against 1125 Park, mirroring the allegations that Sandra, as co-trustee, had made in her petition. This centered on the assertion that 1125 Park denied the share transfer in bad faith to favor a Board member of 1125 Park, who, it was alleged, wanted to purchase the estate's shares and possibly combine the

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apartment with one which that Board member already owned.

Thereafter, 1125 Park moved to dismiss the petition. In a 2016 decision, this court, among other things, granted the motion, holding that the Trust lacked standing to assert claims on behalf of the decedent shareholder (see Matter of Schulte, NYLJ, Apr. 18, 2016, at 19, col 2 [Sur Ct, NY County 2016]). Although the court denied 1125 Park's motion to dismiss the estate's cross-claim and the cross-claim remained, the Executor did not prosecute it. Sandra eventually petitioned for and was granted Limited Letters of Administration CTA and was substituted for the Executor as the party asserting the cross-claim in 2018.^[1]

1125 Park filed the instant motion for summary judgment prior to the filing of Sandra's motion to amend; however, the court scheduled the motion to amend to be heard first. The motion to amend was precipitated by Sandra's assertion that over a dozen additional depositions were required in this matter so that she could pursue unpled claims of personal animus and bad faith despite the period of discovery having concluded long before.

Sandra, as Limited Administrator CTA, sought to amend the estate's cross-claim by adding allegations that after decedent's death in 2005, and commencing sometime in late 2006 or 2007, 1125 Park had treated her unfairly and abusively in connection with apartment repairs and other matters.^[2] She claimed such treatment, unequal in her view in comparison to the way other residents were treated, amounted to bad faith motivated by the cooperative Board's personal animus toward her.

Although motions to amend should be freely granted in the absence of prejudicial delay

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(CPLR 3025[b]; see e.g. Wells Fargo Bank, N.A. v Morgan, 139 A.D.3d 1046 [2d Dept 2016]), here, significant prejudice to 1125 Park...