In re Thomas, 2022-22039

CourtNew York Surrogate Court
Writing for the CourtHON. CHRISTOPHER S. CIACCIO JUDGE.
Decision Date08 February 2022
PartiesIn the Matter of the Accounting of Tom J. Thomas as Executor of the Estate of Anthony J. Thomas, Deceased. In the Matter of the Accounting of Tom J. Thomas as Trustee of the Trust under Article FOURTH of the Last Will and Testament of Anthony J. Thomas, Deceased. In the Matter of the Accounting of Tom J. Thomas as Executor of the Estate of Dorothy Thomas, Deceased.
Docket Number2022-22039,File 2012-1469

In the Matter of the Accounting of Tom J. Thomas as Executor of the Estate of Anthony J. Thomas, Deceased. In the Matter of the Accounting of Tom J. Thomas as Trustee of the Trust under Article FOURTH of the Last Will and Testament of Anthony J. Thomas, Deceased. In the Matter of the Accounting of Tom J. Thomas as Executor of the Estate of Dorothy Thomas, Deceased.

No. 2022-22039

File No. 2012-1469

Surrogate's Court, Monroe County

February 8, 2022


For the Executor, Tom J. Thomas: Barclay Damon LLP, Karen Schaefer, of counsel, Rachelle Nuhfer, of counsel..

For Objectant, Gloria M. Borrelli: Phillips Lytle, LLP, Alan J. Bozer, of counsel, Kenneth A. Grossberg, of counsel.

Co-Counsel to the Executor, Anthony J. Adams, Jr.: Adams Leclair LLP, Anthony J. Adams, Jr., of counsel.

HON. CHRISTOPHER S. CIACCIO JUDGE.

Since the death of Anthony J. Thomas in April 2012 and the death of his wife Dorothy in August 2012, Tom J. Thomas (hereinafter referred to as "Tom") and his siblings Gloria Borrelli ("Gloria") and Joseph Thomas ("Joseph") [1] have been tethered in litigation over the disposition of the assets of their parents' estates, and primarily (but not solely), whether shares of the New York State Fence Company ("NYSFC"), a company founded in 1958 by Anthony Thomas and incorporated in 1978, were transferred to Tom J. Thomas prior to Anthony's passing, or were intended to be included as an estate asset shared by the siblings, all legatees under the Last Will and Testament ("Will") of Anthony Thomas and the trust created for the benefit of his wife Dorothy.

That litigation has come to a near end, this court having previously decided, after nine years of litigation, two bench trials, three appeals, two reversals, three judges presiding over the proceedings, and a final decision on the merits following the second bench trial, that the disputed shares of NYSFC were indeed not estate assets but belonged solely to the executor Tom J. Thomas. The only remaining issue, as set forth in the pending Petition for Judicial Settlement filed by Tom, is whether the court shall grant Tom's request to have the estate, and not Tom individually, pay the attorneys' fees and costs incurred by Tom in defending against the proceedings brought by his siblings, and if the estate is to pay any or all of those fees, then whether any of the fees and costs should be borne by the individual litigants, the objectants herein, Gloria and the Estate of Joseph Thomas [2] (the objectants).

Pursuant to CPLR 3212, Tom now moves for summary judgment dismissing the sole remaining objection and granting the relief requested in his Petition for Judicial Settlement.

History Of The Litigation

Anthony and Dorothy Thomas had four children: Tom Thomas, Gloria Borelli, Daniel Thomas, and Joseph Thomas. Pursuant to the Last Will and Testament of Anthony J. Thomas, son Tom J. Thomas was named executor of his estate and trustee of a trust created for the benefit of his wife Dorothy. When Dorothy died shortly after Anthony, Tom was named executor of her estate as well.

All the children were named in Anthony's Will as beneficiaries of either the residuary estates or of the trust [3] (Matter of Thomas, 124 A.D.3d 1235, 1236 [4th Dept 2015]). The wills of both Anthony and Dorothy were admitted to probate and Letters Testamentary were issued to Tom J. Thomas.

In 2013 Gloria and Joseph commenced a proceeding "to impose a constructive trust over certain monies, real property, insurance proceeds and business interests controlled by fiduciary (emphasis added) Tom J. Thomas" (Petition, NYSCEF No. 25). The proceeding challenged real estate transactions between Tom and his father related to properties located on North Greece Road and Manitou Road.

That same proceeding "also challenged respondent's failure to identify any shares of New York State Fence Company (NYSFC) as being included within the assets of decedents' estates" and requested the imposition of a constructive trust on all "stock certificates in NYSFC owned by Anthony," given that Tom had failed to produce any records reflecting the transfer of NYSFC stock from Anthony to respondent or any records reflecting respondent's payments for the stock (Matter of Thomas, 124 A.D.3d at 1236).

No mention is made in the wills or trust of the ownership of the NYSFC stock, nor was mention made of properties on North Greece Road and Manitou Road.

Petitioners Gloria and Joseph also sought a partial distribution pursuant to SCPA 2102 (5), information pursuant to SCPA 2102 (1), an accounting pursuant to SCPA 2205 and revocation of letters granted to respondent pursuant to SCPA 711 (1) and (2).

According to the Verified Petition filed by Gloria and Joseph, their brother Tom "'exploited his close relationship with [Anthony and Dorothy] by inducing them to transfer to him certain properties they owned, with the promise of payment for, and/or re-conveyance of, the parcels to [decedents] and/or his siblings.' Inasmuch as respondent never paid for the parcels or reconveyed them to decedents or his siblings, petitioners sought to impose a constructive trust, inter alia, on monies received by respondent or entities controlled by him related to the sale of property on North Greece Road (NGR property), and on the Manitou Road property and any monies received by respondent or entities controlled by him related to a lease on that property" (Matter of Thomas, 124 A.D.3d at 1236).

Regarding the NYSFC stock, it was alleged that Tom had claimed to be the sole shareholder of NYSFC, yet that he was unable to produce "any records reflecting the transfer of NYSFC stock from Anthony to him or records reflecting any payments to Anthony for said stock. Nor did Anthony file any gift tax returns reflecting a gift of these shares to Tom during his life, according to counsel for the estate." That stock was at the time of Anthony's death "valued in the multi-millions of dollars." (Petition, NYSCEF # 25.)

Monroe County Surrogate's Court granted Tom's motion to dismiss the entire proceeding 1) for failing to state a cause of action for the imposition of a constructive trust to prevent "unjust enrichment," and 2) as time-barred.

The Appellate Division, Fourth Department, modified, reinstating the cause of action for a constructive trust with respect to the NYSFC stock. "Based on the circumstances of the relationship between respondent and decedents and the nature of their multiple transactions, we conclude that there are sufficient facts from which we can conclude that there was an implied promise made by respondent to decedents; that the transfer of stock, if indeed there was a transfer, was made in reliance upon that promise; and that the promise was thereafter broken, resulting in an unjust enrichment to respondent" (Matter of Thomas, 124 A.D.3d at 1238).

The Fourth Department also determined the action with respect to the NYSFC stock was not time-barred. "That promise (to re-convey the property to his father) was thus not breached until 2012, when decedents died, and respondent failed to share that stock with his siblings. Inasmuch as this proceeding was commenced in 2013, the claim for a constructive trust over the NYSFC stock therefore is not time-barred." (Matter of Thomas, 124 A.D.3d at 1239).

It also modified the Surrogate's decision with respect to the North Greece Road and Manitou Road properties, finding that the petition stated a cause of action for a constructive trust and unjust enrichment:

"The facts as alleged in the petition and set forth in the corresponding affidavits establish the existence of a confidential and fiduciary relationship between respondent and decedents. The facts with respect to the NGR [North Greece Road] and Manitou Road properties establish that respondent promised to pay decedents for the NGR property and to reconvey the Manitou Road property to decedents after it was subdivided by respondent. The petition further alleges that the properties were transferred to respondent as a result of those promises, and that respondent breached those promises and was thereby unjustly enriched." (Matter of Thomas, 124 A.D.3d at 1237-38.)

Even though it found a cause of action had been properly stated regarding the NGR and Manitou Road properties, the Fourth Department affirmed that part of the Surrogate's decision dismissing the actions as time barred, finding that the statute of limitations began to run on the NGR property sometime between 1989 and 1992, and on the Manitou Road property at the latest in 1998, thus, expiring fifteen years and nine years, respectively, prior to the commencement of the proceeding in 2013.

On March 7-8, 2016 the Surrogate held a bench trial and allowed "Petitioners. (to present) testimony and exhibits in support of a claim that decedent Anthony J. Thomas was a shareholder of NYSFI [sic] [4] at the time of his death..." (see Decree dated March 25, 2016, NYSCEF # 277). Ruling from the bench, and on motion of the respondent Tom J. Thomas pursuant to CPLR 4401 for dismissal, the court held that "Petitioners (Gloria Borelli and Joseph Thomas) failed as a matter of law to meet their burden of proof either that a constructive trust should be imposed upon Respondent's interest in NYSFC or that decedent Anthony J. Thomas owned any interest in NYSFC at the time of his death."

Petitioners appealed, and the Appellate Division, Fourth Department, reversed, reinstated the petition and a supplemental petition, and remitted the matter to the lower court. Noting, inferentially, that the Surrogate had mischaracterized the proceeding as "basically... dealing with a miscellaneous proceeding to determine the ownership of" the NYSFC stock, the Fourth Department held that the lower court had erred in placing the burden of proof on the petitioners to prove the "substantially impossible," that the stock was not transferred by the decedent...

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