Krimsky v. Lombardi

• Decision Date: 05 July 1974
• Citation: 78 Misc.2d 685,357 N.Y.S.2d 671
• Parties: Ralph KRIMSKY and Alfred Moskowitz, Individually and as Executors of the Estate of Philip Krimsky, Plaintiffs, v. Louis LOMBARDI et al., Defendants.
• Court: New York Supreme Court

Page 671

357 N.Y.S.2d 671

78 Misc.2d 685

Ralph KRIMSKY and Alfred Moskowitz, Individually and as Executors of the Estate of Philip Krimsky, Plaintiffs, v. Louis LOMBARDI et al., Defendants.

Supreme Court, Albany County.

July 5, 1974.

Ungerman, Harris & Ackerman, Albany, for plaintiffs.

Carter, Conboy, Bardwell & Case, Albany, for defendants.

A. FRANKLIN MAHONEY, Justice.

The defendants, individually and as constituting the law firm of Lombardi and Reinhard, move for an Order dismissing plaintiffs' complaint on the several grounds that plaintiffs (a) as Executors, lack the capacity to sue, (b) as individuals, cannot and do not state a cause of action. In the alternative, defendants move for relief requiring plaintiffs to replead (§§ 3014, 3024 CPLR).

Plaintiffs, as Executors of the Estate of Philip Krimsky, retained defendants as counsel for the estate. Objections to the Executors' accounts were filed by certain beneficiaries of the estate and a hearing and trial of said objections was held in the Surrogate's Court of Albany County. On July 13, 1973 a written agreement of settlement and compromise was approved by the Surrogate and was the genesis of a Decree of Final Settlement, dated July 13, 1973, which states in the final paragraph thereof, 'that said Executors . . . be released and discharged of and from any and all liability . . . as to all matter embraced in the Accounting herein.'

Pliantiffs, as Executors and individually, now seek to recover from the defendants in a malpractice cause of action, damages to the Estate and to themselves allegedly caused by the manner in which defendants discharged their professional obligation to the Estate of Philip Krimsky.

Section 2226 of the Surrogate's Court Procedure Act (formerly § 274 of the Surrogate's Court Act) provides that a decree of judicial settlement is conclusive as to all matters embraced therein with respect to all the parties of whom jurisdiction was obtained. A judicial settlement of account of a fiduciary is the final proceeding in the matter of a deceased's estate. However, a judicial settlement is not final, except as to matters contained in the accounting and the executor is still in office for the purpose of performing any duties that require his action (In re Beach's Estate, 122 Misc. 261, 203 N.Y.S. 492, affd., 208 App.Div. 831, 203 N.Y.S. 919). Therefore, it can be said that a judicial decree of settlement is conclusive evidence against all the parties of whom jurisdiction was obtained as to all matters covered in the account and decree (Matter of Payne, 12 Misc.2d 861, 179 N.Y.S.2d 594). The conclusiveness extends to every material matter within the issues which were expressly litigated and determined and also to those matters which, although not expressly determined, are comprehended and involved in the thing expressly stated and decided, whether they were or were not actually litigated or considered (Matter of Jones, 13 Misc.2d 678, 177 N.Y.S.2d 307, affd., 8 A.D.2d 829, 190 N.Y.S.2d 166; Warren's Heaton on Surrogates' Courts, § 402 (3)).

Obviously, the Final Decree in this case, concluding and settling the estate business, necessarily considered, comprehended and dealt with such matters as estate taxes, guardians allowances and attorneys fees. In the absence of an appeal, or modification of the Decree, all parties to the account and decree of settlement thereof are bound as to those matters. Therefore, as to the matters of estate taxes and attorneys fees, including those paid or payable to the defendants, the Decree is res adjudicata. Next, a Final Decree is res adjudicata as to corporate affairs and transactions, where the Surrogate had jurisdiction to hear objections and the objectants failed to present their claims. In the instant case, in the first cause of action, the plaintiffs allege that the malpractice of the defendants caused an overpayment of estate taxes in the amount of $185,000.00 and, further, for loss of estate assets in the amount of $885,000.00 resulting from negligence and, in particular, from incorrectly advising the plaintiffs that they had the power to continue the high risk business owned by the deceased and which formed a large portion of the deceased's estate. Obviously, since the beneficiaries of the estate failed to raise these objections in the course of the hearing and trial before the Surrogate, they are precluded from doing so now because of the finality necessarily accorded to the decree of judicial settlement. If the beneficiaries are precluded, then it necessarily follows that the Executors of the estate cannot now seek to recoup by an action in malpractice those assets which, if the Executors were successful in the malpractice action, would inure to the benefit of the beneficiaries. They cannot obtain vicariously that which is foreclosed by the Final Decree. The Surrogate had jurisdiction to hear objections as to the amount of estate taxes paid, the amount of attorneys fees to be paid to counsel retained by the estate and, similarly, the Surrogate could have entertained objections to the management of the estate. In the absence of objections, these claims are barred and the Decree is res adjudicata as to them (Schuykill Fuel Corp. v. Nieberg Realty Corp., 250 N.Y. 304--306, 165 N.E. 456--457).

Therefore, those portions of the first cause of action that seek recovery from the defendants of the sums of $185,000.00 for overpayment of estate taxes and $850,000.00 for diminution of estate value are dismissed, both as fiduciary and individual causes of action. The entire second cause of action that seeks recoupment of the $50,000.00 legal fee paid to the defendants as attorneys for the estate is dismissed. Again, payment of estate taxes, diminution in estate value during administration and estate counsel fees are, in absence of objections before final settlement, forever foreclosed as to those who were parties to the Final Decree of Settlement.

What remains is paragraph '15' of the first cause of action and the third cause of action alleged in the complaint. The allegation set forth in paragraph '15' and the entire third cause of action seem to allege the same wrong. In '15' the plaintiffs state they were damaged in...