Liberti v. Bolen (In re Estate)

• Decision Date: 21 November 2018
• Docket Number: 526465
• Citation: 88 N.Y.S.3d 620,166 A.D.3d 1367
• Parties: In the MATTER OF the ESTATE OF Robert J. BOLEN Jr., Deceased. Margaret A. Liberti et al., Respondents; v. Robert J. Bolen III et al., Appellants. (And Another Related Proceeding.)
• Court: New York Supreme Court — Appellate Division

166 A.D.3d 1367

88 N.Y.S.3d 620

In the MATTER OF the ESTATE OF Robert J. BOLEN Jr., Deceased.

Margaret A. Liberti et al., Respondents;

v.Robert J. Bolen III et al., Appellants.

(And Another Related Proceeding.)

526465

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: October 11, 2018

Decided and Entered: November 21, 2018

FitzGerald Morris Baker Firth, PC, Glens Falls (John D. Aspland Jr. of counsel), for appellants.

Brody & Brody LLP, Delmar (Mark D. Brody of counsel), for respondents.

Before: McCarthy, J.P., Egan Jr., Lynch, Mulvey and Rumsey, JJ.

MEMORANDUM AND ORDER

Mulvey, J.

Robert J. Bolen Jr. (hereinafter decedent) died testate on July 24, 2016, predeceased by his wife. He was survived by his daughter, petitioner Margaret A. Liberti, and his four sons, respondent Robert J. Bolen III, respondent Thomas R. Bolen, petitioner Hanz W. Bolen and Timothy Joseph Bolen. Decedent's last will and testament named his wife as the executor of his estate and provided that, in the event she predeceased him, respondents were to be appointed as coexecutors.¹ In September 2016, petitioners commenced this proceeding seeking probate of the will and letters of administration, alleging, among other things, that respondents were ineligible to receive letters testamentary due to a conflict of interest and breaches of fiduciary duties. Respondents filed objections and cross-petitioned for a decree of probate and issuance of letters testamentary to themselves. Surrogate's Court, without holding a hearing, dismissed respondents' application, granted petitioners' petition and issued letters of administration to them. Respondents appeal.

It is well settled that "a decedent's choice of executor should be given great deference and not disregarded unless that executor is not legally qualified to act as a fiduciary" ( Matter of Palma, 40 A.D.3d 1157, 1158, 835 N.Y.S.2d 755 [2007] ; see Matter of Duke, 87 N.Y.2d 465, 473, 640 N.Y.S.2d 446, 663 N.E.2d 602 [1996] ; Matter of Flood, 236 N.Y. 408, 410, 140 N.E. 936 [1923] ; Matter of King, 147 A.D.3d 1286, 1287, 48 N.Y.S.3d 541 [2017] ). Eligibility to receive letters testamentary is governed by SCPA 707, which, insofar as is relevant here, permits the denial of letters to "one who does not possess the qualifications required of a fiduciary by reason of substance abuse, dishonesty, improvidence, want of understanding, or who is otherwise unfit for the execution of the office" ( SCPA 707[1][e] ). The grounds for disqualification under SCPA 707 are exclusive, and the burden of proof falls upon the party alleging ineligibility (see Matter of Palma, 40 A.D.3d at 1158, 835 N.Y.S.2d 755 ; Matter of Shephard, 249 A.D.2d 748, 749, 671 N.Y.S.2d 561 [1998] ; Matter of Krom, 86 A.D.2d 689, 690, 446 N.Y.S.2d 522 [1982], lv dismissed 56 N.Y.2d 807, ––– N.Y.S.2d ––––, ––– N.E.2d –––– [1982] ). Because disqualification of a named executor is a "most serious" course of relief, it "may only be decreed when the grounds set forth in [ SCPA 707 ] have been clearly established" ( Matter of Duke, 87 N.Y.2d at 473, 640 N.Y.S.2d 446, 663 N.E.2d 602 ; accord Matter of Kaufman, 137 A.D.3d 1034, 1035, 28 N.Y.S.3d 94 [2016], lv denied 28 N.Y.3d 908, 2016 WL 6827061 [2016] ; Matter of Mercer, 119 A.D.3d 689, 691, 990 N.Y.S.2d 58 [2014] ).

Petitioners' application for letters of administration, as well as their objections to respondents' request for letters testamentary, is primarily grounded upon a claimed conflict of interest between respondents in their individual and representative capacities. It is undisputed that, prior to decedent's death, Robert J. Bolen III was appointed as a coguardian of decedent's person and property pursuant to Mental Hygiene Law article 81. Thereafter, a proceeding was commenced by Timothy Joseph Bolen, as coguardian of decedent's property, alleging that respondents had breached fiduciary duties owed to decedent and seeking, among other things, to set aside a conveyance of real property from decedent to Thomas R. Bolen and to direct repayment of certain insurance proceeds that "may be owed to [decedent]." Decedent died during the pendency of that application, as a result of which Surrogate's Court issued a letter informing the parties that it was "closing it's [sic] file in this matter." Petitioners thus argue that decedent's estate has causes of action against respondents and that, if appointed as coexecutors, respondents would be placed in a position where they would be obligated to pursue litigation against themselves individually.

Even accepting these allegations as true, the adversity of interest said to exist was not sufficient to nullify decedent's choice to appoint respondents as coexecutors. " ‘[I]t is actual misconduct, not a conflict of interest, that justifies the removal of a fiduciary’ " ( Matter of Morningstar, 21 A.D.3d 1285, 1287, 801 N.Y.S.2d 674 [2005], quoting Matter of Shaw, 186 A.D.2d 809, 810, 589 N.Y.S.2d 97 [1992] ; see Matter of Marsh, 179 A.D.2d 578, 580, 578 N.Y.S.2d 911 [1992] ; Matter of Foss, 282 App.Div. 509, 513–514, 125 N.Y.S.2d 105 [1953] ; Matter of De Belardino, 77 Misc.2d 253, 255–256, 352 N.Y.S.2d 858 [Sur. Ct., Monroe County 1974], affd 47 A.D.2d 589, 363 N.Y.S.2d 974 [1975] ; Matter of Sandow, 21 Misc.2d 292, 292–293, 192 N.Y.S.2d 975 [Sur. Ct., N.Y. County 1959] ). Simply put, "a conflict does not make a fiduciary ineligible under SCPA 707, and public policy zealously protects the decedent's right to name a fiduciary, even one with a conflict" (Margaret Valentine Turano, Practice Commentaries, McKinney's Cons Laws of NY, Book 58A, SCPA 702 at 196). Thus, petitioners' remedy for the alleged conflict of interest lies not in the ineligibility provisions of SCPA 707, but in the provisions of SCPA 702 authorizing the issuance of limited and restricted letters of administration under certain enumerated circumstances.

To that end, SCPA 702(9) specifically provides for the issuance of limited letters of administration to a party for the purpose of commencing "any action or proceeding against the fiduciary, in his or her individual capacity, or against anyone else against whom the fiduciary fails or refuses to bring such a proceeding." Indeed, this subdivision is designed to preserve a decedent's choice of fiduciary "by permitting the appointment of a second limited administrator instead of requiring the disqualification or removal of original fiduciaries where their conflicts of interests preclude them from pursuing claims against themselves or others to the prejudice of other persons interested in the estate" ( Matter of Teah, 166 Misc.2d 976, 977, 636 N.Y.S.2d 1000 [Sur. Ct., Bronx County 1996] ; see Matter of Bennett, 84 A.D.3d 1365, 1366, 923 N.Y.S.2d 715 [2011], lv denied 19 N.Y.3d 801, 2012 WL 1500072 [2012] ; Margaret Valentine Turano, Practice Commentaries, McKinney's Cons Laws of NY, Book 58A, SCPA 702 at 196; 1 Harris, New York Estates: Probate, Administration and Litigation § 11:164 [6th ed] ). For these reasons, we conclude that the conflict alleged did not render respondents ineligible to serve as fiduciaries of decedent's estate under SCPA 707.

To the extent that petitioners' application for letters of administration is premised on the alleged misconduct itself, we note that "not every breach of fiduciary duty warrants the corresponding removal of an executor" ( Matter of Burkich, 12 A.D.3d 766, 768, 785 N.Y.S.2d 135 [2004] ; see Matter of Duke, 87 N.Y.2d at 473, 640 N.Y.S.2d 446, 663 N.E.2d 602 ). Further, and particularly relevant here, Surrogate's Court may disqualify a fiduciary without a hearing "only where the misconduct is established by...