Toombs v. John H. (In re James H. Supplemental Needs Trusts)

• Decision Date: 09 May 2019
• Docket Number: 526474,526923
• Court: New York Supreme Court — Appellate Division
• Parties: In the MATTER OF the JAMES H. SUPPLEMENTAL NEEDS TRUSTS. Kathleen Toombs, as Guardian of the Property of James H., Respondent; v. John H., as Trustee, Appellant.

172 A.D.3d 1570
101 N.Y.S.3d 477

In the MATTER OF the JAMES H. SUPPLEMENTAL NEEDS TRUSTS.

Kathleen Toombs, as Guardian of the Property of James H., Respondent;
v.
John H., as Trustee, Appellant.

526474
526923

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

Calendar Date: March 22, 2019
Decided and Entered: May 9, 2019

101 N.Y.S.3d 479

Law Offices of David A. Antwork, PC, Merrick (David A. Antwork of counsel), for appellant.

Kathleen Toombs, Schenectady, pro se, and Nicholas E. Tishler, Niskayuna, for respondent.

Before: Garry, P.J., Mulvey, Aarons, Rumsey and Pritzker, JJ.

MEMORANDUM AND ORDER

Mulvey, J.

172 A.D.3d 1570

Appeals (1) from an order, judgment and decree of the Supreme Court (Buchanan, J.), entered June 12, 2017 in Schenectady County, which granted petitioner's application, in a proceeding pursuant to EPTL 7–2.6, to remove respondent as trustee of certain supplemental needs trusts, and (2) from an order of said court, entered September 26, 2017 in Schenectady County, which, among other things, upon reargument, adhered to its prior decision.

172 A.D.3d 1571

James H., who suffers from mental illness and has been deemed an incapacitated person, is the named beneficiary of five supplemental needs trusts (hereinafter SNTs). Respondent, James H.'s brother, is named as trustee of three of those SNTs. In 2015, following the death of their mother, James H.'s cancer diagnosis and a deterioration in the brothers' relationship, James H. began to have financial difficulties and Mental Hygiene Legal Service successfully petitioned to have a guardian appointed for his property. Thereafter, petitioner – the court-appointed guardian – began working with James H. and requested that respondent make various distributions from the SNTs and provide documentation related to James H.'s health and dental insurance. Respondent was reticent to do so. Petitioner eventually filed an application pursuant to EPTL article 7 seeking to remove respondent as trustee of a first-party SNT. At the hearing, petitioner orally moved to amend her petition to encompass all three SNTs over which respondent was a trustee. Supreme Court granted petitioner's amended application and removed respondent as trustee of the three SNTs. Subsequently, respondent moved to reargue and renew. Respondent appeals both the original order removing him as trustee and the subsequent order granting reargument and adhering to the prior determination.¹

101 N.Y.S.3d 480

Supreme Court did not abuse its discretion in permitting petitioner to amend the petition. Initially, respondent did not argue in Supreme Court that the amendment was improper based on venue, rendering that argument unpreserved for our review. "A motion to conform the pleadings to the proof may be made at any time and should be liberally granted unless doing so results in prejudice to the nonmoving party" ( Noble v. Slavin, 150 A.D.3d 1345, 1346, 54 N.Y.S.3d 200 [2017] [internal quotation marks and citations omitted]; see CPLR 3025[c] ; Murray v. City of New York, 43 N.Y.2d 400, 405, 401 N.Y.S.2d 773, 372 N.E.2d 560 [1977] ). An opposing party cannot meet its burden to show prejudice "when the difference between the original pleading and the evidence results from proof admitted at the instance or with the acquiescence of the opposing party" ( Noble v. Slavin, 150 A.D.3d at 1346–1347, 54 N.Y.S.3d 200 [internal quotation marks, brackets and citations omitted]; see Kimso Apts., LLC v. Gandhi, 24 N.Y.3d 403, 413, 998 N.Y.S.2d 740, 23 N.E.3d 1008 [2014] ; Lakshmi Grocery & Gas, Inc. v. GRJH, Inc., 138 A.D.3d 1290, 1292, 30 N.Y.S.3d 743 [2016] ). Whether to allow

172 A.D.3d 1572

amendment of pleadings is left to the court's sound discretion (see Kimso Apts., LLC v. Gandhi, 24 N.Y.3d at 411, 998 N.Y.S.2d 740, 23 N.E.3d 1008 ; Murray v. City of New York, 43 N.Y.2d at 405, 401 N.Y.S.2d 773, 372 N.E.2d 560 ; Noble v. Slavin, 150 A.D.3d at 1346, 54 N.Y.S.3d 200 ).

Petitioner's original application referenced numerous family trusts and sought removal of respondent as trustee for the first-party SNT for which James H. was beneficiary. The petition indicated that there were three SNTs but noted that petitioner was not sure that she had all the trust documents and information. The petition requested that respondent be required to provide documents and clarify the various trusts, accounts they held and evidence of their funding and, if respondent had failed to fund any trust, that the court take necessary action. In opposition, respondent provided the trust documents for six SNTs in which James H. was named as a beneficiary, noting that one had not been executed, respondent was named as a trustee of three and only one had been funded. The two unfunded SNTs of which respondent was a trustee were to be funded with assets from the estate of respondent's and James H.'s mother, who died in 2014; respondent had not acted – either in his role as trustee or as executor of the mother's estate – to ensure that those two trusts were funded.

To the extent that respondent argues that he was prejudiced because he did not have notice that the third-party SNTs would be the subject of the underlying proceeding, such contention is belied by the record, which shows that both the original petition and respondent's opposition papers reference the various trusts, including the third-party SNTs, that listed James H. as beneficiary (see Noble v. Slavin, 150 A.D.3d at 1346–1347, 54 N.Y.S.3d 200 ; Lakshmi Grocery & Gas, Inc. v. GRJH, Inc., 138 A.D.3d at 1292, 30 N.Y.S.3d 743 ). Moreover, respondent's ability to formulate his defense was not impeded by the fact that the initial petition did not seek his removal as trustee of the third-party SNTs because his defense for all the trusts is essentially the same – that he was performing well as trustee (see Kimso Apts., LLC v. Gandhi, 24 N.Y.3d at 412, 998 N.Y.S.2d 740, 23 N.E.3d 1008 ; Noble v. Slavin, 150 A.D.3d at 1347–1348, 54 N.Y.S.3d 200 ; compare

101 N.Y.S.3d 481

Young v. Zwack, Inc., 98 A.D.2d 913, 914, 471 N.Y.S.2d 175 [1983] ).² Thus, Supreme Court did not abuse its discretion in granting petitioner's motion to amend the pleadings.

Supreme Court did not err in removing respondent as trustee. A trustee may be removed if he or she "has violated or

172 A.D.3d 1573

threatens to violate his or her trust or is otherwise unsuitable to execute the...